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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


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

                                    FORM 10-K

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

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

                        Commission file number 333-11811

                              ELDORADO RESORTS LLC
                             ELDORADO CAPITAL CORP.
           (EXACT NAMES OF REGISTRANTS AS SPECIFIED IN THEIR CHARTERS)

            NEVADA                                    88-0115550
            NEVADA                                    88-0367075
(STATE OR OTHER JURISDICTION OF            (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)

                  345 NORTH VIRGINIA STREET, RENO, NEVADA 89501
          (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)

                                 (775) 786-5700
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE

        SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE

Indicate by check mark whether the registrants (1) have 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
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes X No

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

Aggregate market value of the Registrants' voting stock held by non-affiliates
of the Registrants: None

Number of shares of common stock of Eldorado Capital Corp. outstanding at March
12, 1999: 2,500 Shares.



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PART I

ITEM 1.  BUSINESS.                         

                  Eldorado Resorts LLC, a Nevada limited liability company
("Resorts"), was formed to be the successor to Eldorado Hotel Associates Limited
Partnership (the "Predecessor Partnership") pursuant to an exchange of all of
the then outstanding partnership interests in the Predecessor Partnership for
membership interests in Resorts (the "Reorganization"). The Reorganization was
effective on July 1, 1996. Insofar as they relate to periods prior to the
effective date of the Reorganization, references to Resorts are to the
Predecessor Partnership except to the extent the context requires otherwise.
Eldorado Capital Corp., a Nevada corporation wholly-owned by Resorts
("Capital"), was incorporated with the sole purpose of serving as co-issuer of
$100,000,000 principal amount of 10 1/2% Senior Subordinated Notes due 2006
issued by Resorts and Capital on July 31, 1996. Accordingly, Capital holds no
significant assets and conducts no business activity. Resorts and Capital,
together with Eldorado Limited Liability Company, a 96% owned subsidiary of
Resorts and Nevada limited liability company ("ELLC"), are collectively referred
to as the "Company." Effective June 30, 1997, ELLC completed a recapitalization,
converting a note receivable and accrued interest thereon into equity,
increasing Resorts' interest in ELLC from approximately 77% to approximately
96%.

         The Company owns and operates the Eldorado Hotel & Casino (the
"Eldorado"), a premier hotel/casino and entertainment facility in Reno, Nevada.
The Company has established the Eldorado as a luxury destination resort by
creating a sophisticated, elegant atmosphere and providing unsurpassed personal
service and cuisine, a dynamic gaming environment and a wide variety of
amenities attractive to multiple market segments. The Eldorado is centrally
located in downtown Reno and is easily accessible both to vehicle traffic from
Interstate 80, the principal highway linking Reno to its primary visitor markets
in northern California, and to pedestrian traffic from nearby casinos. In
addition to owning the Eldorado, ELLC owns a 50% interest in a 50/50 joint
venture with a subsidiary of Circus Circus Enterprises, Inc. ("Circus Circus")
which owns the Silver Legacy Resort Casino (the "Silver Legacy"), a major themed
hotel/casino located adjacent to the Eldorado.


BUSINESS STRATEGY

         The Company has a broad experienced management team that includes,
among others, Donald Carano and several members of his immediate family. Donald
Carano, the Chief Executive Officer and a member of the Board of Managers of
Resorts, co-founded the Eldorado in 1973 and has been the driving force behind
its development. In addition to Donald Carano, each of the Company's other seven
senior executives has in excess of 10 years of operating experience in the
gaming industry. Management believes that its family-oriented, hands-on approach
has enabled the Company to operate the Eldorado successfully for over two
decades. In addition to their roles in management of the Company, members of the
Carano family beneficially own 63% of the Company.

         The Company's business strategy draws upon its extensive gaming
management experience gained from operating the Eldorado successfully for over
two decades. Key elements of the Company's strategy include the following:

         UNSURPASSED PERSONAL SERVICE AND HIGH QUALITY AMENITIES. One of the
cornerstones of the Company's business strategy is to provide its customers with
an extraordinary level of personal service. The Company's senior management is
actively involved in the daily operations of the Eldorado, frequently
interacting with hotel, restaurant and gaming patrons to ensure that they are
receiving the highest level of personal attention. Management believes that
extraordinary personal service is an integral part of fostering customer loyalty
and generating repeat business. Management regularly conducts feedback sessions
and focus groups with customers to elicit comments and suggestions on ways it
can improve each customer's experience at the Eldorado. Additionally, management
personally responds to suggestions made on comment cards placed in each of the
Eldorado's hotel rooms. Furthermore, management continually strives to instill
in each employee a dedication to superior service designed to exceed guests'
expectations.

         In addition to personalized service, the Eldorado has earned a
reputation for high quality amenities and an excellent price-to-value
relationship. Locals and visitors alike are attracted to the Eldorado's
selection of dining venues and exceptional food quality, for which the Eldorado
has received national recognition. Management believes that the Eldorado's
excellent cuisine adds to the overall atmosphere and prestige of the hotel and
therefore emphasizes outstanding food and ambiance and a wide variety of dining
choices.

         The Eldorado continually monitors and enhances its casino operations 
to react to changing market conditions and customer demands. For example, the 
Company has shifted its slots mix towards $1 and higher denominated machines 
in response to the increased popularity of higher-end slot machines, which 
the Company believes appeal to its base of higher-income gaming clientele. 
The Company targets premium-play customers as well as the 

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value-conscious gaming patron with its state-of-the-art casino featuring the 
latest in game technology, electronic displays and customer-convenient 
features.

          MARKETING TO TARGET GAMING PATRONS. The Company primarily targets its
marketing programs to four segments of the gaming market: the free and
independent traveler, preferred casino customers, local patrons and the
wholesale/specialty groups.

         The free and independent traveler segment consists of those travelers
not affiliated with groups who make their reservations directly with the
Eldorado or through independent travel agents. To attract the independent
traveler, the Company uses print media, radio, television and direct mail to
advertise in northern California, the Pacific Northwest and other regional
travel markets.

         Preferred casino customers are those patrons who maintain the necessary
gaming criteria to become established casino guests. The Company uses a broad
special events agenda and an extensive guest development program, including
providing casino credit, to attract and retain preferred casino customers. In
addition, the Company utilizes its quality hotel rooms, excellent restaurant
venues and other amenities to offer complimentaries to a broad spectrum of
established casino guests, from the frequent players who place relatively modest
wagers to the true premium players who consistently wager high amounts. The
Company believes that the ability to reward the more modest gaming patrons
fosters intense loyalty and repeat business.

         Wholesale/specialty groups consist of those customers participating in
travel packages offered by air tour operators, groups of up to 100 people with
strong gaming profiles and visitors attending tournaments at the National
Bowling Stadium. The Eldorado sales force targets this segment by attending
trade shows in order to establish relationships with airlines, travel agents,
meeting planners and wholesalers. The Eldorado has developed special marketing
programs and tools to cultivate relationships with these air tour operators and
specialty groups, including offering familiarization tours of the Eldorado. The
Eldorado attempts to utilize this market segment as a means of creating a
consistent utilization of its rooms during the calendar year.

         The Eldorado has a state-of-the-art, real-time customer tracking system
which comprehensively tracks its gaming customers throughout the casino.
Customers are given an electronically readable card to insert into slot machines
and to provide to floor supervisors at table games. The slot machines
automatically transmit gaming data to a central computer and floor supervisors
manually enter certain data relating to gaming customers which is then
computerized. The system enables the Eldorado to obtain up-to-the-minute
information on a customer's gaming habits, maximum and minimum wagers, the total
amount wagered and length of play. The Eldorado can thereby ensure that
customers receive immediate recognition and complimentaries based on their
levels of gaming. This innovation is enhanced by a friendly, knowledgeable staff
and a conveniently located promotion center. In addition, "Club Eldorado," the
casino's full-service slot club, offers an array of special events and exciting
tournaments and convenient ways of earning complimentaries.

         The cost incurred by the Company for advertising in 1998 was $4,383,000
compared with $3,890,000 in 1997.

          STRATEGIC EXPANSION AND IMPROVEMENTS. Since opening the Eldorado in 
1973, the Company has employed a strategy of continual expansion and 
improvement in order to maintain and enhance its position as a leader in the 
Reno market. Continuing its successful expansion strategy, the Eldorado 
opened a state-of-the-art 566-seat showroom in May 1997. The showroom adds an 
entertainment experience that management believes attracts a larger and 
broader audience of entertainment seekers. The showroom features the only 
nightly production show of its kind in downtown Reno. In addition, the 
Company opened a new VIP Lounge in December 1997, offering a relaxing 
atmosphere, including a complimentary full service bar and VIP room 
registration for preferred casino customers. In February 1998, the Eldorado 
opened a new slot area with 97 slot machines across from the property's 
microbrewery, THE BREW BROTHERS. Management believes that the addition of 
these unique amenities has enhanced the Eldorado's position in the Reno 
market. In July 1998 a portion of CHOICES RESTAURANT was enclosed and 
remodeled into a 78-seat Asian cuisine restaurant, the Golden Fortune.

         The Company owns a 31,000 square foot piece of property across the
street from and west of the Eldorado, which could be used for further expansion
of the Eldorado, although there are no immediate plans for the development of
this site.


ELDORADO HOTEL & CASINO

         The Eldorado is centrally positioned in the heart of Reno's prime
gaming area and room base. Easily accessible to both foot and vehicle traffic,
the Eldorado is strategically located directly off Interstate 80, the principal
highway linking the Reno market with San Francisco, Sacramento and other cities
in its primary visitor market of

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northern California. With three golden towers, including a 26-story tower 
that lights up with over 2,000 feet of neon at night, the Eldorado is visible 
from Interstate 80, attracting visitors to the downtown area and generating 
interest in the property. Management believes the Eldorado serves as a 
downtown landmark, situated to attract a large volume of foot traffic from 
other casinos as well as from the local populace. In addition, the Eldorado 
is easily accessible to visitors competing in and attending the various 
bowling tournaments that are held in the National Bowling Stadium, which is 
located just one block away.

         As of December 31, 1998, the Eldorado offered approximately 84,000 
square feet of gaming space, with approximately 1,871 slot machines, 79 table 
games consisting of blackjack, craps, roulette, Pai Gow Poker, Let It 
Ride(R), Caribbean stud poker, mini-baccarat, three keno games, a poker room 
and a race and sports book. The Eldorado also operates a satellite race and 
sports book at the Silver Legacy. The Eldorado's casino includes a mix of 
slot machines and table games which management believes makes it attractive 
to both middle-income and premium-play customers. Slot machines, which are 
offered in denominations from 5 cents to $100, generated approximately 67% of 
the total gaming revenues for the casino in 1998 and provide consistency in 
revenues and cash flow. A diverse selection of table games and a variety of 
table limits allow play from a wide range of gaming customers, which 
management believes makes the Eldorado one of the premier table games casinos 
in the Reno market.

         The interior of the hotel is designed to create a European ambiance and
offers 816 finely-appointed rooms and suites, including 18 specialty suites, 93
"Eldorado Player's Spa Suites" with bedside spas and 26 one-bedroom and
two-bedroom penthouse suites. Hotel guests enjoy panoramic views of Reno's
skyline and the majestic Sierra Nevada mountain range. Management believes that
attention to detail, decor and architecture have created an identifiable and
innovative presence in the Reno market for the Eldorado. In 1997 and 1998, the
Eldorado achieved a 90.1% and 92.8% average hotel occupancy rate at an Average
Daily Rate ("ADR") of approximately $60 in both 1997 and 1998.

         The Eldorado is nationally recognized for its exceptional cuisine.
Management believes that the Eldorado's superior cuisine and wide-ranging
selection of dining opportunities are crucial factors in attracting and
retaining customers. All of the Eldorado's dining venues, which range from
buffet to gourmet, offer high quality food at reasonable prices. The following
chart details the Eldorado's dining venues, their respective seating capacities
and their outstanding attributes, including a detail of the awards and
distinctions each has received.















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                       ELDORADO RESTAURANTS

                    SEATING
DINING VENUE        CAPACITY                   DESCRIPTION

Bistro Roxy         175   .    A Parisian-style bistro, bar and restaurant 
                               offering French country fare, steak and seafood
                          .    Designed by famed restaurant designer Pat Kuleto
                               to feature seven distinct architectural styles
                          .    Awarded the Golden Cup Award by Specialty Coffee
                               Association of America in 1997
                          .    Received "Award of Excellence" from WINE 
                               SPECTATOR 1998

La Strada           170   .    Features northern Italian cuisine in an Italian 
                               countryside  villa setting
                          .    Recognized as one of the country's top 10 Italian
                               restaurants in the 1994 BEST OF THE BEST ACADEMY
                               AWARDS OF THE RESTAURANT INDUSTRY
                          .    Recipient of the WINE SPECTATOR AWARD OF 
                               EXCELLENCE in each of the past five years
                          .    Hailed in the March 1993 issue of BON APPETIT  
                               magazine as a "sure thing in Reno" for food 
                               lovers

The Brew             225  .    The first microbrewery located in a hotel/casino.
Brothers                       Features a variety of handcrafted beers and live
                               nightly entertainment
                          .    Named as the area's best microbrewery in the RENO
                               GAZETTE-JOURNAL in 1998
                          .    Offers eight microbrewed beers, including Lady 
                               Luck Lager, Eldorado Extra Pale Honey Ale, 
                               Redhead Amber Ale, Wild Card Wheat Ale, Big Dog
                               Ale, Gold Dollar Pale Ale, Double Down Stout and
                               a rotating seasonal brew.

The Grill           185   .    A spirited, lively steak and seafood house
                          .    Specializes in prime rib and grilled entrees at
                               affordable prices
                          .    Offers top quality USDA cuts of beef and fresh 
                               seafood, a "never-ending" salad and fruit bar
                               with homemade soups

Chefs' Buffet       525   .    A 220-foot buffet offering a wide variety of 
(formerly-Chefs'               cuisines, including a Mongolian barbecue, 
Pavilion)                      omelet station and a salad, fruit, ice cream 
                               and dessert bar
                          .    Features an open exhibition kitchen where  
                               customers can observe meals being prepared

Tivoli Gardens      210   .    A 24-hour restaurant with a menu featuring Asian,
                               Italian, Mexican and South American cuisines
                          .    Features the Eldorado Coffee Company, where fresh
                               coffee beans are roasted each day for use 
                               throughout the hotel and for retail purchase

Choices Express     185   .    A food court offering a diverse selection of
Cafe                           cuisines, including an Asian noodle kitchen,
                               a delicatessen, a gelato shop where 24 flavors 
                               are made fresh each day, a salad bar, a bakery 
                               and an espresso bar

Seafood Buffet      425   .    Offered each Friday and Saturday night during
                               the summer months, in the Convention Center, 
                               featuring Reno's best seafood spread
                          .    Named one of the top 25 seafood restaurants in
                               the country in the 1994 BEST OF THE BEST ACADEMY
                               AWARDS OF THE RESTAURANT INDUSTRY

Golden Fortune --   78    .    Authentic Hong Kong style cuisine offering 
He Fu Li                       90 specialties
                          .    A classic Chinese setting atmosphere featuring
                               hand blown and stained glass imported from China


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         The Eldorado's selection of high-quality food and beverages reflects
the Carano family's emphasis on the dining experience. Eldorado chefs utilize
homemade pasta, carefully chosen imported ingredients, fresh seafood and top
quality USDA choice cuts of beef. Throughout the property, beverage offerings
include THE BREW BROTHERS microbrewed beers and wines from the Ferrari Carano
Winery.

         The Eldorado features a 566-seat showroom. Other amenities
offered by the Eldorado include several specialty shops, a versatile 12,400
square foot convention center and an outdoor plaza located diagonal to the
Eldorado which hosts a variety of special events. The Eldorado has parking
facilities for over 1,100 vehicles including a 652-space parking garage, a
360-space valet parking facility and 126 surface parking spaces.


SILVER LEGACY RESORT CASINO

         The Silver Legacy opened in July 1995 as the first major
newly-constructed hotel/casino in the Reno market since 1978 and its first
themed mega-resort. Plans for the Silver Legacy were originally formulated in
1993 by the Company and Circus Circus, who jointly recognized the potential
synergies of constructing a new hotel/casino in between the Eldorado and Circus
Circus-Reno properties.

         The Silver Legacy's design is based upon Nevada's silver mining
heritage and the legend of Sam Fairchild, a fictitious silver baron who "struck
it rich" on the site of the hotel/casino. Accordingly, the opulent interior of
the Silver Legacy showcases a variety of antique silver pieces from the Mackay
silver collection and a casino built around Sam Fairchild's legendary 120-foot
tall mining rig. The mining rig appears to transform ore into silver coins that
cascade into slot machines located at the mining rig's base. The mining rig is
enclosed within a 75,000 square foot dome, the interior of which is painted to
resemble the sky and features three dynamic sound and light shows which are
continuously updated so that visitors are provided with a unique experience each
time they enter the hotel. The exterior of the dome serves as a distinctive
landmark on the Reno skyline. The Company's management believes that the Silver
Legacy is a "must see" attraction for visitors to the Reno market.

         The Silver Legacy is situated on two city blocks, encompassing 240,000
square feet in downtown Reno. The hotel currently offers 1,712 guest rooms and
suites, many of which feature views of Reno's skyline and the Sierra Nevada
mountain range. The Silver Legacy's 10-story parking facility can accommodate
approximately 1,800 vehicles. At December 31, 1998, the Silver Legacy's casino
featured approximately 88,500 square feet of gaming space and contained over
2,243 slot machines and 81 table games, including blackjack, craps, roulette,
Pai Gow Poker, Let It Ride(R), Caribbean stud poker, mini-baccarat and Pai Gow
and two keno games. The Eldorado operates a satellite race and sports book
located on the Silver Legacy's casino floor. "Club Legacy," the Silver Legacy's
slot club, offers customers exciting special events and tournaments and
convenient ways of earning complimentaries.

         The Silver Legacy's dining options include a 240-seat buffet, a 
steak and seafood restaurant, an oyster bar, a 24-hour coffee shop and a 
gourmet coffee house. In addition, the hotel sponsors entertainment events 
which are held in the hotel's convention area. The Silver Legacy's other 
amenities include custom retail shops, exercise facilities, a beauty salon, 
comedy club and an outdoor swimming pool and sundeck, as well as a video 
arcade.

         The Eldorado, Silver Legacy, and Circus Circus-Reno properties are 
connected in a "seamless" manner by 200-foot wide skyway corridors. These 
enclosed corridors serve as entertainment bridgeways between the three 
properties and house several restaurants and custom retail shops. The 
Eldorado, Silver Legacy and Circus Circus-Reno comprise the heart of the Reno 
market's prime gaming area and room base, providing the most extensive and 
the broadest variety of gaming, entertainment, lodging and dining amenities 
in the Reno area, with an aggregate of over 4,100 rooms, 19 restaurants and 
enough parking to accommodate approximately 6,600 vehicles and, as of 
December 31, 1998, approximately 5,900 slot machines and 230 table games. The 
Company's management believes that centralized location and critical mass of 
these three properties, together with the ease of access between the 
facilities, provide the Eldorado with significant advantages over other 
freestanding hotel/casinos in the Reno market.


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SILVER LEGACY JOINT VENTURE AGREEMENT

         The Silver Legacy was developed by the Silver Legacy Joint Venture 
formed pursuant to the Agreement of Joint Venture of Circus and Eldorado 
Joint Venture (the "Joint Venture Agreement") dated as of March 1, 1994, 
between ELLC and Galleon, Inc. ("Circus Sub"). Under the terms of the Joint 
Venture Agreement, each of ELLC and Circus Sub (together the "Partners") owns 
a 50% interest in the Silver Legacy Joint Venture (each Partner's "Percentage 
Interest"). Each Partner was obligated to contribute cash or property to the 
Silver Legacy Joint Venture with a value equal to 15% of the total budgeted 
cost for developing and constructing the Silver Legacy. To satisfy their 
respective contribution obligations, ELLC contributed real property worth 
$25.0 million on which to build the Silver Legacy and $26.9 million in cash 
and Circus Sub contributed $51.9 million in cash. In addition, pursuant to 
the Joint Venture Agreement, Circus Sub's parent corporation, Circus Circus, 
provided certain loans to the Silver Legacy Joint Venture for the costs of 
developing and constructing the Silver Legacy and also provided credit 
support for a $230 million credit agreement originally entered into by the 
Silver Legacy Joint Venture on May 30, 1995 (the "Original Silver Legacy 
Credit Agreement") to fund the balance of the development and construction 
costs (such loans and financing are collectively referred to herein as the 
"Construction Financing"). In return, Circus Circus receives from the Silver 
Legacy Joint Venture an annual fee equal to 1.5% of the average outstanding 
principal balance of such financing. The Original Silver Legacy Credit 
Agreement, as amended and restated, most recently on November 24, 1997 (the 
"Silver Legacy Credit Agreement") is secured by a deed of trust on the Silver 
Legacy and by security interests in other assets of the Silver Legacy Joint 
Venture. Under the terms of the Silver Legacy Credit Agreement, the borrowing 
limit ($213 million at December 31, 1998) is subject to scheduled reductions 
(adjustable ratably for any voluntary permanent reductions) of $4.25 million 
quarterly through December 31, 2000 (with the next such payment being due on 
March 31, 1999), $5.5 million quarterly from March 31, 2001 through December 
31, 2002, $6 million on March 31, 2003, and the balance on June 30, 2003 when 
any indebtedness then outstanding thereunder will become due and payable. 
Each of ELLC's and Circus Sub's ability to participate in cash flows 
generated by the Silver Legacy is limited by the terms of the Joint Venture 
Agreement and the Silver Legacy Credit Agreement. On November 24, 1997, in 
connection with the most recent amendment and restatement of the Silver 
Legacy Credit Agreement, the Silver Legacy Joint Venture repaid its 
indebtedness to Circus Circus in the amount of $35.1 million and funded the 
repayment by an additional advance under the Silver Legacy Credit Agreement. 
As of December 31, 1998, the assets of the Silver Legacy Joint Venture, 
including the Silver Legacy, were subject to encumbrances securing the 
repayment of indebtedness in the principal amount of $198.5 million 
(representing the principal amount then outstanding under the Silver Legacy 
Credit Agreement) plus accrued interest of $1,279,000.

         Additional capital contributions in proportion to each Partner's 
Percentage Interest may be required by the Managing Partner (as defined in 
the Joint Venture Agreement) to defray any net loss (not including 
depreciation and amortization expenses) incurred by the Silver Legacy Joint 
Venture. If either Partner fails to make such additional capital 
contributions, the non-defaulting Partner may (i) contribute the amount of 
the additional capital contribution that the defaulting Partner has failed to 
pay to the Silver Legacy Joint Venture on behalf of the defaulting Partner, 
which amount will be considered a loan to the defaulting Partner from the 
non-defaulting Partner (an "Additional Capital Contribution Loan") and must 
be repaid by the defaulting Partner from the cash distributions it receives 
pursuant to the Joint Venture Agreement or (ii) loan the amount of the 
additional capital contribution that the defaulting Partner has failed to pay 
to the Silver Legacy Joint Venture, which loan must be repaid from Net Cash 
from Operations (as defined herein).

         PROFIT ALLOCATION. Under the terms of the Joint Venture Agreement,
Profits of the Silver Legacy Joint Venture (defined as the Silver Legacy Joint
Venture's taxable income with certain adjustments) in each fiscal year currently
are allocated to the Partners pursuant to the following formula: (i) the net
operating income of the Silver Legacy Joint Venture for financial reporting
purposes (determined in accordance with generally accepted accounting
principles) for such fiscal year, exclusive of interest expense, is credited to
Circus Sub up to the amount of its Priority Allocation (as defined below) for
such fiscal year, any balance is credited to ELLC up to the amount of Circus
Sub's Priority Allocation for such fiscal year and any remaining balance is
credited to the Partners in proportion to their Percentage Interests, (ii)
interest expense of the Silver Legacy Joint Venture for such fiscal year is
charged to the Partners in proportion to their Percentage Interests and (iii)
the difference between net operating income less interest expense and Profits
for such fiscal year is credited (or charged) to the Partners in proportion to
their Percentage Interests. If this formula causes a Partner to be charged with
a loss in any fiscal year, such Partner will be allocated zero Profits for such
year and the other Partner will be allocated all of the Profits for such year.
Under the terms of the Joint Venture Agreement, such Profits were allocated to
the Partners in proportion to their respective Percentage Interests prior to May
1, 1997. Losses of the Silver Legacy Joint Venture (defined as the Silver Legacy
Joint Venture's taxable loss with certain adjustments) in any fiscal year are
allocated to the Partners in proportion to their Percentage Interests.

         Circus Sub is entitled to a priority allocation ("Priority 
Allocation") in an amount equal to approximately 11.54% of the average of the 
"Adjusted Initial Investment" (as defined) for the period. If, after 
deducting equal shares of interest expense, a Partner's share of the Priority 
Allocation is less than zero, additional operating income is allocated to 
that Partner to bring their allocation to zero. For purposes of determining 
the amount of the Priority Allocation for any period, the term "Adjusted 
Initial Investment" means $290,000,000 (the "Initial Investment") as adjusted 
at the end of each year by subtracting (i) the depreciation on the Initial 
Investment taken in such year in accordance with the depreciation schedule 
agreed to by the Partners and (ii) the principal payments which would have 
been made in repayment of the orginal bank financing utilized for the 
development, construction and completion of the Silver Legacy.

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Circus Sub is entitled to such Priority Allocation, which began May 1, 1997, 
for so long as ELLC selects the General Manager (as defined in the Joint 
Venture Agreement) of the Silver Legacy (as provided for in the Joint Venture 
Agreement).

         DISTRIBUTIONS OF CASH FROM OPERATIONS. The Joint Venture Agreement
provides that Net Cash from Operations (defined as the gross cash proceeds from
all Silver Legacy Joint Venture operations less cash operating expenses and
certain other expenses and obligations, including interest and principal
payments on indebtedness including the Construction Financing, other than
indebtedness owed Partners or affiliates as provided for in the Joint Venture
Agreement) is to be distributed quarterly to the Partners in proportion to their
Percentage Interests after satisfaction of certain other obligations as follows:
(i) at the end of the first year of operation only, the distribution to each
Partner of an amount equal to its tax liability attributable to the Silver
Legacy Joint Venture, (ii) the payment of interest and principal on all loans to
the Silver Legacy Joint Venture from Partners and affiliates (excluding payment
of principal on the Construction Financing), (iii) the payment of principal and
interest on any Additional Capital Contribution Loan, plus the distribution to
the non-defaulting Partner who provided such Additional Capital Contribution
Loan of an amount equal to the amount of such Additional Capital Contribution
Loan, (iv) the payment of certain construction cost overruns, (v) at the end of
the first year of operation only, the payment of the balance of the principal of
the Construction Financing not including cost overruns, (vi) to the extent
earned and available, the distribution to Circus Sub of an amount up to its
Priority Allocation and to ELLC of an amount up to the amount distributed to
Circus Sub pursuant to Circus Sub's Priority Allocation, (vii) after the first
year of operation, the distribution to each Partner of an amount equal to its
tax liability attributable to the Silver Legacy Joint Venture and (viii) the
payment of the balance of the portion of the Construction Financing provided by
Circus Circus until such loans are paid in full or refinanced. In addition, any
withdrawal from the Silver Legacy Joint Venture by either party results in a
reduction of distributions to such withdrawing Partner to 75% of amounts
otherwise payable to such Partner.

         MANAGEMENT. The Silver Legacy Joint Venture is managed by an Executive
Committee, a Managing Partner and a General Manager. The Executive Committee
consults with, reviews, monitors and oversees the performance of the Managing
Partner and the General Manager, thus functioning in a capacity similar to a
corporation's board of directors. The Executive Committee may act only upon the
approval of a majority of its members. The Executive Committee has five members,
three of whom are appointed by the Managing Partner and the other two of whom
are appointed by the other Partner. The Joint Venture Agreement names Circus Sub
as the Managing Partner. The current members of the Executive Committee
appointed by the Managing Partner are Steve Greathouse, Yvette Landau and Scott
Beeman; the current members appointed by ELLC are Donald Carano and Robert
Jones.

         The Managing Partner is generally responsible for overseeing the
management and the business affairs of the Silver Legacy Joint Venture and may
be replaced only: (i) upon the unanimous agreement of the Partners or (ii) by
the other Partner if the Silver Legacy Joint Venture's net operating results for
any four consecutive quarters are less than 80% of the amount projected in the
Silver Legacy Joint Venture's annual business plan, upon which such other
Partner will become the Managing Partner; provided, however, that as long as
ELLC appoints the General Manager, ELLC may not require Circus Sub to resign as
Managing Partner.

         The General Manager is responsible for the oversight and management of
the day-to-day operations of the Silver Legacy and other business of the Silver
Legacy Joint Venture. The General Manager, currently Gary Carano, is appointed
by ELLC subject to the approval of Circus Sub. The General Manager will continue
to be selected by ELLC so long as Circus Sub is allocated its Priority
Allocation or so long as the Silver Legacy Joint Venture's net operating results
are not less than 80% of the amount projected in the Silver Legacy Joint
Venture's annual business plan. If the General Manager fails to meet such
performance requirements, Circus Sub may replace the General Manager; provided,
however, that if Circus Sub replaces the General Manager without ELLC's consent,
Circus Sub will not receive its Priority Allocation.

         TRANSFERS OF PARTNERSHIP INTERESTS. After the Silver Legacy has been in
operation for at least 10 years and the initial Construction Financing has been
paid in full, either Partner may, so long as such Partner is not in default of
any of the provisions of the Joint Venture Agreement, offer to purchase the
entire interest of the other Partner. If either Partner makes such an offer, the
other Partner is required to either sell its interest or purchase the interest
of the offering Partner at the price proposed by the offering Partner, subject
to a pro rata adjustment if the interests are not equal at the time of the
offer. In addition, in the event that (i) a Partner is in default at any time on
any two required additional capital contributions, (ii) an Additional Capital
Contribution Loan is not repaid within two years, (iii) any deed of trust for
the benefit of Circus Circus for the Construction Financing is in default for
over one year or (iv) unless otherwise agreed to by Circus Circus, Donald
Carano, an immediate family member acceptable to Circus Sub or one of their
respective affiliates does not control ELLC, or unless otherwise agreed to by
ELLC, Circus Circus does not control Circus Sub, then the non-defaulting Partner
may purchase the defaulting Partner's interest. The purchase price will be equal
to the net equity of the defaulting Partner's interest, decreased by any amount
that the non-defaulting Partner contributed as a capital contribution on behalf
of the defaulting Partner (which amount is considered a loan to


                                      7

<PAGE>


the defaulting Partner pursuant to the Joint Venture Agreement). Any such 
purchase and sale is subject to the approval of the Nevada Gaming Authorities.

RENO MARKET

         The Reno market is one of the larger gaming markets in the United
States which generated approximately $930 million of gaming revenues in 1998.
The opening of the Silver Legacy in 1995 marked Reno's first opening of a newly
constructed major hotel/casino since 1978 and its first themed mega-resort,
representing an approximately 13% increase in the number of hotel rooms and an
approximately 10% increase in the number of gaming positions in the Reno market.
As of December 31, 1998, the Reno market featured 15,271 hotel rooms which had
an estimated 79.1% average hotel occupancy rate in 1998. According to the Reno
Sparks Convention and Visitors Authority (the "Visitors Authority"), other
approved or announced projects are expected to add up to 4,800 rooms to the Reno
market within a decade, although the Company can not predict how many rooms will
actually be completed and placed into service.

         Reno is the second largest city in Nevada, with a population of
approximately 166,000 as of July 1998, and is located at the base of the Sierra
Nevada mountains along Interstate 80, approximately 140 miles east of
Sacramento, California and 225 miles east of San Francisco, California. Reno is
a destination resort market which attracts visitors by offering gaming as well
as numerous other summer and winter recreational activities. In addition to
gaming, the Reno area features numerous national forests, mountains and lakes
(including Lake Tahoe) and offers outstanding year-round opportunities for
outdoor activities of all types. According to the Visitors Authority, visitors
to the Reno market stayed an average of 2.5 nights in 1998. The Reno area enjoys
relatively mild weather, with abundant sunshine throughout the year and low
humidity. Reno's annual snowfall is modest, although heavier snowfall in the
mountain passes around Reno can obstruct traffic to Reno. Special annual events
in the Reno area include Hot August Nights, the National Championship Air Races,
the Reno Balloon Races and the Reno Rodeo. According to the Visitors Authority,
the greater Reno area attracted an estimated 5.1 million visitors in both 1998
and 1997.

         The following table sets forth certain statistical information for the
Reno market for the years 1994 through 1998 as reported by the Visitors
Authority or the Nevada State Gaming Control Board.

<TABLE>
<CAPTION>

                                                                   THE RENO MARKET

                                               1994         1995         1996          1997         1998
                                               ----         ----         ----          ----         ----
     <S>                                  <C>            <C>          <C>           <C>          <C>
     Gaming Revenues (000's) ...........   $   826,174   $  889,480   $  885,578    $  901,989   $  929,844
     Gaming Positions(1)(2).............        29,943       31,926       32,164        31,762       30,816
     Hotel Rooms(1).....................        12,582       14,241       15,536        15,773       15,271
     Average Hotel Occupancy Rate.......          84.4%        86.0%        83.3%         80.3%        79.1%
     Airline Passenger Arrivals(3)......     2,670,969    2,911,834    3,450,920     3,523,410    3,487,360
     Convention Attendance..............       203,389      314,137      196,707       250,170      256,285
</TABLE>

   (1) As of December 31 for each period shown.
   (2) Calculated from information provided by the Nevada State Gaming Control
       Board.
   (3) Arrivals to Reno/Tahoe International Airport.


         The National Bowling Stadium, located approximately one block from the
Eldorado and Silver Legacy, opened in February 1995 at a reported cost of
approximately $48 million. The state-of-the-art facility, which features 80
bowling lanes, has been selected to host tournaments for the American Bowling
Congress (the "ABC") and the Women's International Bowling Congress (the "WIBC")
over the next 10 years and is expected to host many other tournaments for other
bowling organizations. The National Bowling Stadium held the WIBC's National
Championship Bowling Tournament in 1997 and has scheduled the 2000, 2003, 2006
and 2009 tournaments and the ABC's National Championship Bowling Tournament for
1998, 2001, 2004 and 2007, providing a major bowling tournament in Reno two out
of every three years through the year 2009. According to the Visitors Authority,
bowling tournaments held at the National Bowling Stadium attract visitors from
markets that do not normally contribute substantially to Reno's visitor profile.
The National Bowling Stadium also features a large-screen movie theater and
retail space and can be configured to host special events and conventions.

         In 1998, eleven scheduled airlines and a number of other charter
airlines provided non-stop service between Reno and approximately 21 North
American cities, providing available seats for more than 13,800 people daily
both

                                     8
<PAGE>


inbound and outbound. The most frequent users of the airport are Reno Air and 
Southwest Airlines, with approximately 79 and 87 daily flights, respectively, 
to or from Reno as of December 31, 1998. The Eldorado and Silver Legacy are 
within a 10-minute drive of the airport, making them easily accessible to 
visitors traveling to Reno by air.

COMPETITION

         The Company competes for customers primarily on the basis of location,
range and pricing of amenities and overall atmosphere. Of the 44 casinos
currently operating in the Reno market, the Company competes principally with
the eight other hotel/casinos that each generate over $36 million in annual
gaming revenues, including Circus Circus-Reno and the Silver Legacy. The
Visitors Authority estimates that up to approximately 4,800 rooms will be added
to the Reno market within a decade. The Company expects that any additional
rooms added in the Reno market will increase competition for visitor revenue. To
a lesser extent, the Company also competes with hotel/casino operations located
in Las Vegas and Laughlin, Nevada and in the Lake Tahoe area. A substantial
number of customers travel to both Reno and the Lake Tahoe market during their
visits. Consequently, the Company believes that its success is influenced to
some degree by the success of the Lake Tahoe market. Environmental restrictions
place limitations on the expansion of hotels and casinos in the Lake Tahoe
market. Additionally, the Company competes with casino gaming on Native
American-owned lands throughout California, Washington and Oregon, from where it
is estimated the Reno market drew in excess of 67% of its visitors in 1998.
Furthermore, since the 1980's, legalized gaming opportunities have proliferated
throughout the United States, and the Company now competes with pari-mutuel
wagering, state-sponsored lotteries, card clubs, bingo, off-track betting,
riverboat and other forms of legalized gaming.

         In November 1998, the California electorate approved Proposition 5, 
the California Indian Self-Reliance Initiative, to provide a model compact 
between the State of California and its Indian tribes, setting terms and 
conditions for gambling on tribal lands. Video gaming devices and card games 
are currently operated on a number of California reservations without the 
State approval required by law. If implemented, Proposition 5 would give all 
California Indian tribes the right to operate an unlimited number of certain 
kinds of gaming machines and conduct other forms of casino wagering on 
California reservations. In December 1998, the California Supreme Court 
blocked the enforcement of Proposition 5 pending the resolution of legal 
challenges to Proposition 5 which are currently before the Court. However, in 
December 1998, the United States Court of Appeals in San Francisco declined 
to enforce a federal injunction shutting down the gaming operations currently 
conducted on California reservations. Legal challenges to Proposition 5 may 
delay or prevent its implementation. However, if implemented, Proposition 5 
may negatively affect Nevada gaming markets, including Reno. The Company is 
unable at this time to determine the outcome of the litigation relating to 
Proposition 5 or to assess the impact on the Company's operations and those 
of Silver Legacy if Proposition 5 is eventually implemented.

         Riverboat, dockside or land-based casino gaming is currently legal 
in 16 states and casino gaming on Native American-owned land is legal in at 
least 24 states, including California, Washington, and Oregon. In addition, 
California (from which the Reno market drew approximately 50% of its 
visitors, and whose residence contributed a significant portion of the 
Company's revenues, in 1998) allows other non-casino style gaming, including 
pari-mutuel wagering, state-sponsored lottery, card clubs, bingo, and 
off-track betting. The Company believes that the expansion of casino gaming 
on Native American lands in California, and to a lesser extent in Washington 
and Oregon, could have a material adverse affect on the Company's operations. 
Furthermore, while the Company believes that the continued spread of 
legalized gaming may in the future present the Company with opportunities for 
expansion (subject to available financing), increased legalized gaming in 
other states, particularly in areas close to Nevada, such as California, 
Washington, and Oregon, could adversely affect the Company's operations.

NEVADA REGULATION AND LICENSING

         The ownership and operation of casino gaming facilities in Nevada are
subject to the Nevada Gaming Control Act (the "Nevada Act") and regulations
promulgated there under as well as various local regulations. The Company's
gaming operations are subject to the licensing and regulatory control of the
Nevada Gaming Commission (the "Nevada Commission"), the Nevada State Gaming
Control Board (the "Nevada Board") and various local and governmental
authorities (collectively with the Nevada Commission and the Nevada Board, the
"Nevada Gaming Authorities"). The laws, regulations and supervisory procedures
of the Nevada Gaming Authorities are based upon declarations of public policy
which seek to, among other things, (i) prevent unsavory or unsuitable persons
from having any direct or indirect involvement with gaming at any time or in any
capacity, (ii) establish and maintain responsible accounting practices and
procedures, (iii) maintain effective control over the financial practices of
licensees, including establishing minimum procedures for internal fiscal affairs
and the safeguarding of assets and revenues, providing reliable recordkeeping
and requiring the filing of periodic reports with the Nevada Gaming Authorities,
(iv) prevent cheating and fraudulent practices and (v) provide a source of state
and local revenues through taxation and licensing fees. Changes in such laws,
regulations and procedures could have an adverse effect on the Company's gaming
operations.


                                      9
<PAGE>


         Resorts, which operates the Eldorado, is licensed by the Nevada Gaming
Authorities and is a corporate licensee (a "Corporate Licensee") under the terms
of the Nevada Act. The gaming license requires the periodic payment of fees and
taxes and is not transferable. Resorts and Capital each is registered by the
Nevada Commission as a publicly traded corporation (a "Registered Corporation").
Registered Corporations are required periodically to submit detailed financial
and operating reports to the Nevada Commission and furnish any other information
that the Nevada Commission may request. No person may become a member of, or
receive any percentage of the profits from, the Company without first obtaining
licenses and approvals from the Nevada Gaming Authorities. All of the members of
Resorts have obtained the licenses and approvals necessary to own their
respective interests in the Company. The Company has obtained from the Nevada
Gaming Authorities the various registrations, approvals, permits and licenses
required in order to engage in gaming activities at the Eldorado.

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

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

         The Company is required to submit detailed financial and operating
reports to the Nevada Commission. Substantially all material loans, leases,
sales of securities and similar financing transactions by the Company must be
reported to, or approved by, the Nevada Commission.

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

         The Nevada Commission may, in its discretion, require the holder of any
debt security of the Company, including the 10 1/2% Senior Subordinated Notes
due 2006 of Resorts and Capital, to file applications, be investigated and be
found suitable to own such debt security. If the Nevada Commission determines
that a person is unsuitable to own such security, then pursuant to the Nevada
Act, the Company can be sanctioned, including the loss of its licenses, if
without the prior approval of the Nevada Commission, it: (i) pays to the
unsuitable person any dividend, interest or any distribution whatsoever, (ii)
recognizes any voting right by such unsuitable person in connection with such
securities, (iii) pays the unsuitable person remuneration in any form or (iv)
makes any payment to the unsuitable person by way of principal, redemption,
conversion, exchange, liquidation or similar transaction.

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

         The Nevada Act requires any person who acquires beneficial ownership of
more than 5% of a Registered Corporation's voting securities to report the
acquisition to the Nevada Commission. The Nevada Act requires that beneficial
owners of more than 10% of a Registered Corporation's voting securities apply to
the Nevada Commission for a finding of suitability within 30 days after the
Chairman of the Nevada Gaming Board mails the written notice requiring such
filing. Under certain circumstances, an "institutional investor," as defined in
the Nevada Act, which acquires more than 10%, but not more than 15%, of a
Registered Corporation's voting securities may apply to the

                                     10
<PAGE>


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

         Any person who fails or refuses to apply for a finding of suitability
or a license within 30 days after being ordered to do so by the Nevada
Commission or the Chairman of the Nevada Board may be found unsuitable. The same
restrictions apply to a record owner of the Company's securities if the record
owner, after request, fails to identify the beneficial owner of such securities.
Any shareholder found unsuitable and who holds, directly or indirectly, any
beneficial ownership of the voting securities of a Registered Corporation beyond
such period of time as may be prescribed by the Nevada Commission may be guilty
of a criminal offense. A Registered Corporation is subject to disciplinary
action if, after it receives notice that a person is unsuitable to be a member
of or to have any other relationship with such corporation, the Registered
Corporation (i) pays that person any dividend or interest upon voting securities
of such corporation, (ii) allows that person to exercise, directly or
indirectly, any voting right conferred through securities held by that person,
(iii) pays remuneration in any form to that person for services rendered or
otherwise or (iv) fails to pursue all lawful efforts to require such unsuitable
person to relinquish his voting securities, including, if necessary, the
immediate purchase of such voting securities for cash at fair market value.

         A Registered Corporation is required to maintain a current stock ledger
in Nevada which may be examined by the Nevada Gaming Authorities at any time. If
any securities are held in trust by an agent or by a nominee, the record holder
may be required to disclose the identity of the beneficial owner to the Nevada
Gaming Authorities. A failure to make such disclosure may be grounds for finding
the record holder unsuitable. A Registered Corporation is also required to
render maximum assistance in determining the identity of the beneficial owner.
The Nevada Commission has the power to require the stock certificates of a
Registered Corporation to bear a legend indicating that the securities are
subject to the Nevada Act.

         Neither the Company nor a Registered Corporation may make a public
offering of its securities without the prior approval of the Nevada Commission
if the securities or proceeds therefrom are intended to be used to construct,
acquire or finance gaming facilities in Nevada or to retire or extend
obligations incurred for such purposes. Such approval, if given, does not
constitute a finding, recommendation or approval by the Nevada Commission or the
Nevada Board as to the accuracy or adequacy of the prospectus or the investment
merits of the securities. Any representation to the contrary is unlawful.

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

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

                                      11
<PAGE>



         License fees and taxes, computed in various ways depending on the type
of gaming or activity involved, are payable to the State of Nevada and to the
counties and cities in which the Nevada licensee's respective operations are
conducted. Depending upon the particular fee or tax involved, these fees and
taxes are payable either monthly, quarterly or annually and are based upon
either: (i) a percentage of the gross revenues received, (ii) the number of
gaming devices operated or (iii) the number of table games operated. A casino
entertainment tax is also paid by casino operations where entertainment is
furnished in connection with the selling of food or refreshments.

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


NATIONAL GAMBLING COMMISSION

         A National Gambling Impact Study Commission (the "National Commission")
has been established by the United States Congress to conduct a comprehensive
legal and factual study of the social and economic impact of gaming in the
United States. The National Commission is required by the enabling legislation
to issue a comprehensive report containing its findings and conclusions,
together with any recommendations of the National Commission for legislation and
administrative actions, within two years after the date on which it held its
first meeting, which occurred on June 20, 1997. Any recommendations which may be
made by the National Commission could result in the enactment of new laws and/or
the adoption of new regulations which could adversely impact the gaming industry
in general and the Company in particular. The Company is unable at this time to
determine what recommendations, if any, the National Commission will make, or
the ultimate disposition of any recommendations the National Commission may
make.


ENVIRONMENTAL MATTERS

         As is the case with any owner or operator of real property, the Company
is subject to a variety of federal, state and local governmental regulations
relating to the use, storage, discharge, emission and disposal of hazardous
materials. Federal, state and local environmental laws and regulations also
impose liability on potentially responsible parties, including the owners or
operators of real property, to clean up, or contribute to the cost of cleaning
up, sites at which hazardous wastes or materials were disposed of or released.
The Company does not have environmental liability insurance to cover such
events.

         Certain of the Company's properties and former properties, including
the Silver Legacy property, had or have varying degrees of petroleum
contamination in the soil and/or groundwater. In each instance where such
petroleum contamination has been identified, investigation or remediation
activities have been undertaken or are ongoing. The possibility exists that
additional contamination, as yet unknown, may exist at these or other of the
Company's properties. In addition, under the terms of an Environmental
Indemnity, dated May 30, 1995 (the "Environmental Indemnity"), the Company has
agreed jointly and severally with Circus Circus to indemnify, defend and hold
harmless the agents and lenders under the Silver Legacy Joint Venture's bank
credit facility from and against any and all Environmental Losses (as defined in
the Environmental Indemnity) suffered or incurred on the premises of the Silver
Legacy or arising through the ownership, use, occupancy or operation thereof.
Generally, liability under the Environmental Indemnity covers the period prior
to the date the lenders foreclose on and take possession of the real property
securing their loans to the Silver Legacy Joint Venture. The agents and lenders
are not required to seek payments from the Silver Legacy Joint Venture before
pursuing payments from the Company and Circus Circus for Environmental Losses.
In all cases, the Company believes that the contamination arose from activities
of prior owners or occupants, or from offsite sources and not as a result of any
actions or operations conducted by the Company.

           In 1998 the Silver Legacy received reimbursement and indemnification
from Chevron Company USA of $750,000 for petroleum contamination identified on
the Silver Legacy property. The possibility exists that other responsible
parties may be identified for this or other sites, and the Company will
determine whether to seek contribution or reimbursement from such parties. In
addition, reimbursement for some of the expenditures has been, 


                                     12
<PAGE>


and further reimbursement may be, obtained from the State of Nevada Petroleum 
Fund which has been established to reimburse parties for costs incurred in 
clean-up of underground storage tank related contamination.

         The Company's properties and former properties also lie within the
proposed Central Truckee Meadows Remediation District, encompassing much of the
City of Reno, which will address groundwater contaminated with solvents as
identified by the Nevada Division of Environmental Protection. The Company does
not believe that it has contributed to this solvent contamination. The Company
has not been required to conduct any remediation or investigation of this matter
nor to contribute toward any costs associated therewith. However, the
possibility remains that funding of the investigation or remediation of this
regional groundwater issue could result in a special assessment on the Company's
properties or former properties among others within the Remediation District.
The possibility exists that the entire area of contamination, or a portion
thereof, could be listed under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980.

         Asbestos has been determined to be present in the sheetrock of
approximately 400 of the Eldorado's older hotel rooms. Removal of the asbestos
will be required only in the event of the demolition of the affected rooms or if
the asbestos is otherwise disturbed. Management currently has no plans to
renovate or demolish the affected rooms in a manner that would require removal
of the asbestos at this time.

         The Company has expended approximately $734,000 in connection with
environmental matters from January 1, 1993 through December 31, 1998, of which
approximately $9,000 was expended during 1998.


EMPLOYEES

         As of December 31, 1998, the Company had 2,456 employees, the 
substantial majority of whom are nonmanagement personnel. The number of 
people employed at any time is subject to seasonal fluctuation. None of the 
Company's employees is covered by a collective bargaining agreement. The 
Company believes that employee relations are excellent.


FORWARD LOOKING INFORMATION

         Certain information included in this report and other materials filed
or to be filed by the Company with the Securities and Exchange Commission (as
well as information included in oral statements or written statements made or to
be made by the Company) contains statements that are forward-looking within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such statements include
information relating to plans for future expansion and other business
development activities as well as other capital spending, financing sources and
the effects of regulation (including gaming and tax regulation) and competition.
Such forward-looking information involves important risk and uncertainties that
could significantly affect anticipated results in the future and, accordingly,
such results may differ from those expressed in any forward-looking statements
made by or on behalf of the Company. These risk and uncertainties include, but
are not limited to, those relating to development and construction activities,
dependence on existing management, leverage and debt service (including
sensitivity to fluctuations in interest rates), domestic or global economic
conditions, changes in Federal or state tax laws or the administration of such
laws, changes in gaming laws or regulations (including the legalization of
gaming in certain jurisdictions) and applications for licenses and approvals
under applicable laws and regulations (including gaming laws and regulations).


ITEM 2.  PROPERTIES.

         The Company's executive offices reside inside the Eldorado, which is
located on an approximately 159,000 square foot parcel at 345 North Virginia
Street, Reno, Nevada. The Company owns the entire parcel, except for
approximately 30,000 square feet which is leased by the Company from C, S and Y
Associates, a general partnership of which Donald Carano is a general partner.
See "Compensation Committee Interlocks and Insider Participation" in Item 11 of
this Report. The lease expires on June 30, 2027. Annual rent is equal to the
greater of (i) $400,000 and (ii) an amount based on a decreasing percentage of
the Eldorado's gross gaming revenues ranging from 3.0% of the first $6.5 million
of gross gaming revenues to 0.1% of gross gaming revenues in excess of $75.0
million. Rent in 1998 totaled $654,000. Substantially all of the Company's real
property, including the Eldorado, is subject to encumbrances securing the
repayment of the Company's $50 million revolving credit facility (the "Credit
Facility"). The amount of credit available pursuant to the Credit Facility
reduced to approximately $40.6 million on December 31, 1998 and, by its terms,
the facility reduces by an additional $1,562,500 at the end of each subsequent
quarter until July 31, 2001, when it terminates and any balance then outstanding
becomes due and payable. At December 31, 1998, the indebtedness outstanding
under the Credit Facility was $20.0 million. The Credit Facility is secured by a
first deed of trust and


                                      13

<PAGE>


security interest in all real property interests and fixtures underlying the 
Eldorado, certain parking facilities, a second deed of trust on the 31,000 
square foot property located across the street from the Eldorado, all related 
personal property, substantially all other assets of the Company and a pledge 
of the Company's interest in ELLC. In addition, Capital has guaranteed the 
Company's obligations under the Credit Facility.

         The Company owns a 35,000 square foot parcel of land located at 444 
North Center Street, Reno, Nevada, on which the Company's human resources 
offices are located, and owns approximately 90 acres of land located in 
Verdi, Nevada. The Credit Facility is secured by a first deed of trust and 
security interest in all real property interests and fixtures relating to the 
land located in Verdi, Nevada and the land located at 444 North Center Street.

         The Company owns a 31,000 square foot parcel of property across the
street from and west of the Eldorado, which could be used for expansion of the
Eldorado. As of December 31, 1998, this parcel was subject to an encumbrance
securing the repayment of indebtedness of $2,294,000, in addition to the
aforementioned second deed of trust securing the Company's interest under the
Credit Facility.

         The Company and Circus Circus each own a one-half interest in a 63,000
square foot parcel of land across the street from the Silver Legacy. At December
31, 1998, this parcel was subject to an encumbrance securing the repayment of
indebtedness of $893,000. Circus Circus reimburses the Eldorado on a quarterly
basis for one half the total principal and interest payments relating to this
indebtedness.

         The Company's 96% owned subsidiary, ELLC, owns a 50% joint venture
interest in the Silver Legacy, a major themed hotel/casino located adjacent to
the Eldorado. Reference is made to the information appearing under the heading
"Silver Legacy Resort Casino" in Item 1 of this Report, which information is
hereby incorporated in this Item 2 by this reference.


ITEM 3.  LEGAL PROCEEDINGS.

         The Company from time to time is involved in litigation arising in the
ordinary course of its business. The Company does not believe that such
litigation to which the Company or any subsidiary of the Company is a party or
of which any of their property is the subject will, individually or in the
aggregate, have a material adverse effect on the Company's financial position or
the results of its operations.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         Not applicable.


PART II

ITEM 5.   MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         There is no established public trading market for the Company's 
outstanding membership interests which were owned of record by three entities 
and two individuals as of December 31, 1998. See Item 12 of this Report for 
additional information concerning the ownership of Resorts' membership 
interests. As a limited liability company, Resorts is not (and its 
predecessor, the Predecessor Partnership, was not) subject to Federal income 
tax liability. Because the Company's holders of membership interests are (and 
the Predecessor Partnership's partners were) required to include their 
respective shares of Resorts or the Predecessor Partnership's taxable income 
in their individual income tax returns, Resorts and the Predecessor 
Partnership have made distributions to their members and partners to cover 
such tax liabilities. Distributions for 1998 were, and distributions for 
subsequent years will be, limited in accordance with the provisions of the 
Operating Agreement of Eldorado Resorts LLC dated as of June 28, 1996 (the 
"Operating Agreement"). The Operating Agreement provides that the Board of 
Managers will distribute each year to each member an amount equal to such 
member's allocable share of taxable income multiplied by the highest marginal 
combined Federal, state, and local income tax rate applicable to individuals 
for that year; provided that such distributions will not be made after any 
event that causes Resorts to thereafter be taxed under the Internal Revenue 
Code of 1986, as amended, as a corporation. Distributions of Resorts to its 
members aggregated $7 million and $11.4 million for 1997 and 1998, 
respectively, of which approximately $4.8 million in 1997 and $3.9 million in 
1998 was for income taxes.

                                     14


<PAGE>



ITEM 6.  SELECTED FINANCIAL DATA.

                                        SELECTED CONSOLIDATED FINANCIAL DATA
                                               (DOLLARS IN THOUSANDS)
                                              YEARS ENDED DECEMBER 31, 

<TABLE>
<CAPTION>

                                           1994            1995            1996            1997            1998
                                        ---------        --------        --------        --------        --------
<S>                                     <C>              <C>             <C>             <C>             <C>
CONSOLIDATED STATEMENT OF INCOME DATA:
Operating revenues:
     Casino...........................   $ 97,809        $106,737        $104,608        $104,513        $104,441
     Food and beverage................     31,137          33,265          34,061          36,529          37,938
     Hotel ...........................     16,837          17,200          16,784          17,769          18,142
     Entertainment....................        581             515             422           4,532           6,392
     Equity in net income (loss) of
      unconsolidated affiliate(1).....     --              (3,208)          1,758             390              --
     Other............................      4,316           4,908           7,120           7,093           6,698
     Less promotional allowances......    (12,482)        (13,895)        (14,102)        (14,545)        (15,296)
                                        ---------        --------        --------        --------        --------
             Net revenues.............    138,198         145,522         150,651         156,281         158,315

Operating expenses:
     Casino...........................     37,554          42,692          44,557          45,786          47,575
     Food and beverage................     22,047          25,359          25,412          27,576          28,321
     Hotel ...........................      6,554           7,536           7,219           7,387           7,611
     Entertainment....................        959           1,004             813           2,955           4,696
     Other............................      2,361           2,043           3,246           3,510           3,881
     Selling, general and                
       administrative(2)..............     27,509          28,335          29,237          30,566          29,745
     Depreciation.....................      7,325           8,166          10,361          12,478          13,718
     Abandonment loss(3)..............         --           1,862              --              --              --
                                        ---------        --------        --------        --------        --------
             Total Operating expenses.    104,309         116,997         120,845         130,258         135,547
                                        ---------        --------        --------        --------        --------
Operating income .....................     33,889          28,525          29,806          26,023          22,768
Interest expense, net.................     (3,254)         (5,336)        (10,935)        (13,694)        (13,151)
                                        ---------        --------        --------        --------        --------

Net income before minority interest...     30,635          23,189          18,871          12,329           9,617
Minority interest in net (income) loss
 of unconsolidated affiliate(4)......          --             745            (408)            (91)             --
                                        ---------        --------        --------        --------        --------
Net income(5).........................  $  30,635        $ 23,934        $ 18,463        $ 12,238        $  9,617
                                        ---------        --------        --------        --------        --------
                                        ---------        --------        --------        --------        --------

OTHER DATA:
EBITDA(6).............................   $ 41,214        $ 41,761        $ 38,409        $ 38,111        $ 36,486
Net cash provided by (used in):
     Operating activities.............     38,786          36,345          31,201          22,782          23,122
     Investing activities.............    (37,045)        (62,791)        (22,336)        (15,837)         (5,484)
     Financing activities.............     (1,205)         27,208          (9,202)         (6,361)        (15,920)
Capital expenditures..................     12,053          57,451          24,981          15,957           5,665

OPERATING DATA(7):
Number of hotel rooms(8)..............        783             817             817             815             816
Average hotel occupancy rate..........       93.7%           93.8%           93.6%           90.1%           92.8%
Casino square footage(8)..............     61,500          76,500          81,500          81,500          84,000
Number of slot machines(8)............      1,597           1,904           1,976           1,858           1,871
Number of table games(8)..............         71              84              89              79              79

                                                                              AT DECEMBER 31,  
                                      -----------------------------------------------------------------------------
                                          1994             1995           1996            1997            1998
                                        ---------        --------        --------        --------        --------
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents.............  $  5,360         $  6,122        $  5,785        $  6,369        $  8,087
Total assets..........................   160,384          215,592         234,293         238,627         231,258
Total debt............................    79,064          123,630         128,503         129,404         124,884
Members' equity (9)...................    69,634           74,768          84,031          89,269          87,486

</TABLE>
SEE FOOTNOTES TO SELECTED CONSOLIDATED FINANCIAL DATA WHICH APPEAR ON THE NEXT
PAGE.

                                      15


<PAGE>



            FOOTNOTES TO SELECTED CONSOLIDATED FINANCIAL DATA


(1)  Equity in net income (loss) of unconsolidated affiliate represents ELLC's
     50% joint venture interest in the Silver Legacy Joint Venture. The equity
     in net income (loss) of unconsolidated affiliate for the year ended
     December 31, 1995, includes the impact of ELLC's share of the $9.9 million
     of pre-opening expenses that were incurred by the Silver Legacy Joint
     Venture.

(2)  Resorts pays management fees to Recreational Enterprises, Inc. and Hotel
     Casino Management, Inc., the owners of 55% and 29% of Resorts' equity
     interests, respectively. The management fees paid to Recreational
     Enterprises, Inc. and Hotel Casino Management, Inc. are included in
     selling, general and administrative expenses and totaled $2.9 million, $1.8
     million and $1.8 million for the years ended December 31, 1996, 1997 and
     1998, respectively. Historically, the salaries of senior executive officers
     and certain other key employees of the Predecessor Partnership were not
     directly incurred by the Predecessor Partnership but were paid from a
     portion of the management fees paid to Recreational Enterprises, Inc. As of
     July 1, 1996, the aggregate annual salaries of such senior executive
     officers and other key employees became payroll obligations of Resorts.
     Resorts has entered into a Management Agreement with Recreational
     Enterprises, Inc. and Hotel Casino Management, Inc. providing that future
     management fees paid to Recreation Enterprises, Inc. and Hotel Casino
     Management, Inc. will not exceed 1.5% of Resorts' annual net revenues. As a
     result of the Management Agreement and Resorts' assumption of
     responsibility for the salaries of senior executive officers and other key
     employees previously paid by Recreational Enterprises, Inc. from its
     management fee, Resorts incurred such salaries and management fees for the
     years ended December 31, 1996, 1997 and 1998 of $4.6 million, $4.3 million
     and $3.9 million, respectively.

(3)  Abandonment loss equals the net book value of property disposed of as a
     result of the expansion of the Eldorado and represents the undepreciated
     value of such property.

(4)  Minority interest in net (income) loss of unconsolidated affiliate
     represented the 23% minority interest partners' share of ELLC's 50% joint
     venture interest in the Silver Legacy Joint Venture. The minority interest
     in ELLC is owned by Resorts' equityholders. In June 1998, ELLC completed a
     recapitalization, effective June 30, 1997, decreasing minority interest in
     net (income) loss of unconsolidated affiliate to 4%.

(5)  As a limited liability company, Resorts is not (and its predecessor
     Partnership, was not) subject to Federal income tax liability. Because the
     Company's holders of membership interests are (and the Predecessor
     Partnership's partners were) required to include their respective shares of
     Resorts or the Predecessor Partnership's taxable income in their individual
     income tax returns, Resorts and the Predecessor Partnership have made
     distributions to their members and partners to cover such liabilities.

(6)  EBITDA is defined as earnings before interest, taxes, depreciation and
     amortization. For the year ended December 31, 1995, EBITDA was adjusted to
     exclude ELLC's equity in net income (loss) of its unconsolidated affiliate
     of ($3.2) million and abandonment loss of $1.9 million. For the year ended
     December 31, 1996, EBITDA was adjusted to exclude ELLC's equity in net
     income of its unconsolidated affiliate of $1.8 million. For the year ended
     December 31, 1997, EBITDA was adjusted to exclude ELLC's equity in net
     income of its unconsolidated affiliate of $0.4 million. EBITDA as presented
     may not be comparable to EBITDA of other entities as other entities may not
     calculate EBITDA in the same manner. EBITDA should not be construed as an
     alternative to operating income or net income (as determined in accordance
     with generally accepted accounting principles) as an indicator of the
     Company's operating performance, or as an alternative to cash flows
     generated by operating, investing and financing activities (as determined
     in accordance with generally accepted accounting principles) as an
     indicator of cash flows or a measure of liquidity. EBITDA is presented
     solely as supplemental disclosure because management believes that it is a
     widely used measure of operating performance in the gaming industry.

(7)  Excludes the operating data of the Silver Legacy.

(8)  As of the end of each period presented.

(9)  Effective upon consummation of the Reorganization, partners' equity was
     reclassified as members' equity.

                                    16
<PAGE>



ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
         AND RESULTS OF OPERATIONS.

GENERAL

         Eldorado Resorts LLC ("Resorts") was formed in June 1996 to be the 
successor to Eldorado Hotel Associates Limited Partnership (the "Predecessor 
Partnership") pursuant to an exchange of all the outstanding partnership 
interests in the Predecessor Partnership for membership interests in Resorts 
(the "Reorganization"). The Reorganization was effective on July 1, 1996. 
Resorts owns and operates the Eldorado Hotel & Casino (the "Eldorado"), a 
premier hotel/casino and entertainment facility in Reno, Nevada. In addition 
to owning the Eldorado, Resorts' majority owned subsidiary, Eldorado Limited 
Liability Company, a Nevada limited liability Company ("ELLC"), owns a 50% 
interest in a joint venture (the "Silver Legacy Joint Venture") which owns 
the Silver Legacy Resort Casino (the "Silver Legacy"), a major, themed 
hotel/casino located adjacent to the Eldorado. In June 1998, ELLC completed a 
recapitalization, retroactive to June 30, 1997, converting a note receivable 
and accrued interest thereon into equity, increasing Resorts' interest in 
ELLC from approximately 77% to approximately 96%. Resorts, ELLC and Eldorado 
Capital Corp. ("Capital"), a wholly-owned subsidiary of Resorts, which holds 
no significant assets and conducts no business activity, are collectively 
referred to as the "Company."

         The Company accounts for its investment in the Silver Legacy Joint
Venture utilizing the equity method of accounting. The Company's consolidated
net income includes its proportional share of the Silver Legacy Joint Venture's
net income (loss) before taxes as determined in accordance with the terms of the
Silver Legacy Joint Venture's joint venture agreement (the "Joint Venture
Agreement"). See Note 8 of the Notes to the Consolidated Financial Statements
included in this Report.

         The following discussion of the Company's operations relates to the
Eldorado except as otherwise indicated.



YEAR ENDED DECEMBER 31, 1998 COMPARED TO
YEAR ENDED DECEMBER 31, 1997

NET REVENUES

         Net revenues increased by approximately $2.0 million to $158.3 million
for the year ended December 31, 1998 compared to $156.3 million for the year
ended December 31, 1997. The increase in net revenues resulted from increases in
hotel revenues, food and beverage and entertainment revenues. Net revenues
increased notwithstanding the fact that the Company did not recognize income
from its unconsolidated affiliate, the Silver Legacy Joint Venture, as compared
to recognition of $0.4 million of income from the Silver Legacy Joint Venture
for the year ended December 31, 1997, as the result of a priority allocation to
Galleon, Inc. pursuant to the Joint Venture Agreement. See Note 8 of the Notes
to the Consolidated Financial Statements included in this Report.

         Casino revenues remained essentially unchanged at $104.4 million for
the year ended December 31, 1998 compared to $104.5 million in 1997.

         Food and beverage revenues were $37.9 million for the year ended 
December 31, 1998 compared to $36.5 million in 1997, an increase of 3.9%. The 
increase is primarily a result of a slight increase in restaurant customer 
counts and an increase in the average check.

         Hotel revenues increased slightly to $18.1 million for the year ended
December 31, 1998 from $17.8 million for the year ended December 31, 1997, an
increase of 2.1%. The increase is primarily a result of an increase in the
Company's hotel occupancy rate for the year ended December 31, 1998 to
approximately 93% from 90% in 1997. The Company's average daily rate ("ADR") was
comparable at approximately $60 for the years ended December 31, 1998 and 1997.

         Entertainment revenues increased by approximately 41% or $1.9 million
to $6.4 million for the year ended December 31, 1998 compared to $4.5 million in
1997. The increase was primarily due to the Eldorado's Showroom which had a full
year of operations in 1998 as compared to eight months in 1997.

         Other revenues decreased by approximately $0.4 million or 5.6%, to $6.7
million for year ended December 31, 1998 as compared to $7.1 million in 1997 as
a result of lower parking and retail revenue.

                                     17
<PAGE>


         Promotional allowances, expressed as a percentage of casino revenues 
increased to 14.7% in 1998 as compared to 13.9% in 1997. The increase is due 
to increased use of complimentaries to all levels of casino patrons and an 
increase in promotions related to the Eldorado Showroom.


OPERATING EXPENSES

         The Company's operating expenses increased by 4.1% to $135.5 million
for the year ended December 31, 1998 from $130.3 million for the year ended
December 31, 1997. This increase is mainly attributable to increased casino,
food and beverage, entertainment and depreciation expenses.

         Casino expenses increased by 3.9% to $47.6 million for the year ended
December 31, 1998 from $45.8 million for the year ended December 31, 1997. The
increase is attributable to increased slot, entertainment and bus program
promotional expenses, in addition to increased expenses related to a new poker
room which opened in May 1998.

         Food and beverage expenses increased by approximately $0.7 million, or
2.7% to $28.3 million for the year ended December 31, 1998 from $27.6 million
for the year ended December 31, 1997 primarily due to slight increases in cost
of sales and payroll expenses.

         Entertainment expenses increased approximately $1.7 million to $4.7
million for the year ended December 31, 1998 from $3.0 million for the year
ended December 31, 1997. The increase was primarily due to additional months of
operation of Eldorado's Showroom in 1998 as compared to 1997.

         Hotel expenses increased slightly by 3.0% or $0.2 million to $7.6
million for the year ended December 31, 1998 from $7.4 million for the year
ended December 31, 1997 due to a slight increase in payroll and amenity
expenses.


SELLING, GENERAL AND ADMINISTRATIVE EXPENSES AND MANAGEMENT FEES

         Selling, general and administrative expenses and management fees
decreased by 2.7% to $29.7 million for the year ended December 31, 1998 from
$30.6 million during the same period in 1997. The decrease was primarily due to
a decrease in the employee bonuses for the year ended December 31, 1998 as
compared to 1997.


DEPRECIATION

         Depreciation for the year ended December 31, 1998 was $13.7 million
compared to $12.5 million for the year ended December 31, 1997, an increase of
9.9%. The increase was primarily attributable to the opening of the Eldorado
Showroom in May 1997 and casino and hotel refurbishments completed during the
first quarter of 1998.


INTEREST EXPENSE, NET

         Interest expense, net of capitalized interest and interest income,
decreased slightly to $13.2 million for the year ended December 31, 1998
compared to $13.7 million for the year ended December 31, 1997. Interest expense
decreased as a result of a decrease in the average outstanding borrowings during
1998 as compared to 1997. The Company capitalized interest of approximately
$72,000 for the year ended December 31, 1998 compared to $256,000 during 1997.


NET INCOME

         As a result of the factors described above, net income for the year
ended December 31, 1998 declined by 21.4% to $9.6 million compared to a net
income of $12.2 million in 1997.


YEAR ENDED DECEMBER 31, 1997 COMPARED TO
YEAR ENDED DECEMBER 31, 1996

NET REVENUES

         Net revenues were $156.3 million for the year ended December 31, 1997,
compared to $150.7 million in 1996, an increase of 3.7%, despite a January 1997
flood in Reno, which negatively impacted traffic during the month. The 


                                  18
<PAGE>


increase in net revenues resulted from increased hotel revenues and food, 
beverage and entertainment revenues, due in part to an influx of visitors in 
the Reno market attending the WIBC National Championship Bowling Tournament 
held from March through July 1997. Net revenues increased notwithstanding the 
fact that the Company only recognized income from its unconsolidated 
affiliate, the Silver Legacy Joint Venture, during the first quarter of 1997, 
as the result of a priority allocation to Galleon, Inc. pursuant to the Joint 
Venture Agreement. See Note 8 of the Notes to the Consolidated Financial 
Statements included in this Report. The Company recognized income from its 
unconsolidated affiliate from January 1, 1997 through May 1, 1997, after 
clarification of the Joint Venture Agreement. Net revenues for the year ended 
December 31, 1997 include $0.4 million of income from its unconsolidated 
affiliate as compared to $1.8 million for the year ended December 31, 1996.

         Casino revenues remained essentially unchanged at $104.5 million for
the year ended December 31, 1997 compared to $104.6 million in 1996.

         Food, beverage and entertainment revenues were $41.1 million for the
year ended December 31, 1997 compared to $34.5 million in 1996, an increase of
19.1%. The increase in food, beverage and entertainment revenues was due
primarily to the opening of THE BISTRO ROXY in December 1996 and the ELDORADO
SHOWROOM which opened in May 1997.

         Hotel revenues increased to $17.8 million for the year ended December
31, 1997 from $16.8 million for the year ended December 31, 1996, an increase of
5.9%, despite a decrease in the Company's hotel occupancy rate for the year
ended December 31, 1997 to approximately 90.1% from 93.6% in 1996. Such decrease
in the hotel occupancy rate was due primarily to the flood in January 1997. The
revenue increase is a result of an increase in the Company's average daily rate
("ADR") by approximately $5 in 1997 compared with 1996. The influx of visitors
attending the WIBC National Championship Bowling Tournament was a factor
contributing to this increase in ADR.

         Other revenues for the year ended December 31, 1997 and 1996 were
comparable at $7.1 million. Included in the 1996 amount is a $0.5 million gain
on the sale of land during the second quarter of 1996, which was primarily
offset by increased revenues in the Company's retail shops in 1997.

         Promotional allowances, expressed as a percentage of casino revenues,
increased to 13.9% in 1997 as compared to 13.5% in 1996. The increase is due to
increased use of complimentaries to all levels of casino patrons including those
participating in the WIBC National Championship Bowling Tournament.


OPERATING EXPENSE

         The Company's operating expenses increased by 7.8% to $130.3 million
for the year ended December 31, 1997 from $120.8 million for the year ended
December 31, 1996. This increase is attributable to increased expenses in the
casino, food, beverage and entertainment departments, depreciation and an
increase in selling, general and administrative expenses.

         Casino expenses increased by 2.8% to $45.8 million for the year ended
December 31, 1997 from $44.6 million for the year ended December 31, 1996. The
increase was due to the opening, during the second quarter of 1996, of a
satellite race and sports book operated by the Eldorado at the Silver Legacy, in
addition to increased promotional expense related to the WIBC bowling tournament
and bus programs.

         Food, beverage and entertainment expenses increased 16.4% to $30.5
million for the year ended December 31, 1997 from $26.2 million for the year
ended December 31, 1996. The increase is due primarily to the addition of THE
BISTRO ROXY which opened in December 1996 and the ELDORADO SHOWROOM which opened
in May 1997.

         Hotel expenses increased slightly to $7.4 million for the year ended
December 31, 1997 from $7.2 million for the year ended December 31, 1996, an
increase of 2.3%, reflecting a slight increase in payroll and marketing
expenditures despite a decrease in hotel occupancy.


SELLING, GENERAL AND ADMINISTRATIVE EXPENSES AND MANAGEMENT FEES

         Selling, general and administrative expenses and management fees 
increased by 4.6% for the year ended December 31, 1997 to $30.6 million from 
$29.2 million for the year ended December 31, 1996. The increase was 
partially attributable to increased expenditures in advertising, property 
maintenance and public area housekeeping in 1997. Historically, the salaries 
of senior executive officers and certain other key 

                                     19

<PAGE>


employees of the Company were not directly incurred by the Company but were 
paid from a portion of the management fees paid to Recreational Enterprises, 
Inc., Resorts' controlling member. As of July 1, 1996, the aggregate annual 
salaries of such senior executive officers and other key employees became 
payroll obligations of the Company. These obligations and the aforementioned 
management fees are included within selling, general and administrative 
expenses.

DEPRECIATION

         Depreciation for the year ended December 31, 1997 was $12.5 million
compared to $10.4 million for the year ended December 31, 1996, an increase of
20.4%. The increase was attributable to the depreciation of THE BISTRO ROXY and
the ELDORADO SHOWROOM, which were not in service in the prior period, and the
DANIEL'S MOTOR Lodge, which was in service for only a portion of the prior
period.


INTEREST EXPENSE, NET

         Interest expense, net of capitalized interest and interest income, for
the years ended December 31, 1997 and 1996 was $13.7 million and $10.9 million,
respectively, an increase of 25.2%. Interest expense increased as a result of an
increase in the average outstanding borrowings in 1997, as compared to 1996, and
as a result of an increase in the Company's cost of capital in 1997. This
increase in average outstanding borrowings is attributable to costs incurred in
connection with the Company's expansion activities in 1996 and 1997. The
Company's increase in cost of capital is due to the issuance in July 1996 of
$100 million principal amount of 10 1/2% Notes, the net proceeds of which were
used to repay approximately $96.5 million of borrowings outstanding under the
Company's Credit Facility (as defined below), which as of July 31, 1996 bore
interest at an average annual rate of 7.5%. The Company capitalized interest of
$0.3 million for the year ended December 31, 1997 related to construction costs,
as compared to $0.4 million for the year ended December 31, 1996.


NET INCOME

         As a result of the factors described above, net income in net income
for the year ended December 31, 1997, declined by 33.7% to $12.2 million
compared to $18.5 million for the year ended December 31, 1996.


CORPORATE EXPENSES/MANAGEMENT FEES

         The Company pays management fees to Recreational Enterprises, Inc. 
and Hotel Casino Management, Inc., the owners of 55% and 29% of the Company's 
equity interests, respectively. The management fees paid to Recreational 
Enterprises, Inc. and Hotel Casino Management, Inc. are included in selling, 
general and administrative expenses and totaled $2.9 million, $1.8 million 
and $1.8 million for the years ended December 31, 1996, 1997 and 1998, 
respectively. Historically, the salaries of senior executive officers and 
certain other key employees were not directly incurred but were paid from a 
portion of the management fees paid to Recreational Enterprises, Inc. As of 
July 1, 1996, the aggregate annual salaries of such senior executive officers 
and other key employees have become payroll obligations of the Company and 
the Company entered into a Management Agreement with Recreational 
Enterprises, Inc. and Hotel Casino Management, Inc. providing that future 
management fees paid to Recreational Enterprises, Inc. and Hotel Casino 
Management, Inc. will not exceed 1.5% of the Company's annual net revenues. 
As a result of the Management Agreement and the Company's assumption of 
responsibility for the salaries of senior executive officers and other key 
employees previously paid by Recreational Enterprises, Inc. from its 
management fee, the Company incurred such salaries and management fees for 
the years ended December 31, 1996, 1997 and 1998 of $4.6 million, $4.3 
million and $3.9 million, respectively.

SEASONALITY

         Hotel/casino operations in the Reno market are subject to seasonal
variation, with the strongest operating results occurring in the third quarter
of each year and the weakest results occurring during the period from November
through February. Such variations occur when weather conditions have made travel
to Reno by visitors from northern California and the Pacific Northwest
difficult. The following table shows the Company's percentage of gross revenues
by quarter for each of 1996, 1997 and 1998.


                                      20
<PAGE>


<TABLE>
<CAPTION>


                                   1996       1997      1998
                                   ----       ----      ----
            <S>                   <C>        <C>      <C>
            First quarter......    21.8%      21.8%    21.3%
            Second quarter.....    25.4%      26.3%    26.0%
            Third quarter......    29.0%      28.3%    27.7%
            Fourth quarter.....    23.8%      23.6%    25.0%
                                  ------      -----    -----
                 Total.........   100.0%     100.0%   100.0%
</TABLE>


LIQUIDITY AND CAPITAL RESOURCES

        The Company's primary sources of liquidity and capital resources have
been through cash flow from operations, borrowings under various credit
agreements and the issuance in July 1996 of $100 million in aggregate principal
amount of 10 1/2% Notes. Since 1996, the Company has completed several expansion
and remodeling projects, accounting for a significant use of cash flow from
operations and borrowed funds. The Company's earnings before interest, taxes,
depreciation and amortization as adjusted to exclude equity in net income of its
unconsolidated affiliate was $36.5 million for the year ended December 31, 1998,
as compared to $38.1 million during the same period in 1997. Net cash provided
by operating activities was $23.1 million for the year ended December 31, 1998
compared to $22.8 million for the prior year.

        At December 31, 1998, the Company had $8.1 million of cash and cash
equivalents and $19.3 million available pursuant to its Credit Facility (as
defined below). The net proceeds of the offering (the "Offering") by the Company
and its wholly-owned subsidiary, Eldorado Capital Corp., of the 10 1/2% Notes
were used to repay a portion of the indebtedness under the Loan Agreement dated
as of March 25, 1994, (the "Former Credit Facility"), between the Company, the
banks named therein and Bank of America NT&SA, as administrative agent. The
Former Credit Facility was amended concurrently with the closing of the Offering
to provide the Company with a senior secured revolving credit facility in the
original amount of $50 million (as amended, the "Credit Facility"). The amount
of credit available pursuant to the Credit Facility reduced to approximately
$40.6 million on December 31, 1998 and, by its terms, the facility reduces by an
additional $1,562,500 as of the end of each subsequent quarter until July 31,
2001 when it terminates and any balance then outstanding becomes due and
payable.

         As of December 31, 1998, the Company had $100 million in aggregate
principal amount of 10 1/2% Notes outstanding, approximately $20 million
outstanding under the Credit Facility and $2.2 million of other long term debt
(net of current portion).

        The Operating Agreement of Resorts dated June 28, 1996 obligates Resorts
to distribute each year for as long as it is not taxed as a corporation to each
of its members an amount equal to such members allocable share of the taxable
income of Resorts multiplied by the highest marginal combined Federal, state and
local income tax rate applicable to individuals for that year. For the year
ended December, 1998, Resorts made distributions of $11.4 million to its members
as compared with distributions of $7.0 million during the same period in 1997.

        During the second quarter of 1998, ELLC completed a recapitalization
increasing Resorts' equity interest in ELLC to 96.19% from 76.76%. A $23,000,000
note receivable and accrued interest due from ELLC was converted into equity as
a contribution of capital. The capital contribution by Resorts diluted down the
equity interests of Recreational Enterprises, Inc., and Hotel Casino Management,
Inc., as they elected not to make proportionate capital contributions. The
recapitalization adjusted the capital balances as of June 30, 1997.

        During the year ended December 31, 1998, the Company's principal uses of
funds were capital expenditures related to the Company's hotel refurbishment of
$0.6 million, casino refurbishment of $0.7 million, signage and building facade
refurbishment of $0.5 million, construction of a new mezzanine slot area located
across from Brew Brothers, which opened in February 1998, of $0.7 million in
addition to recurring capital expenditures. Additionally, a portion of CHOICES
restaurant was enclosed and remodeled for approximately $0.2 million into a
78-seat Asian cuisine restaurant, the GOLDEN FORTUNE opened July 1998. Total
capital expenditures for the year ended December 31, 1998 were $5.7 million.

        The Company's future sources of liquidity are anticipated to be from its
operating cash flow, funds available from the Credit Facility and capital lease
financing for certain of its fixed asset purchases. The Company's anticipated
uses of cash in the near term will be for recurring capital expenditures and
debt service.

                                      21

<PAGE>



YEAR 2000 READINESS DISCLOSURE

BACKGROUND

         In the past, many computer software programs were written using two
digits rather than four to define the applicable year. As a result, information
technology such as date-sensitive computer software ("IT") as well as non-IT
systems such as equipment containing microcontrollers or other embedded
technology may recognize a date using "00" as the year 1900 rather than the year
2000 (the "Year 2000"). The inability of date-sensitive IT and non-IT systems
and equipment using two digits rather than four to differentiate between the
years 1900 and 2000 may cause such systems and equipment to fail or create
erroneous results at January 1, 2000 (a "Year 2000 Disruption").


RISK FACTORS

         There is worldwide concern that Year 2000 Disruptions could wreak havoc
on global economies, including the U.S. domestic economy. The extent of the
potential impact from Year 2000 Disruptions is not yet known, and may not be
adequately identified prior to the Year 2000. In the event of a significant
adverse impact on the global economies or on the U.S. domestic economy, the
Company may be materially and adversely impacted, even if its own IT and non-IT
systems and equipment are Year 2000 compliant.

         Date-sensitive IT and non-IT systems and equipment are utilized in
virtually all aspects of the hotel, casino and related operations at the
Eldorado and at the Company's 50% owned joint venture property, Silver Legacy.
While task forces have initiated programs at the Eldorado and Silver Legacy to
identify the date-sensitive IT and non-IT systems and equipment at these
properties and to take such actions as may be necessary to make such systems and
equipment Year 2000 compliant, a Year 2000 Disruption could occur in hotel,
casino and related IT and non-IT systems and equipment utilized at the Eldorado
and/or Silver Legacy due to a failure of such systems and equipment to be Year
2000 compliant. Depending on the severity and duration, any such Year 2000
Disruption could have a material adverse impact on the Company.

         In addition to the risks associated with a Year 2000 Disruption from
the failure of the IT and non-IT systems and equipment at the Eldorado and
Silver Legacy, the Company is exposed to the risk that one or more of the
suppliers of critical goods or services could experience a Year 2000 Disruption
that impacts the ability of such suppliers to provide all of the goods and
services required in the operation of the Eldorado and/or Silver Legacy. The
Company believes that the impact of such an interruption in the delivery of
goods would be limited due to the availability of alternative suppliers of the
essential goods utilized in the operations conducted at the Eldorado and Silver
Legacy, although no assurances can be given that a Year 2000 Disruption will not
materially disrupt the ability to secure delivery of such goods from any source.

         A Year 2000 Disruption of essential services to the Eldorado or Silver
Legacy, such as utilities or banking services, could, depending on the extent of
the disruption, have a material adverse impact on the Company. Because the
Eldorado and Silver Legacy obtain their utilities from the same providers that
serve all of the greater Reno area and there are no alternative sources from
which to obtain such services (other than limited-capacity generators for the
production of electricity during short-term emergency situations), a Year 2000
Disruption in the delivery of power, natural gas or water would most likely
impact all or a significant portion of the Reno area, including the Eldorado and
Silver Legacy, and would require that such properties be closed for the duration
of any extended interruption of such service. While an interruption in telephone
service might not require that the affected properties be closed, such an
interruption could, depending on the nature and duration of the interruption,
have a material adverse effect on operations at the Eldorado and Silver Legacy.

         The Company is exposed to the risk that a Year 2000 Disruption could
result in a significant interruption of banking services in the Reno area. A
significant number of the Eldorado's and Silver Legacy's customers depend on
credit card processing and automated teller machines to access cash or credit
during their visits to the Eldorado and Silver Legacy. In addition, the Eldorado
and Silver Legacy depend on a reliable source of cash to fund the day-to-day
casino operations at those properties. Accordingly, any interruption of banking
services could, depending upon the nature and duration of the interruption, have
a material adverse effect on operations at the Eldorado and Silver Legacy.

         The Company is also exposed to the risk that a Year 2000 Disruption
could result in a significant interruption of airline service to the Reno area.
The Company believes that a significant number of the Eldorado's and Silver
Legacy's customers (including hotel guests and walk-in customers at the casinos)
depend on the airlines for their travel to and from Reno. Accordingly, any such
interruption of airline service could, depending upon the extent of the
interruption, have a material adverse effect on operations at the Eldorado and
Silver Legacy.

                                       22
<PAGE>


APPROACH

         The Company has established a task force to coordinate its response to
the Year 2000. This task force includes the Company's Chief Financial Officer,
Manager of Internal Audit, the Director of Information Services as well as
support staff. An outside consultant was also engaged who assisted in
establishing a Year 2000 compliance program for the Company at the Eldorado.

         A separate task force has been established by the Silver Legacy Joint
Venture at the Silver Legacy to coordinate the response to the Year 2000 at that
property. This task force includes Silver Legacy's Director of Finance and
Administration and its Director of Information Services as well as support
staff.

         The Year 2000 compliance programs developed for the Eldorado and Silver
Legacy consist of the following phases:

         PHASE 1   Compilation of an inventory of IT and non-IT systems and
                   equipment that may cause a Year 2000 Disruption ("Critical
                   Systems and Equipment").

         PHASE 2   Identification and prioritization of the Critical Systems and
                   Equipment from the inventory compiled in Phase 1 and
                   inquiries of third parties with whom the Eldorado or Silver
                   Legacy does significant business (I.E., vendors and
                   suppliers) as to the state of their Year 2000 readiness.

         PHASE 3   Analysis of the identified Critical Systems and Equipment to
                   determine which systems and equipment are not Year 2000
                   compliant and evaluation of the costs to repair or replace
                   those systems and equipment.

         PHASE 4   Repair or replacement and testing of noncompliant Critical
                   Systems and Equipment and the testing of Critical Systems and
                   Equipment for which representation as to Year 2000 compliance
                   has not been received or for which representation has been
                   received but has not been confirmed.

         Neither the Eldorado nor Silver Legacy is currently planning to use any
independent verification and validation process to assure the reliability of
their risk and cost estimates. However, this position will continue to be
reevaluated as the Year 2000 compliance programs proceed at the Eldorado and
Silver Legacy.


STATUS

         Phases 1 and 2 are substantially complete at the Eldorado and Silver
Legacy but for the process of making inquiries of third parties as to their Year
2000 readiness, which is currently ongoing with respect to each property. All
initial inquiries to identified significant third party vendors and suppliers
have been completed by the Eldorado and Silver Legacy. To date neither the
Eldorado nor Silver Legacy has been advised by any significant third party
supplier of goods or services that it will not be fully Year 2000 compliant by
the Year 2000. The initial third party inquiries to the remaining third party
vendors and suppliers are expected to be completed by March 31, 1999.

         Phases 3 and 4 are ongoing at the Eldorado and Silver Legacy. September
30, 1999 has been established as the current target date to complete the Year
2000 compliance program at both properties. Based upon the analysis conducted to
date, the Company believes all of the Critical Systems and Equipment at the
Eldorado and Silver Legacy are either currently Year 2000 compliant or will be
Year 2000 compliant by September 30, 1999, although there can be no assurance as
to the ability to achieve full Year 2000 compliance at either property. The most
significant aspect of the Eldorado's Year 2000 compliance that has been
identified is the software modification of the property's casino system. The
most significant aspect of Silver Legacy's Year 2000 compliance that has been
identified is the replacement of that property's non-Year 2000 compliant
personal computers.


COSTS

         The total cost to the Company of making its systems at the Eldorado
Year 2000 compliant, including estimated costs of remediation or replacement and
testing, is currently estimated to be in the range of $800,000 to $1 million.
This current estimate includes the following: (i) $670,000 to $840,000 relating
to software modification, of which approximately $135,000 had been incurred at
December 31, 1998; and (ii) $130,000 to $160,000 to replace problem systems and
equipment, of which approximately $20,000 had been incurred at December 31,
1998. The replacement of problem systems and equipment costs will be capitalized
and depreciated over their expected useful lives. To the extent existing
hardware or software is replaced, the Company will recognize a loss currently
for the undepreciated balance. This loss is included in the above cost estimate.
Furthermore, all costs related to software modification, as well as all costs
associated with the Company's administration of its Year 2000 project, are being
expensed as incurred.

         The total cost to Silver Legacy of making the systems at that property
Year 2000 compliant, including estimated costs of remediation or replacement and
testing, is currently estimated to be in the range of $600,000 to $850,000, none
of which had been incurred at December 31, 1998. The current estimated cost
relating to Silver Legacy's software modification is $200,000 to $250,000. The
current estimated costs to replace Silver Legacy's problem systems and equipment
is $400,000 to $600,000. The replacement of problem systems and equipment costs
will be capitalized and depreciated over their expected useful

                                     23
<PAGE>


lives. To the extent existing hardware or software is replaced, the Silver 
Legacy will recognize a loss currently for the undepreciated balance. This 
loss is included in the above cost estimate. Furthermore, all costs related 
to software modification, as well as all costs associated with the Silver 
Legacy's administration of its Year 2000 project, are being expensed as 
incurred.

         The Company believes the most significant risk of a Year 2000
Disruption at the Eldorado or Silver Legacy is the loss of utilities at those
properties, particularly power or water, as to which a contingency plan is not
feasible. The Eldorado and Silver Legacy are in the initial stages of evaluating
various alternatives to other potential Year 2000 Disruptions that might occur
at the Eldorado or Silver Legacy.

         The source of funding of the costs incurred in connection with the Year
2000 compliance programs at the Eldorado and Silver Legacy is anticipated to be
the operating cash flows at the respective properties.

         There can be no assurance that as yet unidentified costs will not be
incurred in connection with the Year 2000 compliance program at the Eldorado or
at Silver Legacy or that the costs actually incurred to achieve full Year 2000
compliance at either property will not be materially higher than currently
estimated.


FORWARD-LOOKING STATEMENTS

        Certain information included in this report and other materials filed or
to be filed by the Company with the Securities and Exchange Commission (as well
as information included in oral statements or written statements made or to be
made by the Company) contains statements that are forward-looking within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such statements include
information relating to current expansion projects, plans for future expansion
projects and other business development activities as well as other capital
spending, financing sources, Year 2000 compliance and effects of regulation
(including gaming and tax regulation) and competition. Such forward-looking
information involves important risks and uncertainties that could significantly
affect anticipated results in the future and, accordingly, such results may
differ from those expressed in any forward-looking statements made by or on
behalf of the Company. These risks and uncertainties include, but are not
limited to dependence on existing management, leverage and debt service
(including sensitivity to fluctuations in interest rates), domestic or global
economic conditions, changes in Federal or state tax laws or the administration
of such laws, changes in gaming laws or regulations (including the legalization
of gaming in certain jurisdictions) those relating to any development and
construction activities and applications for licenses and approvals under
applicable laws and regulations (including gaming laws and regulations).


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         Not applicable.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         Reference is made to the report of independent public accountants and
the consolidated financial statements appearing on pages 39 through 55 of this
Report, which are incorporated in this Item 8 by such reference.


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

         Not applicable.


                                      24

<PAGE>



PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS.

         Resorts is managed by its Board of Managers, which currently consists
of four Board Members. The initial Board Members designated in the Operating
Agreement are Donald Carano, Recreational Enterprises, Inc. and Hotel Casino
Management, Inc. In September 1996, the Members elected Leslie Stone Abraham as
an additional Board Member. Each corporation that serves as a Board Member must
select a corporate officer as its representative. Recreational Enterprises, Inc.
has selected Gary Carano as its representative and Hotel Casino Management, Inc.
has selected Raymond Poncia as its representative. A corporation which is a
Board Member may change its representative at any time by providing notice to
Resorts. The Operating Agreement provides that the Board of Managers will
consist of at least three, but not more than seven, Board Members, as determined
by a majority of the Board of Managers.

         Board Members are elected at annual meetings of the Resorts' members
for one-year terms. Any Board Member may be removed from office with a vote of
60% of the membership interests, but no Board Member may be removed where there
would be enough votes to elect that Board Member at an election. In an election,
each Member is entitled to as many votes as equals the number of percentage
points of such Member's interest multiplied by the number of Board Members to be
elected. Members can cast all of their votes for a single Board Member or
distribute them among the candidates for Board Members as they see fit. The
Board of Managers generally has control over the management and affairs of
Resorts. Board Members are required to devote enough time to Resorts to
reasonably perform their duties. Resorts' Chief Executive Officer, Donald L.
Carano, supervises the day-to-day operations of Resorts. Members and interest
holders have no right to participate directly in management or control of
Resorts, except for votes required for certain extraordinary transactions
described in the Operating Agreement.

         The Operating Agreement provides that no Board Member or Officer will
be liable to Resorts, its Members or holders of its membership interests for
acts or omissions of such Board Member or Officer in connection with the
business or affairs of Resorts, including for breach of fiduciary duty or
mistake of judgment, except for acts involving intentional misconduct, fraud or
knowing violations of the law. The Operating Agreement also provides that
Resorts will indemnify, defend and hold harmless every Board Member and Officer
for any losses arising out of Resorts or its business or affairs, unless such
losses are based on acts or omissions involving intentional misconduct, fraud or
a knowing violation of the law.

         The following tables set forth certain information with respect to
persons who are members of the Board of Managers (each a "Board Member"),
executive officers of Resorts or the Eldorado and other significant employees.
Also set forth are the respective positions with Capital held by each person who
is a director or officer of Capital.

                   BOARD MEMBERS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>

        NAME                AGE               POSITION(S)
 ----------------           ---  -----------------------------------------------
 <S>                        <C>  <C>
 Donald L. Carano           67   Presiding Board Member, Chief Executive Officer
                                 and President of Resorts; President and
                                 Director of Capital
 Robert M. Jones            56   Chief Financial Officer of Resorts
 Gene R. Carano             43   Vice President and Secretary of Resorts
                                 and General Manager of the Eldorado;
                                 Treasurer of Capital
 Gregg R. Carano            39   Vice President of Resorts and Director of
                                 Customer Development of the Eldorado; Director
                                 of Capital
 Gary L. Carano             46   Board Member--Appointed by Recreational
                                 Enterprises, Inc. as its corporate
                                 representative
 Raymond J. Poncia, Jr.     65   Board Member--Appointed by Hotel Casino
                                 Management, Inc. as its corporate
                                 representative; Director of Capital
 Leslie Stone Abraham       38   Board Member

                                           SIGNIFICANT EMPLOYEES

        NAME                AGE                POSITION(S)
 ------------------        ----  -------------------------------------------
 Robert B. MacKay           51   Director of Administration of the Eldorado
 Robert B. Mouchou          43   Vice President of Operations of the Eldorado
 Rick W. Murdock            43   Director of Casino Marketing of the Eldorado

</TABLE>

                                    25
<PAGE>

<TABLE>
<CAPTION>

 <S>                        <C>  <C>
 Rhonda B. Carano           45   Director of  Advertising  and Public  Relations
                                 of the Eldorado
</TABLE>

DONALD L. CARANO. Mr. Carano has served as Chief Executive Officer of, and has
owned a controlling interest in, Resorts or its predecessor since 1973.
Previously, he was an attorney with the firm of McDonald Carano Wilson McCune
Bergin Frankovich & Hicks LLP, with which he maintains an "of counsel"
relationship. Mr. Carano has been involved in the gaming industry and has been a
licensed casino operator since 1969. Mr. Carano's commitment to the development
and promotion of tourism in Reno has earned him several awards, including the
Nevada Food and Beverage Directors Association Man-of-the-Year Award, the
American Lung Association 1993 Distinguished Community Service Award and the
1992 Hotelier of the Year Award. Also, since 1984, Mr. Carano has been the Chief
Executive Officer of the Ferrari Carano Winery. He is the father of Gary, Gene,
Glenn, Gregg and Cindy Carano and is married to Rhonda Carano.

ROBERT M. JONES. Mr. Jones has served as Chief Financial Officer of Resorts or
its predecessor since 1989. Prior to joining the Predecessor Partnership in
1984, Mr. Jones spent fourteen years in public accounting, ten of which were as
an audit principal with the international accounting firm of Arthur Young &
Company. Mr. Jones is a former Certified Public Accountant, was an honors
graduate of the University of Arizona with a major in accounting and has a
Master of Business Administration degree in taxation from Golden Gate University
in San Francisco.

GENE R. CARANO. Mr. Carano has served as General Manager of the Eldorado 
since July 1998 and served as Vice President of Resorts or its predecessor 
since 1993 and has been Secretary of Resorts since June 1996. From 1993 until 
July 1998 he served as a Co-General Manager of the Eldorado. From 1986 to 
1993, Mr. Carano served as the Eldorado's Director of Gaming. Prior to 
joining the Eldorado, Mr. Carano held various positions at another major 
casino in northern Nevada, including slot floor supervisor and pit boss. Mr. 
Carano studied business management and hotel administration at Utah State 
University and the University of Nevada, Las Vegas.

GREGG R. CARANO. Mr. Carano has served as Vice President of Resorts or its
predecessor since 1994 and has served as the Director of Customer Development of
the Eldorado since July 1998. From 1993 until July 1998 he served as a
Co-General Manager of the Eldorado. He served as General Manager of Circus
Circus-Reno from 1993 to 1994. From 1985 to 1993, Mr. Carano served as Director
of Food and Beverage at the Eldorado. Mr. Carano holds a Bachelor of Science
Degree in Hotel/Restaurant Management from Florida International University and
an Associates Degree in Occupational Studies in Culinary Arts from the Culinary
Institute of America.

GARY L. CARANO. Mr. Carano has served as General Manager of the Silver Legacy
since 1995. Previously, he served as Assistant General Manager, General Manager
and Chief Operating Officer of the Eldorado from 1980 to 1994. Mr. Carano holds
a Bachelors Degree in Business Administration from the University of Nevada,
Reno.

RAYMOND J. PONCIA, JR. Mr. Poncia has had an ownership interest in the Eldorado
since 1973 and has been involved in the gaming industry since 1968. He has been
involved with the Eldorado in the areas of development, architectural and
interior design, construction financing and business planning. Mr. Poncia
received his architectural degree from Case-Reserve University and has been a
licensed architect in private practice since 1960.

LESLIE STONE ABRAHAM. Ms. Abraham has been a Board Member since 1996. Since 
December 1996, she has been a Managing Director of Wasserstein Perella & Co. 
Inc., where she has been a director since 1995. Prior thereto, Ms. Abraham 
was a Vice President at Salomon Brothers Inc. where she provided capital 
raising and financial advisory services to a wide variety of companies. Ms. 
Abraham received an M.B.A. and a B.S. from U.C.L.A.

ROBERT B. MACKAY. Mr. MacKay has been the Director of Administration of the
Eldorado since 1989. From 1985 to 1989, Mr. MacKay served as the Eldorado's
Treasurer. He also has held the positions of Director of Finance and Controller
of the Eldorado. Mr. MacKay is a Certified Public Accountant and is a graduate
of the University of Nevada, Reno with a degree in Accounting.

ROBERT B. MOUCHOU. Mr. Mouchou has been the Vice President of Operations of the
Eldorado since 1997. Mr. Mouchou joined the Eldorado in 1979 and has held a
variety of positions, including Director of Gaming, Games Manager, Assistant
Slot Manager, Casino Analyst, Assistant Controller and Audit Supervisor.

RICK W. MURDOCK. Mr. Murdock has been the Director of Casino Marketing of the
Eldorado since 1995. He began his career at the Eldorado in 1981 and has since
held various positions, including Director of Sales, National Sales Manager and
Assistant Hotel Manager.

RHONDA B. CARANO. Mrs. Carano has been the Director of Advertising and Public
Relations of the Eldorado since 1978. Mrs. Carano previously worked as a
management trainee at the Eldorado from 1976 to 1978 where she learned 


                                      26
<PAGE>


the hotel/casino business. Mrs. Carano is the Vice President of the Ferrari 
Carano Winery. She received a Bachelor of Science degree from the University 
of Nevada, Reno.

ITEM 11.  EXECUTIVE COMPENSATION.

SUMMARY COMPENSATION TABLES

The following table sets forth all compensation paid by the Predecessor
Partnership from January 1, 1996 through June 30, 1996, and by Resorts from July
1, 1996 through December 31, 1998, to the Resort's officers named below (the
"Named Officers").

<TABLE>
<CAPTION>
                                                                     ANNUAL               LONG-TERM
                                                                COMPENSATION(1)          COMPENSATION
                                                             ---------------------      --------------
                                                                                          NUMBER OF
                                                                                         APPRECIATION
                                                                                            RIGHTS            ALL OTHER
           NAME AND PRINCIPAL POSITION                        SALARY          BONUS         GRANTED          COMPENSATION
                                                             --------         -----     --------------       ------------
<S>                                                  <C>     <C>              <C>       <C>                  <C>        
Donald Carano.....................................   1998    $550,000              0             0             $2,851(2)
  Board Member and Chief Executive                   1997     561,000              0             0              2,693
  Officer of Resorts                                 1996     550,000              0             0              2,564

Robert Jones......................................   1998    $320,000              0             0             $3,642(3)
  Chief Financial Officer of Resorts                 1997     303,000         24,000             0              3,488
                                                     1996     270,000         24,000             0              3,344

Gene Carano.......................................   1998    $300,000              0             0             $2,632(4)
  Vice President of Resorts and                      1997     306,000         71,500             0              3,000
  General Manager of the Eldorado                    1996     300,000         48,000             0              3,235

Gregg Carano......................................   1998    $300,000              0             0             $3,632(5)
  Vice President of Resorts and Director of          1997     306,000         72,000             0              3,488
   Customer Development of the Eldorado              1996     300,000         48,000             0              3,344


Rob Mouchou.......................................   1998    $300,000              0             0             $2,650(6)
  Vice President of Operations                       1997     263,000         20,000             0              2,507
                                                     1996     195,000         20,000             0              2,357
</TABLE>
(1)  Salary includes for each Named Officer any amount he or she elected to
     defer the receipt of pursuant to the Company's Deferred Compensation Plan.
     Prior to July 1, 1996, the salaries of the Named Officers were not directly
     incurred by the Company but were paid from a portion of the management fees
     paid to Recreational Enterprises, Inc. Certain of such Named Officers also
     perform services for Recreational Enterprises, Inc. unrelated to the
     business of the Company for which they receive salaries from Recreational
     Enterprises, Inc., which are not included in the compensation reported in
     this table. As of July 1, 1996, the aggregate annual salaries of such Named
     Officers and certain other key employees became payroll obligations of the
     Company. The Company has been informed by Recreational Enterprises, Inc.
     that the salaries and bonuses (including deferred compensation) shown for
     the periods prior to July 1996 are attributable to services provided by the
     Named Officers to the Company.

(2)  Includes contributions to the Company's 401(k) Plan (as defined herein) of
     $2,500, payment of term life insurance premiums of $150 and payment of
     health insurance premiums of $201.

(3)  Includes contributions to the Company's 401(k) Plan of $2,510, payment of
     term life insurance premiums of $150 and payment of health insurance
     premiums of $982.

(4)  Includes contributions to the Company's 401(k) Plan of $1,500, payment of
     term life insurance premiums of $150 and payment of health insurance
     premiums of $982.

(5)  Includes contributions to the Company's 401(k) Plan of $2,500, payment of
     term life insurance premiums of $150 and payment of health insurance
     premiums of $982.

(6)  Includes contributions to the Company's 401(k) Plan of $2,500, payment of
     term life insurance premiums of $150.


                                      27
<PAGE>



1995 PERFORMANCE AND APPRECIATION RIGHTS PLAN

         The Eldorado Hotel Associates Limited Partnership 1995 Performance and
Appreciation Rights Plan (the "Rights Plan"), which was adopted effective
January 1, 1995, provides certain executives and other key employees of the
Company who have substantial responsibility for its management and growth with
incentives and rewards. The Rights Plan is administered by a Committee comprised
of Donald Carano and two other individuals selected by the members of the
Company (the "Rights Committee"). The Rights Committee has sole and complete
authority to select eligible employees, to grant performance and appreciation
rights up to a maximum of 1,000,000 each in the aggregate, to determine the date
on which each performance right or appreciation right will vest and to impose
restrictions and conditions on performance and appreciation rights. An employee
is eligible to be granted performance and appreciation rights if, on the
proposed grant date, such employee is an executive or other key employee of the
Company or an affiliate of the Company, as determined by the Rights Committee.
An employee's performance rights terminate upon such employee's exercise of any
appreciation rights or the termination of such employee's employment with the
Company. Upon the termination of an employee's employment with the Company, the
employee will be entitled to exercise appreciation rights only to the extent
that such rights have vested to such date. No performance or appreciation rights
may be granted after June 1, 2000.

         A performance right allows an employee to receive upon exercise
compensation equal to a percentage of the total distributions to the members of
the Company for the prior fiscal quarter between the date that the right was
granted and the date of exercise. An appreciation right allows an employee upon
exercise to receive compensation based on the difference between the value of
the membership interests of the Company at the date the right was granted and
the date of exercise. The combination of one performance right and one
appreciation right is intended to represent the economic equivalent of ownership
of .00001% of one membership interest in the Company. Performance and
appreciation rights do not, however, entitle holders thereof to any rights in or
to own or control any membership interests in the Company.

         Performance rights and appreciation rights may not be transferred other
than by will or the laws of descent and distribution or to a family trust
created solely for the benefit of an employee or such employee's spouse and
descendants. Performance rights and appreciation rights may be exercised only by
the employee holding such rights (or a legal guardian, legal representative,
trustee of a family trust or executor of the estate of a deceased employee). The
Rights Committee, however, may in its discretion allow certain other transfers
of performance and appreciation rights, such as transfers during the lifetime of
an employee to the spouse and children of the employee.

         The Company did not grant any appreciation rights to the Named 
Officers in 1998. Nor did any of the Named Officers exercise any appreciation 
rights during 1998. No performance rights had been granted under the Rights 
Plan as of December 31, 1998. The following table provides certain 
information with respect to the appreciation rights held by the Named 
Officers as of December 31, 1998.

<TABLE>
<CAPTION>

                           NUMBER OF UNEXERCISED          VALUE OF UNEXERCISED
                         APPRECIATION RIGHTS AS OF     APPRECIATION RIGHTS AS OF
                             DECEMBER 31, 1998             DECEMBER 31, 1998
                        --------------------------     --------------------------
      NAME              EXERCISABLE  UNEXERCISABLE     EXERCISABLE  UNEXERCISABLE
--------------------    -----------  -------------     -----------  -------------
<S>                     <C>          <C>               <C>          <C>
Donald Carano.......         --            --               --           --
Robert Jones........       37,500        37,500             $0           $0
Gene Carano.........       50,000        50,000              0            0
Gregg Carano........       50,000        50,000              0            0
Robert Mouchou......       25,000        25,000              0            0
</TABLE>

DEFERRED COMPENSATION PLAN.

         Effective January 1, 1990, the Eldorado Hotel Casino Deferred
Compensation Plan (the "Deferred Compensation Plan") was established for the
benefit of a select group of management and highly compensated employees. As of
December 31, 1998, four employees of the Company were eligible to participate.
Under the Deferred Compensation Plan as presently administered, eligible
employees may elect each year to defer the receipt of a portion of their
compensation from the Company. A participating employee is 100% vested with
respect to any amount deferred pursuant to his or her deferral election. Amounts
deferred in prior years which were determined in the sole discretion of Resorts'
Chief Executive Officer, Donald Carano, vest 20% per year so that they become
vested over a five-year period. A participating employee becomes 100% vested in
all amounts credited to such employee's account upon retirement, death,
permanent disability or termination of employment with the Company for any
reason other than

                                  28
<PAGE>

fraud, or upon a sale of substantially all of the Company's assets or if the 
Carano family ceases to have majority ownership or control of the Company. 
Participating employees are entitled to receive annual distributions 
commencing upon the earliest of the second month after death, permanent 
disability, retirement or, if employment is terminated for reasons other than 
death or disability prior to attainment of age 60, attainment of age 60. 
However, Resorts' Chief Executive Officer may in his sole discretion elect to 
make a distribution to a terminated employee prior to such terminated 
employee attaining age 60. In addition, such Chief Executive Officer may in 
his sole discretion elect to distribute an employee's benefits in the form of 
a lump sum distribution and may elect to distribute benefits to an employee 
over a shorter period of time than that provided for in the Deferred 
Compensation Plan. Amounts the Company is obligated to distribute to 
participants pursuant to the Deferred Compensation Plan represent an unfunded 
obligation of the Company which, as of December 31, 1998, totaled $1,047,000.

401(K) RETIREMENT SAVINGS PLAN

         The Company maintains a savings plan (the "401(k) Plan") qualified
under Sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as
amended. Generally, all employees of the Company in the United States who are 21
years of age or older, who have completed six months and 1,000 hours of service
and who are not covered by collective bargaining agreements are eligible to
participate in the 401(k) Plan. Employees who elect to participate in the 401(k)
Plan may defer up to 15% but not less than 1% of their annual compensation,
subject to statutory and certain other limits. The Company makes matching
contributions of 25% of the employees' contributions, up to a maximum of 1.5% of
the employees' annual compensation and subject to certain other limitations.


COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         The Company has historically paid a management fee to each of
Recreational Enterprises, Inc. and Hotel Casino Management, Inc. A portion of
these fees represented compensation for services provided to the Company by
certain members of the Carano family. Effective July 1, 1996, the Company
entered into a new Management Agreement (the "Management Agreement") with
Recreational Enterprises, Inc. and Hotel Casino Management, Inc. which provides
that Recreational Enterprises, Inc. and Hotel Casino Management, Inc.
(collectively, the "Managers") will, among other things, (a) develop strategic
plans for the Company's business, including preparing annual budgets and capital
expenditure plans, (b) provide advice and oversight with respect to financial
matters of the Company, (c) establish and oversee the operation of financial
accounting systems and controls and regularly review the Company's financial
reports, (d) provide planning, design and architectural services to the Company
and (e) furnish advice and recommendations with respect to certain other aspects
of the Company's operations. In consideration for such services, the Company
will pay to the Managers a management fee not to exceed 1.5% of the Company's
annual net revenues. The current term of the Management Agreement continues in
effect until July 1, 1999 and will be automatically renewed for additional
three-year terms until terminated by one of the parties. In 1998, the management
fees paid by the Company to Recreational Enterprises, Inc. and Hotel Casino
Management, Inc. pursuant to the Management Agreement aggregated $1,386,168 and
$392,490, respectively. There can be no assurance that the terms of the
Management Agreement are at least as favorable to the Company as could be
obtained from unaffiliated third parties.

         The Company owns the entire parcel on which the Eldorado is located, 
except for approximately 30,000 square feet which is leased by the Company 
from C, S and Y Associates, a general partnership of which Donald Carano is a 
general partner (the "C, S and Y Lease"). The C, S and Y Lease expires on 
June 30, 2027. Annual rent is equal to the greater of (i) $400,000 or (ii) an 
amount based on a decreasing percentage of the Eldorado's gross gaming 
revenues ranging from 3% of the first $6.5 million of gross gaming revenues 
to 0.1% of gross gaming revenues in excess of $75 million. In 1998 , the rent 
paid pursuant to the C, S and Y Lease, totaled $654,000. In the opinion of 
the Company's management, the terms of the C, S and Y Lease are at least as 
favorable to the Company as could have been obtained from unaffiliated third 
parties.

         Donald Carano has been an attorney with the firm of McDonald Carano
Wilson McCune Bergin Frankovich & Hicks LLP ("McDonald Carano") since 1961. Mr.
Carano maintains an "of counsel" relationship with McDonald Carano, but is not
involved in the active practice of law or in the representation of the Company
or any of its affiliates as an attorney. Donald Carano receives no compensation
from McDonald Carano. The Company currently retains McDonald Carano in
connection with a variety of legal matters. In the opinion of the Company's
management, the fees paid to McDonald Carano are at least as favorable to the
Company as could be obtained from any other law firm for comparable services.

         Donald Carano and Recreational Enterprises, Inc., which is owned by
members of the Carano family, collectively own a 50% equity interest in the
Pioneer Inn Hotel Casino, a small hotel/casino located in downtown Reno.

                                     29

<PAGE>


         The Company from time to time leases an aircraft owned by 
Recreational Enterprises, Inc., for use in operating the Company's business. 
In 1998, lease payments for the aircraft totaled $227,000. In the opinion of 
the Company's management, the lease payments are at least as favorable to the 
Company as could have been obtained from an unaffiliated third party.

         The Company does not have a compensation committee or other committee
of the Board of Managers performing equivalent functions. The compensation paid
in 1998 to each of the Company's Board Members and executive officers was
determined by the Chief Executive Officer, and it is anticipated that such
compensation will be so determined in the future.






                                      30
<PAGE>



ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The following chart illustrates the ownership of the Company and the
Silver Legacy Joint Venture. Recreational Enterprises, Inc. is beneficially
owned by members of the Carano family and Hotel Casino Management, Inc. is
beneficially owned by members of the Poncia family. Capital is a wholly-owned
subsidiary of Resorts.





DESCRIPTION OF THE CHART: The chart illustrates the following relationships: (i)
the ownership of Resorts by Recreational Enterprises, Inc. (55%), Hotel Casino
Realty Investments, Inc. (6%), Hotel Casino Management, Inc. (29%), Donald L.
Carano (5%) and Ludwig J. Corrao (5%); (ii) the ownership of Hotel Casino Realty
Investments, Inc. by Recreational Enterprises, Inc. (50%) and Hotel Casino
Management, Inc. (50%); (iii) the ownership of Capital by Resorts (100%); (iv)
the ownership of ELLC by Recreational Enterprises, Inc. (2.5428%), Hotel Casino
Management, Inc. (1.2714%) and Resorts (96.1858%); (v) the ownership of Silver
Legacy Joint Venture by ELLC (50%) and Circus Sub (50%); and (vi) the ownership
of Circus Sub by Circus Circus (100%).









                                     31

<PAGE>



             The following table sets forth certain information regarding the
beneficial ownership of the Resorts' outstanding membership interests by (i)
each person known by Resorts to be a beneficial owner of 5% or more of the
outstanding membership interests, (ii) each Board Member, (iii) each of the
Named Officers and (iv) all Board Members and executive officers of Resorts as a
group.

<TABLE>
<CAPTION>
                                                                          MEMBERSHIP
                 NAME AND ADDRESS OF BENEFICIAL OWNER                      INTEREST %
                 ------------------------------------                     -----------
            <S>                                                           <C>
            Donald L. Carano(1)(2).....................................      63.0%
            Recreational Enterprises, Inc.(3)..........................      55.0%
            Raymond J. Poncia, Jr.(4)(5)...............................      32.0%
            Hotel Casino Management, Inc.(5)(6)........................      29.0%
            Hotel Casino Realty Investments, Inc.(7)...................       6.0%
            Gene R. Carano(2)(8).......................................       5.6%
            Gregg R. Carano(2)(8)......................................       5.6%
            Gary L. Carano(2)(8).......................................       5.6%
            Cindy L. Carano(2)(8)......................................       5.6%
            Glenn T. Carano(2)(8)......................................       5.6%
            Ludwig J. Corrao(9)........................................       5.0%
            Robert M. Jones............................................        --
            Rob B. Mouchou.............................................        --
            Leslie Stone Abraham.......................................        --
            All Board Members and executive officers as a group .......      95.0%
</TABLE>
----

(1)  Includes 5.0% owned by Mr. Carano individually, 55.0% owned by Recreational
     Enterprises, Inc., which is owned by members of the Carano family, and 3.0%
     beneficially owned by Mr. Carano through Recreational Enterprises, Inc.'s
     50.0% ownership of Hotel Casino Realty Investments, Inc.

(2)  The address of Donald L. Carano, Gene R. Carano, Gregg R. Carano and Cindy
     L. Carano is c/o Eldorado Resorts LLC, P.O. Box 3399, Reno, Nevada 89505.
     The address of Gary L. Carano and Glenn T. Carano is c/o Silver Legacy
     Resort Casino, 407 N. Virginia Street, Reno, Nevada 89501.

(3)  Recreational Enterprises, Inc. is beneficially owned by the following
     members of the Carano family in the following percentages: Donald L.
     Carano-49.5%; Gene R. Carano-10.1%; Gregg R. Carano-10.1%; Gary L.
     Carano-10.1%; Cindy L. Carano-10.1% and Glenn T. Carano-10.1%. Gary holds
     7.185% of his interest in Recreational Enterprises, Inc. through various
     trusts. Gene, Gregg, Cindy and Glenn each hold all of their respective
     interests in Recreational Enterprises, Inc. through various trusts. The
     address of Recreational Enterprises, Inc. is P.O. Box 2540, Reno, Nevada
     89505.

(4)  Includes 29.0% owned by Hotel Casino Management, Inc., which is owned by
     members of the Poncia family, and 3.0% beneficially owned by Mr. Poncia
     through Hotel Casino Management, Inc.'s 50.0% ownership of Hotel Casino
     Realty Investments, Inc.

(5)  The address of Raymond J. Poncia, Jr. and Hotel Casino Management, Inc. is
     P.O. Box 429, Verdi, Nevada 89439.

(6)  Hotel Casino Management, Inc. is beneficially owned by the following
     members of the Poncia family in the following percentages: Raymond J.
     Poncia, Jr.-49.712%; Cathy L. Poncia-Vigen-12.572%; Linda R.
     Poncia-12.572%; Michele L. Poncia-12.572% and Tammy R. Poncia-12.572%.
     Cathy, Linda, Michele and Tammy each hold all of their respective interests
     in Hotel Casino Management, Inc. through various trusts.

(7)  Recreational Enterprises, Inc. and Hotel Casino Management, Inc. each own
     50% of the outstanding shares of capital stock of Hotel Casino Realty
     Investments, Inc. The address of Hotel Casino Realty Investments, Inc. is
     P.O. Box 429, Verdi, Nevada 89439.

(8)  All of such membership interest is beneficially owned through such
     individual's 10.1% ownership of Recreational Enterprises, Inc.

(9)  The address of Ludwig J. Corrao is P.O. Box 12907, Reno, Nevada 89510.

                                     32
<PAGE>


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         Resorts' approximately 96% owned subsidiary, ELLC, holds a 50% interest
in the Silver Legacy Joint Venture, which owns and operates the Silver Legacy.
In connection with ELLC's entering into the Silver Legacy Joint Venture, Resorts
loaned $23.0 million to ELLC, and ELLC contributed the $23.0 million to the
Silver Legacy Joint Venture as a portion of its equity investment. In June 1998,
ELLC completed a recapitalization, effective June 30, 1997, converting a note
receivable and accrued interest thereon into equity, increasing Resorts'
interest in ELLC from approximately 77% to approximately 96%.

         On May 16, 1996, the Company entered into an agreement with the Silver
Legacy Joint Venture to operate a race and sports book located in the Silver
Legacy, (the "Legacy Book"). The company supplies the management, employees, and
equipment associated with the operation of the Legacy Book and records a
proportionate share of revenue and expenses included in casino revenue and
casino expense according to a formula included in the race and sports book
agreement. For the year ended December 31, 1998 the Company recorded $810,000 in
casino revenues and $400,000 in casino expenses. Silver Legacy Joint Venture is
owned approximately 3% and 1% respectively, by entities which are beneficially
owned by members of the Carano family and the Poncia family. See Item 12 of the
Report.

         A reference is made to the information which appears under the heading
"Compensation Committee Interlocks and Insider Participation" in Item 11 of this
Report, which information is incorporated herein by this reference.











                                       33

<PAGE>



PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.


(a)(1)    Financial Statements

          Incorporated by reference in Item 8 of this Report and included on
          pages 39 through 55 hereof:

          Consolidated Balance Sheets at December 31, 1998 and December 31, 1997

          Consolidated Statements of Income for the Years Ended December 31,
          1998, 1997 and 1996

          Consolidated Statements of Members' Equity for the Years Ended
          December 31, 1998, 1997 and 1996

          Consolidated Statements of Cash Flows for the Years Ended December 31,
          1998, 1997 and 1996

          Notes to Consolidated Financial Statements

(a)(2)    Financial Statement Schedules

          Schedule I - Condensed Financial Information of Registrants

(a)(3)    Exhibits:

          The following exhibits are filed as part of this Report or
          incorporated herein by reference:

EXHIBIT
NUMBER      DESCRIPTION OF EXHIBIT

2.1      Eldorado Resorts LLC Articles of Merger. (Incorporated by reference to
         Exhibit 2.1 to the Registrants' Form S-4 Registration Statement -
         Securities and Exchange Commission File No. 333-11811)

2.2      Agreement and Plan of Merger dated as of June 28, 1996 by and between
         Eldorado Hotel Associates Limited Partnership and Eldorado Resorts LLC.
         (Incorporated by reference to Exhibit 2.2 to the Registrants' Form S-4
         Registration Statement - Securities and Exchange Commission File No.
         333-11811)

3.1      Articles of Organization of Eldorado Capital Corp. (Incorporated by
         reference to Exhibit 3.1 to the Registrants' Form S-4 Registration
         Statement - Securities and Exchange Commission File No. 333-11811)

3.2      Articles of Incorporation of Eldorado Capital Corp. (Incorporated by
         reference to Exhibit 3.2 to the Registrants' Form S-4 Registration
         Statement - Securities and Exchange Commission File No. 333-11811)

3.3      Operating Agreement of Eldorado Resorts LLC dated as of June 28, 1996
         by and among Recreational Enterprises Inc., Hotel-Casino Management,
         Inc., Hotel Casino Realty Investments, Inc., Donald L. Carano and
         Ludwig J. Corrao. (Incorporated by reference to Exhibit 3.3 to the
         Registrant's Form S-4 Registration Statement - Securities and Exchange
         Commission File No. 333-11811)


                                     34
<PAGE>


3.4      Bylaws of Eldorado Capital Corp. (Incorporated by reference to Exhibit
         3.4 to the Registrants' Form S-Registration Statement - Securities and
         Exchange Commission File No. 333-11811)

4.1      Indenture dated July 31, 1996 between Eldorado Resorts, Eldorado
         Capital Corp. and Fleet National Bank, as trustee, and Form of Exchange
         Note. (Incorporated by reference to Exhibit 4.1 to the Registrants'
         Form S-4 Registration Statement Securities and Exchange Commission File
         No. 333-11811)

4.2      Registration Rights Agreement dated as of July 31, 1996 by and among
         Eldorado Resorts LLC, Eldorado Capital Corp., Bear, Stearns & Co. Inc.,
         Wassertstein Perella Securities, Inc. and BA Securities, Inc.
         (Incorporated by reference to Exhibit 4.2 to the Registrants' Form S-4
         Registration Statement - Securities and Exchange Commission File No.
         333-11811)

4.3      Amended and Restated Loan Agreement dated as of July 31, 1996 among
         Eldorado Resorts LLC and Bank of America National Trust and Savings
         Association, as sole initial Bank, Issuing Bank and Administrative
         Agent. (Incorporated by reference to Exhibit 4.3 to the Registrants'
         Form S-4 Registration Statement - Securities and Exchange Commission
         File No. 333-11811)

4.4      Amendment No. 1, dated as of July 31, 1997, to Loan Agreement dated as
         of July 31, 1996 among Eldorado Resorts LLC and Bank of America
         National Trust and Savings Association, as Administrative Agent.
         (Incorporated by reference to Exhibit 4 to the Registrants' Quarterly
         Report on Form 10-Q for the period ended June 30, 1997)

10.1     Agreement of Joint Venture of Circus and Eldorado Joint Venture dated
         as of March 1, 1994 by and between Eldorado Limited Liability Company
         and Galleon, Inc. (Incorporated by reference to Exhibit 10.1 to the
         Registrants' Form S-4 Registration Statement - Securities and Exchange
         Commission File No. 333-11811)

10.2     Environmental Indemnity entered into as of May 30, 1995 by Circus
         Circus Enterprises, Inc. and Eldorado Hotel Associates Limited
         Partnership. (Incorporated by reference to Exhibit 10.2 to the
         Registrants' Form S-4 Registration Statement - Securities and Exchange
         Commission File No. 333-11811)

10.3.1   Management Agreement dated as of June 28, 1996 by and between Eldorado
         Resorts LLC, Recreational Enterprises, Inc. and Hotel-Casino
         Management, Inc. (Incorporated by reference to Exhibit 10.3 to the
         Registrants' Form S-4 Registration Statement - Securities and Exchange
         Commission File No. 333-11811)

10.3.2   Written Consent in Lieu of Meeting of Members of Eldorado Limited 
         Liability Company (Incorporated by reference to Exhibit 10 to the 
         Registrants' quarterly report on Form 10-Q for the period ended
         June 30, 1998)

10.4     Indemnity Agreement dated as of July 25, 1996 between Eldorado Resorts
         LLC and Eldorado Capital Corp. (Incorporated by reference to Exhibit
         10.4 to the Registrants' Form S-4 Registration Statement - Securities
         and Exchange Commission File No. 333-11811)

10.5     Purchase Agreement and Joint Escrow Instructions dated June 26, 1996 by
         and between Daniel's Motor Lodge, Inc. and Eldorado Hotel Associates
         Limited Partnership. (Incorporated by reference to Exhibit 10.5 to the
         Registrants' Form S-4 Registration Statement - Securities and Exchange
         Commission File No. 333-11811)
            
10.6.1   Lease dated July 21, 1972 by and between C. S. & Y. Associates and
         Eldorado Hotel Associates . (Incorporated by reference to Exhibit
         10.6.1 to the Registrants' Form S-4 Registration Statement - Securities
         and Exchange Commission File No. 333-11811)

10.6.2   Addendum to Lease dated March 20, 1973 by and between C. S. & Y.
         Associates and Eldorado Hotel Associates. (Incorporated by reference to
         Exhibit 10.6.2 to the Registrants' Form S-4 Registration Statement -
         Securities and Exchange Commission File No. 333-11811)


                                      35
<PAGE>


10.6.3   Amendment to Lease dated January 1, 1978 by and between C. S. & Y.
         Associates and Eldorado Hotel Associates. (Incorporated by reference to
         Exhibit 10.6.3 to the Registrants' Form S-4 Registration Statement -
         Securities and Exchange Commission File No. 333-11811)

10.6.4   Amendment to Lease dated January 31, 1985 by and between C. S. & Y.
         Associates and Eldorado Hotel Associates. (Incorporated by reference to
         Exhibit 10.6.4 to the Registrants' Form S-4 Registration Statement -
         Securities and Exchange Commission File No. 333-11811)

10.6.5   Third Amendment to Lease dated December 24, 1987 by and between C. S. &
         Y. Associates and Eldorado Hotel Associates. (Incorporated by reference
         to Exhibit 10.6.5 to the Registrants' Form S-4 Registration Statement -
         Securities and Exchange Commission File No. 333-11811)

10.7*    Eldorado Hotel Associates Limited Partnership 1995 Performance and
         Appreciation Rights Plan effective January 1, 1995. (Incorporated by
         reference to Exhibit 10.7 to the Registrants' Form S-4 Registration
         Statement - Securities and Exchange Commission File No. 333-11811)

10.8*    Eldorado Hotel Casino Deferred Compensation Plan effective January 1,
         1990. (Incorporated by reference to Exhibit 10.8 to the Registrants'
         Form S-4 Registration Statement - Securities and Exchange Commission
         File No. 333-11811)

10.9*    Eldorado Hotel Casino Deferred Compensation Plan Trust Agreement dated
         December 1, 1990 by and between Eldorado Hotel Associates Limited
         Partnership and Donald L. Carano. (Incorporated by reference to Exhibit
         10.9 to the Registrants' Form S-4 Registration Statement - Securities
         and Exchange Commission File No. 333-11811)

10.10    Amended and Restated Credit Agreement, dated November 24, 1997, by and
         among Circus and Eldorado Joint Venture, the Banks named therein and
         Bank of America National Trust and Savings Association as
         Administrative Agent, and the related Note, Amended and Restated
         Make-Well Agreement and Amended and Restated Deed of Trust.
         (Incorporated by reference to Exhibit 4 (h) to the Quarterly Report for
         the quarterly period ended October 31, 1997 of Circus Circus
         Enterprises, Inc. (Commission File No. 1-8570.) 

21       List of Subsidiaries.

27       Financial Data Schedule
         ---------------------------

         * Constitutes a management contract or compensatory plan or
         arrangement.

         (b)  Reports on Form 8-K

              During the fourth quarter of 1998, the Registrants filed no
              Current Report on Form 8-K.

         (c)  The exhibits required by Item 601 of Regulation S-K filed as part
              of this Report or incorporated herein by reference are listed in
              Item 14 (a)(3) above, and the exhibits filed herewith are listed
              on the Index to Exhibits which accompanies this Report.

         (d)  See Item 14 (a)(2) of this Report.


                                      36
<PAGE>


                                   SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrants have duly caused this report to be signed on their
behalf by the undersigned, thereunto duly authorized.


                                     ELDORADO RESORTS LLC


Date:  March 24, 1999                By:   /S/ Donald L. Carano
                                         -----------------------------
                                           Donald L. Carano
                                           CHIEF EXECUTIVE OFFICER, PRESIDENT
                                           AND PRESIDING MANAGER


                                      ELDORADO CAPITAL CORP.


Date:  March 24, 1999                 By:  /S/ Donald L. Carano
                                         -----------------------------
                                           Donald L. Carano
                                           PRESIDENT


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


Signature                  Title                                Date


/S/ Donald L. Carano      Chief Executive Officer, President    March 24, 1999
---------------------     and Presiding Manager of the Board
Donald L. Carano          of Managers of Eldorado Resorts
                          LLC (Principal Executive Officer)
                          and President (Principal Executive
                          Officer) and Director of Eldorado
                          Capital Corp.



/S/ Robert M. Jones       Chief Financial Officer of            March 24, 1999
--------------------      Eldorado Resorts LLC (Principal
Robert M. Jones           Financial and Accounting Officer)



                                      37


<PAGE>



Signature                  Title                                Date


/S/  Gene R. Carano        Treasurer of Eldorado Capital        March 24, 1999
----------------------     Corp. (Principal Financial and
Gene R. Carano             Accounting Officer)



/S/  Raymond J. Poncia     Member of the Board of Managers      March 24, 1999
----------------------     of Eldorado Resorts LLC--
Raymond J. Poncia, Jr.     appointed by Hotel Casino
                           Management, Inc. as its corporate
                           representative and Director of
                           Eldorado Capital Corp.


/S/  Gary L. Carano        Member of the Board of Managers      March 24, 1999
----------------------     of Eldorado Resorts LLC--
Gary L. Carano             appointed by Recreational
                           Enterprises, Inc. as its corporate
                           representative



/S/  Gregg R. Carano       Director of Eldorado Capital Corp.    March 24, 1999
----------------------
Gregg R. Carano 



/S/   Leslie S. Abraham     Member of the Board of Managers      March 24, 1999
----------------------      of Eldorado Resorts LLC
Leslie S. Abraham






                                        38
<PAGE>



         INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                              PAGE
                                                             ------
Report of Independent Public Accountants.................      40

Consolidated Balance Sheets .............................      41

Consolidated Statements of Income .......................      42

Consolidated Statements of Members' Equity ..............      43

Consolidated Statements of Cash Flows....................      44

Notes to Consolidated Financial Statements ..............      46





                                   39
<PAGE>



                REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Members of Eldorado Resorts LLC:

         We have audited the accompanying consolidated balance sheets of
ELDORADO RESORTS LLC, a Nevada limited liability company (the "Company"), as of
December 31, 1998 and 1997, and the related consolidated statements of income,
members' equity and cash flows for the three years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Eldorado Resorts LLC
as of December 31, 1998 and 1997, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.



                                                   ARTHUR ANDERSEN LLP
                 

Las Vegas, Nevada
February 23, 1999










                                     40



<PAGE>



                         ELDORADO RESORTS LLC

                      CONSOLIDATED BALANCE SHEETS
                         (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                            DECEMBER 31,  
                                                                 -----------------------------
                                                                     1997            1998
                                                                 -------------   -------------
<S>                                                              <C>             <C>
                                   A S S E T S
CURRENT ASSETS:
     Cash and cash equivalents.................................. $    6,369       $   8,087
     Accounts receivable, net...................................      3,456           3,261
     Due from members and affiliates...........................         194             154
     Inventories................................................      2,882           2,904
     Prepaid expenses...........................................      1,703           1,857
     Note Receivable............................................        180             377
                                                                 -------------   -------------
          Total current assets..................................     14,784          16,640

NOTE RECEIVABLE.................................................        377             --

INVESTMENT IN JOINT VENTURE.....................................     46,792          46,792

PROPERTY AND EQUIPMENT, net.....................................    163,443         155,005

OTHER ASSETS, net...............................................     13,231          12,821
                                                                 -------------   -------------
           Total assets ........................................   $238,627        $231,258
                                                                 -------------   -------------
                                                                 -------------   -------------

          L I A B I L I T I E S  A N D   M E M B E R S'  E Q U I T Y

CURRENT LIABILITIES:
     Current portion of long-term debt .........................   $    556        $  1,136
     Current portion of capital lease obligations ..............        713             749
     Accounts payable...........................................      3,710           2,737
     Construction and retention payables........................        319              15
     Interest payable ..........................................      3,950           3,991
     Accrued and other liabilities..............................      5,571           5,831
     Notes payable..............................................        224             --
     Due to members and affiliates..............................        115             113
                                                                 -------------   -------------
          Total current liabilities.............................     15,158          14,572

LONG-TERM DEBT, less current portion............................    126,613         122,226

CAPITAL LEASE OBLIGATIONS, less current portion.................      1,522             773

OTHER LIABILITIES...............................................        911           1,047
                                                                 -------------   -------------
          Total liabilities.....................................    144,204         138,618
                                                                 -------------   -------------

MINORITY INTEREST ..............................................      5,154           5,154

 COMMITMENTS AND CONTINGENCIES (Note 13)

MEMBERS' EQUITY.................................................     89,269          87,486
                                                                 -------------   -------------
                                                                 -------------   -------------
          Total liabilities and members' equity.................   $238,627        $231,258
                                                                 -------------   -------------
                                                                 -------------   -------------
</TABLE>
   The accompanying notes are an integral part of these
consolidated statements.



                                        41



<PAGE>



                          ELDORADO RESORTS LLC

                    CONSOLIDATED STATEMENTS OF INCOME
                         (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                               FOR THE YEARS ENDED DECEMBER 31,
                                                            1996              1997            1998
                                                       ----------------   -------------   -------------
<S>                                                    <C>                <C>             <C>
OPERATING REVENUES:
     Casino  ..........................................   $104,608           $104,513        $104,441
     Food and beverage.................................     34,061             36,529          37,938
     Hotel.............................................     16,784             17,769          18,142
     Entertainment.....................................        422              4,532           6,392
     Equity in net income of unconsolidated affiliate..      1,758                390              --
     Other.............................................      7,120              7,093           6,698
                                                       ----------------   -------------   -------------
                                                           164,753            170,826         173,611   
     Less--promotional allowances.......................   (14,102)            (14,545)       (15,296)
                                                       ----------------   -------------   --------------
     Net revenues......................................    150,651            156,281         158,315
                                                       ----------------   -------------   -------------

OPERATING EXPENSES:
     Casino............................................     44,557             45,786          47,575
     Food and beverage.................................     25,412             27,576          28,321
     Hotel.............................................      7,219              7,387           7,611
     Entertainment.....................................        813              2,955           4,696
     Other.............................................      3,246              3,510           3,881
     Selling, general and administrative...............     26,293             28,723          27,966
     Management fees...................................      2,944              1,843           1,779
     Depreciation......................................     10,361             12,478          13,718
                                                       ----------------   -------------   -------------
     Total operating expenses..........................    120,845            130,258         135,547
                                                       ----------------   -------------   -------------

OPERATING INCOME.......................................     29,806             26,023          22,768

INTEREST EXPENSE, net..................................    (10,935)          (13,694)         (13,151)
                                                       ----------------  ---------------  --------------


NET INCOME BEFORE MINORITY INTEREST....................     18,871             12,329           9,617

MINORITY INTEREST IN NET (INCOME)
   OF  UNCONSOLIDATED AFFILIATE .......................      (408)                (91)             --

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

NET INCOME.............................................   $ 18,463          $  12,238         $ 9,617
                                                       ----------------   --------------  -------------
                                                       ----------------   --------------  -------------
</TABLE>

   The accompanying notes are an integral part of these
consolidated statements.



                                         42

<PAGE>



                                  ELDORADO RESORTS LLC

                      CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY
                                (DOLLARS IN THOUSANDS)
<TABLE>
<S>                                                               <C>
BALANCE, December 31, 1995........................................  $  74,768 
                                                                  ---------------
     Distributions................................................     (9,200)
     Net Income...................................................     18,463 
                                                                  ---------------

BALANCE, December 31, 1996 .......................................     84,031
                                                                  ---------------
     Distributions ...............................................     (7,000)
     Net Income ..................................................     12,238
                                                                  ---------------

BALANCE, December 31, 1997........................................     89,269
                                                                  ---------------
     Distributions................................................    (11,400)
     Net Income...................................................      9,617
                                                                  ---------------

BALANCE, December 31, 1998........................................  $  87,486
                                                                  ---------------
</TABLE>


       The accompanying notes are an integral part of these
consolidated statements.





                                     43

<PAGE>



                        ELDORADO RESORTS LLC

                CONSOLIDATED STATEMENTS OF CASH FLOWS
                       (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                             FOR THE YEARS ENDED DECEMBER 31,
                                                            1996            1997            1998
                                                            ----            ----            ----
<S>                                                         <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income............................................    $18,463         $12,238         $ 9,617
  Adjustments to reconcile net income to net cash
     provided by operating activities:
  Depreciation..........................................     10,361          12,478          13,718
  Equity in net (income) of unconsolidated
     affiliate..........................................     (1,758)           (390)             --
  Minority interest in net income of
     unconsolidated affiliate...........................        408              91              --
  (Gain) loss on sale of property and equipment.........       (450)           (103)            204
  (Increase) Decrease in--
  Accounts receivable, net and due from members and
     affiliates.........................................        (38)            336             235
  Note receivable.......................................         90             135             180
  Inventories...........................................       (479)           (411)            (22)
  Prepaid expenses......................................        269            (444)           (154)
  Other assets, net ....................................        178             748             410
  (Decrease) Increase in--
  Notes payable short-term .............................         --             224            (224)
  Accounts payable, construction and retention payables, 
    interest payable, accrued and other liabilities, 
    due to members and affiliates and other long-term 
    liabilities.........................................      4,157          (2,120)           (842)
                                                        -------------   -------------   -------------
  Net cash provided by operating activities.............     31,201          22,782          23,122
                                                        -------------   -------------   -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property and equipment...................    (24,981)        (15,957)         (5,665)
  Proceeds from sale of property and equipment..........      2,645             120             181
                                                        -------------   -------------   -------------
  Net cash used in investing activities.................    (22,336)        (15,837)         (5,484)
                                                        -------------   -------------   -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from long-term and other debt................    142,072          28,500          21,250
  Principal payments on long-term and other debt........   (138,255)        (27,599)        (25,770)
  Bond offering costs ..................................     (3,819)           (262)             --
  Distributions.........................................     (9,200)         (7,000)        (11,400)
                                                        -------------   -------------   -------------

  Net cash (used in) financing activities...............   $ (9,202)       $ (6,361)      $ (15,920)
                                                        -------------   -------------   -------------
</TABLE>

   The accompanying notes are an integral part of these
consolidated statements.




                                      44

<PAGE>



                        ELDORADO RESORTS LLC

          CONSOLIDATED STATEMENTS OF CASH FLOWS--(CONTINUED)
                       (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                FOR THE YEARS ENDED DECEMBER 31,
                                                               1996           1997            1998
                                                               ----           ----            ----
<S>                                                        <C>            <C>                <C>
(DECREASE)/INCREASE IN CASH AND CASH
   EQUIVALENTS .........................................   $    (337)     $     584          $1,718

CASH AND CASH EQUIVALENTS AT
   BEGINNING OF YEAR ...................................       6,122          5,785           6,369
                                                           -------------  --------------  --------------

CASH AND CASH EQUIVALENTS AT END OF
   YEAR ................................................    $  5,785       $  6,369          $8,087
                                                           -------------  --------------  --------------
                                                           -------------  --------------  --------------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION:
      Cash paid during year for interest, net of amounts
      capitalized ......................................     $ 7,182        $13,668         $12,548
                                                           -------------  --------------  --------------
                                                           -------------  --------------  --------------
</TABLE>


SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:


        During the year ended December 31, 1996, the Company entered into
capital lease obligations totaling $1,056,000 for slot machines and other
equipment.

        During the year ended December 31, 1996, the Company accepted a $782,000
note receivable in partial payment for the sale of land.


        The accompanying notes are an integral part of these
consolidated statements.

                                     45
<PAGE>


                      ELDORADO RESORTS LLC

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      PRINCIPLES OF CONSOLIDATION/OPERATIONS

         The consolidated financial statements include the accounts of Eldorado
Resorts, LLC, ("Resorts") a Nevada limited liability company, Eldorado Capital
Corp., ("Capital") a Nevada Corporation and wholly-owned subsidiary of Resorts,
and a majority owned subsidiary, Eldorado Limited Liability Company ("ELLC")
and, for the period prior to July 1, 1996, Resorts' Predecessor, Eldorado Hotel
Associates Limited Partnership (the "Predecessor Partnership") (together, the
"Company"). All significant intercompany accounts and transactions have been
eliminated in consolidation.

         The Company owns and operates the Eldorado Hotel & Casino, an 
816-room hotel casino in downtown Reno, Nevada. ELLC owns a 50% interest in 
the Circus and Eldorado Joint Venture that owns the Silver Legacy Resort 
Casino, a 1,712 room hotel casino that opened July 28, 1995 and is located 
contiguous to the Eldorado Hotel & Casino.

         ELLC was organized as a Nevada limited liability company on March 1, 
1994. During 1994, the Predecessor Partnership contributed land and received 
an initial 88.75% interest in ELLC. During 1995, the Predecessor 
Partnership's interest was reduced to 76.76% as a result of other members' 
contributions. Effective June 30, 1997, ELLC completed a recapitalization by 
converting a note receivable and accrued interest thereon into equity, 
increasing Resorts' interest to 96.12%.

         Resorts was formed on July 1, 1996, to be the successor to the
Predecessor Partnership pursuant to an exchange of all the then currently
outstanding partnership interests in the Predecessor Partnership for membership
interests in Resorts (the "Reorganization"), which was effective July 1, 1996.
Eldorado Capital Corp. was incorporated with the sole purpose of serving as
co-issuer of the 10 1/2% Senior Subordinated Notes due 2006 (the "Notes") in
order to facilitate the offering thereof.


      USE OF ESTIMATES

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.


      CASH AND CASH EQUIVALENTS

         Cash and cash equivalents include investments purchased with an
original maturity of 90 days or less.


      INVENTORIES

         Inventories are stated at the lower of cost, using a first-in,
first-out basis, or market value.

      PROPERTY AND EQUIPMENT

         Property and equipment are stated at cost. Depreciation is computed
using the straight-line method over the estimated useful life of the asset or
the term of the capitalized lease, whichever is less. Costs of major
improvements are capitalized, while costs of normal repairs and maintenance are
charged to expense as incurred.


      CAPITALIZATION OF INTEREST

         The Company capitalizes interest on funds disbursed during the active
construction and development phases of its facilities and other major projects.
This includes interest capitalized on the Company's investment in the Silver
Legacy Resort Casino. Interest capitalized during the fiscal years ended
December 31, 1996, 1997 and 1998 was approximately $365,000, $256,000 and
$72,000, respectively.


                                      46

<PAGE>



      INVESTMENT IN THE SILVER LEGACY RESORT CASINO

         ELLC accounts for its 50% joint venture interest in the Silver Legacy
Joint Venture (as defined herein) under the equity method of accounting.


      CASINO REVENUE AND PROMOTIONAL ALLOWANCES

         In accordance with industry practice, the Company recognizes as casino
revenue the net win from gaming activities, which is the difference between
gaming wins and losses. The retail value of food, beverage, rooms and other
services furnished to customers on a complimentary basis is included in gross
revenue and then deducted as promotional allowances. The cost of providing such
complimentary services is charged to operating expenses in the casino
department. Such costs of providing complimentary services are as follows (in
thousands):


<TABLE>
<CAPTION>
                                                                FOR THE YEARS ENDED
                                                                     DECEMBER 31,
                                                       1996             1997              1998
                                                   --------------   --------------    -------------
         <S>                                       <C>              <C>               <C>       
         Food,  beverage and entertainment .......   $  7,695         $  7,970          $  8,779
         Hotel ...................................      1,474            1,521             1,617
         Other ...................................      1,098            1,162             1,030
                                                   --------------   --------------    -------------
                                                   --------------   --------------    -------------
                                                      $10,267          $10,653           $11,426
                                                   --------------   --------------    -------------
                                                   --------------   --------------    -------------
</TABLE>

      ADVERTISING

         Advertising costs are expensed the first time the advertising takes
place. Advertising costs included in selling, general and administrative
expenses were $3,192,000, $3,890,000 and $4,383,000 for the years ended December
31, 1996, 1997 and 1998, respectively.


      MEMBERS' EQUITY

         Effective upon consummation of the Reorganization, partners' equity was
reclassified as members' equity.


      FEDERAL INCOME TAXES

         The Predecessor Partnership was not subject to income taxes; therefore,
no provision for income taxes was made as the Partners included their respective
shares of partnership income in their income tax returns. As a limited liability
company, Resorts is not subject to income tax liability. Therefore, holders of
membership interests will include their respective shares of Resorts' taxable
income in their income tax returns and Resorts will continue to make
distributions for such tax liabilities.

         The Operating Agreement of Eldorado Resorts LLC dated June 28, 1996
obligates Resorts to distribute each year, for as long as it is not taxed as a
corporation, to each of its members an amount equal to such member's allocable
share of the taxable income of Resorts multiplied by the highest marginal
combined Federal, state and local income tax rate applicable to individuals for
that year.


        FAIR VALUE OF FINANCIAL INSTRUMENTS

         The fair value of the Company's financial instruments approximates 
their recorded value at December 31, 1997 and 1998, except for the 10 1/2% 
Senior Subordinated Notes ("Notes"), the fair market values of which, based 
on quoted market prices, were approximately $105.0 million and $110.5 
million, respectively. The fair values are not necessarily indicative of the 
amounts the Company could realize in a current market exchange.

                                    47
<PAGE>



RECLASSIFICATIONS

      Certain reclassifications have been made to prior years' consolidated
financial statements, which have no effect on net income, to conform to current
year presentation.


2. OPERATING AGREEMENT OF RESORTS

         The rights and obligations of the equityholders of Resorts (the
"Members") are governed by the Operating Agreement of Eldorado Resorts LLC dated
as of June 28, 1996, as amended (the "Operating Agreement"), entered into in
connection with the Reorganization. In accordance with the Reorganization, all
assets and liabilities of the Predecessor Partnership became the assets and
liabilities of Resorts. Each Members' interest in Resorts is equal to the
percentage of capital contributed by that Member, in accordance with the
ownership percentages previously held in the Predecessor Partnership. The
Operating Agreement provides that no officer or member of the Board of Managers
("Board Member") of Resorts will be liable to Resorts, its Members or holders of
its membership interests for acts or omissions of such officer or Board Member
in connection with the business or affairs of Resorts, including for any breach
of fiduciary duty or mistake of judgment, except for acts involving intentional
misconduct, fraud or knowing violations of the law. Resorts will dissolve upon
the earliest to occur of: (a) December 31, 2030, (b) the sale or disposition of
all or substantially all of the assets in Resorts, (c) the written consent of
Members holding more than a 75% voting interest in Resorts or (d) any event
that, pursuant to the Operating Agreement, terminates a Member's interest,
unless there are at least two remaining Members and at least a Majority
Interest, as defined in the Operating Agreement, of the remaining Members agree
to continue Resorts.



3. ACCOUNTS RECEIVABLE

Components of accounts receivable, net are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                FOR THE YEARS ENDED
                                                                    DECEMBER 31,
                                                               1997             1998
                                                           -------------    -------------
        <S>                                                <C>              <C>
        Accounts receivable .........................        $  4,952           $4,880
        Allowance for doubtful accounts...........             (1,496)          (1,619)
                                                           -------------   ---------------
                     Total ..........................        $  3,456           $3,261
                                                           -------------   ---------------
                                                           -------------   ---------------
</TABLE>

        The  provision for bad debt expense is $1,320,000, $1,088,000 and 
$864,000 for the years ended  December 31, 1996, 1997 and 1998, respectively.


4. NOTE RECEIVABLE

        Note receivable consists of a partial payment for the sale of land to
Galleon, Inc., a 50% interest holder in the Silver Legacy Joint Venture.

        The note receivable bears interest at the Wells Fargo Prime Rate plus
2%. Resorts makes quarterly payments of $90,000 and is reimbursed quarterly
by Circus in the amount of $45,000. The note matures on July 31, 1999.


5. CERTAIN RISK AND UNCERTAINTIES

         A significant portion of the Company's revenues and operating income
are generated from patrons who are residents of northern California. A change in
general economic conditions or the extent and nature of casino gaming in
California, Washington or Oregon could adversely affect the Company's operating
results.



                                       48

<PAGE>



6. PROPERTY AND EQUIPMENT

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

                                                          ESTIMATED      
                                                         SERVICE LIFE           DECEMBER 31,
                                                           (years)          1997             1998
                                                                        -------------    --------------
<S>                                                      <S>            <C>              <C>
Land and improvements....................................    --          $  15,773        $  15,639
Buildings and other leasehold improvements...............   10-33          157,697          157,017
Furniture, fixtures and equipment........................    5-15           54,351           57,938
Property held under capital lease (Note 13)..............    3-15            6,765            6,765
Construction in progress.................................                    1,654              119
                                                                        -------------    --------------
                                                                           236,240          237,478
Less--Accumulated depreciation............................               (  72,797)         (82,473)
                                                                        -------------    --------------
                                                                        -------------    --------------
     Property and equipment, net.........................                 $163,443         $155,005
                                                                        -------------    --------------
                                                                        -------------    --------------
</TABLE>

        Substantially all property and equipment are pledged as collateral for
long-term debt (see Note 10).


        7.  OTHER ASSETS

         Other assets include the following amounts (in thousands):

<TABLE>
<CAPTION>
                                                                          DECEMBER 31,
                                                                    1997              1998
                                                                --------------    -------------
<S>                                                             <C>               <C>
Land held for development.......................................  $  8,157            $8,157
Loan acquisition costs..........................................     1,876             1,876
Bond offering costs.............................................     4,238             4,238
Other...........................................................       541               803
                                                                --------------    -------------
                                                                    14,812            15,074
Accumulated amortization loan  costs............................    (1,007)           (1,250)
Accumulated amortization bond costs.............................      (574)           (1,003)
                                                                --------------    -------------
          Total.................................................   $13,231           $12,821
                                                                --------------    -------------
                                                                --------------    -------------
</TABLE>


8. INVESTMENT IN THE SILVER LEGACY RESORT CASINO

         Effective March 1, 1994, ELLC and Galleon, Inc. (a Nevada corporation
owned and controlled by Circus Circus Enterprises, Inc.) entered into the Silver
Legacy Joint Venture pursuant to a joint venture agreement (the "Joint Venture
Agreement") to develop the Silver Legacy. The Silver Legacy consists of a casino
and hotel located in Reno, Nevada, which began operations on July 28, 1995.
During 1994, ELLC contributed land to the Silver Legacy Joint Venture with a
fair value of $25,000,000 (a book value of $17,215,000), and cash of
$23,000,000. Additional cash contributions of $3,900,000 were made in 1995, for
a total equity investment of $51,900,000. Each partner owns a 50% interest in
the Silver Legacy Joint Venture. Galleon, Inc. contributed cash of $51,900,000
to the Silver Legacy Joint Venture. Galleon, Inc. is entitled to receive a
priority allocation of operating income, up to an amount equal to 7.5% of the
initial $290,000,000 investment, adjusted for taxes, and reduced for
depreciation and principal payments, starting May 1997, as defined in the Joint
Venture Agreement.

         During 1994, the Predecessor Partnership contributed land with a 
fair value of $22,185,000 (cost of $15,715,000) to ELLC; the minority 
interest member of ELLC contributed land with a fair value of $2,815,000 
(cost of $1,500,000) to ELLC. Based upon these contributions, the Predecessor 
Partnership had an 88.75% interest in ELLC as of December 31, 1994. In 
addition, during 1994, the Company loaned $23,000,000 to ELLC to contribute 
to the Silver Legacy Joint Venture; during 1995, the minority interest member 
contributed cash of $3,900,000 to ELLC; as a result, the Predecessor 
Partnership's interest in ELLC was reduced to 76.76%. Effective June 30, 
1997, ELLC completed a recapitalization, converting the loan and accrued 
interest thereon into equity, increasing Resorts' interest in ELLC from 
approximately 77% to approximately 96%. For the years ended December 31, 
1996, and 1997, ELLC's 50% share of the Silver Legacy Joint Venture's net 
income was $1,758,000 and $390,000, respectively. The Company did not 

                                     49
<PAGE>


recognize income in 1998 as a result of the priority allocation to Galleon, 
Inc. pursuant to the Joint Venture Agreement. The minority interest members' 
investment in ELLC was therefore adjusted by $408,000, and $91,000, its 
respective share of the income for the years ended 1996 and 1997.

<TABLE>
<CAPTION>

                                                            DECEMBER 31,        DECEMBER 31,
                                                                1997                1998
                                                          -----------------   ----------------
                                                           (in thousands)      (in thousands)
 <S>                                                      <C>                 <C>
 Beginning balance.....................................       $  46,402          $  46,792
 Equity in net income of unconsolidated affiliate......             390              --
                                                              ---------          ---------
 Ending balance........................................       $  46,792          $  46,792
                                                              ---------          ---------
                                                              ---------          ---------
</TABLE>

Summarized balance sheet information for the Silver Legacy Joint Venture is as
follows (in thousands):

<TABLE>
<CAPTION>

                                                                   DECEMBER 31,          
                                                               1997             1998     
                                                           --------------   -------------
<S>                                                        <C>              <C>
Current assets ........................................... $     18,230      $    18,272
Property and equipment,net................................      326,018          313,181
Other assets..............................................        2,306            1,772
                                                           ------------      -----------
     Total assets ........................................ $    346,554      $   333,225
                                                           ------------      -----------
                                                           ------------      -----------

Current liabilities....................................... $     22,939      $    16,661
Long-term liabilities.....................................      213,000          196,000
Partners' equity..........................................      110,615          120,564
                                                           ------------      -----------
                                                           ------------      -----------
     Total liabilities and partners' equity............... $    346,554      $   333,225
                                                           ------------      -----------
                                                           ------------      -----------
</TABLE>

Summarized results of operations for the Silver Legacy Joint Venture are as
follows (in thousands):


<TABLE>
<CAPTION>
                                                                     YEAR ENDED DECEMBER 31,
                                                            1996              1997               1998
                                                            ----              ----               ----
<S>                                                    <C>               <C>                <C>
 Net Revenues......................................... $    147,121       $    159,810        $  160,318
 Operating Expenses ..................................     (122,268)          (129,054)         (131,732)
                                                       ---------------   ---------------    ---------------
 Operating Income ....................................        24,853            30,756            28,586
                                                       ---------------   ---------------    ---------------
 Other Expense .......................................       (21,337)          (21,041)          (18,637)
                                                       ---------------   ---------------    ---------------
 Net Income .......................................... $       3,516      $      9,715        $    9,949
                                                              
                                                       ---------------   ---------------    ---------------
                                                       ---------------   ---------------    ---------------
</TABLE>

The Silver Legacy commenced operations on July 28, 1995.


                                         50


<PAGE>



9. ACCRUED AND OTHER LIABILITIES

        Accrued and other liabilities consist of the following (in thousands):
<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                                                                1997            1998
                                                            -------------   --------------
               <S>                                          <C>             <C>
               Accrued payroll and benefits.................  $   1,089       $     846
               Accrued vacation ............................      1,059             875
               Accrued medical claims ......................        282             355
               Progressive slot liability ..................        827           1,124
               Related party rent and management fees......         109             114
               Other .......................................      2,205           2,517
                                                            -------------   --------------
                                                            -------------   --------------
                                                              $   5,571        $  5,831
                                                            -------------   --------------
                                                            -------------   --------------
</TABLE>






                                           51
<PAGE>



10. LONG-TERM DEBT

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

                                                                                DECEMBER 31,
                                                                           1997              1998
                                                                       --------------    -------------
<S>                                                                    <C>               <C>
10  1/2% Senior Subordinated Notes; semi-annual payments of 
    interest only, in arrears on February 15 and August 15 
    of each year, commencing on February 15, 1997, 
    maturing August 15, 2006.........................................    $100,000          $100,000

Outstanding portion of reducing revolver and the revolving credit 
    line, due in quarterly installments of principal (plus interest
    calculated using either the Base rate or Eurodollar rate; the 
    Eurodollar rate at December 31, 1997 and December 31, 1998 was 
    5.88% and 5.06%, respectively, and the Base rate at December 31, 
    1997 and December 31, 1998 was 8.5% and 7.75%, respectively) 
    due July 31, 2001; secured by substantially all real 
    property.........................................................      23,250            20,000

Notes payable to a corporation, due in quarterly principal 
    installments of $97,500 and $90,000, respectively (including 
    monthly interest at prime plus 2%; the rate at December 31, 1997
    and December 31, 1998 was 10.5%, and 9.75%, respectively), to 
    June 30, 1997 and July 30, 1999, respectively, when principal
    balance is due; secured by real property.........................        1,144               893

Notes payable to individuals, due in monthly installments of $34,614 
    (including monthly interest at 9%), to August 14, 2006, when 
    principal balance is due; secured by real property...............        2,494             2,294


Notes payable, other.........,.......................................          281               175
                                                                       --------------    -------------
                                                                           127,169           123,362
Less--Current portion................................................         (556)           (1,136)
                                                                       --------------    -------------
                                                                          $126,613          $122,226
                                                                       --------------    -------------
                                                                       --------------    -------------
</TABLE>

        Scheduled maturities of long-term debt are as follows for the years
ended December 31, (in thousands):

<TABLE>

                  <S>                        <C>
                  1999...................... $    1,136
                  2000......................        266
                  2001......................     20,292
                  2002......................        319
                  2003......................        349
                  Thereafter................    101,000
                                            --------------
                                               $123,362
                                            --------------
                                            --------------

</TABLE>





                                    52

<PAGE>



             On July 31, 1996, Resorts and Capital (the "Issuers"), sold 
$100,000,000 in aggregate principal amount of 10 1/2% Senior Subordinated 
Notes due 2006, (the "Notes"). The Notes are joint and several obligations of 
the Issuers. The Notes mature on August 15, 2006, and bear interest at the 
rate of 10 1/2% per annum, payable semi-annually in arrears on February 15 
and August 15 of each year, commencing on February 15, 1997. Pursuant to a 
Registration Rights Agreement dated as of July 31, 1996, among the Issuers 
and the Initial Purchasers party thereto, the Issuers filed a registration 
statement under the Securities Act of 1933, as amended (the "1933 Act") with 
respect to an offer to exchange the Notes, which were issued in reliance on 
an exemption from registration under the 1933 Act, for registered debt 
securities of the Issuers ("Registered Notes") with terms identical to the 
Notes. The exchange of the Notes for the Registered Notes was completed on 
February 26, 1997.

         The Indenture relating to the Notes contains certain covenants 
which, among other things, limit the ability of the Issuers and any 
Restricted Subsidiaries (as defined in the Indenture) to incur additional 
indebtedness, pay dividends or make other distributions, create certain 
liens, enter into certain transactions with affiliates, utilize proceeds from 
asset sales, issue or sell equity interests of subsidiaries and enter into 
certain mergers and consolidations and requires the Company to maintain 
certain financial requirements. The Company is in compliance with these 
covenants at December 31, 1998.

         The net proceeds from the issuance of the Notes of approximately $96.5
million were used by the Company to repay a portion of its existing debt.
Concurrent with this repayment, the Company amended its $130 million existing
bank credit facility, which was scheduled to mature March 25, 2000. The amended
credit facility (the "Credit Facility") provides for a senior secured revolving
Credit Facility of $50 million. The amount of credit available pursuant to the
Credit Facility reduced to approximately $40.6 million on December 31, 1998 and,
by its terms, the facility reduces by an additional $1,562,500 at the end of
each subsequent quarter until July 31, 2001, when it terminates and any balance
then outstanding becomes due and payable. Borrowings bear interest, at the
Company's option, at either (i) the greater of (a) the reference rate publicly
announced by Bank of America and (b) the Federal Funds Rate plus .50% plus an
applicable percentage or (ii) the Eurodollar rate plus an applicable percentage.
The Credit Facility will mature July 31, 2001. As of December 31, 1998, $20.0
million of borrowings were outstanding under the Credit Facility and an
additional $19.3 million of borrowing capacity was available thereunder.

         The Credit Facility is secured by substantially all of the Company's
real property. The facility includes various restrictions and other covenants
including: (i) restrictions on the disposition of property, (ii) restrictions on
investments and acquisitions, (iii) restrictions on distributions to members of
Resorts, (iv) restrictions on the incurrence of negative pledges, (v)
restrictions on the incurrence of indebtedness and the issuance of guarantees,
(vi) restrictions on transactions with affiliates and, (vii) restrictions on
annual capital expenditures including capital leases. The Credit Facility also
contains financial covenants including a maximum total debt to EBITDA ratio, a
maximum senior debt to EBITDA ratio, a minimum fixed charge coverage ratio and a
minimum equity requirement. As of December 31, 1998, the Company was in
compliance with all provisions of the Credit Facility. Included in other assets
at December 31, 1998 are $3.9 million of debt offering costs related to the
Indenture and the amendment to the Credit Facility which are being amortized
over the life of the applicable agreements.


 11. EMPLOYEE BENEFIT PLANS

         On May 1, 1990, the Company established a voluntary, qualified, 
defined contribution plan covering all full-time employees of the Company who 
have completed six months and 1,000 hours of service and are age twenty-one 
or older. The plan allows for an employer contribution up to 25 percent of 
the first 6 percent of each participating employee's contribution. Plan 
participants can elect to defer before tax compensation through payroll 
deductions. These deferrals are regulated under Section 401(k) of the 
Internal Revenue Code. The Company's matching contributions were $224,000, 
$255,000 and $281,000 for the fiscal years ended December 31, 1996, 1997 and 
1998, respectively.

12. EXECUTIVE DEFERRED COMPENSATION PLANS

         Effective January 1, 1990, the Company established a Deferred
Compensation Plan for the benefit of a select group of management or highly
compensated employees. As of December 31, 1996, 1997 and 1998, the Company had
accrued obligations of $762,000, $911,000 and $1,047,000, respectively, related
to this deferred compensation agreement which represents an unfunded obligation
of the Company.

         The Company instituted the Eldorado Performance and Appreciation Rights
Plan (the "Plan") for the benefit of certain of its key executives and other key
employees of the Company and its general partners, effective for the fiscal year
commencing January 1, 1995. A person shall be eligible to be granted performance
and/or appreciation rights only if on the proposed grant date, such person is an
executive or other key employee of the Company or an affiliate of the Company.
The performance right allows the key employee the right to receive an amount
equal to a percentage of income from the grant date, as defined, through the
date of exercise. The appreciation right allows the

                                      53
<PAGE>



key employee to receive compensation based upon the difference between the 
value of the Company, as defined, as of January 1, 1995 (the "Base Rate") and 
the future value of the Company. One Company Unit (1% of the Company) is 
equivalent to the combination of 100,000 performance rights and 100,000 
appreciation rights. The Base Rate for each appreciation right is $26.66 as 
of January 1, 1995. The Company value is calculated as a factor of eight (8) 
times trailing twelve months operating income (adjusted for certain items to 
approximate EBITDA) less funded indebtedness and adjusted for certain 
additional items, as defined. The rights are not ownership interests in the 
Company. As of December 31, 1996, 860,000 appreciation rights had been 
granted. No additional rights were granted in 1997 or 1998. The maximum 
amount of performance rights and appreciation rights which may be granted 
shall not exceed 1,000,000 each.

         The Plan's committee shall determine the date on which each performance
right or appreciation right shall vest and become exercisable; as of December
31, 1998, no vesting period had been established. The Company value as of
December 31, 1997 and 1998, as calculated, is below the $26.66 Base Rate, and
therefore no accrual is required as of December 31, 1998. Except as defined in
the Plan agreement, the Company has no duty or obligation to fund or secure the
benefits payable to key executives.


13. COMMITMENTS AND CONTINGENCIES

       LETTERS OF CREDIT

         The Credit Facility (see Note 10) allows for the issuance of letters of
credit which reduces the available line by the amount pledged. At December 31,
1998, the amount pledged was $1,341,150, inclusive of $372,000 pledged on behalf
of Express Vacations, LLC, a Nevada limited liability company. Resorts is a
one-third member of Express Vacations, LLC and recognized $210,000 of income
reflected in Other Income.


       CAPITAL LEASES

         The Company leases certain equipment under agreements classified as 
capital leases. The future minimum lease payments by year under these leases, 
together with the present value of the minimum lease payments consisted of 
the following at December 31, 1998 (in thousands):

<TABLE>
              <S>                                        <C>
              1999.......................................   $    848
              2000.......................................        720 
              2001.......................................         90 
              2002.......................................        --
              2003.......................................        --
              Thereafter.................................        --
                                                         -------------
              Minimum lease payments.....................      1,658
              Less--Amounts representing interest........       (136)
                                                         -------------
                                                            $  1,522
                                                         -------------
                                                         -------------
</TABLE>

       OPERATING LEASES

         The Company leases equipment under operating leases. Future minimum
payments (expiring from 1999 and thereafter) under noncancellable operating
leases with initial terms of one year or more consisted of the following at
December 31, 1998 (in thousands):

                                   54
<PAGE>


<TABLE>
<CAPTION>

                                                    FUTURE MINIMUM
                                                    LEASE PAYMENTS
              <S>                                   <C>
              1999 ................................   $    237
              2000.................................        127
              2001 ................................        127
              2002 ................................        127
              2003.................................        127
              Thereafter ..........................         --
                                                      ---------
                                                       $   745
                                                      ---------
                                                      ---------
</TABLE>

        Total rental expense under operating leases was $1,210,000 for the year
ended December 31, 1996, $1,027,000 for the year ended December 31, 1997 and
$882,000 for the year ended December 31, 1998. Additional rent for land upon
which the Eldorado Hotel Casino resides of $654,000 in 1998 ($646,000 in 1996
and $668,000 in 1997) was paid to a related party based on gross gaming
receipts. This rental agreement expires June 30, 2027.


      LEGAL MATTERS

         The Company is a litigant in legal matters arising in the normal course
of business. In the opinion of management, all pending legal matters are either
adequately covered by insurance or, if not insured, will not have a material
adverse effect on the financial position or results of operations of the
Company.


14. CORPORATE EXPENSES/MANAGEMENT FEES

         Resorts pays management fees to Recreational Enterprises, Inc. and 
Hotel Casino Management, Inc., the owners of 55% and 29% of Resorts' equity 
interests, respectively. Historically, the salaries of senior executive 
officers and certain other key employees of the Predecessor Partnership were 
not directly incurred by the Predecessor Partnership, but were paid from a 
portion of the management fees paid to Recreational Enterprises, Inc. As of 
July 1, 1996, the aggregate annual salaries of such senior executive officers 
and other key employees became payroll obligations of Resorts. In connection 
with the consummation of the offering of the Notes, Resorts entered into a 
Management Agreement with Recreational Enterprises, Inc. and Hotel Casino 
Management, Inc. providing that future management fees paid to Recreational 
Enterprises, Inc. and Hotel Casino Management, Inc. will not exceed 1.5% of 
Resorts' annual net revenues.

15. RELATED PARTIES

         Resorts pays management fees to two of its corporate Members. Such 
fees, included in general and administration and operating department 
expenses, were $2,944,000 for 1996, $1,843,000 for 1997 and $1,779,000 for 
1998.

         On May 16, 1996, the Company entered into an agreement with the 
Circus and Eldorado Joint Venture, (the "Silver Legacy") to operate a race 
and sports book located in the Silver Legacy, (the "Legacy Book"). The 
Company supplies the management, employees and equipment associated with the 
operation of the Legacy Book and records a proportionate share of revenue and 
expenses included in casino revenue and casino expense according to a formula 
included in the race and sports book agreement. For the years ended December 
31, 1996, 1997 and 1998 the Company recorded $243,000, $483,000 and $810,000 
in casino revenues and $205,000, $358,000 and $400,000 in casino expenses, 
respectively.

                                        55
<PAGE>



                                EXHIBITS INDEX


EXHIBIT 
NUMBER          DESCRIPTION OF EXHIBIT
------         ----------------------

21             List of Subsidiaries

27             Financial Data Schedule








                                    56