##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549


FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 1, 2001

Commission file number: 0-26518

FITZGERALDS GAMING CORPORATION

(Exact name of registrant as specified in its charter)


|                                                                      |  |                                                
|--------------------------------------------------------------------- |  | -----------------------------------------------
|Nevada
(State or other jurisdiction of
incorporation or organization) |  | 88-0329170
(IRS Employer Identification Number)

301 Fremont Street, Las Vegas NV 89101
(Address of principal executive offices) (Zip Code)

(702) 388-2400
(Registrants telephone number, including area code)

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 than 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 [   ]

Shares outstanding of each of the registrants
classes of common stock as of August 9, 2001

|                             |  |                                 
|---------------------------- |  | --------------------------------
|Class                        |  | Outstanding as of August 9, 2001
|                             |  |                                 
|Common stock, $.01 par value |  | 5,508,082                       





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TABLE OF CONTENTS



|                              |                                                                                               |                                                                    |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------------ |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | Item 1. Condensed Consolidated Financial Statements                                          
|                              |                                                                                               | Unaudited Condensed Consolidated Balance Sheets                   
|                              |                                                                                               | Unaudited Condensed Consolidated Statements of Operations         
|                              |                                                                                               | Unaudited Condensed Consolidated Statements of Cash Flows         
|                              |                                                                                               | Notes to the Unaudited Condensed Consolidated Financial Statements
|                              | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                              | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|PART II. OTHER INFORMATION   
|SIGNATURES                   



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##### Table of Contents



FITZGERALDS GAMING CORPORATION (DEBTOR-IN-POSSESSION)

FORM 10-Q

INDEX

|           |                       |                                                                                                                                 |   
|---------- | --------------------- | ------------------------------------------------------------------------------------------------------------------------------- | --
|PART I.    | FINANCIAL INFORMATION |                                                                                                                                 |   
|          
|           | Item 1.               | CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                                                                    
|          
|           |                       | Unaudited Condensed Consolidated Balance
Sheets as of July 1, 2001 and December 31,
2000                                        | 4 
|          
|           |                       | Unaudited Condensed Consolidated
Statements of Operations for the Quarters
and Two Quarters Ended July 1, 2001 and
July 2, 2000 | 6 
|          
|           |                       | Unaudited Condensed Consolidated
Statements of Cash Flows for the Two
Quarters Ended July 1, 2001 and July 2,
2000              | 7 
|          
|           |                       | Notes to the Unaudited Condensed
Consolidated Financial Statements                                                              | 8 
|          
|           | Item 2.               | Managements Discussion and Analysis of
Financial Condition and Results of
Operations                                           | 19
|          
|           | Item 3.               | Quantitative and Qualitative Disclosures About Market Risk                                                                      | 31
|          
|PART II.   | OTHER INFORMATION     | 32                                                                                                                             
|          
|SIGNATURES | 36                   





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##### Table of Contents









PART I. FINANCIAL INFORMATION









Item 1. Condensed Consolidated Financial Statements









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##### Table of Contents









FITZGERALDS GAMING CORPORATION (Debtor-In-Possession)
Unaudited Condensed Consolidated Balance Sheets
July 1, 2001 and December 31, 2000

---

|                            |                                                                                    |              |                      |               |         |             |             |             |           |             | 
|--------------------------- | ---------------------------------------------------------------------------------- | ------------ | -------------------- | ------------- | ------- | ----------- | ----------- | ----------- | --------- | ----------- | 
|ASSETS                      |                                                                                    | July 1, 2001 |                      | Dec. 31, 2000
|                            |                                                                                    |              |                      |              
|CURRENT ASSETS:             |                                                                                    |              |                      |               |         |             |             |            
|                           
|                           
|                           
|                           
|                            | Cash and cash equivalents                                                          |              | $                    | 22,406,719    |         |             | $           | 8,181,388   |          
|                           
|                           
|                           
|                           
|                            | Accounts receivable, net of allowance for doubtful
accounts of $76,152 and $64,087 |              |                      | 256,234       |         |             |             | 575,765     |          
|                           
|                           
|                           
|                           
|                            | Inventories                                                                        |              |                      | 517,216       |         |             |             | 471,913     |          
|                           
|                           
|                           
|                           
|                            | Prepaid expenses:                                                                  |              |                      |               |         |             |             |             |          
|                           
|                           
|                           
|                           
|                            |                                                                                    | Gaming taxes |                      |               | 947,739 |             |             |             | 993,551   |            
|                           
|                           
|                           
|                           
|                            |                                                                                    | Other        |                      |               | 989,160 |             |             |             | 1,394,968 |            
|                            |                                                                                    |              |                      |               |         |             |             |            
|                            |                                                                                    |              | Total current assets |               |         | 25,117,068  |             |             |           | 11,617,585  | 
|                            |                                                                                    |              |                      |               |         |             |             |            
|PROPERTY AND EQUIPMENT, net |                                                                                    |              | 41,775               |               |         |             | 79,656      |            
|                            |                                                                                    |              |                      |               |         |             |             |            
|OTHER ASSETS:               |                                                                                    |              |                      |               |         |             |             |            
|                           
|                           
|                           
|                           
|                            | Net assets held for sale                                                           |              |                      | 170,943,337   |         |             |             | 170,388,338 |          
|                           
|                           
|                           
|                           
|                            | Restricted cash                                                                    |              |                      | 4,839,822     |         |             |             | 4,489,000   |          
|                           
|                           
|                           
|                           
|                            | Other assets                                                                       |              |                      | 1,601,983     |         |             |             | 1,473,204   |          
|                            |                                                                                    |              |                      |               |         |             |             |            
|                            |                                                                                    |              | Total other assets   |               |         | 177,385,142 |             |             |           | 176,350,542 | 
|                            |                                                                                    |              |                      |               |         |             |             |            
|TOTAL                       |                                                                                    | $            | 202,543,985          |               |         | $           | 188,047,783 |            
|                            |                                                                                    |              |                      |               |         |             |             |            

(continued)

|                                                                       |             
|---------------------------------------------------------------------- | ------------
|See Notes to the Unaudited Condensed Consolidated Financial Statements | Page 4 of 36



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##### Table of Contents



FITZGERALDS GAMING CORPORATION (Debtor-In-Possession)
Unaudited Condensed Consolidated Balance Sheets (continued)
July 1, 2001 and December 31, 2000

---

|                                                                                                                                                                                                                                                                                                                                                                |                                                                                                     |                              |                                             |               |           |             |             |              |           |             |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------- | ---------------------------- | ------------------------------------------- | ------------- | --------- | ----------- | ----------- | ------------ | --------- | ----------- | -
|LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                                                                                                                                                                                                                                                                                                        |                                                                                                     | July 1, 2001                 |                                             | Dec. 31, 2000
|                                                                                                                                                                                                                                                                                                                                                                |                                                                                                     |                              |                                             |              
|LIABILITIES NOT SUBJECT TO COMPROMISE                                                                                                                                                                                                                                                                                                                          
|CURRENT LIABILITIES:                                                                                                                                                                                                                                                                                                                                            |                                                                                                     |                              |                                             |               |           |             |             |             
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                | Current portion of long-term debt                                                                   |                              |                                             | 110,530       |           |             |             | 109,937      |          
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                | Accounts payable                                                                                    |                              |                                             | 1,465,816     |           |             |             | 306,299      |          
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                | Accrued and other:                                                                                  |                              |                                             |               |           |             |             |              |          
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                |                                                                                                     | Payroll and related          |                                             |               | 2,206,811 |             |             |              | 2,652,200 |            
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                |                                                                                                     | Progressive jackpots         |                                             |               | 66,296    |             |             |              | 63,633    |            
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                |                                                                                                     | Outstanding chips and tokens |                                             |               | 173,553   |             |             |              | 187,652   |            
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                |                                                                                                     | Other                        |                                             |               | 753,116   |             |             |              | 649,866   |            
|                                                                                                                                                                                                                                                                                                                                                                |                                                                                                     |                              |                                             |               |           |             |             |             
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                |                                                                                                     |                              | Total current liabilities                   |               |           | 4,776,122   |             |              |           | 3,969,587   |  
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|LONG-TERM DEBT, net of current portion                                                                                                                                                                                                                                                                                                                          |                                                                                                     |                              | 2,352,307                                   |               |           |             | 2,407,023   |             
|                                                                                                                                                                                                                                                                                                                                                                |                                                                                                     |                              |                                             |               |           |             |             |             
|                                                                                                                                                                                                                                                                                                                                                                |                                                                                                     |                              | Total liabilities not subject to compromise |               |           | 7,128,429   |             |              |           | 6,376,610   |  
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|LIABILITIES SUBJECT TO COMPROMISE                                                                                                                                                                                                                                                                                                                               |                                                                                                     |                              | 241,865,839                                 |               |           |             | 242,869,829 |             
|                                                                                                                                                                                                                                                                                                                                                                |                                                                                                     |                              |                                             |               |           |             |             |             
|                                                                                                                                                                                                                                                                                                                                                                |                                                                                                     |                              | Total liabilities                           |               |           | 248,994,268 |             |              |           | 249,246,439 |  
|                                                                                                                                                                                                                                                                                                                                                                |                                                                                                     |                              |                                             |               |           |             |             |             
|CUMULATIVE REDEEMABLE PREFERRED STOCK,
$.01 par value; $25 stated value; 800,000 shares
authorized, issued and outstanding; liquidation
preference $20,000,000 stated value plus accrued
dividends of $25,178,767 and $21,971,855 recorded
at liquidation preference, net of unamortized
offering costs and discount of $5,161,279 and
$5,565,696, respectively |                                                                                                     |                              | 40,017,488                                  |               |           |             | 36,406,159  |             
|                                                                                                                                                                                                                                                                                                                                                                |                                                                                                     |                              |                                             |               |           |             |             |             
|STOCKHOLDERS DEFICIENCY:                                                                                                                                                                                                                                                                                                                                       |                                                                                                     |                              |                                             |               |           |             |             |             
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                | Common stock, $.01 par value; 29,200,000 shares
authorized; 5,508,082 shares issued and outstanding |                              |                                             | 55,080        |           |             |             | 55,080       |          
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                | Additional paid-in capital                                                                          |                              |                                             | 23,675,511    |           |             |             | 23,675,511   |          
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                | Accumulated deficit                                                                                 |                              |                                             | (110,198,362  | )         |             |             | (121,335,406 | )        
|                                                                                                                                                                                                                                                                                                                                                                |                                                                                                     |                              |                                             |               |           |             |             |             
|                                                                                                                                                                                                                                                                                                                                                                |                                                                                                     |                              | Total stockholders deficiency              |               |           | (86,467,771 | )           |              |           | (97,604,815 | )
|                                                                                                                                                                                                                                                                                                                                                                |                                                                                                     |                              |                                             |               |           |             |             |             
|TOTAL                                                                                                                                                                                                                                                                                                                                                           |                                                                                                     | $                            | 202,543,985                                 |               |           | $           | 188,047,783 |             
|                                                                                                                                                                                                                                                                                                                                                                |                                                                                                     |                              |                                             |               |           |             |             |             



|                                                                       |             
|---------------------------------------------------------------------- | ------------
|See Notes to the Unaudited Condensed Consolidated Financial Statements | Page 5 of 36



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##### Table of Contents









FITZGERALDS GAMING CORPORATION (Debtor-In-Possession)
Unaudited Condensed Consolidated Statements of Operations
For the Quarters and Two Quarters Ended July 1, 2001 and July 2, 2000

---

|                                                    |                                                                                                                                         |       |            |                |            |                    |            |              |            |              |            |            |             |   |             |             |             | 
|--------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | ----- | ---------- | -------------- | ---------- | ------------------ | ---------- | ------------ | ---------- | ------------ | ---------- | ---------- | ----------- | - | ----------- | ----------- | ----------- | 
|                                                    |                                                                                                                                         |       |            | Quarters
Ended |            | Two Quarters Ended
|                                                    |                                                                                                                                         |       |            |                |            |                   
|                                                    |                                                                                                                                         |       |            | July 1, 2001   |            | July 2, 2000       |            | July 1, 2001 |            | July 2, 2000
|                                                    |                                                                                                                                         |       |            |                |            |                    |            |              |            |             
|OPERATING REVENUES:                                 |                                                                                                                                         |       |            |                |            |                    |            |              |            |              |            |            |             |   |             |            
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Casino                                                                                                                                  |       | $          | 49,359,437     |            |                    | $          | 46,568,853   |            |              | $          | 97,349,580 |             |   | $           | 92,617,300  |            
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Food and beverage                                                                                                                       |       |            | 6,450,951      |            |                    |            | 6,528,061    |            |              |            | 12,941,871 |             |   |             | 13,349,897  |            
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Rooms                                                                                                                                   |       |            | 5,739,390      |            |                    |            | 5,754,019    |            |              |            | 11,081,047 |             |   |             | 11,107,065  |            
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Other                                                                                                                                   |       |            | 1,146,254      |            |                    |            | 1,043,707    |            |              |            | 2,409,248  |             |   |             | 2,188,483   |            
|                                                    |                                                                                                                                         |       |            |                |            |                    |            |              |            |              |            |            |             |   |             |            
|                                                    |                                                                                                                                         | Total |            |                | 62,696,032 |                    |            |              | 59,894,640 |              |            |            | 123,781,746 |   |             |             | 119,262,745 | 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Less promotional allowances                                                                                                             |       |            | 8,820,576      |            |                    |            | 7,963,244    |            |              |            | 17,776,813 |             |   |             | 16,478,765  |            
|                                                    |                                                                                                                                         |       |            |                |            |                    |            |              |            |              |            |            |             |   |             |            
|                                                    |                                                                                                                                         | Net   |            |                | 53,875,456 |                    |            |              | 51,931,396 |              |            |            | 106,004,933 |   |             |             | 102,783,980 | 
|                                                    |                                                                                                                                         |       |            |                |            |                    |            |              |            |              |            |            |             |   |             |            
|OPERATING COSTS AND EXPENSES:                       |                                                                                                                                         |       |            |                |            |                    |            |              |            |              |            |            |             |   |             |            
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Casino                                                                                                                                  |       |            | 22,885,612     |            |                    |            | 21,714,731   |            |              |            | 44,973,697 |             |   |             | 42,982,229  |            
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Food and beverage                                                                                                                       |       |            | 3,966,213      |            |                    |            | 3,778,427    |            |              |            | 7,745,331  |             |   |             | 7,680,989   |            
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Rooms                                                                                                                                   |       |            | 3,121,461      |            |                    |            | 3,155,906    |            |              |            | 6,354,629  |             |   |             | 6,233,327   |            
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Other operating expense                                                                                                                 |       |            | 537,660        |            |                    |            | 551,487      |            |              |            | 1,040,781  |             |   |             | 1,109,164   |            
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Selling, general and
administrative                                                                                                     |       |            | 14,506,787     |            |                    |            | 14,421,568   |            |              |            | 28,577,024 |             |   |             | 28,605,763  |            
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Depreciation and amortization                                                                                                           |       |            | 7,987          |            |                    |            | 3,665,715    |            |              |            | 19,534     |             |   |             | 7,353,460   |            
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Reorganization items                                                                                                                    |       |            | 891,657        |            |                    |            |             |            |              |            | 1,573,685  |             |   |             |            |            
|                                                    |                                                                                                                                         |       |            |                |            |                    |            |              |            |              |            |            |             |   |             |            
|                                                    |                                                                                                                                         | Total |            |                | 45,917,377 |                    |            |              | 47,287,834 |              |            |            | 90,284,681  |   |             |             | 93,964,932  | 
|                                                    |                                                                                                                                         |       |            |                |            |                    |            |              |            |              |            |            |             |   |             |            
|INCOME FROM OPERATIONS                              |                                                                                                                                         |       | 7,958,079  |                |            |                    | 4,643,562  |              |            |              | 15,720,252 |            |             |   | 8,819,048   |            
|                                                   
|                                                   
|                                                   
|                                                   
|OTHER INCOME (EXPENSE):                             |                                                                                                                                         |       |            |                |            |                    |            |              |            |              |            |            |             |   |             |            
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Interest income                                                                                                                         |       |            | 31,673         |            |                    |            | 239,489      |            |              |            | 77,665     |             |   |             | 433,572     |            
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Interest expense (contractual
interest for the quarter and
two quarters Ended July 1, 2001
of $8,968,073 and $17,851,544,
respectively) |       |            | (507,212       | )          |                    |            | (8,348,023   | )          |              |            | (1,015,101 | )           |   |             | (16,752,305 | )          
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Other income (expense)                                                                                                                  |       |            | (38,719        | )          |                    |            | 10,481       |            |              |            | (34,443    | )           |   |             | 19,642      |            
|                                                    |                                                                                                                                         |       |            |                |            |                    |            |              |            |              |            |            |             |   |             |            
|NET INCOME (LOSS)                                   |                                                                                                                                         |       | 7,443,821  |                |            |                    | (3,454,491 | )            |            |              | 14,748,373 |            |             |   | (7,480,043  | )          
|                                                   
|                                                   
|                                                   
|                                                   
|PREFERRED STOCK DIVIDENDS AND
ACCRETION OF DISCOUNT |                                                                                                                                         |       | (1,837,615 | )              |            |                    | (1,580,191 | )            |            |              | (3,611,329 | )          |             |   | (3,103,269  | )          
|                                                    |                                                                                                                                         |       |            |                |            |                    |            |              |            |              |            |            |             |   |             |            
|NET INCOME (LOSS) APPLICABLE TO
COMMON STOCKHOLDERS |                                                                                                                                         | $     | 5,606,206  |                |            | $                  | (5,034,682 | )            |            | $            | 11,137,044 |            |             | $ | (10,583,312 | )          
|                                                    |                                                                                                                                         |       |            |                |            |                    |            |              |            |              |            |            |             |   |             |            
|EARNINGS (LOSS) PER COMMON
SHARE  BASIC            |                                                                                                                                         | $     | 1.02       |                |            | $                  | (0.91      | )            |            | $            | 2.02       |            |             | $ | (1.92       | )          
|                                                    |                                                                                                                                         |       |            |                |            |                    |            |              |            |              |            |            |             |   |             |            
|EARNINGS (LOSS) PER COMMON
SHARE  DILUTED          |                                                                                                                                         | $     | 1.02       |                |            | $                  | (0.91      | )            |            | $            | 2.02       |            |             | $ | (1.92       | )          
|                                                    |                                                                                                                                         |       |            |                |            |                    |            |              |            |              |            |            |             |   |             |            
|WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING          |                                                                                                                                         |       | 5,508,082  |                |            |                    | 5,508,082  |              |            |              | 5,508,082  |            |             |   | 5,508,082   |            
|                                                    |                                                                                                                                         |       |            |                |            |                    |            |              |            |              |            |            |             |   |             |            



|                                                                       |             
|---------------------------------------------------------------------- | ------------
|See Notes to the Unaudited Condensed Consolidated Financial Statements | Page 6 of 36



---



##### Table of Contents









FITZGERALDS GAMING CORPORATION (Debtor-In-Possession)
Unaudited Condensed Consolidated Statements of Cash Flows
For the Two Quarters Ended July 1, 2001 and July 2, 2000

---

|                                                                                    |                                       |   |              |            |              |   |            |            |  
|----------------------------------------------------------------------------------- | ------------------------------------- | - | ------------ | ---------- | ------------ | - | ---------- | ---------- | -
|                                                                                    |                                       |   | July 1, 2001 |            | July 2, 2000
|                                                                                    |                                       |   |              |            |             
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                           |                                       | $ | 15,753,984   |            |              | $ | 13,824,567 |           
|                                                                                    |                                       |   |              |            |              |   |            |           
|CASH FLOWS FROM INVESTING ACTIVITIES:                                               |                                       |   |              |            |              |   |            |           
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Proceeds from sale of assets          |   |              | 55,405     |              |   |            | 19,937     |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Acquisition of property and equipment |   |              | (1,014,444 | )            |   |            | (7,855,280 | )
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Increase in restricted cash           |   |              | (350,822   | )            |   |            |           |  
|                                                                                    |                                       |   |              |            |              |   |            |           
|                                                                                    | Net cash used in investing activities |   |              | (1,309,861 | )            |   |            | (7,835,343 | )
|                                                                                    |                                       |   |              |            |              |   |            |           
|CASH FLOWS FROM FINANCING ACTIVITIES:                                               |                                       |   |              |            |              |   |            |           
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Repayment of long-term debt           |   |              | (218,792   | )            |   |            | (474,000   | )
|                                                                                    |                                       |   |              |            |              |   |            |           
|                                                                                    | Net cash used in financing activities |   |              | (218,792   | )            |   |            | (474,000   | )
|                                                                                    |                                       |   |              |            |              |   |            |           
|NET INCREASE IN CASH AND CASH EQUIVALENTS                                           |                                       |   | 14,225,331   |            |              |   | 5,515,224  |           
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                      |                                       |   | 8,181,388    |            |              |   | 22,115,594 |           
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|CASH AND CASH EQUIVALENTS INCLUDED IN NET ASSETS
HELD FOR SALE, BEGINNING OF PERIOD |                                       |   | 10,111,872   |            |              |   |           |           
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|CASH AND CASH EQUIVALENTS INCLUDED IN NET ASSETS
HELD FOR SALE, END OF PERIOD       |                                       |   | (10,111,872  | )          |              |   |           |           
|                                                                                    |                                       |   |              |            |              |   |            |           
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                            |                                       | $ | 22,406,719   |            |              | $ | 27,630,818 |           
|                                                                                    |                                       |   |              |            |              |   |            |           
|CASH PAID FOR INTEREST                                                              |                                       | $ | 2,006,019    |            |              | $ | 165,311    |           
|                                                                                    |                                       |   |              |            |              |   |            |           
|SUMMARY OF NON-CASH INVESTING AND FINANCING ACTIVITIES:                             |                                       |   |              |            |              |   |            |           
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Property and equipment acquired through issuance of debt                            |                                       | $ |             |            |              | $ | 2,250,000  |           
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Accretion of discount on preferred stock                                            |                                       |   | 404,417      |            |              |   | 335,470    |           
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Accrual of preferred stock dividends                                                |                                       |   | 3,206,912    |            |              |   | 2,767,799  |           



|                                                                       |             
|---------------------------------------------------------------------- | ------------
|See Notes to the Unaudited Condensed Consolidated Financial Statements | Page 7 of 36



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##### Table of Contents









Fitzgeralds Gaming Corporation (Debtor-In-Possession)

Notes to the Unaudited Condensed Consolidated Financial Statements



|1. |  | BASIS OF PRESENTATION
|-- |  | ---------------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The accompanying condensed consolidated financial statements of Fitzgeralds
Gaming Corporation (the Company) (Debtor-In-Possession) have been prepared
by the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles (GAAP) have been
condensed or omitted.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In the opinion of management, all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the interim
condensed consolidated financial statements have been included. These
condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto included in the
Companys Annual Report on Form 10-K for the year ended December 31, 2000.
The results of operations for the two quarters ended July 1, 2001 are not
necessarily indicative of the results to be expected for the year ending
December 31, 2001.



| |                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company utilizes a 4-4-5 (weeks) financial reporting period which
maintains a December 31 year-end. This method of reporting results in 13
weeks in each quarterly accounting period. The first and fourth accounting
periods will have a fluctuating number of days resulting from the
maintenance of a December 31 year end, whereas the second and third periods
will have the same number of days each year.



| |                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------
| | Certain amounts in the 2000 condensed consolidated financial statements have
been reclassified to conform to the 2001 method of presentation.



|2. |  | PETITION FOR RELIEF UNDER CHAPTER 11
|-- |  | ------------------------------------



| | General
| | -------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On December 5, 2000, the Company (together with its subsidiaries) commenced
cases under Chapter 11 of the Bankruptcy Code (collectively, the Bankruptcy
Cases) in the United States Bankruptcy Court for the Northern District of
Nevada (the Bankruptcy Court). The Bankruptcy Cases are jointly
administered and coordinated under Case No. BK-N-00-33467 GWZ. The
Bankruptcy Cases were commenced in accordance with an Agreement Regarding
Pre-Negotiated Restructuring, dated as of December 1, 2000 (the
Restructuring Agreement), with the holders (the Consenting Noteholders)
of a majority in interest of the Companys 12.25% Senior Secured Notes (the
Notes) issued under an indenture dated December 30, 1997 (the
Indenture). The Restructuring Agreement contemplates an

Page 8 of 36



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##### Table of Contents





| |                                                                                                        
| | -------------------------------------------------------------------------------------------------------
| | expeditious and orderly sale of all of the Companys operating assets and
properties as going concerns.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Restructuring Agreement provides a vehicle for liquidating the assets of
the Company in the Bankruptcy Court through Chapter 11 of the Bankruptcy
Code. Upon execution of the Restructuring Agreement and before commencement
of the Bankruptcy Cases, the Company distributed $13.0 million in Excess
Cash (as that term is defined in the Restructuring Agreement) to the trustee
under the Indenture (the Indenture Trustee) to be applied to unpaid and
accrued Indenture Trustees fees and expenses incurred and as partial
payment of accrued and unpaid interest and principal as provided in the
Indenture. Pursuant to the Restructuring Agreement and an order entered by
the Bankruptcy Court, the Company is required to distribute unrestricted
cash (which includes cash in net assets held for sale) in excess of $24.8
million to holders of its Notes within 45 days after the end of each
quarter. In May 2001, the Company distributed $1.8 million in Excess Cash
to the Indenture Trustee to be applied to accrued and unpaid interest and
principal as provided in the Indenture. As part of the Restructuring
Agreement, the Consenting Noteholders and Indenture Trustee agree to forbear
from exercising certain of their rights otherwise allowable under the Notes
and the Indenture.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The parties to the Restructuring Agreement have each concluded that the fair
market value of the Companys real and personal property given as collateral
for the Notes is less than the total outstanding principal and interest due
under the Notes, and that the fair market value of the real and personal
property not securing the Notes is less than the amount of the unsecured
deficiency claim of the holders of the Notes. As a result, it is not
expected that any distribution will be made to holders of the existing
capital stock of the Company. The Restructuring Agreement requires that as
part of the liquidation process, all of the existing common stock and
preferred stock of the Company is to be canceled and extinguished without
payment therefor.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In accordance with the Restructuring Agreement, an auction sale was to be
scheduled for no later than June 15, 2001 in the Bankruptcy Court with
respect to those operating assets and properties not sold pursuant to
negotiated sales agreements such as the Purchase Agreement, as referred to
below. With the consent of the Consenting Noteholders, the auction sale was
not conducted and the Company and the Consenting Noteholders are negotiating
an amendment to the Restructuring Agreement to conduct the auction sale
during October 2001.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Under the terms of the Restructuring Agreement, upon the closing of each
sale of the Companys assets, the net proceeds of the collateral for the
Notes, less certain reserves for management incentives and other
liabilities, must be distributed to the Indenture Trustee for the benefit of
and distribution to the holders of the Notes in accordance with the
Indenture. All of the Companys assets remaining after such sales,
including any notes received as part of the consideration for the sales of
the Companys assets and payment of remaining liabilities of the Company,
will be transferred to a liquidating trust created for the benefit of the
holders of the Notes and others under a plan of reorganization to be
consistent with the terms of the Restructuring Agreement.

Page 9 of 36



---



##### Table of Contents





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In light of the regulatory approvals needed to accomplish the liquidations,
and recognizing the need to retain senior management in order to insure
continuity and compliance with all gaming regulations and licensing
requirements in the Companys operations during the process, the
Restructuring Agreement requires implementation of a senior management
incentive and retention program. After obtaining Bankruptcy Court approval
in December 2000, this program was adopted by the Company in order to retain
Philip D. Griffith, Michael E. McPherson, Max L. Page and Paul H. Manske,
each an officer, director and/or senior executive of the Company, as key
executives and to compensate them for their continued employment with the
Company during the process.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On March 19, 2001, as part of the restructuring contemplated in the
Restructuring Agreement, the Company, as debtor in possession, received the
Bankruptcy Court approval to: (i) sell free and clear of liens pursuant to
Section 363 of the Bankruptcy Code substantially all of its assets; and (ii)
assume and assign pursuant to Section 365 of the Bankruptcy Code contracts
used in its operations in Las Vegas, Nevada, Black Hawk, Colorado and
Tunica, Mississippi to an affiliate of The Majestic Star Casino, LLC, an
Indiana limited liability company (Majestic), pursuant to the Purchase and
Sale Agreement dated as of November 22, 2000, as amended on December 4, 2000
(the Purchase Agreement).



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Pursuant to the Purchase Agreement, the Company has agreed to: (i) sell free
and clear of liens pursuant to Section 363 of the Bankruptcy Code
substantially all of the Companys assets including Fitzgeralds Las Vegas,
Fitzgeralds Black Hawk and Fitzgeralds Tunica; and (ii) assume and assign
pursuant to Section 365 of the Bankruptcy Code contracts used in its
operations at Fitzgeralds Las Vegas, Fitzgeralds Black Hawk, and Fitzgeralds
Tunica, as well as the Companys interest in The Fremont Street Experience
Limited Liability Company (collectively, the Assets) to Majestic for
$149.0 million in cash, subject to certain holdbacks and adjustments, plus
the assumption of certain liabilities relating to the Assets. Majestic has
deposited into an escrow account $2.0 million of the cash portion of the
purchase price as an earnest money deposit. The Purchase Agreement contains
customary representations, warranties, conditions and covenants, that
provides for a dollar-for-dollar purchase price adjustment based on changes
in each of the target properties working capital and long-term debt,
excluding debt related to the Notes, at closing, and adjustment if the
Companys earnings before interest, income taxes, depreciation and
amortization for the 12-month period prior to closing vary by 5% or more
from a target earnings amount for such period and adjustments as may apply
in the event that the Company fails to obtain certain consents. The closing
is contingent upon, among other things, Majestic obtaining financing of up
to $137.0 million and approval of gaming authorities in Colorado,
Mississippi and Nevada.



| |                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | For further information concerning the Purchase Agreement, please refer to
our Current Report on Form 8-K, dated December 5, 2000, as filed with the
Securities and Exchange Commission.

Page 10 of 36



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##### Table of Contents





| | Reorganization Items
| | --------------------



| |                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------
| | For the Quarter and the Two Quarters Ended July 1, 2001, the Company
incurred the following expenses subsequent to the filing of the Bankruptcy
Cases:

|                                                                              |  |              |           |              |  |   |           |  
|----------------------------------------------------------------------------- |  | ------------ | --------- | ------------ |  | - | --------- | -
|                                                                              |  | Quarter      |           | Two Quarters
|                                                                              |  | Ended        |           | Ended       
|                                                                              |  | July
1, 2001 |           | July
1, 2001
|                                                                              |  |              |           |             
|Reorganization Items:                                                         |  |              |           |              |  |   |           |  
|Post petition professional fees                                               |  | $            | 1,067,997 |              |  | $ | 1,766,508 |  
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|U.S. trustee fees                                                             |  |              | 60,474    |              |  |   | 132,275   |  
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Interest earned on accumulated cash resulting from the
bankruptcy proceedings |  |              | (236,814  | )            |  |   | (325,098  | )
|                                                                              |  |              |           |              |  |   |           |  
|                                                                              |  | $            | 891,657   |              |  | $ | 1,573,685 |  
|                                                                              |  |              |           |              |  |   |           |  



| | Liabilities Subject to Compromise
| | ---------------------------------



| |                                                                                                    
| | ---------------------------------------------------------------------------------------------------
| | At July 1, 2001 and December 31, 2000 liabilities subject to compromise
consisted of the following:

|                                   |  |              |             |               |  |   |             |  
|---------------------------------- |  | ------------ | ----------- | ------------- |  | - | ----------- | -
|                                   |  | July
1, 2001 |             | Dec.
31, 2000
|                                   |  |              |             |              
|Liabilities subject to compromise: |  |              |             |               |  |   |             |  
|Notes                              |  | $            | 205,000,000 |               |  | $ | 205,000,000 |  
|                                  
|                                  
|                                  
|                                  
|Discount on the Notes              |  |              | (1,394,652  | )             |  |   | (1,549,855  | )
|                                  
|                                  
|                                  
|                                  
|Accrued interest on the Notes      |  |              | 42,969,931  |               |  |   | 44,813,080  |  
|                                  
|                                  
|                                  
|                                  
|Debt offering costs on the Notes   |  |              | (4,809,667  | )             |  |   | (5,513,521  | )
|                                  
|                                  
|                                  
|                                  
|Unsecured creditors                |  |              | 100,227     |               |  |   | 120,125     |  
|                                   |  |              |             |               |  |   |             |  
|                                   |  | $            | 241,865,839 |               |  | $ | 242,869,829 |  
|                                   |  |              |             |               |  |   |             |  



|3. |  | RECENTLY ISSUED ACCOUNTING STANDARDS
|-- |  | ------------------------------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On June 30, 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities.This statement establishes accounting
and reporting standards for derivative instruments and hedging activities
and is effective for the Companys fiscal year ending December 31, 2001.
Adoption of this statement did not have a material impact on the Companys
financial condition or results of operations.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On January 1, 2001, the Company implemented Emerging Issues Task Force
(EITF) No. 00-14 Accounting for Certain Sales Incentive, EITF No. 00-21
Accounting for Multiple-Element Revenue Arrangements, EITF No. 00-22
Accounting for Points and Certain Other Time-Based or Volume-Based Sales
Incentive Offers, and Offers for Free Products or Services to Be Delivered
in the Futureand EITF No. 00-25 Accounting for Consideration from a Vendor
to a Retailer in Connection with the Purchase or Promotion of the Vendors
Productsrequiring cash coupons or rebates to be classified as a reduction
of revenue. Prior

Page 11 of 36



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##### Table of Contents





| |                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | to this ruling, the Company had expensed the cash coupons, players club
reward program and other cash back programs as a casino or marketing
expense. In 2001, the Company reclassified its 2000 income statement to
reflect such expenses as promotional expense thereby reducing net revenue.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In June 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 141 (SFAS 141), Business
Combinations, which requires the purchase method of accounting for business
combination initiated after June 30, 2001 and prohibits the use of the
pooling-of-interest method. The Company does not believe that the adoption
of SFAS 141 will have a significant impact on its financial statements.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Also in June 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 142 (SFAS 142) Goodwill
and Other Intangible Assets, which is effective January 1, 2002. SFAS 142
requires that goodwill and other intangible assets with indefinite useful
lives no longer be amortized, but instead tested for impairment at least
annually. As of July 1, 2001 the Company had goodwill, net of accumulated
amortization, of approximately $13.0 million which is currently included in
net assets held for sale. The Company discontinued amortizing the goodwill
subsequent to filing the Bankruptcy cases. Amortization expense related to
goodwill was $0.2 million for the two quarters ended July 2, 2000. The
Company is currently assessing but has not yet determined the impact of SFAS
142 on its financial position and results of operations.



|4. |  | NET ASSETS HELD FOR SALE
|-- |  | ------------------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In December 2000, the Company entered into the Restructuring Agreement with
the Consenting Noteholders. The Restructuring Agreement contemplates an
expeditious and orderly sale of all of the Companys operating assets and
properties. Assets not included in net assets held for sale of $22.1
million consist mainly of cash not transferable upon the close of a sale
with Majestic and assets of Fitzgeralds Reno excluding property and
equipment. On March 19, 2001 the Company received Bankruptcy Court approval
to sell substantially all of its Assets to Majestic pursuant to the Purchase
Agreement for $149.0 million in cash. The closing is contingent upon, among
other things Majestic obtaining financing of up to $137.0 million and
approval of gaming authorities in Colorado, Mississippi and Nevada. The
Company is actively seeking a buyer for the Fitzgeralds Reno property.

Page 12 of 36



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##### Table of Contents



The components of the net assets held for sale as of July 1, 2001 are as follows:

|                                                                       |                              |   |             |   |             |   |             |            |             |   |             |            |       |   |            |          |   |   |            |   |  |   |             |            |  
|---------------------------------------------------------------------- | ---------------------------- | - | ----------- | - | ----------- | - | ----------- | ---------- | ----------- | - | ----------- | ---------- | ----- | - | ---------- | -------- | - | - | ---------- | - |  | - | ----------- | ---------- | -
|                                                                       |                              |   | Fitzgeralds |   | Fitzgeralds |   | Fitzgeralds |            | Fitzgeralds |   |             |            |       |   |            |          |  
|                                                                       |                              |   | Reno        |   | Las Vegas   |   | Tunica      |            | Black Hawk  |   | Elimination |            | Total
|                                                                       |                              |   |             |   |             |   |             |            |             |   |             |            |      
|Assets:                                                                |                              |   |             |   |             |   |             |            |             |   |             |            |       |   |            |          |   |   |            |   |  |   |             |           
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Cash and cash equivalents                                              |                              | $ |            |   |             | $ | 3,082,396   |            |             | $ | 5,274,598   |            |       | $ | 1,754,878  |          |   | $ |           |   |  | $ | 10,111,872  |           
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Account receivable, net of
allowance for doubtful
accounts of $278,851 |                              |   |            |   |             |   | 490,447     |            |             |   | 372,863     |            |       |   | 51,878     |          |   |   |           |   |  |   | 915,188     |           
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Inventories                                                            |                              |   |            |   |             |   | 434,678     |            |             |   | 500,089     |            |       |   | 155,665    |          |   |   |           |   |  |   | 1,090,432   |           
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Prepaid gaming taxes                                                   |                              |   |            |   |             |   | 993,151     |            |             |   |            |            |       |   | 47,300     |          |   |   |           |   |  |   | 1,040,451   |           
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Other current assets                                                   |                              |   |            |   |             |   | 1,267,086   |            |             |   | 483,886     |            |       |   | 160,920    |          |   |   |           |   |  |   | 1,911,892   |           
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Property and equipment, net(1)                                         |                              |   | 29,117,324  |   |             |   | 37,310,214  |            |             |   | 63,238,446  |            |       |   | 24,885,483 |          |   |   | (1,904,147 | ) |  |   | 152,647,320 |           
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Goodwill, net of accumulated
amortization of $1,173,579                |                              |   |            |   |             |   |            |            |             |   |            |            |       |   | 13,005,582 |          |   |   |           |   |  |   | 13,005,582  |           
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Restricted cash                                                        |                              |   |            |   |             |   | 500,000     |            |             |   |            |            |       |   |           |          |   |   |           |   |  |   | 500,000     |           
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Other non-current assets                                               |                              |   |            |   |             |   | 345,916     |            |             |   | 468,920     |            |       |   | 141,363    |          |   |   |           |   |  |   | 956,199     |           
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Current portion of long term debt                                      |                              |   |            |   |             |   | (135,508    | )          |             |   | (10,835     | )          |       |   |           |          |   |   |           |   |  |   | (146,343    | )         
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Accounts payable             |   |             |  |             |   |             | (939,120   | )           |   |             | (1,203,230 | )     |   |            | (450,120 | ) |   |            |  |  |   |             | (2,592,470 | )
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Accrued expenses and other:  |   |             |   |             |   |             |            |             |   |             |            |       |   |            |          |   |   |            |   |  |   |             |            |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Payroll and related          |   |             |  |             |   |             | (1,375,465 | )           |   |             | (2,566,647 | )     |   |            | (712,584 | ) |   |            |  |  |   |             | (4,654,696 | )
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Progressive jackpots         |   |             |  |             |   |             | (222,803   | )           |   |             | (348,164   | )     |   |            | (458,929 | ) |   |            |  |  |   |             | (1,029,896 | )
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Outstanding chips and tokens |   |             |  |             |   |             | (141,615   | )           |   |             | (30,575    | )     |   |            | (43,857  | ) |   |            |  |  |   |             | (216,047   | )
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Other                        |   |             |  |             |   |             | (624,606   | )           |   |             | (1,254,929 | )     |   |            | (393,272 | ) |   |            |  |  |   |             | (2,272,807 | )
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Long term debt                                                         |                              |   |            |   |             |   | (323,340    | )          |             |   |            |            |       |   |           |          |   |   |           |   |  |   | (323,340    | )         
|                                                                       |                              |   |             |   |             |   |             |            |             |   |             |            |       |   |            |          |   |   |            |   |  |   |             |           
|                                                                       |                              | $ | 29,117,324  |   |             | $ | 40,661,431  |            |             | $ | 64,924,422  |            |       | $ | 38,144,307 |          |   | $ | (1,904,147 | ) |  | $ | 170,943,337 |           
|                                                                       |                              |   |             |   |             |   |             |            |             |   |             |            |       |   |            |          |   |   |            |   |  |   |             |           

(1) The elimination entry is for the inter-company purchase and sale of property and equipment.

The components of the net assets held for sale as of December 31, 2000 are as follows:

|                                                                       |                              |   |             |   |             |   |             |            |             |   |             |            |       |   |            |            |   |   |            |   |  |   |             |            |  
|---------------------------------------------------------------------- | ---------------------------- | - | ----------- | - | ----------- | - | ----------- | ---------- | ----------- | - | ----------- | ---------- | ----- | - | ---------- | ---------- | - | - | ---------- | - |  | - | ----------- | ---------- | -
|                                                                       |                              |   | Fitzgeralds |   | Fitzgeralds |   | Fitzgeralds |            | Fitzgeralds |   |             |            |       |   |            |            |  
|                                                                       |                              |   | Reno        |   | Las Vegas   |   | Tunica      |            | Black Hawk  |   | Elimination |            | Total
|                                                                       |                              |   |             |   |             |   |             |            |             |   |             |            |      
|Assets:                                                                |                              |   |             |   |             |   |             |            |             |   |             |            |       |   |            |            |   |   |            |   |  |   |             |           
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Cash and cash equivalents                                              |                              | $ |            |   |             | $ | 3,082,396   |            |             | $ | 5,274,598   |            |       | $ | 1,754,878  |            |   | $ |           |   |  | $ | 10,111,872  |           
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Account receivable, net of
allowance for doubtful
accounts of $210,586 |                              |   |            |   |             |   | 696,054     |            |             |   | 539,510     |            |       |   | 55,420     |            |   |   |           |   |  |   | 1,290,984   |           
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Inventories                                                            |                              |   |            |   |             |   | 445,572     |            |             |   | 445,722     |            |       |   | 153,204    |            |   |   |           |   |  |   | 1,044,498   |           
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Prepaid gaming taxes                                                   |                              |   |            |   |             |   | 566,788     |            |             |   |            |            |       |   | 48,052     |            |   |   |           |   |  |   | 614,840     |           
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Other current assets                                                   |                              |   |            |   |             |   | 1,506,705   |            |             |   | 366,376     |            |       |   | 109,802    |            |   |   |           |   |  |   | 1,982,883   |           
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Property and equipment, net(1)                                         |                              |   | 28,949,595  |   |             |   | 37,162,537  |            |             |   | 62,708,013  |            |       |   | 24,789,132 |            |   |   | (1,904,147 | ) |  |   | 151,705,130 |           
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Goodwill, net of accumulated
amortization of $1,173,579                |                              |   |            |   |             |   |            |            |             |   |            |            |       |   | 13,005,582 |            |   |   |           |   |  |   | 13,005,582  |           
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Restricted cash                                                        |                              |   |            |   |             |   | 500,000     |            |             |   |            |            |       |   |           |            |   |   |           |   |  |   | 500,000     |           
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Other non-current assets                                               |                              |   |            |   |             |   | 320,251     |            |             |   | 461,361     |            |       |   | 141,363    |            |   |   |           |   |  |   | 922,975     |           
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Current portion of long term debt                                      |                              |   |            |   |             |   | (167,273    | )          |             |   | (73,015     | )          |       |   |           |            |   |   |           |   |  |   | (240,288    | )         
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Accounts payable             |   |             |  |             |   |             | (514,831   | )           |   |             | (809,013   | )     |   |            | (227,676   | ) |   |            |  |  |   |             | (1,551,520 | )
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Accrued expenses and other:  |   |             |   |             |   |             |            |             |   |             |            |       |   |            |            |   |   |            |   |  |   |             |            |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Payroll and related          |   |             |  |             |   |             | (1,336,852 | )           |   |             | (2,349,516 | )     |   |            | (667,094   | ) |   |            |  |  |   |             | (4,353,462 | )
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Progressive jackpots         |   |             |  |             |   |             | (269,561   | )           |   |             | (322,665   | )     |   |            | (387,602   | ) |   |            |  |  |   |             | (979,828   | )
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Outstanding chips and tokens |   |             |  |             |   |             | (104,175   | )           |   |             | (91,247    | )     |   |            | (39,152    | ) |   |            |  |  |   |             | (234,574   | )
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Other                        |   |             |  |             |   |             | (788,550   | )           |   |             | (1,095,992 | )     |   |            | (1,152,148 | ) |   |            |  |  |   |             | (3,036,690 | )
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Long term debt                                                         |                              |   |            |   |             |   | (394,064    | )          |             |   |            |            |       |   |           |            |   |   |           |   |  |   | (394,064    | )         
|                                                                       |                              |   |             |   |             |   |             |            |             |   |             |            |       |   |            |            |   |   |            |   |  |   |             |           
|                                                                       |                              | $ | 28,949,595  |   |             | $ | 40,704,997  |            |             | $ | 65,054,132  |            |       | $ | 37,583,761 |            |   | $ | (1,904,147 | ) |  | $ | 170,388,338 |           
|                                                                       |                              |   |             |   |             |   |             |            |             |   |             |            |       |   |            |            |   |   |            |   |  |   |             |           

(1)  The elimination entry is for the inter-company purchase and sale of
property and equipment.

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| |                                                                                                          
| | ---------------------------------------------------------------------------------------------------------
| | Net property and equipment held for sale consists of the following at July
1, 2001 and December 31, 2000:

|                                               |  |              |             |              |  |   |             |  
|---------------------------------------------- |  | ------------ | ----------- | ------------ |  | - | ----------- | -
|                                               |  | July 1, 2001 |             | Dec.31, 2000
|                                               |  |              |             |             
|Land used in casino operations                 |  | $            | 18,204,843  |              |  | $ | 18,204,843  |  
|                                              
|                                              
|                                              
|                                              
|Buildings and improvements                     |  |              | 122,745,145 |              |  |   | 122,789,471 |  
|                                              
|                                              
|                                              
|                                              
|Site improvements                              |  |              | 20,960,324  |              |  |   | 20,960,324  |  
|                                              
|                                              
|                                              
|                                              
|Barge and improvements                         |  |              | 12,920,531  |              |  |   | 12,896,235  |  
|                                              
|                                              
|                                              
|                                              
|Furniture, fixtures and equipment              |  |              | 67,583,833  |              |  |   | 67,330,488  |  
|                                               |  |              |             |              |  |   |             |  
|                                               |  |              | 242,414,676 |              |  |   | 242,181,361 |  
|                                              
|                                              
|                                              
|                                              
|Less accumulated depreciation
and amortization |  |              | (90,696,907 | )            |  |   | (91,240,929 | )
|                                               |  |              |             |              |  |   |             |  
|                                               |  |              | 151,717,769 |              |  |   | 150,940,432 |  
|                                              
|                                              
|                                              
|                                              
|Construction in progress                       |  |              | 929,551     |              |  |   | 764,698     |  
|                                               |  |              |             |              |  |   |             |  
|Total                                          |  | $            | 152,647,320 |              |  | $ | 151,705,130 |  
|                                               |  |              |             |              |  |   |             |  



|5. |  | LONG-TERM DEBT
|-- |  | --------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Notes bear interest at a fixed annual rate of 12.25% payable on June 15
and December 15 of each year, commencing June 15, 1998. The Notes will
mature on December 15, 2004. The Company has not paid the regularly
scheduled interest payments of $12.5 million that were due and payable June
15, 1999, 2000 and 2001 and December 15, 1999 and 2000. Under the Note
Indenture, an Event of Default occurred on July 15, 1999. Failure to make
the scheduled interest payment on June 15, 1999 resulted in a 1.0% increase
in the interest rate to 13.25%, effective June 16, 1999 until the Company
filed the Bankruptcy Cases. In accordance with the Indenture, the Company
began accruing interest on the unpaid interest at 13.25% effective June 16,
1999 until the filing of the Bankruptcy Cases. Upon execution of the
Restructuring Agreement and before commencement of the Bankruptcy Cases, the
Company distributed $13.0 million in Excess Cash (as that term is defined in
the Restructuring Agreement) to the Indenture Trustee to be applied to
unpaid and accrued Indenture Trustees fees and expenses incurred and as
partial payment of accrued and unpaid interest as provided in the Indenture.
In May 2001, the Company distributed $1.8 million in Excess Cash to the
Indenture Trustee to be applied to accrued and unpaid interest and principal
as provided in the Indenture. The Company stopped accruing interest on the
Note on December 5, 2000 with the commencement of the Bankruptcy Cases.



| |                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In February 2000, Fitzgeralds Reno purchased an adjacent 834-space parking
garage for $3.0 million. The seller-financed acquisition required a $0.75
million down payment, with the balance financed at an interest rate of 10.0%
with monthly principal and interest payments based on a 20-year amortization
schedule. The note matures in ten years with a lump sum principal payment
due of approximately $1.7 million.

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|6. |  | EARNINGS PER SHARE
|-- |  | ------------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | During the quarters ended July 1, 2001 and July 2, 2000, there were no
outstanding convertible securities and warrants that would result in
dilutive potential to the common shares and, as such, diluted earnings per
share are not applicable. Options to purchase 267,000 shares of common stock
at prices ranging from $1.00 to $1.10 per share were outstanding at July 2,
2000. Such options are not included in the computation of diluted earnings
per share because to do so would have been antidilutive. No options were
outstanding at July 1, 2001.



|7. |  | CONTINGENCIES
|-- |  | -------------



| | Central City Litigation
| | -----------------------



| |                                                                                                                                                                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On or about May 25, 2001, City of Central, Colorado (Central City), and
certain businesses claiming to do business in Central City commenced an
action, Civil Action No. 01-D-0964, in the United States District Court for
the District of Colorado against the City of Black Hawk, Colorado
(Blackhawk), certain companies alleged to do business in or about
Blackhawk and various individuals.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 101 Main, a wholly owned subsidiary of
Fitzgeralds Black Hawk II, is a named
defendant in the action. The claims against all defendants, including 101
Main, are predicated on 15 U.S.C. section 1 (Restraint of Trade), 15 U.S.C.
section 2 (Monopolization), 15 U.S.C. section 2 (Attempted Monopolization),
Colorado Revised Statute section 6-4-104 (Restraint of Trade), violation of
Colorado Revised Statute section 6-4-105 (Monopolization), Colorado Revised
Statute section 6-4-105 (Attempted Monopolization), 18 U.S.C. section 1962
(Racketeering), Colorado Revised Statute section 18-17-104 (Colorado
Organized Crime Control Act), intentional interference with prospective
economic advantage, civil conspiracy, tortious interference with contractual
relations and inducing breach of contract. The plaintiffs in the action are
seeking judgment by jury against all defendants for an amount in excess of
$100.0 million. The principal cause of the action relating to 101 Main is
that the defendants, including 101 Main, engaged in certain conduct to
prevent the construction of a highway defined as the Southern Access Road
that would provide access to travelers directly to Central City from
Interstate 70 instead of requiring passage through Blackhawk.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The complaint was filed after the commencement of the Bankruptcy Cases, and
101 Main has asserted that the action was commenced in violation of the
automatic stay, Section 362(a) of the Bankruptcy Code. Accordingly, the
Company believes that the action, as it applies to 101 Main, is void under
applicable case law, as was the plaintiffs purported services of process
following commencement of the action. 101 Main has demanded that plaintiffs
dismiss it from the action. In the event 101 Main is not dismissed from the
action, 101 Main will seek appropriate redress from the Bankruptcy
Court, and alternatively defend against the claims for relief set forth in the
complaint. The Company believes that the claims asserted against 101 Main
are without merit.

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| |                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Additionally, none of the plaintiffs filed proofs of claim in the Bankruptcy
Cases within the time permitted pursuant to Bankruptcy Court order. In the
event that the Bankruptcy Court determines that the claims were not timely
filed, the claims are subject to disallowance, or alternatively,
subordination to timely filed claims regarding distribution of assets from
the Bankruptcy Cases.



| | Reliance
| | --------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | From April 1, 1998 through
September 30, 1999, the Company's general liability insurance
and worker's compensation insurance carrier was Reliance Insurance
Company ("Reliance"). On May 29, 2001, a Pennsylvania court
placed Reliance under the control of the Pennsylvania Department of
Insurance for rehabilitation. At the present time, the Company is
unable to determine what effect this action may have on liability and
worker's compensation claims which arose during the coverage period
for which Reliance was the Company's insurance carrier or whether any
limitations on coverage would have a material adverse effect on the
Company's financial condition.



|8. |  | SEGMENT INFORMATION
|-- |  | -------------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The accounting policies of each business segment are the same as those
described in the summary of significant accounting policies in the Companys
Annual Report on Form 10-K for the year ended December 31, 2000. There are
minimal inter-segment sales. The Company continues to evaluate its business
segment performance based on the Companys earnings before interest, income
taxes, depreciation and amortization (EBITDA). The Company has not
changed its basis of segmentation from the year ended December 31, 2000.

|                        |       |                        |   |                        |        |              |   |        |        | 
|----------------------- | ----- | ---------------------- | - | ---------------------- | ------ | ------------ | - | ------ | ------ | 
|                        |       |                        |   | For the Quarters Ended
|                        |       |                        |   |                       
|                        |       |                        |   | July 1, 2001           |        | July 2, 2000
|                        |       |                        |   |                        |        |             
|                        |       |                        |   | (in thousands)        
|Net operating revenues: |       |                        |   |                        |        |              |   |       
|                       
|                       
|                       
|                       
|                        |       | Fitzgeralds Las Vegas  |   | $                      | 13,616 |              |   | $      | 13,318 | 
|                       
|                       
|                       
|                       
|                        |       | Fitzgeralds Tunica     |   |                        | 20,827 |              |   |        | 18,875 | 
|                       
|                       
|                       
|                       
|                        |       | Fitzgeralds Reno       |   |                        | 10,928 |              |   |        | 11,653 | 
|                       
|                       
|                       
|                       
|                        |       | Fitzgeralds Black Hawk |   |                        | 8,516  |              |   |        | 8,085  | 
|                       
|                       
|                       
|                       
|                        |       | Other                  |   |                        | (12    | )            |   |        |       | 
|                        |       |                        |   |                        |        |              |   |       
|                        | Total |                        | $ | 53,875                 |        |              | $ | 51,931 |       
|                        |       |                        |   |                        |        |              |   |       

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|                               |       |                        |                  |       |                        |       |              |       |       |       | 
|------------------------------ | ----- | ---------------------- | ---------------- | ----- | ---------------------- | ----- | ------------ | ----- | ----- | ----- | 
|                               |       |                        |                  |       | For the Quarters Ended
|                               |       |                        |                  |       |                       
|                               |       |                        |                  |       | July 1, 2001           |       | July 2, 2000
|                               |       |                        |                  |       |                        |       |             
|                               |       |                        |                  |       | (in thousands)        
|Income (loss) from operations: |       |                        |                  |       |                        |       |              |      
|                              
|                              
|                              
|                              
|                               |       | Fitzgeralds Las Vegas  |                  | $     | 840                    |       |              | $     | 91    |      
|                              
|                              
|                              
|                              
|                               |       | Fitzgeralds Tunica     |                  |       | 4,889                  |       |              |       | 1,950 |      
|                              
|                              
|                              
|                              
|                               |       | Fitzgeralds Reno       |                  |       | 1,363                  |       |              |       | 1,618 |      
|                              
|                              
|                              
|                              
|                               |       | Fitzgeralds Black Hawk |                  |       | 2,003                  |       |              |       | 1,588 |      
|                              
|                              
|                              
|                              
|                               |       | Other                  |                  |       | (1,125                 | )     |              |       | (594  | )    
|                               |       |                        |                  |       |                        |       |              |      
|                               |       |                        | Total Properties |       |                        | 7,970 |              |       |       | 4,653 | 
|                              
|                              
|                              
|                              
|                               |       | Nevada Club            |                  |       | (12                    | )     |              |       | (9    | )    
|                               |       |                        |                  |       |                        |       |              |      
|                               | Total |                        | $                | 7,958 |                        |       | $            | 4,644 |      
|                               |       |                        |                  |       |                        |       |              |      



| |                                                                                                               
| | --------------------------------------------------------------------------------------------------------------
| | Reconciliation of total business segment operating income to consolidated
net income (loss) before income tax:

|                               |  |                                                 |         |   |                            |   |              |   |        |   | 
|------------------------------ |  | ----------------------------------------------- | ------- | - | -------------------------- | - | ------------ | - | ------ | - | 
|                               |  |                                                 |         |   | For the Quarters Ended    
|                               |  |                                                 |         |   |                           
|                               |  |                                                 |         |   | July 1, 2001               |   | July 2, 2000
|                               |  |                                                 |         |   |                            |   |             
|                               |  |                                                 |         |   | (in thousands)            
|Total segment operating income |  | $                                               | 9,095   |   |                            | $ | 5,247        |  
|                              
|                              
|                              
|                              
|                               |  | Nevada Club                                     |         |   | (12                        | ) |              |   | (9     | )
|                              
|                              
|                              
|                              
|                               |  | Other                                           |         |   | (1,125                     | ) |              |   | (594   | )
|                              
|                              
|                              
|                              
|                               |  | Eliminations                                    |         |   | (8,087                     | ) |              |   | 1,686  |  
|                              
|                              
|                              
|                              
|                               |  | Interest income                                 |         |   | 32                         |   |              |   | 239    |  
|                              
|                              
|                              
|                              
|                               |  | Interest income  shareholder and
intercompany  |         |   |                           |   |              |   | 7,938  |  
|                              
|                              
|                              
|                              
|                               |  | Interest expense                                |         |   | (507                       | ) |              |   | (8,348 | )
|                              
|                              
|                              
|                              
|                               |  | Interest expense  shareholder and
intercompany |         |   |                           |   |              |   | (7,920 | )
|                              
|                              
|                              
|                              
|                               |  | Other expense                                   |         |   | 8,048                      |   |              |   | (1,693 | )
|                               |  |                                                 |         |   |                            |   |              |   |        |  
|Net income (loss)              |  | $                                               | 7,444   |   |                            | $ | (3,454       | )
|                               |  |                                                 |         |   |                            |   |              |   |        |  
|                              
|                               |  |                                                 |         |   | For the Two Quarters Ended
|                               |  |                                                 |         |   |                           
|                               |  |                                                 |         |   | July 1, 2001               |   | July 2, 2000
|                               |  |                                                 |         |   |                            |   |             
|                               |  |                                                 |         |   | (in thousands)            
|Net operating revenues:        |  |                                                 |         |   |                            |   |              |  
|                              
|                              
|                              
|                              
|                               |  | Fitzgeralds Las Vegas                           |         | $ | 27,925                     |   |              | $ | 27,822 |  
|                              
|                              
|                              
|                              
|                               |  | Fitzgeralds Tunica                              |         |   | 42,063                     |   |              |   | 37,831 |  
|                              
|                              
|                              
|                              
|                               |  | Fitzgeralds Reno                                |         |   | 19,591                     |   |              |   | 20,720 |  
|                              
|                              
|                              
|                              
|                               |  | Fitzgeralds Black Hawk                          |         |   | 16,392                     |   |              |   | 16,411 |  
|                              
|                              
|                              
|                              
|                               |  | Other                                           |         |   | 34                         |   |              |   |       |  
|                               |  |                                                 |         |   |                            |   |              |   |        |  
|Total                          |  | $                                               | 106,005 |   |                            | $ | 102,784      |  
|                               |  |                                                 |         |   |                            |   |              |   |        |  

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|                               |       |                        |                  |        |                            |        |              |       |        |       | 
|------------------------------ | ----- | ---------------------- | ---------------- | ------ | -------------------------- | ------ | ------------ | ----- | ------ | ----- | 
|                               |       |                        |                  |        | For the Two Quarters Ended
|                               |       |                        |                  |        |                           
|                               |       |                        |                  |        | July 1, 2001               |        | July 2, 2000
|                               |       |                        |                  |        |                            |        |             
|                               |       |                        |                  |        | (in thousands)            
|Income (loss) from operations: |       |                        |                  |        |                            |        |              |      
|                              
|                              
|                              
|                              
|                               |       | Fitzgeralds Las Vegas  |                  | $      | 2,504                      |        |              | $     | 1,000  |      
|                              
|                              
|                              
|                              
|                               |       | Fitzgeralds Tunica     |                  |        | 10,330                     |        |              |       | 4,182  |      
|                              
|                              
|                              
|                              
|                               |       | Fitzgeralds Reno       |                  |        | 1,291                      |        |              |       | 1,365  |      
|                              
|                              
|                              
|                              
|                               |       | Fitzgeralds Black Hawk |                  |        | 3,596                      |        |              |       | 3,370  |      
|                              
|                              
|                              
|                              
|                               |       | Other                  |                  |        | (1,954                     | )      |              |       | (1,076 | )    
|                               |       |                        |                  |        |                            |        |              |      
|                               |       |                        | Total Properties |        |                            | 15,767 |              |       |        | 8,841 | 
|                              
|                              
|                              
|                              
|                               |       | Nevada Club            |                  |        | (47                        | )      |              |       | (22    | )    
|                               |       |                        |                  |        |                            |        |              |      
|                               | Total |                        | $                | 15,720 |                            |        | $            | 8,819 |       
|                               |       |                        |                  |        |                            |        |              |      



| |                                                                                                               
| | --------------------------------------------------------------------------------------------------------------
| | Reconciliation of total business segment operating income to consolidated
net income (loss) before income tax:

|                               |                                                 |   |                            |         |              |   |        |         |  
|------------------------------ | ----------------------------------------------- | - | -------------------------- | ------- | ------------ | - | ------ | ------- | -
|                               |                                                 |   | For the Two Quarters Ended
|                               |                                                 |   |                           
|                               |                                                 |   | July 1, 2001               |         | July 2, 2000
|                               |                                                 |   |                            |         |             
|                               |                                                 |   | (in thousands)            
|Total segment operating income |                                                 | $ | 17,721                     |         |              | $ | 9,917  |        
|                              
|                              
|                              
|                              
|                               | Nevada Club                                     |   |                            | (47     | )            |   |        | (22     | )
|                              
|                              
|                              
|                              
|                               | Other                                           |   |                            | (1,954  | )            |   |        | (1,076  | )
|                              
|                              
|                              
|                              
|                               | Eliminations                                    |   |                            | (17,782 | )            |   |        | 4,079   |  
|                              
|                              
|                              
|                              
|                               | Interest income                                 |   |                            | 78      |              |   |        | 434     |  
|                              
|                              
|                              
|                              
|                               | Interest income  shareholder and
intercompany  |   |                            |        |              |   |        | 16,046  |  
|                              
|                              
|                              
|                              
|                               | Interest expense                                |   |                            | (1,015  | )            |   |        | (16,752 | )
|                              
|                              
|                              
|                              
|                               | Interest expense  shareholder and
intercompany |   |                            |        |              |   |        | (16,010 | )
|                              
|                              
|                              
|                              
|                               | Other expense                                   |   |                            | 17,747  |              |   |        | (4,096  | )
|                               |                                                 |   |                            |         |              |   |        |        
|Net income (loss)              |                                                 | $ | 14,748                     |         |              | $ | (7,480 | )      
|                               |                                                 |   |                            |         |              |   |        |        

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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

The Private Securities Litigation Reform Act of 1995 provides a safe harbor
for forward-looking statements. The following discussion should be read in
conjunction with, and is qualified in its entirety by, the Condensed
Consolidated Financial Statements and the Notes thereto included in this
report. The following discussion and other material in this Quarterly Report
on Form 10-Q contain certain forward-looking statements. The forward-looking
statements are necessarily based upon a number of estimates and assumptions
that, while considered reasonable, are inherently subject to significant
business, economic and competitive uncertainties and contingencies, many of
which are beyond the control of the Company, and upon assumptions with respect
to future business decisions which are subject to change. Risks to which the
Company is subject include, but are not necessarily limited to, its efforts to
restructure its indebtedness and capital structure, competition, high level of
indebtedness, the need for additional financing, development and construction
risks, market fluctuations, gaming, liquor and other regulatory matters,
taxation, the availability and retention of key management, environmental
matters and other factors discussed in the Companys other filings with the
Securities and Exchange Commission. Accordingly, actual results could differ
materially from those contemplated by such forward-looking statements.

General

The Company is a diversified multi-jurisdictional gaming holding company that
owns and operates four Fitzgeralds-brand casino-hotels, in downtown Las Vegas,
Nevada (Fitzgeralds Las Vegas), Reno, Nevada (Fitzgeralds Reno), Tunica,
Mississippi (Fitzgeralds Tunica), and Black Hawk, Colorado (Fitzgeralds
Black Hawk), collectively referred to as the Operating Properties. The
Company markets its properties primarily to middle-market customers,
emphasizing its Fitzgeralds brand and its Fitzgeralds Irish Luck theme.

The Company currently conducts substantially all of its business through
wholly-owned subsidiaries; Fitzgeralds Reno, Inc. (FRI); Fitzgeralds South,
Inc. (FSI); and Fitzgeralds Incorporated (FI). FRI directly owns and
operates Fitzgeralds Reno; FSI owns and operates Fitzgeralds Las Vegas and
Fitzgeralds Tunica through wholly-owned subsidiaries; and FI owns and operates
Fitzgeralds Black Hawk through wholly-owned subsidiaries, including 101 Main
Street Limited Liability Company (101 Main).

Unless the context otherwise requires, the Company refers to Fitzgeralds
Gaming Corporation and its subsidiaries. The Company was incorporated in
Nevada in 1994 to serve as a holding company. The executive office of the
Company is located at 301 Fremont Street, Las Vegas, Nevada 89101; telephone
(702) 388-2400; facsimile (702) 382-5562.

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In the narrative discussion below, the 2001 Q2 Period is defined as the
quarter ended July 1, 2001 and the 2000 Q2 Period is defined as the quarter
ended July 2, 2000. The Cumulative 2001 Period is defined as the two
quarters ended July 1, 2001 and the Cumulative 2000 Period is defined as the
two quarters ended July 2, 2000. Unless otherwise noted, the narrative
discussion below is focused on the Companys Operating Properties, which
together with unallocated corporate and restructuring expenses are referred to
as the Properties. Corporate expenses of $0.25 million for each of the two
quarters presented are allocated to each of the four Operating Properties as an
operating expense. The remainder of the unallocated corporate and
restructuring expenses is included in Other. See Note 1 of Statement of
Operations Data.

Quarter Ended July 1, 2001 Comparison to Quarter Ended July 2, 2000

The table below sets forth Net Operating Revenues, Income (Loss) from
Operations, EBITDA, Adjusted EBITDA and other financial data for the 2001 Q2
Period and the 2000 Q2 Period. EBITDA for the Properties was $8.0 million and
$8.3 million for the 2001 and 2000 Q2 Periods, respectively. Adjusted EBITDA,
which the Company uses as a reasonable measure of its ability to generate cash
from operating activities and as a means to compare the Companys performance
with that of its competitors, increased from $8.8 million for the 2000 Q2
Period to $8.9 million for the 2001 Q2 Period. For a definition of EBITDA and
Adjustments to EBITDA, see Notes 2 and 3, respectively, of Statement of
Operations Data.

|                               |                        |                  |   |                |        |  |   |        |        | 
|------------------------------ | ---------------------- | ---------------- | - | -------------- | ------ |  | - | ------ | ------ | 
|Statement of Operations Data   |                        | July 1, 2001     |   | July 2, 2000  
|                               |                        |                  |   |                |        | 
|                               |                        |                  |   | (in thousands)
|Net Operating Revenues:        |                        |                  |   |                |        |  |   |       
|                              
|                              
|                              
|                              
|                               | Fitzgeralds Las Vegas  |                  | $ | 13,616         |        |  | $ | 13,318 |       
|                              
|                              
|                              
|                              
|                               | Fitzgeralds Tunica     |                  |   | 20,827         |        |  |   | 18,875 |       
|                              
|                              
|                              
|                              
|                               | Fitzgeralds Reno       |                  |   | 10,928         |        |  |   | 11,653 |       
|                              
|                              
|                              
|                              
|                               | Fitzgeralds Black Hawk |                  |   | 8,516          |        |  |   | 8,085  |       
|                              
|                              
|                              
|                              
|                               | Other                  |                  |   | (12            | )      |  |   |       |       
|                               |                        |                  |   |                |        |  |   |       
|                               |                        | Total            |   | $              | 53,875 |  |   | $      | 51,931 | 
|                               |                        |                  |   |                |        |  |   |       
|Income (loss) from operations: |                        |                  |   |                |        |  |   |       
|                              
|                              
|                              
|                              
|                               | Fitzgeralds Las Vegas  |                  | $ | 840            |        |  | $ | 91     |       
|                              
|                              
|                              
|                              
|                               | Fitzgeralds Tunica     |                  |   | 4,889          |        |  |   | 1,950  |       
|                              
|                              
|                              
|                              
|                               | Fitzgeralds Reno       |                  |   | 1,363          |        |  |   | 1,618  |       
|                              
|                              
|                              
|                              
|                               | Fitzgeralds Black Hawk |                  |   | 2,003          |        |  |   | 1,588  |       
|                              
|                              
|                              
|                              
|                               | Other(1)               |                  |   | (1,125         | )      |  |   | (594   | )     
|                               |                        |                  |   |                |        |  |   |       
|                               |                        | Total Properties |   |                | 7,970  |  |   |        | 4,653  | 
|                              
|                              
|                              
|                              
|                               | Nevada Club            |                  |   | (12            | )      |  |   | (9     | )     
|                               |                        |                  |   |                |        |  |   |       
|                               |                        | Total            |   | $              | 7,958  |  |   | $      | 4,644  | 
|                               |                        |                  |   |                |        |  |   |       

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|           |                          |                        |   |                |       |              |   |       |       | 
|---------- | ------------------------ | ---------------------- | - | -------------- | ----- | ------------ | - | ----- | ----- | 
|Other Data |                          | For
the Quarters Ended
|           |                          |                        |   |               
|           |                          |                        |   | July
1, 2001   |       | July
2, 2000
|           |                          |                        |   |                |       |             
|           |                          |                        |   | (in
thousands)
|EBITDA(2): |                          |                        |   |                |       |              |   |      
|          
|          
|          
|          
|           | Fitzgeralds Las Vegas    |                        | $ | 840            |       |              | $ | 1,068 |      
|          
|          
|          
|          
|           | Fitzgeralds Tunica       |                        |   | 4,889          |       |              |   | 3,573 |      
|          
|          
|          
|          
|           | Fitzgeralds Reno         |                        |   | 1,363          |       |              |   | 2,212 |      
|          
|          
|          
|          
|           | Fitzgeralds Black Hawk   |                        |   | 2,003          |       |              |   | 2,049 |      
|          
|          
|          
|          
|           | Other(1)                 |                        |   | (1,117         | )     |              |   | (584  | )    
|           |                          |                        |   |                |       |              |   |      
|           |                          | Total Properties       |   |                | 7,978 |              |   |       | 8,318 | 
|          
|          
|          
|          
|           | Nevada Club              |                        |   | (12            | )     |              |   | (9    | )    
|           |                          |                        |   |                |       |              |   |      
|           |                          | Total
EBITDA           |   |                | 7,966 |              |   |       | 8,309 | 
|           | Adjustments to EBITDA(3) |                        |   | 904            |       |              |   | 461   |      
|           |                          |                        |   |                |       |              |   |      
|           |                          | Adjusted
EBITDA        |   | $              | 8,870 |              |   | $     | 8,770 | 
|           |                          |                        |   |                |       |              |   |      



---

|(1) |  | Other includes corporate expenses not allocated to the Operating
Properties for the 2000 and 2001 Periods, which include $0.5 million of
pre-petition professional fees and expenses incurred with the Companys
restructuring in the 2000 Period which are included in selling, general
and administrative expenses and $0.9 million of post-petition professional
fees and expenses, net of interest income included in reorganization items
for the 2001 Period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | EBITDA is a supplemental financial measurement used by the Company in the
evaluation of its gaming business and by many gaming industry analysts.
EBITDA is calculated by adding depreciation and amortization expense to
income from operations. At any property, EBITDA is calculated after the
allocation of corporate costs. However, EBITDA should only be read in
conjunction with all of the Companys financial data summarized above and
its financial statements prepared in accordance with GAAP appearing
elsewhere herein, and should not be construed as an alternative either to
income from operations (as determined in accordance with GAAP) as an
indication of the Companys operating performance or to cash flows from
operating activities (as determined in accordance with GAAP) as a measure
of liquidity. This presentation of EBITDA may not be comparable to
similarly titled measures reported by other companies.
|   
|   
|   
|   
|(3) |  | Adjustments to EBITDA include (i) exclusion of EBITDA for Nevada Club for
both periods presented; (ii) exclusion of pre-petition professional fees
and expenses incurred with the Companys restructuring of $0.5 million in
the 2000 Period, which are included in selling, general and administrative
expenses and; (iii) exclusion of $0.9 million of post-petition
professional fees and expenses, net of interest income included as
reorganization items in the 2001 Period.                                                                                                                                                                                                                                                                                                                                                                                                                                                              

Operating Revenues

Total revenues for the Operating Properties were $62.7 million and net
operating revenues were $53.9 million for the 2001 Q2 Period, representing 4.7%
and 3.7% increases, respectively, over total revenues of $59.9 million and net
operating revenues of $51.9 million for the 2000 Q2 Period. The increase is
primarily due to the improved performance at the Fitzgeralds Tunica property.

The Companys business can be separated into four operating departments:
casino, food and beverage, rooms and other. Casino revenues for the Operating
Properties represented 78.7% and 77.8% of total revenues for the Operating
Properties for the 2001 and 2000 Q2 Periods, respectively. Casino revenues for
the Operating Properties (of which approximately 86.9% and 85.4% were derived
from slot machine revenues for the 2001 and 2000 Q2 Periods, respectively)
increased 6.0% to $49.4 million for the 2001 Q2 Period from $46.6 million for
the 2000 Q2 Period. Casino revenues increased 14.4%, 4.9% and 3.2% at
Fitzgeralds Tunica, Fitzgeralds

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Black Hawk and Fitzgeralds Las Vegas, respectively. Fitzgeralds Reno casino
revenue decreased 6.4%, primarily as a result of adverse economic conditions in
its target markets.

Room revenues for the Operating Properties (9.2% and 9.6% of total revenues for
the Operating Properties for the 2001 and 2000 Q2 Periods, respectively)
decreased 0.3% from the 2000 Q2 Period. Fitzgeralds Reno room revenues
increased 1.9% due to a combination of a higher average daily rate which
increased 3.7% for the 2001 Q2 Period offset by a decrease in the average
occupancy rate to 95.0% for the 2001 Q2 Period from 96.4% for the 2000 Q2
Period. Room revenues decreased 0.2% at Fitzgeralds Las Vegas due to a lower
average daily rate which decreased 4.0% for the 2001 Q2 Period, offset by an
increase in the average occupancy rate to 93.9% for the 2001 Q2 Period from
93.0% for the 2000 Q2 Period. At Fitzgeralds Tunica, room revenues decreased
2.0% due to the combination of a lower average daily rate which decreased 3.6%
offset by a higher average occupancy rate, which increased to 94.9% for the
2001 Q2 Period from 94.3% for the 2000 Q2 Period.

Food and beverage revenues for the Operating Properties (10.3% and 10.9% of
total revenues for the Operating Properties for the 2001 and 2000 Q2 Periods,
respectively) decreased 1.2% for the 2001 Q2 Period. Fitzgeralds Tunica
experienced a revenue increase of 2.7% for the 2001 Q2 Period. Food and
beverage revenues at Fitzgeralds Reno, Fitzgeralds Las Vegas and Fitzgeralds
Black Hawk decreased 5.6%, 1.7% and 1.0%, respectively.

Promotional allowances for the Operating Properties increased $0.9 million or
10.8% for the 2001 Q2 Period primarily as a result of increased casino volumes
at Fitzgeralds Tunica.

Operating Costs and Expenses

Total operating costs and expenses for the Operating Properties decreased 2.9%
to $45.9 million for the 2001 Q2 Period from $47.3 million for the 2000 Q2
Period due primarily to the decrease in depreciation and amortization as
discussed below.

Casino expenses for the Operating Properties were $22.9 million for the 2001 Q2
Period, a 5.4% increase from $21.7 million for the 2000 Q2 Period,primarily
due to increases in payroll expenses and expenses relating to the leasing and
the rental of slot machines. Food and beverage expenses for the Operating
Properties increased 5.0% to $4.0 million for the 2001 Q2 Period from $3.8
million for the 2000 Q2 Period. Room expenses for the Operating Properties
decreased 1.1% to $3.1 million for the 2001 Q2 Period from $3.2 million for the
2000 Q2 Period. Selling, general and administrative expenses for the Operating
Properties increased 0.6% to $14.5 million for the 2001 Q2 Period from $14.4
million for the 2000 Q2 Period. Professional fees and expenses incurred in
conjunction with the ongoing development, negotiation and implementation of the
Companys restructuring were $0.9 million and $0.5 million for the 2001 and
2000 Q2 Periods, respectively. The $0.5 million of pre-petition professional
fees and expenses incurred with the Companys restructuring in the 2000 Q2
Period are included in selling, general and administrative expenses. Such
expenses also include professional fees and expenses paid by the Company for
the financial and legal advisors to the Committee, the

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Indenture Trustee, and the administrative fees paid to the U.S. Trustee in
connection with the Bankruptcy Cases.

Personnel expenses for the Operating Properties increased 2.7% to approximately
$21.2 million for the 2001 Q2 Period from approximately $20.6 million for the
2000 Q2 Period. Fitzgeralds Las Vegas, Fitzgeralds Tunica and Fitzgeralds
Black Hawk incurred increases in personnel expenses of 4.5%, 3.1% and 2.9%,
respectively. Fitzgeralds Reno had a slight decrease of 0.6% in personnel
expenses.

Marketing expenses for the Operating Properties, which include advertising,
promotional material, special events and the operations of the Fitzgeralds
player-tracking card, decreased 6.7% for the 2001 Q2 Period.

Depreciation and amortization expenses for the Operating Properties decreased
99.8% to approximately $.008 million for the 2001 Q2 Period from $3.7 million
for the 2000 Q2 Period due to the discontinuation of recording depreciation and
amortization expense for the property and equipment included in net assets held
for sale, subsequent to filing the Bankruptcy Cases.

Income from Operations

Income from operations for the Operating Properties increased 71.3% to $8.0
million for the 2001 Q2 Period from $4.7 million for the 2000 Q2 Period. The
increase is due to the discontinuation of recording substantially all
depreciation and amortization expense during the 2001 Q2 Period as discussed
above.

Net Interest Expense

Interest expense for the Operating Properties (net of interest income),
decreased 94.1% to $0.5 million for the 2001 Q2 Period from $8.1 million for
the 2000 Q2 Period. Section 506(b) of the Bankruptcy Code permits the allowance
of interest on an allowed secured claim secured by property, the value of which
is greater than the amount of the claim. Inasmuch as the parties to the
Restructuring Agreement have concluded that the fair market value of the
collateral securing the Notes is less than the outstanding principal of the
Notes, concurrently with the filing of the Bankruptcy Cases on December 5, 2000
the Company ceased accruing interest on the Notes.

Net Income

Net income for the Properties increased
$10.8 million to $7.4 million in the
2001 Q2 Period compared to a net loss of $3.4 million in the 2000 Q2 Period
primarily as a result of the decrease in depreciation and amortization expense
and interest expense.

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Two Quarters Ended July 1, 2001 Comparison to Two Quarters Ended July 2, 2000

The table below sets forth Net Operating Revenues, Income (Loss) from
Operations, EBITDA, Adjusted EBITDA and other financial data for the Cumulative
2001 Period and the Cumulative 2000 Period. EBITDA for the Properties was
$15.8 million and $16.2 million for the Cumulative 2001 and 2000 Periods,
respectively. Adjusted EBITDA, which the Company uses as a reasonable measure
of its ability to generate cash from operating activities and as a means to
compare the Companys performance with that of its competitors, increased from
$17.0 million for the Cumulative 2000 Period to $17.4 million for the
Cumulative 2001 Period. For a definition of EBITDA and Adjustments to EBITDA,
see Notes 2 and 3, respectively, of Statement of Operations Data.

|                               |                          |                  |   |                            |         |  |   |        |         | 
|------------------------------ | ------------------------ | ---------------- | - | -------------------------- | ------- |  | - | ------ | ------- | 
|                               |                          |                  |   | For the Two Quarters Ended
|                               |                          |                  |   |                           
|                               |                          | July 1, 2001     |   | July 2, 2000              
|                               |                          |                  |   |                            |         | 
|                               |                          |                  |   | (In
thousands)            
|Statement of Operations Data   |                          |                  |   |                            |         |  |   |       
|                              
|                              
|                              
|                              
|Net Operating Revenues:        |                          |                  |   |                            |         |  |   |       
|                              
|                              
|                              
|                              
|                               | Fitzgeralds Las Vegas    |                  | $ | 27,925                     |         |  | $ | 27,822 |        
|                              
|                              
|                              
|                              
|                               | Fitzgeralds Tunica       |                  |   | 42,063                     |         |  |   | 37,831 |        
|                              
|                              
|                              
|                              
|                               | Fitzgeralds Reno         |                  |   | 19,591                     |         |  |   | 20,720 |        
|                              
|                              
|                              
|                              
|                               | Fitzgeralds Black Hawk   |                  |   | 16,392                     |         |  |   | 16,411 |        
|                              
|                              
|                              
|                              
|                               | Other                    |                  |   | 34                         |         |  |   |       |        
|                               |                          |                  |   |                            |         |  |   |       
|                               |                          | Total            |   | $                          | 106,005 |  |   | $      | 102,784 | 
|                               |                          |                  |   |                            |         |  |   |       
|Income (Loss) from Operations: |                          |                  |   |                            |         |  |   |       
|                              
|                              
|                              
|                              
|                               | Fitzgeralds Las Vegas    |                  | $ | 2,504                      |         |  | $ | 1,000  |        
|                              
|                              
|                              
|                              
|                               | Fitzgeralds Tunica       |                  |   | 10,330                     |         |  |   | 4,182  |        
|                              
|                              
|                              
|                              
|                               | Fitzgeralds Reno         |                  |   | 1,291                      |         |  |   | 1,365  |        
|                              
|                              
|                              
|                              
|                               | Fitzgeralds Black Hawk   |                  |   | 3,596                      |         |  |   | 3,370  |        
|                              
|                              
|                              
|                              
|                               | Other(1)                 |                  |   | (1,954                     | )       |  |   | (1,076 | )      
|                               |                          |                  |   |                            |         |  |   |       
|                               |                          | Total Properties |   |                            | 15,767  |  |   |        | 8,841   | 
|                              
|                              
|                              
|                              
|                               | Nevada Club              |                  |   | (47                        | )       |  |   | (22    | )      
|                               |                          |                  |   |                            |         |  |   |       
|                               |                          | Total            |   | $                          | 15,720  |  |   | $      | 8,819   | 
|                               |                          |                  |   |                            |         |  |   |       
|Other
Data                     |                          |                  |   |                            |         |  |   |       
|                              
|                              
|                              
|                              
|EBITDA(2):                     |                          |                  |   |                            |         |  |   |       
|                              
|                              
|                              
|                              
|                               | Fitzgeralds Las Vegas    |                  | $ | 2,504                      |         |  | $ | 2,950  |        
|                              
|                              
|                              
|                              
|                               | Fitzgeralds Tunica       |                  |   | 10,330                     |         |  |   | 7,421  |        
|                              
|                              
|                              
|                              
|                               | Fitzgeralds Reno         |                  |   | 1,291                      |         |  |   | 2,577  |        
|                              
|                              
|                              
|                              
|                               | Fitzgeralds Black Hawk   |                  |   | 3,595                      |         |  |   | 4,302  |        
|                              
|                              
|                              
|                              
|                               | Other(1)                 |                  |   | (1,933                     | )       |  |   | (1,055 | )      
|                               |                          |                  |   |                            |         |  |   |       
|                               |                          | Total Properties |   |                            | 15,787  |  |   |        | 16,195  | 
|                              
|                              
|                              
|                              
|                               | Nevada Club              |                  |   | (47                        | )       |  |   | (22    | )      
|                               |                          |                  |   |                            |         |  |   |       
|                               |                          | Total EBITDA     |   |                            | 15,740  |  |   |        | 16,173  | 
|                              
|                              
|                              
|                              
|                               | Adjustments to EBITDA(3) |                  |   | 1,621                      |         |  |   | 826    |        
|                               |                          |                  |   |                            |         |  |   |       
|                               |                          | Adjusted EBITDA  |   | $                          | 17,361  |  |   | $      | 16,999  | 
|                               |                          |                  |   |                            |         |  |   |       

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|                                    |                      |  |                            |        |              |  |        |        |  
|----------------------------------- | -------------------- |  | -------------------------- | ------ | ------------ |  | ------ | ------ | -
|                                    |                      |  | For the Two Quarters Ended
|                                    |                      |  |                           
|                                    |                      |  | July 1, 2001               |        | July 2, 2000
|                                    |                      |  |                            |        |             
|                                    |                      |  | (in thousands)            
|Net Cash Provided by (Used in) (4): |                      |  |                            |        |              |  |        |       
|                                   
|                                   
|                                   
|                                   
|                                    | Operating Activities |  | $                          | 15,754 |              |  | $      | 13,825 |  
|                                   
|                                   
|                                   
|                                   
|                                    | Investing Activities |  |                            | (1,310 | )            |  |        | (7,835 | )
|                                   
|                                   
|                                   
|                                   
|                                    | Financing Activities |  |                            | (219   | )            |  |        | (474   | )
|                                   
|                                   
|                                   
|                                   
|Depreciation and Amortization       |                      |  | 20                         |        |              |  | 7,353  |       
|                                   
|                                   
|                                   
|                                   
|Capital Expenditures                |                      |  | (1,014                     | )      |              |  | (7,855 | )     
|                                   
|                                   
|                                   
|                                   
|Earnings to Fixed Charges (5):      |                      |  | 9.7                        |        |              |  |       |       



---

|(1) |  | Other includes corporate expenses not allocated to the Operating
Properties for the Cumulative 2000 and 2001 Periods, which include $0.8
million of pre-petition professional fees and expenses incurred with the
Companys restructuring in the Cumulative 2000 Period which are included
in selling, general and administrative expenses and $1.6 million of
post-petition professional fees and expenses, net of interest income
included in reorganization items for the Cumulative 2001 Period.                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | EBITDA is a supplemental financial measurement used by the Company in the
evaluation of its gaming business and by many gaming industry analysts.
EBITDA is calculated by adding depreciation and amortization expense to
income from operations. At any property, EBITDA is calculated after the
allocation of corporate costs. However, EBITDA should only be read in
conjunction with all of the Companys financial data summarized above and
its financial statements prepared in accordance with GAAP appearing
elsewhere herein, and should not be construed as an alternative either to
income from operations (as determined in accordance with GAAP) as an
indication of the Companys operating performance or to cash flows from
operating activities (as determined in accordance with GAAP) as a measure
of liquidity. This presentation of EBITDA may not be comparable to
similarly titled measures reported by other companies.
|   
|   
|   
|   
|(3) |  | Adjustments to EBITDA include (i) exclusion of EBITDA for Nevada Club for
both periods presented; (ii) exclusion of pre-petition professional fees
and expenses incurred with the Companys restructuring of $0.8 million in
the Cumulative 2000 Period which are included in selling, general and
administrative expenses and; (iii) exclusion of $1.6 million of
post-petition professional fees and expenses, net of interest income
included as reorganization items in the Cumulative 2001 Period.                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|   
|   
|   
|(4) |  | Includes financial results of Nevada Club for both periods presented.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|   
|   
|   
|(5) |  | For the Ratio of Earnings to Fixed Charges, earnings are defined as
earnings before income taxes, interest on indebtedness, imputed interest
on capital lease obligations and the portion of rent expense deemed to
represent interest. Fixed charges consist of interest on indebtedness,
imputed interest on capital lease obligations and the portion of rent
expense deemed to represent interest. The Fixed Charged Coverage Ratio
was 9.7 for the Cumulative 2001 Period, primarily as a result of the reduction in depreciation and
amortization and interest expense; however, earnings were
insufficient to cover fixed charges by $7.5 million for the Cumulative
2000 Period.                                                                                                                                                                                                                                                        

Operating Revenues

Total revenues for the Operating Properties were $123.8 million and net
operating revenues were $106.0 million for the Cumulative 2001 Period,
representing 3.8% and 3.1% increases, respectively, over total revenues of
$119.3 million and net operating revenues of $102.8 million for the Cumulative
2000 Period. The increase is primarily due to the improved performance at the
Fitzgeralds Tunica property.

The Companys business can be separated into four operating departments:
casino, food and beverage, rooms and other. Casino revenues for the Operating
Properties represented 78.6% and 77.7% of total revenues for the Operating
Properties for the Cumulative 2001 and 2000 Periods, respectively. Casino
revenues for the Operating Properties (of which approximately 86.5% and 84.8%
were derived from slot machine revenues for the Cumulative 2001 and 2000
Periods, respectively) increased 5.1% to $97.4 million for the Cumulative 2001
Period from $92.6 million

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for the Cumulative 2000 Period. Casino revenues increased 15.6% and 0.6%,
respectively, at Fitzgeralds Tunica and Fitzgeralds Las Vegas. Fitzgeralds
Black Hawk casino revenue decreased 1.0%, while Fitzgeralds Reno casino revenue
decreased 5.5%.

Room revenues for the Operating Properties (9.0% and 9.3% of total revenues for
the Operating Properties for the Cumulative 2001 and 2000 Periods,
respectively) decreased 0.2% from the Cumulative 2000 Period. Fitzgeralds Reno
room revenues increased 0.9% due to a 3.0% higher average daily rate, while the
average occupancy rate decreased to 88.4% for the Cumulative 2001 Period from
89.0% for the Cumulative 2001 Period. Room revenues decreased 1.1% at
Fitzgeralds Las Vegas due to a decrease in the average daily rate of 5.2%
offset by an increase in the occupancy rate to 94.2% for the Cumulative 2001
Period, from 91.5% for the Cumulative 2000 Period. At Fitzgeralds Tunica, room
revenues remained the same for the Cumulative 2001 and 2000 Periods.

Food and beverage revenues for the Operating Properties (10.5% and 11.2% of
total revenues for the Operating Properties for the Cumulative 2001 and 2000
Periods, respectively) decreased approximately $0.4 million or 3.1% for the
Cumulative 2001 Period. Fitzgeralds Tunica food and beverage revenue increased
2.6% while Fitzgeralds Reno, Fitzgeralds Las Vegas and Fitzgeralds Black Hawk
experienced revenue decreases of 6.5%, 5.6%, and 4.9%, respectively.

Promotional allowances for the Operating Properties increased $1.3 million or
7.9% for the Cumulative 2001 Period primarily as a result of increased casino
volumes at Fitzgeralds Tunica.

Operating Costs and Expenses

Total operating costs and expenses for the Operating Properties decreased 3.9%
to $90.2 million for the Cumulative 2001 Period from $93.9 million for the
Cumulative 2000 Period primarily due to the decrease in depreciation and
amortization expense.

Casino expenses for the Operating Properties were $45.0 million for the
Cumulative 2001 Period, a 4.6% increase from $43.0 million for the Cumulative
2000 Period,primarily due to increases in payroll expenses and expenses
relating to the leasing and the rental of slot machines. Food and beverage
expenses for the Operating Properties remained approximately the same for the
Cumulative 2000 and 2001 Periods at $7.7 million. Room expenses for the
Operating Properties increased 1.9% to $6.4 million for the Cumulative 2001
Period from $6.2 million for the Cumulative 2000 Period. Selling, general and
administrative expenses for the Operating Properties decreased 0.2% to $28.5
million for the Cumulative 2001 Period from $28.6 million for the Cumulative
2000 Period. Professional fees and expenses incurred in conjunction with the
ongoing development, negotiation and implementation of the Companys
restructuring were $1.6 million and $0.8 million for the Cumulative 2001 and
2000 Periods, respectively. The $0.8 million of pre-petition professional fees
and expenses incurred with the Companys restructuring in the Cumulative 2000
Period are included in selling, general and administrative expenses. Such
expenses also include professional fees and expenses paid by the Company for
the financial

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and legal advisors to the Committee and the Indenture Trustee, and
administrative expenses paid to the U.S. Trustee in connection with the
Bankruptcy Cases.

Personnel expenses for the Operating Properties increased 1.9% to approximately
$42.1 million for the Cumulative 2001 Period from approximately $41.3 million
for the Cumulative 2000 Period. Personnel expenses increased 3.6%, 2.4% and
1.8%, respectively for Fitzgeralds Tunica, Fitzgeralds Black Hawk and
Fitzgeralds Las Vegas, while personnel expenses at Fitzgeralds Reno decreased
1.0%.

Marketing expenses for the Operating Properties, which include advertising,
promotional material, special events and the operations of the Fitzgeralds
player-tracking card, decreased $0.8 million or 9.3% for the Cumulative 2001
Period.

Depreciation and amortization expenses for the Operating Properties decreased
99.7% to $.02 million for the Cumulative 2001 Period from $7.4 million for the
Cumulative 2000 Period, due to the discontinuation of recording depreciation
and amortization expense for property and equipment included in net assets held
for sale, subsequent to filing the Bankruptcy Cases.

Income from Operations

Income from operations for the Operating Properties increased 78.3% to $15.8
million for the Cumulative 2001 Period from $8.8 million for the Cumulative
2000 Period. The increase is primarily due to the discontinuation of recording
substantially all depreciation and amortization expense during the Cumulative
2001 Period.

Net Interest Expense

Interest expense for the Operating Properties (net of interest income),
decreased 94.3% to $0.9 million for the Cumulative 2001 Period from $16.3
million for the Cumulative 2000 Period. Section 506(b) of the Bankruptcy Code
permits the allowance of interest on an allowed secured claim secured by
property, the value of which is greater than the amount of the claim. Inasmuch
as the parties to the Restructuring Agreement have concluded that the fair
market value of the collateral securing the Notes is less than the outstanding
principal of the Notes, concurrently with the filing of the Bankruptcy Cases on
December 5, 2000 the Company ceased accruing interest on the Notes.

Net Income

Net Income for the Properties increased $22.4 million to $14.9 million in the
Cumulative 2001 Period compared to a net loss of $7.5 million in the Cumulative
2000 Period primarily as a result of the decrease in depreciation and
amortization expense and interest expense.

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Liquidity and Capital Resources

At July 1, 2001, the Company had unrestricted cash of $32.5 million compared to
$18.3 million at December 31, 2000, which amounts each include $10.1 million of
cash classified in net assets held for sale. The Companys primary sources of
liquidity and cash flows during the Cumulative 2001 Period were operations of
$15.8 million. Net cash used in investing activities was $1.3 million for the
Cumulative 2001 Period compared to net cash used in investing activities of
$7.8 million for the Cumulative 2000 Period. Cash uses in the Cumulative 2000
Period included $3.8 million for the parking garage expansion at Fitzgeralds
Tunica and $0.75 million for the acquisition of the parking garage at
Fitzgeralds Reno. Net cash used in financing activities was $0.2 million and
$0.5 million for the Cumulative 2001 and 2000 Periods, respectively.

The Companys principal sources of capital will consist of cash from
operations, and vendor or third party financing of gaming and other equipment.
The Company believes that it has adequate sources of liquidity to meet its
normal operating requirements. However, its relatively high degree of leverage
had prevented it from making the level of capital expenditures required to
maintain and enhance the competitive position of its properties. Management
and the Board of Directors did not see any way to resolve this problem without
restructuring the Companys indebtedness. An Event of Default under the
Indenture pursuant to which the Notes were issued occurred on July 15, 1999.

Upon execution of the Restructuring Agreement and before commencement of the
Bankruptcy Cases, the Company distributed $13.0 million in Excess Cash (as that
term is defined in the Restructuring Agreement) to the Indenture Trustee to be
applied to accrued and unpaid interest and principal as provided in the
Indenture. Pursuant to the Restructuring Agreement and an order entered by the
Bankruptcy Court, the Company is required to distribute unrestricted cash
(which includes cash in net assets held for sale) in excess of $24.8 million to
holders of its Notes within 45 days after the end of each quarter. In May
2001, the Company distributed $1.8 million in Excess Cash to the Indenture
Trustee to be applied to accrued and unpaid interest and principal as provided
in the Indenture.

On December 5, 2000, the Company commenced the Bankruptcy Cases in the
Bankruptcy Court. For further information concerning the Bankruptcy Cases and
related matters, see Note 2 to the Notes to the Unaudited Condensed
Consolidated Financial Statements.

By suspending the interest payments on the Notes other than the post-petition
distributions and sales proceeds of collateral for the Notes until such time as
the liquidation of the Companys assets contemplated by the Restructuring
Agreement has been completed, the Company believes that its liquidity and
capital resources will be sufficient to maintain all of its normal operations
at current levels during the pendency of the Bankruptcy Cases and does not
anticipate any adverse impact on its operations, customers or employees.
However, costs incurred and to be incurred in connection with the Bankruptcy
Cases have been and will continue to be substantial and, in any event, there
can be no assurance that the Company will be able to successfully consummate
the Restructuring Agreement and the Purchase Agreement or that its liquidity
and capital resources will be sufficient to maintain its normal operations
during the pendency of the Bankruptcy Cases.

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EBITDA and Adjusted EBITDA

The Companys EBITDA was $15.7 million for the Cumulative 2001 Period and $16.2
million for the Cumulative 2000 Period. EBITDA is calculated by adding
depreciation and amortization expenses to income from operations. The
Companys Adjusted EBITDA was $17.4 million for the Cumulative 2001 Period and
$17.0 million for the Cumulative 2000 Period. Adjusted EBITDA is determined
based on the adjustments described in Note 3 to Statement of Operations Data.
However, EBITDA should only be read in conjunction with all of the Companys
financial data summarized above and its financial statements prepared in
accordance with GAAP appearing elsewhere herein, and should not be construed as
an alternative either to income from operations (as determined in accordance
with GAAP) as an indication of the Companys operating performance or to cash
flows from operating activities (as determined in accordance with GAAP) as a
measure of liquidity. This presentation of EBITDA may not be comparable to
similarly titled measures reported by other companies.

Ratio of Earnings to Fixed Charges

The ratio of earnings to fixed charges measures the extent by which earnings,
as defined, exceed certain fixed charges. Earnings are defined as earnings
before income taxes, interest on indebtedness, imputed interest on capital
lease obligations and the portion of rent expense deemed to represent interest.
Fixed charges consist of interest on indebtedness, imputed interest on capital
lease obligations and the portion of rent expense deemed to represent interest.
The Fixed Charge Coverage Ratio was 9.7 for the Cumulative 2001 Period, primarily as a result of the reduction in
depreciation and amortization and interest expense;
however, earnings were insufficient to cover fixed charges by $7.5 million for
the Cumulative 2000 Period.

Business Seasonality and Severe Weather

The gaming operations of the Company in certain locations may be seasonal and,
depending on the location and other circumstances, the effects of such
seasonality could be significant. At Fitzgeralds Las Vegas, business levels
are generally weaker from Thanksgiving through the middle of January (except
during the week between Christmas and New Years) and throughout the summer,
and generally stronger from mid-January through Easter and from mid-September
through Thanksgiving. At each of the three other Operating Properties,
business levels are typically weaker from Thanksgiving through the end of the
winter and typically stronger from mid-June to mid-November.

The Companys results are also affected by inclement weather in relevant
markets. The Fitzgeralds Black Hawk site, located in the Rocky Mountains of
Colorado, and the Fitzgeralds Reno site, located in the foothills of the Sierra
Nevada mountains in Nevada, are subject to snow and icy road conditions during
the winter months. Any such severe weather conditions may discourage potential
customers from visiting the Companys facilities.

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Recently Issued Accounting Standards

On June 30, 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities.This statement establishes accounting and reporting
standards for derivative instruments and hedging activities and is effective
for the Companys fiscal year ending December 31, 2001. Adoption of this
statement did not have a material impact on the Companys financial condition
or results of operations.

On January 1, 2001, the Company implemented Emerging Issues Task Force (EITF)
No. 00-14 Accounting for Certain Sales Incentive, EITF No. 00-21 Accounting for
Multiple-Element Revenue Arrangements, EITF No. 00-22 Accounting for Points
and Certain Other Time-Based or Volume-Based Sales Incentive Offers, and Offers
for Free Products or Services to Be Delivered in the Futureand EITF No. 00-25
Accounting for Consideration from a Vendor to a Retailer in Connection with the
Purchase or Promotion of the Vendors Productsrequiring cash coupons or
rebates to be classified as a reduction of revenue. Prior to this ruling, the
Company had expensed the cash coupons, players club reward program and other
cash back programs as a casino or marketing expense. In 2001, the Company
reclassified its 2000 income statement to reflect such expenses as promotional
expense thereby reducing net revenue.

In June 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 141 (SFAS 141), Business
Combinations, which requires the purchase method of accounting for business
combination initiated after June 30, 2001 and prohibits the use of the
pooling-of-interest method. The Company does not believe that the adoption of
SFAS 141 will have a significant impact on its financial statements.

Also in June 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 142 (SFAS 142) Goodwill and
Other Intangible Assets, which is effective January 1, 2002. SFAS 142 requires
that Goodwill and other intangible assets with indefinite useful lives no
longer be amortized, but instead tested for impairment at least annually. As
of July 1, 2001 the Company had goodwill, net of accumulated amortization, of
approximately $13.0 million which is currently included in net assets held for
sale. The Company discontinued amortizing the goodwill subsequent to filing
the Bankruptcy cases. Amortization expense related to goodwill was $0.2
million for the two quarters ended July 2, 2000. The Company is currently
assessing but has not yet determined the impact of SFAS 142 on its financial
position and results of operations.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

The fair market value of the Companys fixed debt obligations has increased to
approximately $124.4 million at July 1, 2001 compared to $115.0 million at
December 31, 2000. See Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations -Liquidity and Capital Resources.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

Reno Transportation Rail Access Corridor (ReTRAC) Project

In October 1998, the Reno City Council approved a special assessment district
to finance a portion of the costs to lower the railroad tracks that run through
downtown Reno, Nevada (the ReTRAC Project). Preliminary plans for the ReTRAC
Project provide for the construction of a temporary rail bypass that will be
used to divert rail traffic around the main railroad during construction. The
City of Reno (the City) estimates that a period of approximately two and one
half years will be required to complete the ReTRAC Project. The southern
boundary of the bypass will extend out into the middle of Commercial Row, the
street where Fitzgeralds Reno hotel entrance, valet parking area and hotel
loading zone are situated.

On November 30, 1998, the Company filed a lawsuit against the City to challenge
the method by which the special assessment to be levied against the Company was
determined. Based on preliminary plans prepared by the City, Fitzgeralds Reno
would expect to lose several parking spaces, the current valet parking area, an
outdoor billboard structure advertising available rooms and a building used to
house administrative offices, and be required to relocate the hotel entrance
currently on Commercial Row. The City has also subsequently indicated that the
ReTRAC Project might require the demolition of the Fitzgeralds Reno Rainbow
Skyway. Implementation of the ReTRAC Project under these circumstances would
cause the Company to suffer significant and permanent loss in business revenue
and income; certain operating efficiencies from demolished or impaired physical
structures; and a portion of its existing customer base as a result of the
construction and operation of the proposed rail bypass.

The City of Reno filed an answer to the Companys lawsuit on January 19, 1999.
Subsequent thereto, George Karadanis and Robert Maloff d/b/a Sundowner Hotel
and Casino (the Sundowner) were permitted by court order to file a Complaint
in Intervention. Notwithstanding that intervention, on December 22, 1999, the
court granted the City of Renos Motion for Summary Judgment against the
Sundowner which motion was joined in by the Company.

After hearing oral arguments and considering the parties briefs, the Court
concluded that there was insufficient evidence before the Reno City Council to
support a finding that the ReTRAC Project confers a special benefit on
Fitzgeralds Reno as is required by statute before a special assessment may be
imposed. The Court remanded the matter to the Reno City Council and directed
the council to conduct a new hearing to consider evidence as to whether
Fitzgeralds Reno would receive a special benefit from the proposed project. On
June 20, 2001, the Reno City Council commenced a public hearing in compliance
with the remand order of the Court. That public hearing was recessed and
continued to August 27, 2001.

On February 27, 2001, the Reno City Council voted to continue the process of
determining the actual cost of construction of the ReTRAC Project, which has
previously been estimated to be $218 million. It is anticipated that the
construction cost analysis will be completed in April

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2002. On May 24, 2001, Fitzgeralds Reno commenced an action,
CV-N-01-0329-PMP-RAM, in the United States District Court for the District of
Nevada, against the Federal Highway Administration (FHWA), the Nevada
Department of Transportation (NDOT), and the City (collectively, the
Defendants) for violations of the National Environmental Policy Act (NEPA),
codified at 42 U.S.C. §§ 4321-4327. The claims against all Defendants
constitute a violation of 42 U.S.C. § 4332 (Violation of NEPA: Failure to
Consider Reasonable Alternatives & Failure to Consider and Provide Adequate
Mitigation Measures). Specifically, the Defendants failed to consider the
Partial Cover and Cut Tunnel Alternative and the use of the Feather River Route
on a temporary basis, and failed to include a plan for mitigating the adverse
environmental impacts, including construction disruption, loss of operating
facilities, noise and vibration impacts, that will be caused by the ReTRAC
Project and incurred by Fitzgeralds Reno and others.

On or about June 12, 2001, NDOT filed a motion to dismiss the Companys NEPA
complaint based on a claim of sovereign immunity. The Court is considering an
unopposed motion by the Company to amend the complaint to substitute as a
defendant the Director of NDOT, Thomas E. Stephens, for the Defendant NDOT, in
lieu of considering NDOTs Eleventh Amendment immunity claim. After the
complaint is so amended, NDOT will answer. The Defendants, FHWA and the City
have not answered the complaint and are not scheduled to do so until September
5, 2001.

Central City Litigation

On or about May 25, 2001, City of Central, Colorado (Central City), and
certain businesses alleged to do business in Central City commenced an action,
Civil Action No. 01-D-0964, in the United States District Court for the
District of Colorado against the City of Black Hawk, Colorado (Blackhawk),
certain companies alleged to do business in or about Blackhawk and various
individuals.

101 Main, a wholly owned subsidiary of Fitzgeralds Black Hawk II, is a named
defendant in the action. The claims against all defendants, including 101 Main
are predicated on 15 U.S.C. section 1 (Restraint of Trade), 15 U.S.C. section 2
(Monopolization), 15 U.S.C. section 2 (Attempted Monopolization), Colorado
Revised Statute section 6-4-104 (Restraint of Trade), violation of Colorado
Revised Statute section 6-4-105 (Monopolization), Colorado Revised Statute
section 6-4-105 (Attempted Monopolization), 18 U.S.C. section 1962
(Racketeering), Colorado Revised Statute section 18-17-104 (Colorado Organized
Crime Control Act), intentional interference with prospective economic
advantage, civil conspiracy, tortious interference with contractual relations
and inducing breach of contract. The plaintiffs in the action are seeking
judgment by jury against all defendants for an amount in excess of $100.0
million. The principal cause of the action relating to 101 Main is that the
defendants, including 101 Main, engaged in certain conduct to prevent the
construction of a highway defined as the Southern Access Road that would
provide access to travelers directly to Central City from Interstate 70 instead
of requiring passage through Blackhawk.

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The complaint was filed after the commencement of the Bankruptcy Cases, and 101
Main has asserted that the action was commenced in violation of the automatic
stay, Section 362(a) of the Bankruptcy Code. Accordingly, the Company believes
that the action, as it applies to 101 Main, is void under applicable case law,
as was the plaintiffs purported services of process following commencement of
the action. 101 Main has demanded that plaintiffs dismiss it from the action.
In the event 101 Main is not dismissed from the action, 101 Main will seek appropriate redress from the Bankruptcy Court, and alternatively defend
against the claims for relief set forth in the complaint. The Company believes
that the claims asserted against 101 Main are without merit

Additionally, none of the plaintiffs filed proofs of claim in the Bankruptcy
Cases within the time permitted pursuant to Bankruptcy Court order. In the
event that the Bankruptcy Court determines that the claims were not timely
filed, the claims are subject to disallowance, or alternatively, subordination
to timely filed claims regarding distribution of assets from the Bankruptcy
Cases.

Other Litigation

The Company is a party to various lawsuits relating to routine matters
incidental to its business. Except as noted below, the Company does not believe
that the outcome of such litigation, individually or in the aggregate, will
have any material adverse effect on its financial condition.

However, April 1, 1998 to September 30, 1999, the Companys general liability
insurance and workers compensation insurance carrier was Reliance Insurance
Company (Reliance). On May 29, 2001, a Pennsylvania court placed Reliance
under the control of the Pennsylvania Department of Insurance for
rehabilitation. At the present time, the Company is unable to determine what
effect this action may have on liability and workers compensation claims which
arose during the coverage period for which Reliance was the Companys insurance
carrier or whether any limitations on coverage would have a material adverse
effect on the Companys financial condition.

Item 2. Changes in Securities and Use of Proceeds.

Not Applicable

Item 3. Defaults Upon Senior Securities.



|(a) |  | As previously reported in its Report on Form 8-K filed July 22, 1999 and
elsewhere in this Form 10-Q, the Company is in default on its $205.0
million Senior Secured Notes.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

Not Applicable

Item 5. Other Information.

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The Company files monthly operating statements with the Bankruptcy Court.
These filings are available for public inspection at the office of the clerk of
the Bankruptcy Court at 300 Booth Street, Reno, Nevada 89509 or on the internet
at www.nvb.uscourts.gov.

Item 6. Exhibits and Reports on Form 8-K.



|(a) |  | Exhibits           
|--- |  | -------------------
|   
|    |  | None               
|   
|(b) |  | Reports on Form 8-K
|   
|    |  | None               

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Dated: August 9, 2001



| | FITZGERALDS GAMING CORPORATION
| | ------------------------------



| | /s/ Michael E. McPherson

Michael E. McPherson
Executive Vice President and
Chief Financial Officer
(Duly Authorized Officer, Principal
Financial Officer and Principal
Accounting Officer)
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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