|SECURITIES AND
EXCHANGE COMMISSION


Washington, D.C. 20549

FORM 10-Q
|----------------------------------------------------------------------

|      |                                                                                            | 
|----- | ------------------------------------------------------------------------------------------ | 
|[X]   | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE                                    | 
|      | SECURITIES EXCHANGE ACT OF 1934For the Quarterly Period Ended September 30, 2003           | 
|      | OR                                                                                         | 
|[   ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE                                   | 
|      | SECURITIES EXCHANGE ACT OF 1934For the Transition Period from ____________ to ____________ | 

|Commission file number
333-4356


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

|                                                                                                       |                                                 
|------------------------------------------------------------------------------------------------------ | ------------------------------------------------
|Nevada(State or other jurisdiction ofincorporation or organization)                                    | 88-0345706(I.R.S. employeridentification number)
|4500 West Tropicana Avenue, Las Vegas, Nevada 89103(Address of principal executive offices) (Zip code)

|(702) 365-7000Registrant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  [   ]


Indicate
by check mark whether the Registrant is an Accelerated Filer (as defined in Exchange Act
rule 12b-2) Yes [   ] No [X]


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 November 13, 2003: 1,000


     Part I  FINANCIAL
INFORMATION


Item 1.  Financial Statements


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

|                                                         | September 30,2003 |  | December 31, 2002 |        
|-------------------------------------------------------- | ----------------- |  | ----------------- | -------
|                                                         | (unaudited)       |  |                   |        
|                                                         |                   |  |                   |        
|ASSETS                                                   |                   | 
|CURRENT ASSETS:                                          |                   |  |                   |        
|Cash and cash equivalents                                |                   |  | $                 | 51,601 
|Accounts receivable, net                                 |                   |  |                   | 6,058  
|Due from Coast Casinos, Inc.                             |                   |  |                   | --     
|Other current assets                                     |                   |  |                   | 22,537 
|                                                         |                   |  |                   |        
|TOTAL CURRENT ASSETS                                     |                   |  |                   | 80,196 
|PROPERTY AND EQUIPMENT, net                              |                   |  |                   | 742,050
|OTHER ASSETS                                             |                   |  |                   | 10,565 
|Due from Coast Casinos, Inc.                             |                   |  |                   | 10,324 
|                                                         |                   |  |                   |        
|                                                         |                   |  | $                 | 843,135
|                                                         |                   |  |                   |        
|LIABILITIES AND                                          |                   | 
|STOCKHOLDER'S EQUITY                                     |                   | 
|CURRENT LIABILITIES:                                     |                   | 
|Accounts payable                                         |                   |  | $                 | 15,061 
|Accrued liabilities                                      |                   |  |                   | 54,603 
|Construction accounts payable                            |                   |  |                   | 96     
|Current portion of long-term debt                        |                   |  |                   | 1,017  
|                                                         |                   |  |                   |        
|TOTAL CURRENT LIABILITIES                                |                   |  |                   | 70,777 
|LONG-TERM DEBT, less current portion                     |                   |  |                   | 484,079
|DEFERRED INCOME TAXES                                    |                   |  |                   | 33,697 
|DEFERRED RENT                                            |                   |  |                   | 29,434 
|                                                         |                   |  |                   |        
|TOTAL LIABILITIES                                        |                   |  |                   | 617,987
|                                                         |                   |  |                   |        
|COMMITMENTS AND CONTINGENCIES                            |                   | 
|STOCKHOLDER'S EQUITY:                                    |                   | 
|Common stock, $1.00 par value, 25,000 shares authorized, |                   | 
|1,000 shares issued and outstanding                      |                   |  |                   | 1      
|Additional paid-in capital                               |                   |  |                   | 86,903 
|Retained earnings                                        |                   |  |                   | 138,244
|                                                         |                   |  |                   |        
|TOTAL STOCKHOLDER'S EQUITY                               |                   |  |                   | 225,148
|                                                         |                   |  |                   |        
|                                                         |                   |  | $                 | 843,135
|                                                         |                   |  |                   |        

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


1


COAST HOTELS AND
CASINOS, INC.(A Wholly Owned Subsidiary of Coast Casinos, Inc.)CONDENSED STATEMENTS
OF OPERATIONSFor the Three Months and Nine months ended September 30, 2003 and 2002(amounts in thousands)(unaudited)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                 | Three Months EndedSeptember 30, |  | Nine Months EndedSeptember 30, |        
|-------------------------------- | ------------------------------- |  | ------------------------------ | -------
|
|OPERATING REVENUES:              |                                 |  |                                |        
|Casino                           |                                 |  | $                              | 106,406
|Food and beverage                |                                 |  |                                | 28,733 
|Hotel                            |                                 |  |                                | 13,126 
|Other                            |                                 |  |                                | 12,806 
|                                 |                                 |  |                                |        
|GROSS OPERATING REVENUES         |                                 |  |                                | 161,071
|Less:  promotional allowances    |                                 |  |                                | (13,058
|                                 |                                 |  |                                |        
|NET OPERATING REVENUES           |                                 |  |                                | 148,013
|                                 |                                 |  |                                |        
|OPERATING EXPENSES:              |                                 | 
|Casino                           |                                 |  |                                | 44,310 
|Food and beverage                |                                 |  |                                | 21,433 
|Hotel                            |                                 |  |                                | 5,493  
|Other                            |                                 |  |                                | 11,633 
|General and administrative       |                                 |  |                                | 28,375 
|Land leases                      |                                 |  |                                | 1,342  
|Deferred rent                    |                                 |  |                                | 779    
|Depreciation and amortization    |                                 |  |                                | 12,611 
|                                 |                                 |  |                                |        
|TOTAL OPERATING EXPENSES         |                                 |  |                                | 125,976
|                                 |                                 |  |                                |        
|OPERATING INCOME                 |                                 |  |                                | 22,037 
|                                 |                                 |  |                                |        
|OTHER INCOME (EXPENSES):         |                                 | 
|Interest expense, net            |                                 |  |                                | (9,279 
|Interest capitalized             |                                 |  |                                | 25     
|Other income (expense)           |                                 |  |                                | 98     
|Loss on early retirement of debt |                                 |  |                                | (419   
|                                 |                                 |  |                                |        
|TOTAL OTHER INCOME (EXPENSES)    |                                 |  |                                | (9,575 
|                                 |                                 |  |                                |        
|INCOME BEFORE INCOME TAXES       |                                 |  |                                | 12,462 
|Income tax provision             |                                 |  |                                | 4,277  
|                                 |                                 |  |                                |        
|NET INCOME                       |                                 |  | $                              | 8,185  
|                                 |                                 |  |                                |        

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


2


COAST HOTELS AND
CASINOS, INC.(A Wholly Owned Subsidiary of Coast Casinos, Inc.)CONDENSED STATEMENTS
OF CASH FLOWSFor the Nine months ended September 30, 2003 and 2002(amounts in thousands)(unaudited)
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                      | Nine Months EndedSeptember 30, | 
|--------------------------------------------------------------------- | ------------------------------ | 
|
|
|
|CASH FLOWS FROM OPERATING ACTIVITIES:                                 |                                | 
|Net income                                                            |                                | 
|                                                                      |                                | 
|ADJUSTMENTS TO RECONCILE NET INCOME TO                                |                                | 
|NET CASH PROVIDED BY OPERATING ACTIVITIES:                            |                                | 
|Depreciation and amortization                                         |                                | 
|Net amortization of debt offering costs and original issue premium    |                                | 
|Loss on early retirement of debt                                      |                                | 
|Loss on disposals of assets                                           |                                | 
|Deferred income taxes                                                 |                                | 
|Deferred rent                                                         |                                | 
|Changes in assets and liabilities:                                    |                                | 
|Net increase in accounts receivable and other assets                  |                                | 
|Net increase in accounts payable and accrued liabilities              |                                | 
|                                                                      |                                | 
|TOTAL ADJUSTMENTS                                                     |                                | 
|                                                                      |                                | 
|NET CASH PROVIDED BY OPERATING ACTIVITIES                             |                                | 
|                                                                      |                                | 
|CASH FLOWS FROM INVESTING ACTIVITIES:                                 |                                | 
|Capital expenditures, net of amounts in construction accounts payable |                                | 
|Proceeds from sale of assets                                          |                                | 
|                                                                      |                                | 
|NET CASH USED IN INVESTING ACTIVITIES                                 |                                | 
|                                                                      |                                | 
|CASH FLOWS FROM FINANCING ACTIVITIES:                                 |                                | 
|Proceeds from issuance of long-term debt, including original issue    |                                | 
|premium, net of financing costs                                       |                                | 
|Principal payments on long-term debt                                  |                                | 
|Proceeds from borrowings under bank lines of credit, net              |                                | 
|of issuance costs                                                     |                                | 
|Repayments of borrowings under bank lines of credit                   |                                | 
|(Increase) decrease in due from  Coast Casinos, Inc.                  |                                | 
|                                                                      |                                | 
|NET CASH PROVIDED BY FINANCING ACTIVITIES                             |                                | 
|                                                                      |                                | 
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                  |                                | 
|CASH AND CASH EQUIVALENTS, at beginning of period                     |                                | 
|                                                                      |                                | 
|CASH AND CASH EQUIVALENTS, at end of period                           |                                | 
|                                                                      |                                | 

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


3


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



NOTE 1  GENERAL


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
Orleans Hotel and Casino opened in 1996 and is located approximately one mile west of the
Las Vegas Strip on Tropicana Avenue.
| | - | ----------------------------------------------------------------------------------------------------------------------------------

| | o | Gold
Coast Hotel and Casino opened in 1986 and is located approximately one mile west of the
Las Vegas Strip on Flamingo Road.
| | - | ------------------------------------------------------------------------------------------------------------------------------

| | o | The
Suncoast Hotel and Casino opened in 2000 and is located in the west end of the Las Vegas
valley.
| | - | ----------------------------------------------------------------------------------------------------

| | o | Barbary
Coast Hotel and Casino opened in 1979 and is located on the Las Vegas Strip.
| | - | ------------------------------------------------------------------------------------

|Basis of Presentation


The
accompanying condensed interim 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 year-end balance sheet data was derived from audited
financial statements, but does not include all disclosures required by generally accepted
accounting principles. 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, 2002. In the opinion of management, all adjustments
and normal recurring accruals considered necessary for a fair statement 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


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



NOTE 2  LONG-TERM
DEBT


Long-term
debt consists of the following as of September 30, 2003 and December 31, 2002:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                                                                   | September 30,2003 |  | December 31,2002 |        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------- |  | ---------------- | -------
|
|                                                                                                                                                                   | (in thousands)    | 
|9.5% senior subordinated notes due April 2009, with interest payable                                                                                               |                   |  |                  |        
|semi-annually on April 1 and October 1, including  unamortized  original issue premium of $3,882 in 2003 and $4,412 in 2002                                        |                   |  | $                | 328,882
|                                                                                                                                                                   |                   | 
|Senior secured credit facility - $225.0 million revolving line of                                                                                                  |                   | 
|credit due September 2008, collateralized by substantially all  of the assets of Coast Hotels and Casinos, Inc.                                                    |                   |  |                  | 63,000 
|                                                                                                                                                                   |                   | 
|Senior secured credit facility - $75.0 million term loan due  September 2008, collateralized by substantially all of the  assets of Coast Hotels and Casinos, Inc. |                   |  |                  | 75,000 
|                                                                                                                                                                   |                   | 
|Senior secured credit facility due September 2004, collateralized  by substantially all of the assets of Coast Hotels and Casinos, Inc.                            |                   |  |                  | --     
|                                                                                                                                                                   |                   | 
|Variable-rate note due March 2009, collateralized by 1996  Canadair Challenger aircraft                                                                            |                   |  |                  | 18,000 
|                                                                                                                                                                   |                   | 
|Other notes payable                                                                                                                                                |                   |  |                  | 214    
|                                                                                                                                                                   |                   |  |                  |        
|                                                                                                                                                                   |                   |  |                  | 485,096
|Less: current portion                                                                                                                                              |                   |  |                  | 1,017  
|                                                                                                                                                                   |                   |  |                  |        
|                                                                                                                                                                   |                   |  | $                | 484,079
|                                                                                                                                                                   |                   |  |                  |        

|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 of each year through their maturity
in March 2009. On February 2, 2001, the Company issued an additional $50.0 million
principal amount of senior subordinated notes. The net proceeds of approximately $49.1
million were used to reduce borrowings under its senior secured credit facility. On March
19, 2002 the Company issued an additional $100.0 million principal amount of senior
subordinated notes. The notes were issued at a $5.0 million premium to par value and the
net proceeds of approximately $103.2 million were used to reduce borrowings under the
senior secured credit facility. The notes 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.


In
February 2003, the Company borrowed $18.0 million under a secured loan agreement,
collateralized by a Company-owned aircraft. The proceeds were used to reduce borrowings
under the then existing credit facility. The loan bears interest at a premium of 2.25%
over the 30-day London Interbank Offered Rate (LIBOR), which is adjusted
monthly. As of September 30, 2003, the interest rate was 3.36%, and for the nine months
ended September 30, 2003, the weighted average interest rate was 3.48%. Payments of
interest only are required during the first twelve months. Commencing on March 28, 2004,
the Company will be required to make monthly principal payments of $120,000 plus interest
on the unpaid balance. A balloon payment of the remaining principal balance is due in
February 2009.


5


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


NOTE 2  LONG-TERM
DEBT (continued)


In
September 2003, the Company replaced its senior secured revolving credit facility due
September 2004 with a $300.0 million senior secured credit facility due September 2008,
comprised of a $225.0 million revolving credit facility and a $75.0 million term loan.
Subject to the satisfaction of certain conditions, the Company may increase the
commitments under the senior secured credit facility by up to $50.0 million. Coast Casinos
is a full and unconditional guarantor of the indebtedness under the senior secured credit
facility and of the senior subordinated notes. Borrowings under the senior secured credit
facility bear interest, selected at the Companys option, at a premium over a base
rate or the one-, two-, three- or six-month Eurodollar Rate (Eurodollar). The
premium varies depending on a certain financial ratio and can vary, if determined by
reference to the base rate, between 0.5% and 1.25% and, if determined by reference to
Eurodollar, between 1.75% and 2.5%. As of September 30, 2003, using the one-month
Eurodollar option, the premium over Eurodollar was 2.25% and the interest rate was 3.37%.
For the nine months ended September 30, 2003, the weighted average interest rate for the
senior secured credit facility (including the indebtedness replaced thereby) was 3.44%.
The Company incurs a commitment fee, payable quarterly in arrears, on the unused portion
of the senior secured credit facility. This fee varies depending on a certain financial
ratio and can vary between 0.375% and 0.5% per annum. As of September 30, 2003, the fee
was 0.5% per annum times the average unused portion of the facility.


In
accordance with the terms of the senior secured credit facility, commencing on December
31, 2005 and each quarter thereafter, the Company is required to repay the $75.0 million
term loan in an amount equal to 8.3333% of the principal amount of the term loan then
outstanding. Advances under the senior secured credit facility may be used for working
capital, general corporate purposes, and certain improvements to existing properties. As
of September 30, 2003, all of the $75.0 million term loan was outstanding and $63.0
million was drawn on the $225.0 million revolving line of credit with $161.3 million of
availability remaining (net of letters of credit of approximately $700,000).


The
credit 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 credit agreement requires that the Company maintain certain financial
ratios with respect to its leverage and fixed charge coverage. 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. Management believes that, at September 30, 2003,
the Company was in compliance with all covenants and required ratios.


6


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 nine months ended September 30, 2003 and 2002:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        | Three Months EndedSeptember 30, |  | Nine Months EndedSeptember 30, |       
|----------------------- | ------------------------------- |  | ------------------------------ | ------
|
|Complimentary revenues: |                                 |  |                                |       
|Food and beverage       |                                 |  | $                              | 10,392
|Hotel                   |                                 |  |                                | 1,783 
|Other                   |                                 |  |                                | 883   
|                        |                                 |  |                                |       
|Promotional allowances  |                                 |  | $                              | 13,058
|                        |                                 |  |                                |       

|The
estimated cost of providing these complimentary services is as follows for the three
months and nine months ended September 30, 2003 and 2002:
|--------------------------------------------------------------------------------------------------------------------------------------------------

|                  | Three Months EndedSeptember 30, |  | Nine Months EndedSeptember 30, |       
|----------------- | ------------------------------- |  | ------------------------------ | ------
|
|Food and beverage |                                 |  | $                              | 10,211
|Hotel             |                                 |  |                                | 605   
|Other             |                                 |  |                                | 353   
|                  |                                 |  |                                |       
|                  |                                 |  | $                              | 11,169
|                  |                                 |  |                                |       

|The
cost of promotional allowances has been allocated to expense as follows for the three
months and nine months ended September 30, 2003 and 2002:
|---------------------------------------------------------------------------------------------------------------------------------------------------

|                           | Three Months EndedSeptember 30, |  | Nine Months EndedSeptember 30, |       
|-------------------------- | ------------------------------- |  | ------------------------------ | ------
|
|Casino                     |                                 |  | $                              | 10,357
|General and administrative |                                 |  |                                | 812   
|                           |                                 |  |                                |       
|                           |                                 |  | $                              | 11,169
|                           |                                 |  |                                |       

|7


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 affect significant judgments and
estimates used in the preparation of our financial statements:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | We
recognize revenue as net wins and losses occur in our casinos, upon the occupancy of our
hotel rooms, upon the delivery of food, beverage and other services, and upon performance
for entertainment revenue. Wagers received on all sporting events are recorded as a
liability until the final outcome of the event when the payoffs, if any, can be
determined. We record cash discounts and certain other cash incentives related to gaming
play be recorded as a reduction to gross casino revenues in accordance with Emerging
Issues Task Force Issue 00-22 (the Issue).
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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 continually evaluating individual customer
receivables, 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 to the extent such claims are not
covered under our existing insurance policies.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|8


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


Critical Accounting
Policies and Estimates (continued)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | At
September 30, 2003, we had net property and equipment of $742.1 million, representing
88.0% of our total assets. We depreciate the property and equipment on a straight-line
basis over their estimated useful lives. The estimated useful lives are based on the
nature of the assets as well as our current operating strategy. Future events, such as
property expansions, property developments, new competition and new regulations, could
result in a change in the manner in which we are using certain assets, requiring a change
in the estimated useful lives of such assets. In assessing the recoverability of the
carrying value of property and equipment, if events and circumstances warrant such an
assessment, we must make assumptions regarding estimated future cash flows and other
factors. If these estimates or the related assumptions change, we may be required to
record an impairment loss for these assets. Such an impairment loss would be recognized
as a non-cash component of operating income.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | We
have entered into lease agreements where the rental payments increase on an annual basis.
We recognize the related rent expense on the straight-line method over the term of the
agreements. Deferred rent is recorded to reflect the excess of rent expense over cash
payments since the inception of the leases.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Results of Operations


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

|                                                | Three Months EndedSeptember 30, |  | Nine Months EndedSeptember 30, |        
|----------------------------------------------- | ------------------------------- |  | ------------------------------ | -------
|
|
|Net operating revenues                          |                                 |  | $                              | 148,013
|Operating expenses                              |                                 |  |                                | 125,976
|                                                |                                 |  |                                |        
|Operating income                                |                                 |  | $                              | 22,037 
|                                                |                                 |  |                                |        
|Net income                                      |                                 |  | $                              | 8,185  
|                                                |                                 |  |                                |        
|Cash provided by operating activities           |                                 |  | $                              | 31,847 
|                                                |                                 |  |                                |        
|Cash used in investing activities               |                                 |  | $                              | (10,625
|                                                |                                 |  |                                |        
|Cash provided by (used in) financing activities |                                 |  | $                              | (6,910 
|                                                |                                 |  |                                |        

|9


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


Three Months Ended
September 30, 2003 Compared to Three Months Ended September 30, 2002 and Nine Months Ended
September 30, 2003 Compared to Nine Months Ended September 30, 2002


In
the three months and nine months ended September 30, 2003, we experienced increases in
revenues, operating income and net income. The increases were primarily due to improved
revenues at The Orleans where customer visitation was up as a result of the 586 new hotel
rooms, additional casino space and other amenities added in the August 2002 expansion. The
elimination of construction disruption also improved access for customers, contributing to
the improved operating results.


In
the three months ended September 30, 2003, net revenues were $148.0 million compared to
$130.9 million in the third quarter of 2002, an increase of 13.1% due primarily to a 25.6%
increase at The Orleans for the reasons described above. Net revenues at the Suncoast,
Gold Coast and Barbary Coast also improved in the quarter, primarily due to higher table
games win percentages and increased slot machine play compared to the third quarter of
2002. In the nine months ended September 30, 2003, net revenues were $439.6 million
compared to $402.4 million in 2002, an increase of 9.2%. A 21.4% increase in revenues at
The Orleans contributed to most of the improvement, but revenues at the Suncoast, Gold
Coast and Barbary Coast also improved in the nine months, primarily due to increased slot
machine play.


Operating
income was $22.0 million in the three months ended September 30, 2003 compared to $12.6
million in the same period in 2002, an increase of 75.6%. Operating income increased at
The Orleans by 78.8% in the quarter due to the increases in revenues described above and
by 44.4% at the Suncoast primarily due to increased revenues and lower promotional
expenses. Operating income in the quarter also improved at the Gold Coast and the Barbary
Coast due to the increased revenues described above. In the nine months ended September
30, 2003, operating income was $77.3 million compared to $57.9 million in 2002, an
increase of 33.5%. Most of the improvement in the nine months is attributable to the
increase in revenues at The Orleans. Operating income at the Suncoast improved 18.4%
year-to-date, due primarily to the higher revenues described above and reduced spending on
promotions. Operating income at the Gold Coast and the Barbary Coast also improved in the
nine months ended September 30, 2003 due to improved revenues.


Casino.Casino
revenues were $106.4 million in the three months ended September 30, 2003
compared to $97.3 million in the same period in 2002, an increase of 9.3%.
Casino revenues at The Orleans increased 16.6% in the third quarter of 2003 due
to improved customer traffic related to the completion of the recent expansion
project. Third quarter casino revenues at the Suncoast, Gold Coast and Barbary
Coast also improved 6.3%, 4.5% and 6.4%, respectively, due to higher table
games win percentages and increased slot machine play.


The increase in casino revenues combined with a decrease in casino operating expenses
contributed to a 58.4% casino operating margin in the quarter compared to 53.7% in the
third quarter of 2002. Casino expenses increased at The Orleans in line with the increased
customer traffic discussed above, but decreased at our other three hotel-casinos due to
reduced spending on promotions.


10


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


Three Months Ended
September 30, 2003 Compared to Three Months Ended September 30, 2002 and Nine Months Ended
September 30, 2003 Compared to Nine Months Ended September 30, 2002 (continued)


Casino
(continued).In the nine months ended September 30, 2003, casino revenues were $319.5
million compared to $300.6 million in 2002, an increase of 6.3%. Casino revenues at The
Orleans increased 13.7% in the first nine months of 2003 due to improved customer traffic
related to the completion of the recent expansion project. Casino revenues in the nine
months were up 2.0% at the Suncoast and the Gold Coast and 6.0% at the Barbary Coast due
to the increased slot machine play discussed above. Casino expenses were lower at all
four of our hotel-casinos, resulting in a combined decrease of 3.8% in the nine months
ended September 30, 2003, contributing to an improved casino operating margin of 59.4%
compared to 55.1% in the first nine months of 2002. The lower casino expenses were
primarily due to a company-wide effort to reduce promotional spending.


Food
and Beverage. Food and beverage revenues were $28.7 million in the third quarter of
2003 compared to $27.7 million in 2002, an increase of 3.7%. Food and beverage revenues
were higher in the quarter at all four of our hotel-casinos, but most of the increase was
attributable to The Orleans and the Suncoast due to higher customer volume. Food and
beverage expenses increased 3.6% in the quarter, contributing to a food and beverage
operating margin of 25.4% compared to 25.3% in the third quarter of 2002.


In
the nine months ended September 30, 2003, food and beverage revenues were $85.6 million,
an increase of 2.8% over revenues of $83.3 million in the first nine months of 2002. Most
of the improvement was due to an increase of 8.3% at The Orleans, which was partially
offset by a 3.2% decrease at the Suncoast, primarily in its buffet, which was affected by
aggressive promotions by competitors. Food and beverage expenses increased 2.4% in the
first nine months of 2003, primarily due to the increased customer volume at The Orleans.
The food and beverage operating margin improved to 25.6% in the first nine months of 2003
compared to 25.3% in 2002.


Hotel.                 Hotel
revenues were $13.1 million in the third quarter of 2003 compared to $9.8
          million in 2002, an increase of 34.0%. The increase was primarily due to the
          opening in August 2002 of 586 new rooms at The Orleans. With the additional
room           nights available at The Orleans in the quarter, an increase of
approximately           32,000 occupied rooms contributed to a 53.9% increase in rooms
revenues. The           percentage of rooms occupied at The Orleans improved to 89.6% in
the quarter           compared to 86.9% in the third quarter of 2002 and the average
daily room rate           improved by $3.00. Room revenues at the Suncoast and the Gold
Coast also           increased in the quarter due to a higher percentage of rooms
occupied and a           higher average daily room rate. Room revenues at the Barbary
Coast were           relatively flat in the quarter, with a slightly higher room rate
offset by a           slightly lower occupancy rate. Hotel expenses in the quarter were
$5.5 million           compared to $4.5 million in 2002, an increase of 22.2%, in line
with the overall           increase in hotel revenues.


In
the nine months ended September 30, 2003, hotel revenues were $39.2 million compared to
$29.8 million in 2002, an increase of 31.5%, primarily due to the new hotel rooms at The
Orleans. Year-to-date, hotel revenues at The Orleans were up 60.0% compared to the first
nine months of 2002. Year-to-date, hotel revenues at the Suncoast, the Gold Coast and the
Barbary Coast were up by 7.9%, 10.1% and 3.0%, respectively. Hotel expenses in the first
nine months of 2003 were $15.9 million compared to $12.5 million in 2002, an increase of
26.4%, in line with the overall increase in hotel revenues.


11


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


Three Months Ended
September 30, 2003 Compared to Three Months Ended September 30, 2002 and Nine Months Ended
September 30, 2003 Compared to Nine Months Ended September 30, 2002 (continued)


Other.Other
revenues are derived primarily from bowling, retail, entertainment and           leased
facilities. In the quarter ended September 30, 2003, other revenues were           $12.8
million compared to $9.9 million in 2002, an increase of 29.1%, primarily           due
to a 63.3% increase at The Orleans. The arena at The Orleans, which opened           in
May 2003, contributed $2.7 million in revenues in the quarter from concerts           and
sporting events. Other revenues at the Suncoast, the Gold Coast and the           Barbary
Coast were flat compared to the prior year. Other expenses in the           quarter
increased by $4.6 million (64.3%), primarily due to the arena at The           Orleans.
Year-to-date, other revenues were $34.2 million compared to $29.0           million in
the first nine months of 2002, an increase of 17.8% primarily due to           the arena
at The Orleans. Other expenses increased year-to-date by $8.3 million           (38.7%),
due to costs related to the arena.


General
and Administrative. General and administrative expenses were $28.4 million in the
third quarter of 2003 compared to $27.3 million in 2002, an increase of 3.8%, primarily
due to increases in payroll and related costs and property taxes. Payroll and related
costs were affected by increased staffing levels at The Orleans due to the recent
expansion at that property. Property taxes were higher due to the expansions at The
Orleans and the Gold Coast. Year-to-date, general and administrative expenses were $80.5
million compared to $75.9 million in the first nine months of 2002, an increase of 6.1%,
also due primarily to the increased payroll, payroll related costs and property taxes
described above, as well as to increased utilities expenses related to the expansion at
The Orleans.


Depreciation
and Amortization. Depreciation and amortization expense was $12.6 million in the third
quarter of 2003 compared to $11.5 million in 2002, an increase of 9.7% due to the
depreciation of completed expansion and remodeling projects at The Orleans and the Gold
Coast. In the nine months ended September 30, 2003, depreciation and amortization expense
was $36.2 million compared to $30.9 million in 2002, an increase of 16.9%, also due to the
reasons described above.


Other
Income (Expenses).Net interest expense was $9.3 million in the third quarter of 2003
compared to $8.8 million in 2002, an increase of 5.1% due primarily to higher aggregate
indebtedness related to the completed expansion and remodeling projects at The Orleans and
the Gold Coast. In the nine months ended September 30, 2003, net interest expense was
$27.9 million compared to $23.9 million in the first nine months of 2002, an increase of
17.1% due to the higher aggregate indebtedness described above. Capitalized interest was
$25,000 in the third quarter compared to $923,000 in the third quarter of 2002. The
decrease was due to the completion prior to the third quarter of the expansion and
remodeling projects at The Orleans and the Gold Coast. Capitalized interest was $1.2
million in the first nine months of 2003 compared to $2.4 million in the same period in
2002. Unamortized costs of $419,000 related to our bank credit facility were written off
in the third quarter of 2003 due to the replacement of that facility with a new one.
Year-to-date, other loss is $117,000, which represents a net loss on disposal of
equipment, compared to other income of $2.4 million in 2002. The prior year income
represented a gain of $2.7 million on the cancellation of an interest rate swap agreement,
offset by a loss of $300,000 on the disposal of equipment.


12


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


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 September 30 are summarized by year
below:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                          | 2004 |  | 2005 |       | 2006 |   | 2007  |  | 2008 |        | Thereafter |   | Total  | 
|----------------------------------------- | ---- |  | ---- | ----- | ---- | - | ----- |  | ---- | ------ | ---------- | - | ------ | 
|Long-Term Indebtedness                    |      |  |      |       |      |   |       |  |      |        |            |   |        | 
|Senior subordinated notes                 |      |  | $    | --    |      | $ | --    |  | $    | --     |            | $ | --     | 
|Bank credit facility                      |      |  |      | --    |      |   | --    |  |      | 22,045 |            |   | 15,565 | 
|Secured aircraft loan                     |      |  |      | 840   |      |   | 1,440 |  |      | 1,440  |            |   | 1,440  | 
|Other                                     |      |  |      | 177   |      |   | 3     |  |      | 3      |            |   | 3      | 
|                                          |      | 
|Fixed Payment Obligations for Land Leases |      | 
|Barbary Coast - land lease                |      |  |      | 190   |      |   | 190   |  |      | 190    |            |   | 190    | 
|The Orleans - land lease                  |      |  |      | 2,700 |      |   | 2,700 |  |      | 2,875  |            |   | 3,000  | 
|Suncoast - land lease                     |      |  |      | 2,525 |      |   | 2,585 |  |      | 2,645  |            |   | 2,705  | 
|                                          |      |  |      |       |      |   |       |  |      |        |            |   |        | 
|Total Indebtedness and                    |      | 
|Fixed Payment Obligations                 |      |  | $    | 6,432 |      | $ | 6,918 |  | $    | 29,198 |            | $ | 22,903 | 
|                                          |      |  |      |       |      |   |       |  |      |        |            |   |        | 

|The
Orleans occupies a portion of an approximately 80-acre site located on West Tropicana
Avenue, about 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 both Coast Hotels and Coast Casinos, 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 $225,000 per month
through February 2006 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 is located in the west end of the Las Vegas valley and occupies an approximately
50-acre site 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.


13


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


Aggregate Indebtedness
and Fixed Payment Obligations (continued)


The
Barbary Coast occupies approximately 1.8 acres at the intersection of Flamingo Road and
the Strip 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 expired on
May 1, 2003. We have exercised the first of two 30-year options, with rental payments
increasing to $190,000 per year during the first ten years of the renewal period. In
January 2003, we purchased the approximately 2.5 additional acres of real property located
adjacent to the Barbary Coast, which we previously leased, for approximately $18.1
million. We use the 2.5-acre property as a parking lot for our employees and for valet
parking.



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 $81.0 million in the nine months
ended September 30, 2003, compared to $78.5 million in the same period in 2002.


Cash
used in investing activities was primarily for capital expenditures and was $78.6 million
in the first nine months of 2003, compared to $164.7 million in 2002. In the first nine
months of 2003, cash used for capital expenditures was $79.3 million, including $38.3
million for the expansion projects at The Orleans and the Gold Coast, $18.1 million for
the purchase of land at the Barbary Coast, $2.2 million for the completion of luxury
suites at the Suncoast, approximately $500,000 for design work on a proposed hotel-casino
project, the South Coast, $1.2 million for capitalized interest and
approximately $19.0 million for maintenance capital expenditures. In the first nine months
of 2002, cash used for capital expenditures was primarily for the expansion projects at
The Orleans and the Gold Coast.


Cash
provided by financing activities was $11.7 million in the nine months ended September 30,
2003, primarily from $17.8 million in net proceeds from the financing of our aircraft and
$171.6 million in proceeds from borrowings under the senior secured credit facility, net
of issuance costs, offset by $173.5 million in repayments of borrowings under the credit
facility. In the first nine months of 2002, cash provided by financing activities was
$75.3 million, primarily from $103.2 million in net proceeds from the issuance of
long-term debt and $89.0 million of proceeds from borrowings under the senior secured
credit facility, offset, in part, by $118.5 million in repayments of borrowings under the
credit facility.


In
March 1999, we issued $175.0 million principal amount of 9.5% senior subordinated notes
due in 2009 with interest payable on April 1 and October 1 of each year through their
maturity in March 2009. On February 2, 2001, we issued an additional $50.0 million
principal amount of senior subordinated notes. The net proceeds of approximately $49.1
million were used to reduce borrowings under our then existing credit facility. On March
19, 2002, we issued an additional $100.0 million principal amount of our senior
subordinated notes. The notes were issued at a premium and the net proceeds of $103.2
million were used to reduce borrowings under our then existing credit facility. The notes
issued in 2001 and 2002 were issued under the same indenture and have the same terms,
interest rate and maturity date as our original $175.0 million principal amount of senior
subordinated notes issued in 1999.


14


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


Liquidity and Capital
Resources (continued)


In
February 2003, we borrowed $18.0 million under a secured loan agreement, collateralized by
our Canadair Challenger aircraft. The proceeds were used to reduce borrowings under the
then existing credit facility. The loan bears interest at a premium of 2.25% over the
30-day London Interbank Offered Rate (LIBOR), which is adjusted monthly. As of
September 30, 2003, the interest rate was 3.36%, and for the nine months ended September
30, 2003, the weighted average interest rate was 3.48%. Payments of interest only are
required during the first twelve months. Commencing on March 28, 2004, we will be required
to make monthly principal payments of $120,000 plus interest on the unpaid balance. A
balloon payment of the remaining principal balance is due in February 2009.


In
September 2003, we replaced our existing credit facility with a $300.0 million senior
secured credit facility due September 2008, represented by a $225.0 million revolving
credit facility and a $75.0 million term loan. Subject to the satisfaction of certain
conditions, we may increase the commitments under the senior secured credit facility by up
to $50.0 million. Coast Casinos is a full and unconditional guarantor of the indebtedness
under both of these debt agreements. Borrowings under the senior secured credit facility
bear interest, selected monthly at our option, at a premium over the base rate or the
one-, two-, three- or six-month Eurodollar Rate (Eurodollar). The premium
varies depending on a certain financial ratio and can vary, if determined by reference to
the base rate, between 0.5% and 1.25% and, if determined by reference to Eurodollar,
between 1.75% and 2.5%. As of September 30, 2003, using the one-month Eurodollar option,
the premium over Eurodollar was 2.25% and the interest rate was 3.37%. For the nine months
ended September 30, 2003, the weighted average interest rate for the senior secured credit
facility (including the indebtedness replaced thereby was 3.44%. We incur a commitment
fee, payable quarterly in arrears, on the unused portion of the senior secured credit
facility. This fee varies depending on a certain financial ratio and can vary between
0.375% and 0.5% per annum. As of September 30, 2003, the fee was 0.5% per annum times the
average unused portion of the facility.


In
accordance with the terms of the senior secured credit facility, commencing on December
31, 2005 and each quarter thereafter, the Company is required to repay the $75.0 million
term loan in an amount equal to 8.3333% of the principal amount of the term loan then
outstanding. Advances under the senior secured credit facility may be used for working
capital, general corporate purposes, and certain improvements to existing properties. As
of September 30, 2003, all of the $75.0 million term loan was outstanding and $63.0
million was drawn on the $225.0 million revolving line of credit with $161.3 million of
availability remaining (net of letters of credit of approximately $700,000).


The
credit agreement governing the senior secured 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 credit agreement
requires that we maintain certain financial ratios with respect to leverage and fixed
charge coverage. We are also subject to certain covenants associated with the indenture
governing our senior subordinated notes, including, in part, limitations on certain
restricted payments, the incurrence of additional indebtedness and asset sales. At
September 30, 2003, we were in compliance with all covenants and required ratios.


15


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


Capital Expenditures


In
January 2001, we commenced an expansion of The Orleans. The expansion project included a
special-events arena, a 586-room hotel tower, a 2,600-car parking garage, six additional
movie theaters, two restaurants, an Irish pub and approximately 40,000 square feet of new
gaming area and public space. The expansion project was completed in the third quarter of
2003 for a total cost of $165.8 million. In the fourth quarter of 2000, we
commenced an expansion and remodel of the Gold Coast. The project included a new, expanded
buffet restaurant, a sports bar, an Asian-themed restaurant, an Italian restaurant, 10,000
square feet of additional meeting space, an additional approximately 20,000 square feet of
slot and table games area, a new bingo room, an expanded porte-cochere and a parking
garage. The expansion and remodel project was completed in the second quarter of 2003 at a
total cost of $72.9 million.


In
the fourth quarter of 2001 and the first quarter of 2002, we purchased land totaling
approximately 60 acres for possible future development. The land is located in a gaming
enterprise district on Las Vegas Boulevard South, adjacent to Interstate 15 and
approximately six miles south of Tropicana Avenue. Subject to market conditions,
availability of financing and receipt of required governmental approvals, we intend to
develop a hotel-casino, the South Coast, on the site. We are currently
developing plans for the project and anticipate beginning construction of the hotel-casino
in the first half of 2004 and opening in the second half of 2005. There are no assurances
that we will actually develop the project in the anticipated time frame or at all.


In
July 2003, the Board of Directors approved the development and construction of additional
hotel rooms at The Orleans. Preliminary plans are for 461 rooms with an estimated project
cost of $36.0 million. Subject to the completion of plans and obtaining necessary permits,
we anticipate starting construction of the hotel tower in the first quarter of 2004. There
are no assurances that we will actually develop the project in the anticipated time frame
or at all.


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 2003.


16


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


Other Matters


In
November 2002, the Financial Accounting Standards Board issued FASB Interpretation No. 45
(FIN 45), Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others. This
interpretation elaborates on the disclosures to be made by a guarantor in its interim and
annual financial statements about its obligations under certain guarantees that it has
issued. It also clarifies (for guarantees issued after January 1, 2003) that a guarantor
is required to recognize, at the inception of a guarantee, a liability for the fair value
of the obligations undertaken in issuing the guarantee. At September 30, 2003, we do not
have any outstanding guarantees and accordingly the adoption of FIN 45 did not have a
material impact on our financial position, results of operations or cash flows.


In
January 2003, the Financial Accounting Standards Board issued FASB Interpretation No. 46
(FIN 46), Consolidation of Variable Interest Entities. This
interpretation addresses the requirements for business enterprises to consolidate related
entities in which they are determined to be the primary economic beneficiary as a result
of their variable economic interests. The interpretation is intended to provide guidance
in judging multiple economic interests in an entity and in determining the primary
beneficiary. The interpretation outlines disclosure requirements for VIEs. We have
reviewed our major relationships and our overall economic interests with other companies
consisting of related parties and other suppliers to determine the extent of our variable
economic interest in these parties. The adoption of FIN 46 did not have a material impact
on our financial position, results of operations or cash flows.


In
May 2003, the Financial Accounting Standards Board issued Statement No. 150, Accounting
for Certain Financial Instruments with Characteristics of Both Liabilities and Equity
(SFAS 150). SFAS 150 establishes standards for how an issuer classifies and
measures certain financial instruments with characteristics of both liabilities and
equity. It requires that an issuer classify a financial instrument that is within its
scope as a liability (or an asset in some circumstances). As the Companys equity
securities are not publicly traded, the Company is a nonpublic entity as defined by SFAS
150, this pronouncement will be effective at the beginning of the first interim period
beginning after December 15, 2003. The adoption of SFAS 150 will not have a material
impact on our financial position, results of operations or cash flows as the Company
currently does not have any such financial instruments.


17


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


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 effects of possible future terrorist activities; and
| | - | ---------------------------------------------------------------------------------

| | o | uncertainties
related to the effects of international hostilities affecting the United States.
| | - | ----------------------------------------------------------------------------------------------

|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.


18


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 $154.0 million during the
next twelve months, a hypothetical 1% increase in our variable interest rate would
increase our annual interest expense by $1.5 million. As of September 30, 2003, we did not
have any investments in derivative- or foreign currency-based financial instruments.


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 period
ended September 30,:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                         | 2004                   |  | 2005 |      | 2006 |   | 2007  |   | 2008 |        | Thereafter |   | Total  |   | FairValue (1) |        
|------------------------ | ---------------------- |  | ---- | ---- | ---- | - | ----- | - | ---- | ------ | ---------- | - | ------ | - | ------------- | -------
|
|                         | (dollars in thousands) | 
|LIABILITIES              |                        |  |      |      |      |   |       |   |      |        |            |   |        |   |               |        
|Short-term debt          |                        | 
|Fixed rate               |                        |  | $    | 177  |      | $ | --    |   | $    | --     |            | $ | --     |   | $             | --     
|Average interest rate(2) |                        |  |      | 9.50 | %    |   | --    |   |      | --     |            |   | --     |   |               | --     
|Variable rate            |                        |  | $    | 840  |      | $ | --    |   | $    | --     |            | $ | --     |   | $             | --     
|Average interest rate(2) |                        |  |      | 3.36 | %    |   | --    |   |      | --     |            |   | --     |   |               | --     
|Long-term debt           |                        | 
|Fixed rate               |                        |  | $    | --   |      | $ | 3     |   | $    | 3      |            | $ | 3      |   | $             | 3      
|Average interest         |                        |  |      | --   |      |   | 9.50  | % |      | 9.50   | %          |   | 9.50   | % |               | 9.50   
|Variable rate            |                        |  | $    | --   |      | $ | 1,440 |   | $    | 23,485 |            | $ | 17,005 |   | $             | 101,830
|Average interest rate(2) |                        |  |      | --   |      |   | 3.37  | % |      | 3.37   | %          |   | 3.37   | % |               | 3.37   

| | (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 rate indebtedness. Based upon the Eurodollar rate
          plus a premium of 2.25% at September 30, 2003, or the LIBOR rate plus a premium
          of 2.25% at September 30, 2003 for variable rate indebtedness.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|19


Item 4.      Controls
and Procedures


We
maintain  disclosure  controls  and  procedures  that are  designed to ensure  that
 information  required to be disclosed  in our  Exchange  Act  reports is  recorded,
 processed,  summarized  and  reported  within the time  periods specified in the SEC's
rules and forms,  and that such  information  is  accumulated  and  communicated  to
 management, including our Chief Executive Officer and Chief Financial Officer,  as
appropriate,  to allow timely decisions regarding required  disclosure.  Management
 necessarily applied its judgment in assessing the costs and benefits of such controls
and procedures that, by their nature, can provide only reasonable assurance regarding
management's control objectives.


As
of September  30, 2003,  we carried out an  evaluation,  under the  supervision  and with
the  participation  of management,  including our Chief Executive Officer along with our
Chief Financial  Officer,  of the effectiveness of the design  and  operation  of our
 disclosure  controls  and  procedures  pursuant  to  Exchange  Act Rules  13a-15(e)  and
15d-15(e).  Based upon the foregoing,  our Chief  Executive  Officer along with our Chief
 Financial  Officer  concluded that our disclosure  controls and procedures are effective
within the reasonable  assurance  threshold  described above. There have been no
 significant  changes in our internal  controls  (including  our  internal  controls
 over  financial reporting) or in other factors,  which could  significantly  affect
internal controls  subsequent to the date we carried out our  evaluation  and no
 significant  deficiencies  or  material  weaknesses  in such  internal  controls
 requiring corrective actions were identified.


20


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:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|ExhibitNumber |  | Description of Exhibit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.34         |  | Amended and  Restated  Credit  Agreement,  dated as of  September  26, 2003 by and
            among Coast Hotels and Casinos,  Inc., Wells Fargo Bank, National  Association and
            Deutsche Bank Trust Company Americas, as Co-Syndication  Agents, Bank of Scotland,
            as Documentation Agent, The CIT Group/Equipment  Financing, Inc., as Co-Agent, the
            lenders  from  time  to  time  parties  thereto  and  Bank of  America,  N.A.,  as
            Administrative Agent. (1)                                      
|10.35         |  | Amended and Restated Security  Agreement of Coast Hotels and Casinos,  Inc., dated
            as of September 26, 2003,  by Coast Hotels and Casinos,  Inc., in favor of Bank of
            America,  N.A., as Administrative Agent under the Credit Agreement and in favor of
            each of the lenders named therein. (1)                                                                                                                                                                                                                       
|10.36         |  | Amended and  Restated  Security  Agreement  of Coast  Casinos,  Inc.,  dated as of
            September 26, 2003, by Coast Casinos,  Inc., in favor of Bank of America, N.A., as
            Administrative  Agent  under  the  Credit  Agreement  and in  favor of each of the
            lenders named therein. (1)                                                                                                                                                                                                                                   
|10.37         |  | Amended and  Restated  Guaranty,  dated as of  September 26,  2003,  made by Coast
            Casinos,  Inc., in favor of Bank of America, N.A., as Administrative Agent for the
            benefit of the Lenders that are party to the Credit Agreement. (1)                                                                                                                                                                                                                                                                                          
|10.38         |  | Amended and Restated Trademark Security Interest  Assignment dated as of September
            26, 2003 made by Coast Hotels and Casinos, Inc. and Coast Casinos,  Inc., a Nevada
            corporation,  together  with each  other  Person  who may  become a party  hereto,
            jointly and severally,  in favor of Bank of America,  N.A., as the  Administrative
            Agent under the Credit  Agreement  for the ratable  benefit of each of the Lenders
            which are parties to the Credit Agreement from time to time (1)

|21



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


(a)
Exhibits (continued)
|---------------------------------------------------------------------------------------

|ExhibitNumber |  | Description of Exhibit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.39         |  | Amended and Restated  Pledge  Agreement  dated as of  September 26,  2003, made by
            Coast Casinos,  Inc., in favor of and for the benefit of Bank of America, N.A., as
            Administrative  Agent  under  the  Credit  Agreement,  and in favor of each of the
            Lenders therein named.(1)                                                                                                                                                                                                               
|10.40         |  | Construction  Deed of Trust with Assignment of Rents and Fixture  Filing,  for the
            Southcoast  Hotel and Casino,  made as of September  26, 2003, by Coast Hotels and
            Casinos,  Inc.,  as trustor,  Equitable  Deed  Company,  as  trustee,  and Bank of
            America,  N.A., as beneficiary,  as Administrative  Agent for itself and the other
            lenders now or  hereafter a party to that  certain  Amended  and  Restated  Credit
            Agreement. (1)                            
|10.41         |  | Amended and  Restated  Credit  Agreement,  dated as of  September  26, 2003 by and
            among Coast Hotels and Casinos,  Inc., Wells Fargo Bank, National  Association and
            Deutsche Bank Trust Company Americas, as Co-Syndication  Agents, Bank of Scotland,
            as Documentation Agent, The CIT Group/Equipment  Financing, Inc., as Co-Agent, the
            lenders  from  time  to  time  parties  thereto  and  Bank of  America,  N.A.,  as
            Administrative Agent.  (1)                
|10.42         |  | Amendment to Amended and Restated  Construction  Deed of Trust with  Assignment of
            Rents and Fixture Filing, for the Suncoast Hotel and Casino,  made as of September
            26, 2003, by Coast Hotels and Casinos,  Inc., as trustor,  Equitable Deed Company,
            as trustee,  and Bank of America,  N.A., as beneficiary,  as Administrative  Agent
            for itself and the other lenders now or hereafter a party to that certain  Amended
            and Restated Credit Agreement. (1)        
|10.43         |  | Amendment to Amended and Restated  Construction  Deed of Trust with  Assignment of
            Rents  and  Fixture  Filing,  for the Gold  Coast  Hotel  and  Casino,  made as of
            September 26, 2003, by Coast Hotels and Casinos, Inc., as trustor,  Equitable Deed
            Company, as trustee, and Bank of America, N.A., as beneficiary,  as Administrative
            Agent for itself and the other  lenders now or  hereafter a party to that  certain
            Amended and Restated Credit Agreement. (1)
|10.44         |  | Amendment to Amended and Restated  Construction  Deed of Trust with  Assignment of
            Rents and Fixture Filing,  for The Orleans Hotel and Casino,  made as of September
            26, 2003, by Coast Hotels and Casinos,  Inc., as trustor,  Equitable Deed Company,
            as trustee,  and Bank of America,  N.A., as beneficiary,  as Administrative  Agent
            for itself and the other lenders now or hereafter a party to that certain  Amended
            and Restated Credit Agreement. (1)        
|31            |  | Certifications  of Chief Executive Officer and Chief Financial Officer pursuant to
          § 302 of the Sarbanes-Oxley Act of  2002.                                                                                                                                                                                                                                                                                                                                                                                               
|32            |  | Certifications  of Chief Executive Officer and Chief Financial Officer pursuant to
         § 906 of the Sarbanes-Oxley Act of  2002.                                                                                                                                                                                                                                                                                                                                                                                                

| | (1) | Previously
filed with the Securities and Exchange Commission as an exhibit to                Coast
Casinos, Inc.s Form 8-K (File no. 333-04356) dated October
               3, 2003 and incorporated herein by reference.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|22



Item 6.  Exhibits and
Reports on Form 8-K (continued):
|------------------------------------------------------------

| | (b)  Reports
on Form 8-K.
| | -------------------------

| | On
July 8, 2003, the Company filed a Form 8-K under Item 5, Other Events, with respect to
Gage Parrish, the Companys Vice President and Chief Financial Officer, speaking at
the 2003 Bank of America Gaming Industry Debt Conference in Las Vegas and the
availability of selected slides from his presentation on the Companys website,
www.coastcasinos.com.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
October 9, 2003, the Company filed a form 8-K under Item 5, Other Events, and Item 7,
Financial Statements, Pro Forma Financial Information and Exhibits, with respect to the
new credit facility entered into on September 26, 2003. A copy of the Amended and
Restated Credit Agreement and other related agreements were filed as exhibits to this
8-K.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|23


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: | November 13, 2003 | COAST HOTELS AND CASINOS, INC.,a Nevada corporation
|      |                   | By:                                                 | /s/ Gage Parrish                                      
|      |                   |                                                     | Gage ParrishVice President and Chief Financial Officer

|24
|--