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

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)
 X           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
---                      SECURITIES EXCHANGE ACT OF 1934
                  For the Quarterly Period Ended June 30, 2002

                                       OR

             TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
---                      SECURITIES EXCHANGE ACT OF 1934
              For the Transition Period from __________ to __________

                         Commission file number 0-26922

                         COAST HOTELS AND CASINOS, INC.
             (Exact name of registrant as specified in its charter)

                        Nevada                          88-0345706
           (State or other jurisdiction of          (I.R.S. employer
            incorporation or organization)        identification number)

               4500 West Tropicana Avenue, Las Vegas, Nevada 89103
               (Address of principal executive offices) (Zip code)

                                 (702) 365-7000
              (Registrant's telephone number, including area code)

                                      None
         (Former name, former address and former fiscal year, if changed
                               since last report.)

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

                      APPLICABLE ONLY TO CORPORATE ISSUERS:
     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the latest practicable date.

     Shares of Common Stock outstanding as of August 14, 2002: 1,000

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

<PAGE>

Part I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                         COAST HOTELS AND CASINOS, INC.
               (A Wholly Owned Subsidiary of Coast Casinos, Inc.)
                            CONDENSED BALANCE SHEETS
                    (amounts in thousands, except share data)

                                              June 30,
                                                2002     December 31,
                                            (unaudited)     2001
                                            -----------  -----------
                   ASSETS

CURRENT ASSETS:
  Cash and cash equivalents................  $  29,357    $  43,347
  Accounts receivable, net.................      7,374        6,367
  Due from Coast Casinos...................         --        5,464
  Other current assets.....................     20,534       18,950
                                            -----------  -----------
  TOTAL CURRENT ASSETS.....................     57,265       74,128
PROPERTY AND EQUIPMENT, net................    664,714      579,545
OTHER ASSETS...............................     11,970        7,807
                                            -----------  -----------
                                             $ 733,949    $ 661,480
                                            ===========  ===========

              LIABILITIES AND
            STOCKHOLDER'S EQUITY

CURRENT LIABILITIES:
  Accounts payable.........................  $  11,864    $  13,138
  Accrued liabilities......................     45,133       41,061
  Due to Coast Casinos.....................         63           --
  Construction accounts payable............     22,399       34,053
  Current portion of long-term debt........        162          148
                                            -----------  -----------
  TOTAL CURRENT LIABILITIES................     79,621       88,400
LONG-TERM DEBT, less current portion.......    422,979      369,376
DEFERRED INCOME TAXES......................     22,781       19,251
DEFERRED RENT..............................     25,506       23,868
                                            -----------  -----------
  TOTAL LIABILITIES........................    550,887      500,895
                                            -----------  -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY:
  Common stock, $1.00 par value, 25,000
    shares authorized, 1,000 shares issued
    and outstanding........................          1            1
  Additional paid-in capital...............     86,903       86,903
  Retained earnings........................     96,158       73,681
                                            -----------  -----------
  TOTAL STOCKHOLDER'S EQUITY...............    183,062      160,585
                                            -----------  -----------
                                             $ 733,949    $ 661,480
                                            ===========  ===========

The  accompanying  notes  are an  integral  part of  these  condensed  financial
statements.


                                       1
<PAGE>

                         COAST HOTELS AND CASINOS, INC.
               (A Wholly Owned Subsidiary of Coast Casinos, Inc.)
         CONDENSED STATEMENTS OF OPERATIONS For the Three Months and Six
                       Months Ended June 30, 2002 and 2001
                             (amounts in thousands)
                                   (unaudited)

                                    Three Months Ended     Six Months Ended
                                         June 30,              June 30,
                                   --------------------  --------------------
                                     2002       2001       2002       2001
                                   ---------  ---------  ---------  ---------
OPERATING REVENUES:
  Casino.........................  $ 102,397  $  93,963  $ 203,305  $ 188,684
  Food and beverage..............     27,588     26,442     55,563     53,135
  Hotel..........................      9,954      9,533     20,043     19,478
  Other..........................      9,767      9,148     19,114     17,934
                                   ---------  ---------  ---------  ---------
    GROSS OPERATING REVENUES.....    149,706    139,086    298,025    279,231
  Less:  promotional allowances..    (13,251)   (12,391)   (26,495)   (24,988)
                                   ---------  ---------  ---------  ---------
    NET OPERATING REVENUES.......    136,455    126,695    271,530    254,243
                                   ---------  ---------  ---------  ---------

OPERATING EXPENSES:
  Casino.........................     45,563     42,755     89,885     85,924
  Food and beverage..............     20,876     19,753     41,541     38,618
  Hotel..........................      4,089      3,872      8,074      7,655
  Other..........................      7,447      6,794     14,362     13,493
  General and administrative.....     26,402     23,986     51,197     46,897
  Deferred rent..................        795        885      1,639      1,769
  Depreciation and amortization..     10,164      8,749     19,443     17,317
                                   ---------  ---------  ---------  ---------
    TOTAL OPERATING EXPENSES.....    115,336    106,794    226,141    211,673
                                   ---------  ---------  ---------  ---------
OPERATING INCOME.................     21,119     19,901     45,389     42,570
                                   ---------  ---------  ---------  ---------
OTHER INCOME (EXPENSES):
  Interest expense, net..........     (7,866)    (7,701)   (15,036)   (15,682)
  Interest capitalized ..........        858        137      1,446        199
  Gain (loss) on disposal of
    assets ......................          7     (1,656)      (311)      (122)
  Other income ..................      2,809         --      2,809         --
                                   ---------  ---------  ---------  ---------
TOTAL OTHER INCOME (EXPENSES)....    (4,192)    (9,220)   (11,092)   (15,605)
                                   ---------  ---------  ---------  ---------
INCOME BEFORE INCOME TAXES.......     16,927     10,681     34,297     26,965
Income tax provision ............      5,833      3,659     11,820      9,280
                                   ---------  ---------  ---------  ---------
NET INCOME.......................  $  11,094  $   7,022  $  22,477  $  17,685
                                   =========  =========  =========  =========

The  accompanying  notes  are an  integral  part of  these  condensed  financial
statements.


                                       2
<PAGE>

                         COAST HOTELS AND CASINOS, INC.
               (A Wholly Owned Subsidiary of Coast Casinos, Inc.)
                       CONDENSED STATEMENTS OF CASH FLOWS
                 For the Six Months Ended June 30, 2002 and 2001
                             (amounts in thousands)
                                   (unaudited)

                                                           Six Months Ended
                                                               June 30,
                                                         --------------------
                                                           2002       2001
                                                         --------   --------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income...........................................  $ 22,477   $ 17,685
                                                         --------   --------
  ADJUSTMENTS TO RECONCILE NET INCOME TO
    NET CASH PROVIDED BY OPERATING ACTIVITIES:
     Depreciation and amortization.....................    19,443     17,317
     Amortization of debt offering costs...............       732        596
     Loss on disposal of assets........................       311        122
     Deferred income taxes.............................     3,190        911
     Deferred rent.....................................     1,639      1,769
     Changes in assets and liabilities:
       Net increase in accounts receivable and
         other assets..................................    (5,595)    (3,196)
       Net increase (decrease) in accounts payable
         and accrued liabilities.......................     2,798     (1,912)
                                                         --------   --------
  TOTAL ADJUSTMENTS....................................    22,518     15,607
                                                         --------   --------
  NET CASH PROVIDED BY OPERATING ACTIVITIES............    44,995     33,292
                                                         --------   --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures, net of amounts in
    construction accounts payable......................  (117,513)   (37,697)
  Proceeds from sale of assets.........................       958      9,415
                                                         --------   --------
  NET CASH USED IN INVESTING ACTIVITIES................  (116,555)   (28,282)
                                                         --------   --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of long-term debt, including
    original issue premium, net of financing costs.....   103,191     49,071
  Principal payments on long-term debt.................      (148)    (2,508)
  Proceeds from borrowings under bank line of credit...    56,500      6,000
  Repayments of borrowings under bank line of credit...  (107,500)   (68,000)
  Payments from Coast Casinos..........................     5,527      5,410
                                                         --------   --------
  NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES..    57,570    (10,027)
                                                         --------   --------
NET DECREASE IN CASH AND CASH EQUIVALENTS..............   (13,990)    (5,017)
CASH AND CASH EQUIVALENTS, at beginning of period......    43,347     43,560
                                                         --------   --------
CASH AND CASH EQUIVALENTS, at end of period............  $ 29,357   $ 38,543
                                                         ========   ========

The  accompanying  notes  are an  integral  part of  these  condensed  financial
statements.


                                       3
<PAGE>

                         COAST HOTELS AND CASINOS, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE 1 - BACKGROUND INFORMATION AND BASIS OF PRESENTATION

Background Information

     Coast  Hotels and Casinos,  Inc.  (the  "Company"  or "Coast  Hotels") is a
Nevada corporation and a wholly owned subsidiary of Coast Casinos,  Inc. ("Coast
Casinos"),  which is also a Nevada  corporation.  Coast Casinos changed its name
from Coast Resorts,  Inc. on July 2, 2002.  Coast Hotels was formed in September
1995 and owns and operates the following hotel-casinos in Las Vegas, Nevada:

o    The Suncoast Hotel and Casino,  which is located in the west end of the Las
     Vegas valley.

o    The Orleans Hotel and Casino, which is located  approximately one mile west
     of the Las Vegas Strip on Tropicana Avenue.

o    Gold Coast Hotel and Casino,  which is located  approximately one mile west
     of the Las Vegas Strip on Flamingo Road.

o    Barbary Coast Hotel and Casino, which is located on the Las Vegas Strip.

Basis of Presentation

     The accompanying condensed financial statements are unaudited and have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with Article 10 of Regulation S-X.  Accordingly,  they
do not include  all of the  information  and  footnotes  required  by  generally
accepted accounting principles for complete financial statements.  The unaudited
financial  statements  should be read in conjunction with the audited  financial
statements and footnotes included in our annual report on Form 10-K for the year
ended  December 31, 2001.  In the opinion of  management,  all  adjustments  and
normal recurring  accruals  considered  necessary for a fair presentation of the
results  for the  interim  periods  have  been  included.  The  interim  results
reflected in the unaudited financial  statements are not necessarily  indicative
of expected results for the full year.


                                       4
<PAGE>
                         COAST HOTELS AND CASINOS, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE 2 - LONG-TERM DEBT

     Long-term  debt  consists of the following as of June 30, 2002 and December
31, 2001:

                                                        June 30,    December 31,
                                                         2002          2001
                                                      -----------   -----------
                                                           (in thousands)

9.5% senior subordinated notes due April 2009,
  with interest payable semiannually on April 1
  and October 1, including unamortized
  original issue premium of $4,765 in 2002
  and $0 in 2001...................................    $ 329,765     $ 225,000

Senior secured credit facility due September 2004,
  collateralized by substantially all of the assets
  of Coast Hotels and Casinos, Inc.................       93,000       144,000

Other notes payable................................          376           524
                                                      -----------   -----------
                                                         423,141       369,524
Less: current portion..............................          162           148
                                                      -----------   -----------
                                                       $ 422,979     $ 369,376
                                                      ===========   ===========

     In March 1999, the Company issued $175.0 million  principal  amount of 9.5%
senior  subordinated  notes  with  interest  payable  on April 1 and  October  1
beginning October 1, 1999 and entered into a $75.0 million senior secured credit
facility due 2004 to  facilitate a  refinancing.  Availability  under the credit
facility was increased to $200.0 million in September 1999, subject to automatic
reductions in  availability  from September 2001 through June 2004, as described
below. Coast Casinos is a guarantor of the indebtedness under both of these debt
agreements.  Borrowings under the credit facility bear interest,  at our option,
at a premium over the one-, two-,  three- or six-month London Interbank  Offered
Rate  ("LIBOR").  The premium varies  depending on the Company's  ratio of total
debt to EBITDA and can vary  between  125 and 250 basis  points.  As of June 30,
2002,  the premium over LIBOR was 1.75% (175 basis points) and the interest rate
was 3.58%. For the six months ended June 30, 2002, the weighted average interest
rate for the senior  secured  credit  facility was 3.62%.  The Company  incurs a
commitment  fee,  payable  quarterly  in arrears,  on the unused  portion of the
credit  facility.  This  variable fee is currently at a rate of 0.375% per annum
times the average unused portion of the facility.

     The  availability  under the senior secured credit  facility was reduced by
$6.0 million to $194.0  million on September 30, 2001, by $6.0 million to $188.0
million on December  31, 2001,  by $6.0  million to $182.0  million on March 31,
2002 and by $6.0  million to $176.0  million  on June 30,  2002.  The  quarterly
reduction will increase to $8.5 million on each of September 30, 2002,  December
31,  2002,  March 31, 2003 and June 30,  2003,  and to $11.5  million on each of
September 30, 2003,  December 31, 2003,  March 31, 2004 and June 30, 2004. As of
June 30, 2002,  the Company had $83.0 million of  availability  under the credit
facility.

     On February 2, 2001, the Company issued $50.0 million additional  principal
amount of senior  subordinated  notes. The net proceeds of  approximately  $49.1
million were used to reduce borrowings under the senior secured credit facility.
On March 19, 2002, the Company issued $100.0 million additional principal amount
of senior  subordinated notes and received a $5.0 million original issue premium
in  connection  with the  issuance.  The net  proceeds of  approximately  $103.2
million were used to reduce borrowings under the credit facility. The notes that
were issued in 2001 and 2002 were issued under the same  indenture  and have the
same terms,  interest  rate and maturity  date as the $175.0  million  principal
amount of senior subordinated notes issued in 1999.


                                       5
<PAGE>

                         COAST HOTELS AND CASINOS, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE 2 - LONG-TERM DEBT (continued)

     The loan agreement  governing the senior secured credit  facility  contains
covenants  that,  among  other  things,  limit the ability of the Company to pay
dividends  or  make  advances  to  Coast  Casinos,   to  make  certain   capital
expenditures,  to repay  certain  existing  indebtedness,  to  incur  additional
indebtedness or to sell material assets of the Company.  Additionally,  the loan
agreement  requires  that the Company  maintain  certain  financial  ratios with
respect to its leverage and fixed charge coverage.  The agreement was amended in
December  2001 and in March  2002 to  increase  the  amount of  certain  capital
expenditures  that may be made. The Company is also subject to certain covenants
associated  with  the  indenture   governing  the  senior   subordinated  notes,
including,  in part,  limitations on certain restricted payments, the incurrence
of additional indebtedness and asset sales. At June 30, 2002, the Company was in
compliance with all covenants and required ratios.

     On April 2, 2002, Coast Hotels entered into an interest rate swap agreement
with a member of the Company's bank group wherein $100.0 million notional amount
of the  Company's  fixed rate debt was converted to a floating  rate.  The fixed
rate paid to the  Company was 5.77% and the  floating  rate paid to the bank was
based on six-month  LIBOR and set at 2.33% for the six months  ending  September
30, 2002.  On July 16,  2002,  the Company  terminated  the swap  agreement  and
received $3.75 million,  including $1.0 million of accrued interest  receivable.
Based on quoted market values as of June 30, 2002,  the estimated  fair value of
the swap  agreement  was $2.8  million.  As of and for the three- and  six-month
periods ended June 30, 2002,  the Company has recorded the estimated  fair value
of the swap  agreement  in the  accompanying  financial  statements  as an other
current asset with the gain reported in other income.


                                       6
<PAGE>
                         COAST HOTELS AND CASINOS, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE 3 - PROMOTIONAL ALLOWANCES

     The  retail  value of hotel  accommodations  and  food and  beverage  items
provided to  customers  without  charge is included in gross  revenues  and then
deducted as promotional allowances,  to arrive at net revenues. The following is
a breakdown of these complimentary  revenues for the three months and six months
ended June 30, 2002 and 2001:

                                    Three Months Ended      Six Months Ended
                                         June 30,               June 30,
                                   --------------------   --------------------
                                     2002       2001        2002       2001
                                   ---------  ---------   ---------  ---------
Complimentary revenues:
  Food and beverage.............   $  10,636  $  10,183   $  21,452  $  20,802
  Hotel.........................       1,727      1,500       3,359      2,979
  Other.........................         888        708       1,684      1,207
                                   ---------  ---------   ---------  ---------
    Promotional allowances......   $  13,251  $  12,391   $  26,495  $  24,988
                                   =========  =========   =========  =========

     The estimated cost of providing these complimentary  services is as follows
for the three months and six months ended June 30, 2002 and 2001:

                                    Three Months Ended      Six Months Ended
                                         June 30,               June 30,
                                   --------------------   --------------------
                                     2002       2001        2002       2001
                                   ---------  ---------   ---------  ---------
  Food and beverage.............   $  10,821  $  10,532   $  21,566  $  21,417
  Hotel.........................         712        647       1,386      1,213
  Other.........................         312        238         567        347
                                   ---------  ---------   ---------  ---------
                                   $  11,845  $  11,417   $  23,519  $  22,977
                                   =========  =========   =========  =========

     The cost of promotional allowances has been allocated to expense as follows
for the three months and six months ended June 30, 2002 and 2001:

                                     Three Months Ended      Six Months Ended
                                         June 30,               June 30,
                                   --------------------   --------------------
                                     2002       2001        2002       2001
                                   ---------  ---------   ---------  ---------
  Casino........................   $  11,055  $  10,713   $  21,778  $  21,146
  General and administrative....         790        704       1,741      1,831
                                  ---------  ---------   ---------  ---------
                                   $  11,845  $  11,417   $  23,519  $  22,977
                                   =========  =========   =========  =========


NOTE 4 - INITIAL PUBLIC OFFERING

     On May 24, 2002,  Coast Casinos  filed a  registration  statement  with the
Securities  and Exchange  Commission  with respect to a proposed  initial public
offering  of its common  stock.  The timing of the  initial  public  offering is
indefinite  and  subject to market  conditions.  There is no  guarantee  that an
initial public offering will take place.


                                       7
<PAGE>

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

Critical Accounting Policies and Estimates

     We have identified the following critical  accounting  policies that affect
our more  significant  judgments and estimates  used in the  preparation  of our
financial statements.  The preparation of our financial statements in conformity
with accounting  principles  generally  accepted in the United States of America
requires that we make estimates and judgments  that affect the reported  amounts
of assets and  liabilities,  revenues and expenses,  and related  disclosures of
contingent  assets and  liabilities.  On an on-going  basis,  we evaluate  those
estimates,  including  those  related  to asset  impairment,  accruals  for slot
marketing points,  self-insurance,  compensation and related  benefits,  revenue
recognition,  allowance for doubtful  accounts,  contingencies  and  litigation.
These estimates are based on the information  that is currently  available to us
and on various  other  assumptions  that we believe to be  reasonable  under the
circumstances.  Actual results could vary from those  estimates  under different
assumptions or conditions.

     We  believe  that  the  following  critical   accounting  policies  require
significant  judgments and estimates  used in the  preparation  of our financial
statements:

o    We maintain  an  allowance  for  doubtful  accounts  for  estimated  losses
     resulting  from the inability of our  customers to make required  payments,
     which  results in bad debt  expense.  We  determine  the  adequacy  of this
     allowance by periodically  evaluating  individual customer  receivables and
     considering the customer's financial condition,  credit history and current
     economic  conditions.  If the  financial  condition  of  customers  were to
     deteriorate,  resulting in an impairment of their ability to make payments,
     additional allowances may be required.

o    We maintain accruals for health and workers compensation self-insurance and
     slot club point redemption,  which are classified as accrued liabilities in
     the  balance  sheets.  We  determine  the  adequacy  of these  accruals  by
     periodically  evaluating  the historical  experience  and projected  trends
     related to these accruals.  If such information indicates that the accruals
     are overstated or understated,  we will adjust the assumptions  utilized in
     the  methodologies  and  reduce  or  provide  for  additional  accruals  as
     appropriate.

o    We are subject to various  claims and legal actions in the ordinary  course
     of business.  Some of these matters include personal  injuries to customers
     and damage to  customers'  personal  assets.  We estimate  guest claims and
     accrue  for  such  liability  based on  historical  experience  in  accrued
     liabilities in the balance sheets.


                                       8
<PAGE>

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

Results of Operations

     The  following  table  sets  forth,  for  the  periods  indicated,  certain
financial information regarding our results of operations:

                               Three Months Ended      Six Months Ended
                                    June 30,               June 30,
                              --------------------   --------------------
                                2002      2001       2002      2001
                              ---------  ---------   ---------  ---------
                                 (in thousands)         (in thousands)

Net operating revenues......  $ 136,455  $ 126,695   $ 271,530  $ 254,243
Operating expenses..........    115,336    106,794     226,141    211,673
                              ---------  ---------   ---------  ---------
Operating income ...........  $  21,119  $  19,901   $  45,389  $  42,570
                              =========  =========   =========  =========

Net income..................  $  11,094  $   7,022   $  22,477  $  17,685
                              =========  =========   =========  =========

EBITDA (1)..................  $  32,078  $  29,535   $  66,471  $  61,656
                              =========  =========   =========  =========

Cash provided by operating
  activities................  $  25,741  $  11,866   $  44,995  $  33,292
                              =========  =========   =========  =========
Cash used in investing
  activities................  $ (60,751) $ (24,463)  $(116,555) $ (28,282)
                              =========  =========   =========  =========
Cash provided by (used in)
  financing activities......  $  28,314  $  (6,680)  $  57,570  $ (10,027)
                              =========  =========   =========  =========

(1)  "EBITDA" means earnings before interest, taxes, depreciation, amortization,
     deferred  (non-cash)  rent  expense,  certain other  non-cash  expenses and
     pre-opening expenses (for all periods presented, the only non-cash expenses
     were deferred rent, gains and losses on disposal of assets and other income
     associated with the interest rate swap agreement). EBITDA is defined in our
     senior  secured credit  facility and in the indenture  governing our senior
     subordinated notes. EBITDA is presented as supplemental  disclosure because
     the  calculation  of EBITDA is necessary to determine our  compliance  with
     certain covenants under these financing  agreements and because  management
     believes that it is a widely used measure of operating  performance  in the
     gaming  industry.  EBITDA  should not be  construed  as an  alternative  to
     operating  income or net income (as determined in accordance with generally
     accepted   accounting   principles)   as  an  indicator  of  our  operating
     performance,  or as an  alternative  to cash flows  generated by operating,
     investing  and financing  activities  (as  determined  in  accordance  with
     generally accepted accounting  principles) as an indicator of cash flows or
     a measure of liquidity.  All companies do not calculate  EBITDA in the same
     manner. As a result,  EBITDA as presented here may not be comparable to the
     similarly titled measures presented by other companies.


                                       9
<PAGE>

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

Three  Months  Ended June 30, 2002  Compared to Three Months Ended June 30, 2001
and Six Months Ended June 30, 2002 Compared to Six Months Ended June 30, 2001

     In the quarter and six months ended June 30, 2002, we experienced increases
in revenues, operating income, net income and EBITDA, primarily due to continued
improvement  in revenues at the Suncoast,  which opened in September  2000.  The
Suncoast improvement was offset somewhat by lower hotel room occupancy levels at
our four  hotel-casino  properties,  consistent  with the  general  slowdown  in
tourism  after the  September 11, 2001  terrorist  attacks.  Net revenues in the
second  quarter  were  $136.5  million  compared to $126.7  million in 2001,  an
increase of 7.7%. Net operating  revenues were up 25.5% at the Suncoast and 6.9%
at the Gold Coast,  but were down 3.8% at The Orleans and relatively flat at the
Barbary  Coast.  Operating  income was $21.1 million in the quarter  compared to
$19.9  million in 2001,  an  increase  of 6.1%.  Net  income  was $11.1  million
compared  to 2001  second  quarter  net income of $7.0  million,  an increase of
58.0%.  EBITDA was $32.1 million in the quarter, an increase of 8.6% over EBITDA
of $29.5 million in the second quarter of 2001.

     In the six months ended June 30, 2002,  net  revenues  were $271.5  million
compared to $254.2 million in the first six months of 2001. Operating income was
$45.4  million in the first half of 2002  compared to $42.6 million in the first
half of 2001,  an increase of 6.6%.  Net income in the six months ended June 30,
2002 was $22.5 million, an increase of 27.1% over net income of $17.7 million in
the  first  half of 2001.  EBITDA in the  first  half of 2002 was $66.5  million
compared to $61.7 million in 2001, an increase of 7.8%.

     Casino.  Casino revenues were $102.4 million in the three months ended June
30, 2002  compared to $94.0  million in the same period in 2001,  an increase of
9.0% due  primarily  to a 24.5%  increase  at the  Suncoast.  Gold Coast  casino
revenues  increased 8.1% in the quarter,  Barbary Coast revenues increased 2.8%,
but casino  revenues at The Orleans  declined  2.8% due, in part,  to  increased
competition and construction disruption.

     In the six months ended June 30, 2002,  casino revenues were $203.3 million
compared to $188.7 million in the first six months of 2001, an increase of 7.7%.
Casino  revenues at the Suncoast  increased 27.8%  year-to-date  over last year.
Gold  Coast  and  Barbary  Coast  casino  revenues   increased  4.4%  and  1.5%,
respectively,  over the first  half of 2001,  but The  Orleans  casino  revenues
decreased  5.1% in the  period due to  increased  competition  and  construction
disruption.

     Casino  expenses  increased  $2.8  million  (6.6%) in the  second  quarter,
primarily  due to an 8.9%  increase  at the  Suncoast  because of the  increased
gaming  activity  there and an 11.4% increase at the Gold Coast due to increased
casino  promotional  expenses.  Year-to-date,  casino  expenses  increased  $4.0
million  (4.6%) due to a 10.9%  increase at the Suncoast and a 7.5%  increase at
the Gold Coast.

     Food and  Beverage.  Food and beverage  revenues  were $27.6 million in the
second  quarter of 2002  compared to $26.4 million in 2001, an increase of 4.3%.
Food and beverage  revenues at the Suncoast  increased  20.5%,  in line with the
overall  increase  in business at that  property.  Gold Coast food and  beverage
revenues increased 7.7%,  primarily due to a new, expanded buffet. The increases
were  partially  offset by a 6.2% decrease in food and beverage  revenues at The
Orleans,  in line with the overall decrease in revenues at The Orleans discussed
above,  and a 2.8% decrease in food and beverage  revenues at the Barbary Coast.
Food and beverage  expenses  increased 5.7% to $20.9 million in 2002 compared to
$19.8 million in 2001,  primarily due to the overall increase in business at the
Suncoast  and the  additional  expenses  related to the larger new buffet at the
Gold Coast.


                                       10
<PAGE>

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

Three  Months  Ended June 30, 2002  Compared to Three Months Ended June 30, 2001
and Six Months  Ended June 30, 2002  Compared to Six Months  Ended June 30, 2001
(continued)

     Food and Beverage (continued).  In the six months ended June 30, 2002, food
and beverage  revenues were $55.6 million,  an increase of 4.6% over revenues of
$53.1  million in the first half of 2001.  The increases  were  primarily at the
Suncoast and the Gold Coast, for the reasons  described above. Food and beverage
expenses  were $41.5  million in the first six months of 2002  compared to $38.6
million in 2001, an increase of 7.6% due primarily to the new buffet at the Gold
Coast and the overall increase in customer volume at the Suncoast.

     Hotel. Hotel room revenues were $10.0 million in the second quarter of 2002
compared to $9.5  million in 2001,  an increase  of 4.4%.  Lower room  occupancy
percentages  and lower  average  room rates due to a slowdown  in tourism  after
September  11, 2001 led to  decreases at the Gold Coast,  Barbary  Coast and The
Orleans.  The decreases  were offset by increases at the Suncoast,  which opened
216 additional  hotel rooms in August 2001.  Hotel expenses were $4.1 million in
the second  quarter  compared to $3.9  million in 2001,  an increase of 5.6% due
primarily to the additional rooms at the Suncoast.

     In the six months  ended June 30,  2002,  hotel  room  revenues  were $20.0
million  compared to $19.5 million in 2001, an increase of 2.9%.  Hotel expenses
in the first  half of 2002 were $8.1  million  compared  to $7.7  million in the
first half of 2001,  an increase of 5.5%.  The  increased  revenues and expenses
were primarily attributable to the additional hotel rooms opened at the Suncoast
in August 2001.

     Other.  Other  revenues  were $9.8  million in the  second  quarter of 2002
compared to $9.1 million in 2001, an increase of 6.8% primarily due to increases
at the  Suncoast.  Slight  increases  at the Gold Coast and  Barbary  Coast were
offset by an 8.1% decrease at The Orleans due to an overall decrease in customer
volume   related  to  increased   competition   and   construction   disruption.
Year-to-date, other revenues were $19.1 million compared to $17.9 million in the
first  six  months of 2001,  an  increase  of 6.6% due  primarily  to  increased
customer volume at the Suncoast.

     General and Administrative.  General and administrative expenses were $26.4
million in the second  quarter of 2002  compared  to $24.0  million in 2001,  an
increase of 10.1%,  primarily due to increases in salaries,  property  taxes and
property and liability insurance costs. Year-to-date, general and administrative
expenses were $51.2 million compared to $46.9 million in the first six months of
2001, an increase of 9.2%, also due to the increases described above.

     Depreciation and  Amortization.  Depreciation and amortization  expense was
$10.2 million in the second quarter of 2002 compared to $8.7 million in 2001, an
increase  of  16.2%  due to the  depreciation  of  remodeling  expenditures  and
equipment  purchases at the Gold Coast and additional rooms and slot machines at
the  Suncoast.  In  the  six  months  ended  June  30,  2002,  depreciation  and
amortization expense was $19.4 million compared to $17.3 million, an increase of
12.3%, also due to the increases described above.


                                       11
<PAGE>

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

Three  Months  Ended June 30, 2002  Compared to Three Months Ended June 30, 2001
and Six Months  Ended June 30, 2002  Compared to Six Months  Ended June 30, 2001
(continued)

     Other Income (Expenses).  Despite a lower weighted-average interest rate on
our debt, net interest  expense was $7.9 million in the second quarter  compared
to $7.7 million in the second quarter of 2001, an increase of 2.1% due to higher
aggregate  indebtedness related to the construction  projects at The Orleans and
the Gold Coast.  The effect of the higher  aggregate  indebtedness was partially
offset  by  $860,000  in  interest  savings  created  by an  interest  rate swap
agreement we entered into in April 2002 (see "Liquidity and Capital Resources").
In the six months ended June 30, 2002,  net interest  expense was $15.0  million
compared to $15.7 million in the first six months of 2001.  The decrease was due
primarily  to  a  lower  weighted-average   interest  rate  on  our  outstanding
indebtedness  and the  $860,000 in  interest  savings  from the swap  agreement.
Capitalized interest was $858,000 in the second quarter, compared to $137,000 in
the second quarter of 2001 due to ongoing  expansion  projects at the Gold Coast
and The Orleans.  Capitalized  interest was $1.4 million in the first six months
of 2002  compared to $199,000 in the same period in 2001 also due to the ongoing
expansion  projects.  Other  income was $2.8  million in the second  quarter and
first six months of 2002 due to the recording of the estimated fair value of the
swap  agreement  as of June 30,  2002,  compared to no other  income in the 2001
periods.  On July 16, 2002 we terminated  the swap  agreement and received $3.75
million, including $1.0 million of accrued interest receivable.


Aggregate Indebtedness and Fixed Payment Obligations

     Our total long-term  indebtedness  (including current maturities) and fixed
payment obligations on the land leases for the twelve-month  periods ending June
30 are summarized by year below:
<TABLE>
<CAPTION>

                                   2003      2004      2005      2006      2007   Thereafter
                                 --------  --------  --------  --------  -------- ----------
                                                  (dollars in thousands)
<S>                              <C>       <C>       <C>       <C>       <C>       <C>
Long-Term Indebtedness:
  Senior subordinated notes....  $     --  $     --  $     --  $     --  $     --  $325,000
  Bank credit facility.........        --        --    93,000        --        --        --
  Other........................       162       177         3         3         3        28

Fixed Payment Obligations
for Land Leases:
  Barbary Coast - land lease...       178       190       190       190       190     5,208
  Barbary Coast - parking lot..        63        --        --        --        --        --
  The Orleans - land lease.....     2,700     2,700     2,700     2,700     2,800   194,311
  Suncoast - land lease........     2,450     2,510     2,570     2,630     2,690   202,480
                                 --------  --------  --------  --------  --------  --------
Total Indebtedness and
Fixed Payment Obligations......  $  5,553  $  5,577  $ 98,463  $  5,523  $  5,683  $727,027
                                 ========  ========  ========  ========  ========  ========
</TABLE>

     For the six months ended June 30, 2002 we made principal  payments of $51.0
million,  net of borrowings,  on the senior secured credit facility and $148,000
in principal payments on other long-term debt. We have debt service payments due
aggregating  $162,000  during the next  twelve  months on other  long-term  debt
obligations.  We also have fixed payment obligations under leases due during the
next twelve months of $5.4 million.  Total remaining  fixed payment  obligations
under leases is $429.5 million. The fixed payment obligations represent payments
due under  operating lease  agreements  primarily for land on which three of our
properties are located.


                                       12
<PAGE>

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

Aggregate Indebtedness and Fixed Payment Obligations (continued)

     The Orleans occupies a portion of an approximately  80-acre site located on
West Tropicana Avenue,  approximately one mile south of the Gold Coast. We lease
the real  property  under a ground  lease  entered  into by Coast Hotels and the
Tiberti  Company,  a Nevada  general  partnership  of which J. Tito  Tiberti,  a
director  of Coast  Hotels,  is  managing  partner.  The lease had an  effective
commencement  date of October 1, 1995, an initial term of 50 years, and includes
an option,  exercisable  by us, to extend the initial term for an  additional 25
years.  The lease  provides  for monthly  rental  payments of $200,000 per month
through February 2002, $225,000 per month during the 48-month period thereafter,
and $250,000 per month during the  60-month  period  thereafter.  In March 2011,
annual rental  payments  will increase on a compounding  basis at a rate of 3.0%
per annum.  In  addition,  we have been  granted an option to purchase  the real
property  during the two-year  period  commencing  in February  2016.  The lease
provides  that the  purchase  price  will be the fair  market  value of the real
property at the time we exercise the option,  provided  that the purchase  price
will not be less than 10 times,  nor more  than 12  times,  annual  rent at such
time.

     The Suncoast occupies the approximately  50-acre site located at the corner
of Rampart Boulevard and Alta Drive in the west end of the Las Vegas valley that
we lease pursuant to a Ground Lease  Agreement dated as of October 28, 1994. The
initial term of the lease expires on December 31, 2055. The lease contains three
options,  exercisable  by us, to extend the term of the lease for 10 years each.
The lease  provided for monthly  rental  payments of $166,667 for the year ended
December  31,  1995.  Thereafter,  the monthly  rent  increases by the amount of
$5,000 in  January of each year.  The  landlord  has the option to require us to
purchase the property at the end of 2014, 2015, 2016, 2017 and 2018, at the fair
market value of the real property at the time the landlord exercises the option,
provided that the purchase price will not be less than 10 times nor more than 15
times  the  annual  rent at such  time.  Based on the  terms of the  lease,  the
potential purchase price commitment ranges from  approximately  $31.0 million to
approximately  $51.0  million in the years 2014 through 2018. We have a right of
first refusal in the event the landlord desires to sell the property at any time
during the lease term.

     The Barbary Coast occupies  approximately  1.8 acres at the intersection of
Flamingo Road and the Strip and occupies real property that we lease pursuant to
a lease dated May 1, 1993.  The lease  provides for rental  payments of $175,000
per year during the initial  term of the lease that  expires on May 1, 2003.  We
have  exercised the first of two 30-year  lease-extension  options,  with rental
payments  increasing  to  $190,000  per year  during  the first ten years of the
renewal  period.  We have an option to purchase the leased  property at any time
during the six month period prior to the  expiration  of the initial term of the
lease,  provided that certain  conditions  are met, at a purchase price equal to
the greater of $3.5 million or the then  appraised  value of the real  property.
Should the landlord  desire to sell the real property during the initial term of
the lease,  we have a right of first refusal.  We also lease  approximately  2.5
additional  acres of real property  located  adjacent to the Barbary Coast.  The
lease expires on December 31, 2002.  The lease  provides for rental  payments of
$125,000  per  annum.  We use the  2.5-acre  property  as a parking  lot for our
employees  and for valet  parking.  The landlord has the right to terminate  the
lease upon six months  prior notice to us if it requires the use of the property
for its own business  purposes  (which  excludes  leaving the property vacant or
leasing it to third parties prior to January 1, 2003).


                                       13
<PAGE>

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

Liquidity and Capital Resources

     Our  principal  sources of liquidity  have  consisted  of cash  provided by
operating  activities and debt financing.  Cash provided by operating activities
was $45.0 million in the six months ended June 30, 2002 and $33.3 million in the
six months ended June 30, 2001.

     Cash used in investing activities in the six months ended June 30, 2002 and
2001 was $116.6 million and $28.3 million,  respectively,  and was primarily for
capital expenditures.

     Cash provided by financing  activities  was $57.6 million in the first half
of 2002 primarily  from the issuance in March 2002 of $100.0  million  principal
amount of senior  subordinated  notes.  The net proceeds of $103.2  million were
used to repay  borrowings  under our line of credit.  In the first half of 2001,
cash used in financing activities was $10.0 million, primarily from repayment of
borrowings  under our credit  facility  offset by proceeds  from the issuance in
February 2001 of $50.0 million principal amount of senior subordinated notes.

     Our  primary  cash  requirements  for the next  twelve  months  include the
payment of principal and interest on our debt, maintenance capital expenditures,
the  completion of the expansion and remodeling  project at the Gold Coast,  the
continued  expansion  of The  Orleans and the  expansion  of the  Suncoast  (see
Capital Expenditures  below). We believe that existing cash balances,  operating
cash flow and available borrowings under our senior secured credit facility will
provide  sufficient  resources to meet our debt and lease  payment  obligations,
budgeted capital  expenditure  requirements at our  hotel-casino  properties and
operating needs for the next 12 months.

     In March 1999, we issued  $175.0  million  principal  amount of 9.5% senior
subordinated  notes with  interest  payable on April 1 and October 1 and entered
into a $75.0 million  senior  secured  credit  facility due 2004 to facilitate a
refinancing.  Availability  under the credit  facility  was  increased to $200.0
million in September 1999, subject to automatic  reductions in availability from
September  2001  through  June 2004,  as  described  below.  Coast  Casinos is a
guarantor of the indebtedness  under both of these debt  agreements.  Borrowings
under the credit  facility bear interest,  at our option,  at a premium over the
one-, two-,  three- or six-month London  Interbank  Offered Rate ("LIBOR").  The
premium  varies  depending  on our ratio of total  debt to  EBITDA  and can vary
between 125 and 250 basis  points.  As of June 30, 2002,  the premium over LIBOR
was 1.75% (175 basis points) and the interest rate was 3.58%. For the six months
ended June 30, 2002, the weighted  average  interest rate for the senior secured
credit  facility was 3.62%.  We incur a  commitment  fee,  payable  quarterly in
arrears,  on the unused  portion of the credit  facility.  This  variable fee is
currently at a rate of 0.375% per annum times the average  unused portion of the
facility.

     The  availability  under the senior secured credit  facility was reduced by
$6.0 million to $194.0  million on September 30, 2001, by $6.0 million to $188.0
million on December  31, 2001,  by $6.0  million to $182.0  million on March 31,
2002 and by $6.0  million to $176.0  million  on June 30,  2002.  The  quarterly
reduction will increase to $8.5 million on each of September 30, 2002,  December
31,  2002,  March 31, 2003 and June 30,  2003,  and to $11.5  million on each of
September 30, 2003, December 31, 2003, March 31, 2004 and June 30, 2004. As of
June 30, 2002, we had $83.0 million of availability under the credit facility.


                                       14
<PAGE>

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

Liquidity and Capital Resources (continued)

     On February 2, 2001, we issued $50.0 million additional principal amount of
senior  subordinated notes. The net proceeds of approximately $49.1 million were
used to reduce borrowings under our senior secured credit facility. On March 19,
2002,  we issued  $100.0  million  additional  principal  amount  of our  senior
subordinated  notes.  The notes were issued at a premium and the net proceeds of
approximately  $103.2  million were used to reduce  borrowings  under our senior
secured credit facility. As a result, we have additional  availability under the
credit facility to complete our capital improvement  projects as described under
"Capital  Expenditures"  below. The notes that were issued in 2001 and 2002 were
issued  under the same  indenture  and have the same  terms,  interest  rate and
maturity date as our the $175.0 million principal amount of senior  subordinated
notes issued in March 1999.

     The loan agreement  governing the credit facility contains  covenants that,
among other things, limit our ability to pay dividends or make advances to Coast
Casinos,  to make  certain  capital  expenditures,  to  repay  certain  existing
indebtedness,  to incur  additional  indebtedness  or to sell  material  assets.
Additionally,  the loan agreement  requires that we maintain  certain  financial
ratios with respect to its leverage and fixed charge coverage. The agreement was
amended in  December  2001 and in March 2002 to  increase  the amount of certain
capital  expenditures that may be made. We are also subject to certain covenants
associated with the indenture  governing our $325.0 million  principal amount of
senior subordinated notes, including, in part, limitations on certain restricted
payments, the incurrence of additional indebtedness and asset sales. At June 30,
2002, we were in compliance with all covenants and required ratios.

     On April 2, 2002, Coast Hotels entered into an interest rate swap agreement
with a member of our bank group wherein  $100.0 million  notional  amount of our
fixed rate debt was converted to a floating  rate. The fixed rate paid to us was
5.77% and the floating  rate paid to the bank was based on  six-month  LIBOR and
was set at 2.33% for the six months ending September 30, 2002. We terminated the
swap agreement in July 2002 and received  $3.75 million,  including $1.0 million
in accrued interest receivable.  We recorded $2.8 million as other income in the
quarter ended June 30, 2002 related to the swap agreement which  represented its
estimated market value as of June 30, 2002.

     On May 24, 2002,  Coast Casinos  filed a  registration  statement  with the
Securities  and Exchange  Commission  with respect to a proposed  initial public
offering  of its common  stock.  The timing of the  initial  public  offering is
indefinite  and  subject to market  conditions.  There is no  guarantee  that an
initial public offering will take place.


                                       15
<PAGE>

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

Capital Expenditures

     Subject  to  receiving  the  required  governmental  approvals,  we plan to
commence an approximately  $65.0 million  expansion of the Suncoast in the first
half of 2003 and  complete it in phases  through  the second  half of 2004.  The
project is  expected  to be paid for with  operating  cash flows and  borrowings
under our senior  secured  credit  facility.  Should Coast  Casinos  complete an
initial public offering, the proceeds may also be used to fund this project. The
expansion is expected to feature a 70,000 square foot casino addition, including
approximately  700 additional slot machines,  a poker room, a new sports book, a
sports bar, additional table games, a new casino bar, an approximately 1,600-car
parking garage and four new restaurants.  We anticipate that remaining 2002 cash
outlays related to the expansion,  consisting of architectural  and design fees,
will total  approximately  $1.0  million.  Through June 30,  2002,  we had spent
$216,000 related to the expansion.

     In January 2001, we commenced an expansion of The Orleans.  The project has
an  estimated  cost of  $150.0  million  and is  expected  to be paid  for  with
operating  cash flows and borrowings  under our senior secured credit  facility.
The expansion includes  approximately  40,000 square feet of new gaming area and
public space, a  special-events  arena, a 586-room hotel tower,  spa and fitness
facilities,  a 2,600-car  parking garage,  six additional  movie  theaters,  two
restaurants and an Irish pub.  Through June 30, 2002, we had completed the movie
theaters, the parking garage, the restaurants,  the Irish pub and the additional
gaming and public  area.  We  anticipate  that 2002 cash outlays for the project
will total approximately $80.0 million, of which $56.7 million had been spent in
the six months ended June 30, 2002.

     In the fourth quarter of 2000, we commenced an expansion and remodel of the
Gold  Coast.  The  project was  originally  designed to include a new,  expanded
buffet  restaurant,  a  sports  bar,  an  Asian-themed  restaurant,  an  Italian
restaurant,  10,000 square feet of additional meeting space, the refurbishing of
our  standard  hotel  guest rooms and the  redesign of most of the Gold  Coast's
public  areas.  In 2001 we  expanded  the  scope of the  project  to  include  a
1,300-car parking garage, an expanded porte-cochere,  a pedestrian bridge to the
casino,  20,000 square feet of new gaming area and a new bingo  parlor.  Through
June 30,  2002,  we had spent  approximately  $48.9  million  and had opened the
multi-station  buffet,  the sports bar, the restaurants,  the additional meeting
space and the  additional  gaming space and we had completed the redesign of the
public  areas.  We expect to complete the project by the fourth  quarter of 2002
and to spend  approximately  $29.0  million in 2002,  of which $17.9 million had
been spent in the six months ended June 30, 2002.

     In the ordinary course of operating our  hotel-casinos,  it is necessary to
upgrade or replace  fixtures and  equipment and to make  improvements  that will
extend the life of our physical  plants.  We anticipate  that these  maintenance
capital  expenditures will total approximately $25.0 million in 2002. In the six
months ended June 30, 2002 we had spent $12.1  million for  maintenance  capital
expenditures.  In addition,  in June 2002 we purchased a 1996 Bombardier  CRJ200
jet  aircraft.  The purchase  price of the  aircraft was $14.5  million plus the
trade-in of our 1980 Hawker-Siddely 700, valued at $3.2 million.


                                       16
<PAGE>

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

Capital Expenditures (continued)

     A key element of our business  strategy is the  expansion or  renovation of
our existing  properties as described above. The completion of these projects is
subject to certain risks, including but not limited to:

o    general construction risks, including cost overruns, shortages of materials
     or skilled labor, labor disputes,  unforeseen  environmental or engineering
     problems,  work stoppages,  fire and other natural disasters,  construction
     scheduling problems and weather interference;

o    change orders and plan or specification modifications;

o    changes and concessions required by governmental or regulatory authorities;

o    delays in obtaining or inability to obtain all required  licenses,  permits
     and authorizations; and

o    disruption  of  our  operations  at  our   hotel-casinos   by  construction
     activities.

     We believe that existing cash  balances,  operating cash flow and available
borrowings under our credit facility will provide  sufficient  resources to meet
our  debt  and  lease  payment   obligations,   budgeted   capital   expenditure
requirements at our hotel-casino  properties and operating needs for the next 12
months.


                                       17
<PAGE>

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

Other Matters

     In July 2001, the Financial Accounting Standards Board issued Statement No.
141,  "Business  Combinations"  and  Statement  No.  142,  "Goodwill  and  Other
Intangible  Assets".   SFAS  141  is  effective  as  follows:  (a)  use  of  the
pooling-of-interests  method is prohibited for business  combinations  initiated
after  June 30,  2001;  and (b) the  provisions  of SFAS  141 also  apply to all
business  combinations  accounted for by the purchase  method that are completed
after June 30, 2001. There are also transition provisions that apply to business
combinations  completed  before  July 1, 2001  which were  accounted  for by the
purchase method.

     SFAS 142 is effective for fiscal years  beginning  after  December 15, 2001
and  applies  to all  goodwill  and other  intangible  assets  recognized  in an
entity's statement of financial position at that date,  regardless of when those
assets were initially recognized.

     In August 2001, the Financial  Accounting  Standards Board issued Statement
No.  143,  "Accounting  for  Obligations   Associated  with  the  Retirement  of
Long-Lived  Assets".  The  objectives  of SFAS 143 are to  establish  accounting
standards for the recognition and measurement of an asset retirement  obligation
and its associated asset retirement cost. SFAS 143 is effective for fiscal years
beginning after June 15, 2002.

     In October 2001, the Financial  Accounting Standards Board issued Statement
No. 144,  "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS
144 addresses financial  accounting and reporting for the impairment or disposal
of long-lived  assets.  SFAS 144 is effective for fiscal years  beginning  after
December 15, 2001 and, generally, is to be applied prospectively.

     In April 2002, the Financial  Accounting  Standards Board issued  Statement
No.  145 ("SFAS  145")  "Rescission  of FASB  Statements  Nos.  4, 44 and 64 and
Amendment of FASB  Statement No. 13." SFAS 145 addresses  the  presentation  for
losses  on  early  retirements  of debt in the  statement  of  operations.  Upon
adoption  of SFAS  145,  the  Company  may no  longer  present  losses  on early
retirements  of  debt  as an  extraordinary  item.  Additionally,  prior  period
extraordinary  losses may be required to be  reclassified to conform to this new
presentation.  Adoption  of SFAS  145  will  have  no  impact  on the  Company's
financial condition or cash flows.

     In June 2002, the Financial Accounting Standards Board issued Statement No.
146  ("SFAS  146")  "Accounting  for  Costs  Associated  with  Exit or  Disposal
Activities."  The  provisions of SFAS 146 become  effective for exit or disposal
activities  commenced  subsequent  to December 31, 2002 and the Company does not
expect any impact on its  financial  condition,  results of  operations  or cash
flows.

     The  adoption  of SFAS  141,  SFAS 142 and SFAS  144 had no  impact  on our
financial  position,  results of operations or cash flows.  We do not expect the
impact of the  adoption of SFAS 143,  SFAS 145 or SFAS 146 to be material to our
financial position, results of operations or cash flows.


                                       18
<PAGE>

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

Certain Forward-Looking Statements

     This Form 10-Q includes "forward-looking  statements" within the meaning of
the securities laws. All statements  regarding our expected financial  position,
business  strategies  and  financing  plans  under  the  headings  "Management's
Discussion  and  Analysis of  Financial  Condition  and Results of  Operations",
"Business" and elsewhere in this Form 10-Q are  forward-looking  statements.  In
addition,   in  those  and  other   portions  of  this  Form  10-Q,   the  words
"anticipates,"  "believes,"  "estimates," "seeks," "expects," "plans," "intends"
and similar expressions,  as they relate to Coast Hotels or its management,  are
intended to identify  forward-looking  statements.  Although we believe that the
expectations  reflected in such forward-looking  statements are reasonable,  and
have based  these  expectations  on our beliefs as well as  assumptions  we have
made, such expectations may prove to be incorrect.  Important factors that could
cause actual results to differ  materially from such  expectations are disclosed
in this Form 10-Q, including, without limitation, the following factors:

o    increased competition, both in Nevada and other states, including increased
     competition from California Native American gaming;

o    dependence on the Las Vegas area and Southern  California for a majority of
     our customers;

o    substantial  leverage and  uncertainty  that we will be able to service our
     debt;

o    uncertainties associated with construction projects,  including the related
     disruption of operations and the availability of financing, if necessary;

o    changes  in laws or  regulations,  third  party  relations  and  approvals,
     decisions of courts, regulators and governmental bodies;

o    uncertainties related to the economy;

o    uncertainties  related to the cost and/or  availability  of electricity and
     natural gas; and

o    the impact on the travel and leisure industry, and Las Vegas in particular,
     of any terrorist  attack or threat of terrorist  attack,  and of the United
     States' response to an attack or threat.

     All subsequent written and oral forward-looking  statements attributable to
us or persons acting on our behalf are expressly  qualified in their entirety by
our cautionary statements. The forward-looking statements included are made only
as of the date of this Form 10-Q. We do not intend, and undertake no obligation,
to update these forward-looking statements.


                                       19
<PAGE>

Item 3.   Quantitative and Qualitative Disclosures about Market Risk

Market Risk

     Market  risk is the risk of loss  arising  from  adverse  changes in market
rates and prices,  such as interest rates,  foreign currency  exchange rates and
commodity  prices.  Our primary  exposure  to market risk is interest  rate risk
associated with our long-term debt. We attempt to limit our exposure to interest
rate  risk  by  managing  the mix of our  long-term  fixed-rate  borrowings  and
short-term  borrowings under our revolving bank credit  facility.  Assuming that
the amount of our variable rate debt remained  constant at $93.0 million  during
the next twelve months, a hypothetical 1% increase in our variable interest rate
would  increase our interest  expense by $930,000.  On April 2, 2002, we entered
into an interest  rate swap  agreement  with a member of our bank group  wherein
$100.0  million  notional  amount of our  fixed  rate  debt was  converted  to a
floating rate. In July 2002 we terminated the swap agreement. (See "Management's
Discussion  and  Analysis of  Financial  Condition  and  Results of  Operation -
Liquidity and Capital Resources".)

     The table below provides  information about our financial  instruments that
are  sensitive to changes in interest  rates.  For debt  obligations,  the table
presents  notional  amounts and weighted  average  interest rates by contractual
maturity dates for the twelve-month periods ended June 30,:

<TABLE>
<CAPTION>
                                                                                                        Fair
                                  2003      2004      2005      2006      2007    Thereafter   Total    Value (1)
                                --------  --------  --------  --------  --------  ----------  --------  --------
                                                               (dollars in thousands)
LIABILITIES
Short-term debt
<S>                             <C>       <C>       <C>       <C>       <C>       <C>      <C>        <C>
  Fixed rate..................  $    162  $     --  $     --  $     --  $     --  $    --  $    162   $    162
    Average interest rate(2)..     9.50%        --        --        --        --       --     9.50%         --

Long-term debt
  Fixed rate..................  $     --  $    177  $      3  $      3  $      3  $325,028  $325,214  $337,402
    Average interest rate(2)..        --     9.50%     9.50%     9.50%     9.50%     9.50%     9.50%        --
  Variable rate...............  $     --  $     --  $ 93,000  $     --  $     --  $     --  $ 93,000  $ 93,000
    Average interest rate(2)..        --        --     3.58%        --        --        --     3.58%        --
<FN>
-----

(1)  The fair values are based on the  borrowing  rate  currently  available for
     debt  instruments  with similar terms and maturities,  and market quotes of
     our publicly traded debt.

(2)  Based upon contractual  interest rates for fixed  indebtedness or the LIBOR
     rate at June 30, 2002 for variable rate indebtedness.
</FN>
</TABLE>


                                       20
<PAGE>

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings.

     Not applicable.

Item 2.  Changes in Securities.

     None.

Item 3.  Defaults Upon Senior Securities.

     None.

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

     Not applicable.

Item 5.  Other Information.

     None.

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

     (a)  Exhibits.

     The following are filed as exhibits to this Quarterly Report on Form 10-Q:

     99.1 - Certification of  Chief Executive Officer pursuant to Section 906 of
     the Sarbanes-Oxley Act of 2002.

     99.2 - Certification of  Chief Financial Officer pursuant to Section 906 of
     the Sarbanes-Oxley Act or 2002.

     (b)  Reports on Form 8-K.

          On May 28, 2002, the Company filed a Form 8-K dated May 24, 2002 under
     Item 5, Other  Events,  with  respect to the filing by its parent  company,
     Coast  Casinos,   with  the   Securities  and  Exchange   Commission  of  a
     registration  statement  relating to a proposed  initial public offering of
     its common stock.

          On June 6, 2002, the Company filed a Form 8-K dated May 24, 2002 under
     Item 5,  Other  Events,  with  respect  to the  expiration  of its offer to
     exchange  up to $100.0  million  principal  amount  of newly  issued 9 1/2%
     Senior Subordinated Notes Due 2009.


                                       21
<PAGE>

                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly caused this  Quarterly  Report on Form 10-Q to be signed on
its behalf by the undersigned thereunto duly authorized.

Date:  August 14, 2002             COAST HOTELS AND CASINOS, INC.,
                                   a Nevada corporation

                                   By: /s/ Gage Parrish
                                      ----------------------------
                                      Gage Parrish
                                      Vice President and Chief Financial Officer