<PAGE>

                      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, 1996

                                      OR

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

                For the transition period from               to


                            Commission File #0-26922

                              COAST RESORTS , INC.

             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

            NEVADA                               88-0345704
(State or other jurisdiction of      (I.R.S. Employer Identification No.)
incorporation or organization)
               4500 WEST TROPICANA ROAD, LAS VEGAS, NEVADA 89103
              (Address of principal executive offices) (Zip Code)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (702) 365-7000

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

          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                          COMMON STOCK, $.01 PAR VALUE

                                (Title of class)

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


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

     The number of shares of the Registrant's Common Stock outstanding as of
March 1, 1997 was 1,494,352.94. The aggregate market value of the Common Stock
held by non-affiliates of the Registrant, was $70,341,002.35 as of March 1,
1997.

                                  ___________
<PAGE>

                              COAST RESORTS, INC.

                               TABLE OF CONTENTS

                           ANNUAL REPORT ON FORM 10-K
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996

                                                                       PAGE
                                                                       ----
                                     PART I
Item 1.      Business.................................................    3
Item 2.      Properties...............................................   10
Item 3.      Legal Proceedings........................................   11
Item 4.      Submission of Matters to a Vote of Security Holders......   11

                                    PART II
Item 5.      Market for the Registrant's Common Equity and Related
              Stockholder Matters.....................................   11
Item 6.      Selected Financial Data..................................   12
Item 7.      Management's Discussion And Analysis Of Financial
              Condition  And Results Of Operations....................   14
Item 8.      Financial Statements and Supplementary Data..............   17
Item 9.      Changes in and Disagreements with Accountants on
              Accounting and Financial Disclosure.....................   17


                                    PART III
Item 10.      Directors and Executive Officers of the Registrant......   18
Item 11.      Executive Compensation..................................   18
Item 12.      Security Ownership of Certain Beneficial Owners and
               Management.............................................   18
Item 13.      Certain Relationships and Related Transactions..........   18

                                    PART IV

Item 14.      Exhibits, Financial Statements, Schedules and Reports on
               Form 8-K...............................................   19

                                       2
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                                     PART I



ITEM 1.  BUSINESS.
         ---------

THE COMPANY

     Coast Resorts, Inc., a Nevada corporation (the "Company"), through its
wholly-owned subsidiary Coast Hotels and Casinos, Inc ("Coast Hotels"), owns and
operates three Las Vegas hotel-casinos, the Gold Coast Hotel and Casino (the
"Gold Coast"), the Barbary Coast Hotel and Casino (the "Barbary Coast") and The
Orleans Hotel and Casino ("The Orleans"), which opened on December 18, 1996.
Another wholly-owned subsidiary, Coast West, Inc. ("Coast West") leases certain
real property held for potential development of another gaming property in the
future, although no assurance can be given that any additional properties will
be developed.  See "Item 2 -- Properties."

     The Company was formed in 1995 as a holding company to consolidate and
reorganize two affiliated partnerships, the Gold Coast Hotel and Casino, a
Nevada limited partnership (the "Gold Coast Partnership"), and the Barbary Coast
Hotel and Casino, a Nevada general partnership (the "Barbary Coast Partnership"
and, together with the Gold Coast Partnership, the "Predecessor Partnerships").
The Gold Coast Partnership, formed in 1986, and the Barbary Coast Partnership,
formed in 1978, previously owned and operated the Gold Coast and the Barbary
Coast, respectively, and the Gold Coast Partnership commenced the development of
The Orleans.

     Unless the context otherwise requires, the term "Company" collectively
refers to the Company and its subsidiaries.

     The principal executive office of the Company is located at 4500 West
Tropicana Road, Las Vegas, Nevada 89103.  The telephone number is (702) 365-
7000.

THE REORGANIZATION

     Effective January 1, 1996, the Predecessor Partnerships were consolidated
and reorganized (the "Reorganization") pursuant to an Agreement and Plan of
Reorganization, as supplemented and amended, entered into among each of the
Predecessor Partnerships, Gaughan-Herbst, Inc., the sole general partner of the
Gold Coast Partnership, and the Company.  As a result of the Reorganization, the
Company, through Coast Hotels, owns and operates the Gold Coast, the Barbary
Coast and The Orleans, and Coast West has become the lessee under the Coast West
Lease (as defined below).  In the Reorganization, (a) the partners of the
Predecessor Partnerships each transferred to the Company, by assignment or
through the merger of Gaughan-Herbst, Inc., their respective partnership
interests in the Predecessor Partnerships in exchange for an aggregate of
1,000,000 shares of common stock, par value $.01 per share, of the Company (the
"Common Stock") and (b) the Company assumed, jointly and severally with Coast
Hotels, all of the liabilities of the Predecessor Partnerships other than (i)
the obligations under approximately $52.5 million principal amount of notes
payable to the shareholders of the Company that were exchanged for an aggregate
of 494,353 shares of Common Stock on January 16, 1996, and (ii) those
liabilities incident to the Coast West Lease, and (c) the Company assumed,
jointly and severally with Coast West, all of the liabilities of the Predecessor
Partnerships incident to the Coast West Lease.

THE GOLD COAST

     The Gold Coast, which opened in 1986, is located on West Flamingo Road
approximately one mile west of the Las Vegas Strip (the "Strip") in close
proximity to a major exit from Interstate 15, the major highway linking Las
Vegas and Southern California.  The Gold Coast features an approximately 70,000
square foot casino, including approximately 2,029 slot machines, 48 table games,
a keno lounge, a 700-seat bingo parlor and a 160-seat race and sports book.  The
Gold Coast also features an 11-story tower with 712 hotel rooms and a swimming
pool with a covered bar.  For the year ended December 31, 1996, the Gold Coast's
average occupancy rate was 92.5% and the average daily room rate was $42.70.

     The Gold Coast features three full-service restaurants, including the
Mediterranean Room, the Cortez Room and the Monterey Room, a 380-seat buffet, a
fast-food restaurant, a snack bar and ice cream parlor.  The Gold Coast's
entertainment amenities include a 72-lane bowling center, two movie theaters,
approximately 10,000 square feet of banquet and meeting facilities, four bars,
two entertainment lounges

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and a dance hall featuring live entertainment. Other amenities include a gift
ship, a liquor store, a travel agency, an American Express office, a Western
Union office, a beauty salon, a barber shop, a child care facility and over
3,000 parking spaces.

     The Gold Coast has developed a number of innovative marketing programs
designed to complement the non-gaming amenities at the Gold Coast and increase
the level of gaming activity. The Gold Coast's slot club (the "Club") has over
100,000 active members. The Club was established in 1987 to encourage repeat
business from its slot machine players. Each time members win at a Gold Coast
slot machine, points are awarded to their accounts. Upon accumulating sufficient
points, members can redeem the points for awards, including appliances,
vacations and other items. Other Gold Coast marketing programs have included the
original "Pick the Pros" football contest, a $250,000 paycheck cashing contest,
live entertainment in the dance hall, Superbowl parties and the annual "Gold
Coast Open," a 10-day poker tournament. In addition, the Gold Coast is a sponsor
of the annual National Finals Rodeo, which attracts thousands of visitors to Las
Vegas each December. The awards ceremonies for the Rodeo are held nightly at the
Gold Coast during the 10-day event.

THE BARBARY COAST

     The Barbary Coast, which opened in 1979, is located at the intersection of
Flamingo Road and the Strip (the "Flamingo Four Corners"), adjacent to the
Flamingo Hotel and Casino.  It is situated directly across from Caesars Palace
and Bally's Grand and is diagonally across from the site where Mirage Resorts,
Inc. is developing a new mega-resort, Bellagio, expected to open in 1998.
Historically, the Barbary Coast has relied on foot traffic on the busy Las Vegas
Strip for a significant amount of its revenues.

     The Barbary Coast features an approximately 30,000 square foot casino,
including approximately 527 slot machines, 44 table games, race and sports books
and other amenities. The Barbary Coast also features an 8-story tower with 197
hotel rooms. For the year ended December 31, 1996, the Barbary Coast's average
occupancy rate was 94.9% and the average daily room rate was $52.33.  The
Barbary Coast is furnished and decorated in an elegant turn-of-the-century
Victorian theme and includes three bars and two restaurants, including Michael's
gourmet restaurant and the Victorian Room, which features Chinese and American
cuisine. For the past three years, Michael's, which caters primarily to
preferred casino customers, has received a distinguished dining award from the
Distinguished Restaurants of North America.

THE ORLEANS

     The Company opened its newest property, The Orleans, on December 18, 1996.
The Orleans was developed to expand the Company's  presence in the growing Las
Vegas market and to capitalize on management's belief in the demand for an
upscale, off-Strip hotel-casino alternative for both visitors to Las Vegas and
local residents.  The Orleans site is located on Tropicana Avenue, approximately
one and one-half miles west of the Strip.

     The Orleans is designed with a distinctive theme reflecting the
architectural heritage of the New Orleans French Quarter. The Orleans features
an approximately 92,000 square foot casino, a 22-story tower with 840 hotel
rooms, a 70-lane bowling center, approximately 40,000 square feet of banquet and
meeting facilities, including an approximately 17,000 square foot grand
ballroom, a wedding chapel, five restaurants, specialty themed bars, a barber
shop, a beauty salon and approximately 3,000 parking spaces. The casino includes
approximately 2,110 slot machines, 60 table games, a keno lounge, a poker parlor
and race and sports books.  The Orleans also includes an 827-seat theater
patterned after those in Branson, Missouri that features live entertainment and
other special events. The Company began construction in the first quarter of
1997 on the second phase of The Orleans.  Phase two is expected to include
twelve movie theaters, a child care facility and restaurant and gaming space in
approximately 180,000 square feet on two levels.



BUSINESS AND MARKETING STRATEGY

     The Company's business strategy is to attract gaming customers to its
various gaming facilities by offering a combination of quality gaming,
entertainment, dining and recreational activities.  In addition,

                                       4
<PAGE>

each of the Company's hotel casinos seeks to encourage repeat business by
providing friendly service and complimentary or reduced-rate accommodations,
meals and automotive and aircraft transportation. However, each of the Company's
properties targets different market segments and employs customer-driven market
strategies designed to expand its growing customer base.

     The Gold Coast primarily targets middle-market gaming customers, catering
to local residents as well as repeat visitors to Las Vegas who desire an
alternative to the hotel-casino properties located on the Strip.  Management's
operating strategy is to maximize customer visitation and thereby increase
casino revenues at the Gold Coast by offering value-conscious customers a
combination of friendly service, generous portions of quality food at
competitive prices and clean, comfortable and inexpensive hotel rooms.
Management believes this value-oriented approach has generated a high level of
customer satisfaction, fostering customer loyalty and repeat business. In
addition, the Gold Coast is conveniently located on West Flamingo Road, in close
proximity to a major exit from Interstate 15, offering easy automotive access
from all four directions in the Las Vegas valley.  The Gold Coast has developed
a number of innovative campaigns designed to promote its business and attract
local residents.  See "--The Gold Coast."

     The Barbary Coast's customer base is primarily visitors to the Las Vegas
area.  In addition to its favorable location on the Las Vegas Strip, which has
historically enabled it to attract a large volume of walk-in traffic, the
Barbary Coast has also benefited from its more intimate gaming atmosphere,
allowing it to develop a loyal base of table games customers.

     The Orleans is designed to differentiate itself in the Las Vegas market by
combining an upscale, off-Strip experience in an exciting New Orleans French
Quarter-themed environment with a wide variety of non-gaming amenities. The
Orleans primarily targets middle to upper-middle income gaming customers, both
visitors to Las Vegas and local residents.   Management believes that The
Orleans is an attractive alternative for Las Vegas visitors and local residents,
offering a full-service hotel-casino and entertainment experience complemented
with a value-oriented pricing strategy.  The Orleans employs marketing programs
similar to those which make the Gold Coast a success, including a slot club and
football contests, and tailors its marketing programs to promote The Orleans as
a multi-faceted entertainment complex.

GAMING SECURITY

     Each of the Company's existing casinos employs extensive supervision and
accounting procedures to control the handling of cash in their gaming
operations.  These measures include security personnel; closed-circuit
television observation of critical areas of the casino; locked cash boxes;
independent auditors and observers; strict sign-in and sign-out procedures which
ensure, to the extent practicable, that gaming chips issued by, and returned to,
the casino cashier's cages are accurately accounted for; and procedures for the
regular observation of gaming employees.  The accounting departments of each of
the Company's casinos, which employ persons who have no involvement in the
gaming operations, review on a daily basis records compiled by gaming employees
pertaining to cash flow and credit extension.  Moreover, regular periodic
analysis of the results of the Company's gaming operations, including analyses
of the Company's compliance with the internal control standards established by
the Nevada Board (as defined herein), are performed by the Company and its
independent auditors to detect significant deviations from industry standards.
Based on the results of these analyses, management believes that its procedures
are in compliance in all material respects with the requirements established by
the Nevada Gaming Authorities (as defined below).


FUTURE PLANS

     The Company is exploring the possible development of additional gaming
properties.  The Company is contemplating the development of a new gaming
property in the western area of the Las Vegas valley on real property which is
leased by Coast West.  Additionally, the Company owns an approximately 29-acre
parcel of undeveloped land located at the corner of Rancho Drive and Carey
Avenue in North Las Vegas, in close proximity to the Fiesta Hotel and Casino and
the Texas Station Hotel and Casino. The site is zoned for gaming.

     The Company has no agreements, arrangements or understandings with respect
to financing the development of either of the foregoing sites, and does not
expect to commence such development in the near future. Any future development
would be subject to, among other things, the Company's ability to

                                       5
<PAGE>

obtain necessary financing. No assurance can be given that the Company will
develop successfully any additional properties or, if completed, such properties
will be successful.

COMPETITION


     Both the gaming and hotel industries are highly fragmented and
characterized by a high degree of competition among a large number of
participants. Many of the Company's competitors are much larger than the Company
and have substantially greater resources.

     The Company's three hotel-casinos face competition from all other casinos
and hotels in the Las Vegas area.  Such competition includes several hotel-
casinos that, like the Gold Coast and The Orleans, target, to a high degree,
local residents.  The Company also competes with non-hotel gaming facilities
that target local residents.  The Company believes that its convenient locations
together with innovative marketing strategies and value-oriented quality rooms
and food enable it to compete effectively for the local resident customers and
repeat visitors to Las Vegas.

     In recent years, many new hotel-casinos have opened and many existing ones
have been expanded.  Currently, there are over 100,000 hotel rooms in the Las
Vegas area and more are planned to open in 1997 and 1998 with the anticipated
openings of properties such as Bellagio, Paris and Sunset Station as well as
expansions at Caesars Palace, Circus-Circus, Harrah's and others. The additional
capacity has, to date, not materially impacted the Company's occupancy levels
and overall revenues, but additional new properties and the expansion of
existing hotel-casinos could have a material adverse effect on the Company's
business and results of operations.

     The Company also competes for gaming customers to a lesser extent with
casinos located in the Laughlin and Reno-Lake Tahoe areas of Nevada, in Atlantic
City, New Jersey, and in other parts of the world, including gaming on cruise
ships and international gaming operations, as well as with state-sponsored
lotteries, on- and off- track wagering, card parlors, riverboat and Native
American gaming ventures and other forms of legalized gaming in the United
States. In addition, several states have recently legalized, and several other
states are currently considering legalizing, casino gaming in specific
geographical areas within those states. The Company believes that the
development of casino properties similar to those in Las Vegas in areas close to
Nevada, particularly California and Arizona, could have a material adverse
effect on its business and its results of operations. The Company believes that
the recent widespread legalization of gaming is being fueled by a combination of
increasing popularity and acceptability of gaming activities and the desire and
need for states and local communities to generate revenues without increasing
general taxation. The Company believes that the legalization of unlimited land-
based casino gaming in or near any major metropolitan area, such as Chicago or
Los Angeles, could have a material adverse effect on its business and results of
operations. In addition, the development or expansion of casinos, lotteries and
other forms of gaming in other states, particularly in areas close to Nevada
such as California, could have a material adverse effect on the Company's
business and its results of operations.

     The Gold Coast primarily targets local residents as well as repeat visitors
to Las Vegas. While The Orleans targets a higher income segment of gaming
customers, it also focuses its marketing efforts in part on the same customer
base as the Gold Coast. The Orleans is located approximately one mile south of
the Gold Coast.  The operation of the two hotel-casinos in close proximity and
their overlapping target markets may impact their respective results of
operations. Additionally, the Company may be subject to greater risks, including
risks related to local competitive and economic conditions, than if these two
gaming properties were more geographically distant or had more diverse targeted
markets.

ENVIRONMENTAL MATTERS

     The Company is subject to a wide variety of federal, state and local laws
and regulations relating to the use, storage, discharge, emission and disposal
of hazardous materials.  While management believes that the Company is presently
in material compliance with all environmental laws, failure to comply with such
laws could result in the imposition of severe penalties or restrictions on
operations by government agencies or courts that could adversely affect
operations.  The Company has completed Phase I environmental assessments at the
seven properties owned or leased by it.  The reports did not identify any
environmental conditions or non-compliance, the remediation or correction of
which are reasonably expected to have a material adverse impact on the business
or financial condition of the Company.

                                       6
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EMPLOYEES

     At March 1, 1997, the Company and its subsidiaries had approximately 5,300
employees.

NEVADA REGULATION AND LICENSING

     The ownership and operation of casino gaming facilities in Nevada are
subject to (i) the Nevada Gaming Control Act and the regulations promulgated
thereunder (collectively, the "Nevada Act"), and (ii) various local 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 the Clark County Liquor and
Gaming Licensing Board (the "Clark County Board").  The Nevada Commission, the
Nevada Board and the Clark County Board are collectively referred to as the
"Nevada Gaming Authorities."

     The laws, regulations and supervisory procedures of the Nevada Gaming
Authorities are based upon declarations of public policy which 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 record keeping 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.

     Coast Hotels, which operates Gold Coast, the Barbary Coast and The Orleans,
is licensed by the Nevada Gaming Authorities and is a corporate licensee (a
"Corporate Licensee") under the terms of the Nevada Act.  The gaming licenses
require the periodic payment of fees and taxes and is not transferable.  The
Company is registered with the Nevada Commission as a publicly traded
corporation (a "Registered Corporation") and has been found suitable to own the
stock of Coast Hotels.  As a Registered Corporation, the Company is 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 shareholder of, or receive any percentage of
the profits from, Coast Hotels without first obtaining licenses and approvals
from the Nevada Gaming Authorities.  The Company and Coast Hotels have obtained
from the Nevada Gaming Authorities the various registrations, approvals, permits
and licenses required in order to engage in gaming activities at its hotel-
casinos.

     The Nevada Gaming Authorities may investigate any individual who has a
material relationship to, or material involvement with, the Company or Coast
Hotels in order to determine whether such individual is suitable or should be
licensed as a business associate of a Corporate Licensee or a Registered
Corporation.  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.  Officers,
directors and key employees of the Company who are actively and directly
involved in gaming activities of Coast Hotels 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 or Coast Hotels unsuitable for licensing or unsuitable
to continue having a relationship with the Company or Coast Hotels, the Company
and Coast Hotels would have to sever all relationships with such person.  In
addition, the Nevada Commission may require the Company and Coast Hotels 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.

                                       7
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     The Company and Coast Hotels are required to submit detailed financial and
operating reports to the Nevada Commission.  Substantially all material loans,
leases, sales of securities and similar financing transactions by Coast Hotels
must be reported to, or approved by, the Nevada Commission.

     If it were determined that the Nevada Act was violated by Coast Hotels, 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, Coast Hotels 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.

     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 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 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 its management policies or
operations; and (iii) such other activities as the Nevada Commission may
determine to be consistent with such investment intent.  If the beneficial
holder of 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 if the owner, after request, fails to
identify the beneficial owner.  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.  The Company is subject
to disciplinary action if, after it receives notice that a person is unsuitable
to be a shareholder or to have any other relationship with the Company or Coast
Hotels, the Company (i) pays that person any dividend or interest upon voting
securities of the Company, (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.

                                       8
<PAGE>

     The Nevada Commission may, in its discretion, require the holder of any
debt security of a Corporate Licensee or a Registered Corporation to file
applications, be investigated and be found suitable to own the debt security.
If the Nevada Commission determines that a person is unsuitable to own such
security, then pursuant to the Nevada Act, the Corporate Licensee or the
Registered Corporation 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.

     The Company 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.  The Company is also required to render maximum
assistance in determining the identity of the beneficial owner.  The Nevada
Commission has the power to require the Company's stock certificates to bear a
legend indicating that the securities are subject to the Nevada Act.

     Neither the Company nor Coast Hotels 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 require 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 had declared that some corporate acquisitions
opposed by management, repurchases of voting securities and corporate defense
tactics affecting Nevada gaming licensees, and Registered Corporations that are
affiliated with those operations, may be injurious to stable and productive
corporate gaming.  The Nevada Commission has established 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, in certain circumstances, required from the Nevada
Commission before a Registered Corporation can make exceptional repurchases of
voting securities above the current market price thereof and before a corporate
acquisition opposed by management can be consummated.  The Nevada Act also
requires prior approval of a plan of recapitalization proposed by 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.

     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.  Nevada
licensees that hold a license as an operator of a slot route, or a
manufacturer's or distributor's license, also pay certain fees and taxes to the
State of Nevada.

                                       9
<PAGE>

     Any person who is licensed, required to be licensed, registered, required
to be registered, or is under common control with such persons (collectively,
"Licensees"), and who proposes to become involved in a gaming venture outside of
Nevada is required to deposit with the Nevada Board, and thereafter maintain, a
revolving fund in the amount of $10,000 to pay the expenses of investigation of
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 on the ground of personal unsuitability.


ITEM 2.  PROPERTIES.
         -----------

     The Company owns the approximately 26.0 acres that the Gold Coast occupies
on West Flamingo Road. The Company also owns an 8.33-acre site across the street
from the Gold Coast that contains an approximately 100,000 square foot
warehouse. The warehouse is used by the Gold Coast, Barbary Coast, and The
Orleans as a shared distribution and storage facility.

     The Barbary Coast occupies approximately 1.8 acres at the intersection of
Flamingo Road and the Strip. The hotel-casino occupies real property that is
currently leased by the Company pursuant to a lease that expires on May 1, 2003.
The lease provides for rental payments of $175,000 per annum. The lease contains
two options, exercisable by the Company, to extend the term of the lease for 30-
years each (with the rent to be readjusted as provided in the lease during those
renewal periods). The Company has an option to purchase the leased property at
any time during the six month period prior to the expiration of the lease,
provided that certain conditions are met, at a purchase price equal to the
greater of $3.5 million or the then appraised value of the real property. The
Company also has a right of first refusal in the event the landlord desires to
sell the real property during the initial term of the lease. The Company also
leases approximately 2.5 additional acres of real property located adjacent to
the Barbary Coast. The lease expires on December 31, 2003. The lease provides
for rental payments of $125,000 per annum. The real property is used by the
Company as a parking lot for its employees and for valet parking. The landlord
has the right to terminate the lease upon six months prior notice to the Company
if it requires the use of the property for its own business purposes (which
excludes leaving the property vacant or leasing it to third parties prior to
January 1, 2003).

     The Orleans is located on a portion of an 80.0-acre site located on West
Tropicana Avenue, approximately one mile south of the Gold Coast. The real
property is leased pursuant to a ground lease entered into by the Company and
The Tiberti Company, a Nevada general partnership and related party,  (see Note
12 of "Notes to Consolidated Financial Statements").  The lease has an effective
commencement date as of October 1, 1995 an initial term of 50 years, and
includes an option, exercisable by the Company, to extend the initial term for
an additional 25 years. The lease provides for monthly rental payments
commencing in January 1996 of $251,726 per month through December 1996, $175,000
per month during the 26-month period thereafter, $200,000 per month during the
36-month period thereafter, $225,000 per month during the 48-month period
thereafter and $250,000 per month during the 60-month period thereafter. In
March 2011, annual rental payments will increase on a compounding basis at a
rate of 3.0% per annum. In addition, the Company has been granted an option to
purchase the real property during the two-year period commencing in February
2016. The lease provides that the purchase price will be the fair market value
of the real property at the time the Company exercises the option, provided that
the purchase price will not be less than 10 times the annual rent and not more
than 12 times such annual rent at such time.

     Coast West, as the successor to the Gold Coast Partnership, leases an
approximately 50.0-acre site located at the corner of Rampart Boulevard and Alta
Drive in northwest Las Vegas pursuant to a Ground Lease Agreement dated as of
October 28, 1994 (the "Coast West Lease"). The initial term of the

                                       10
<PAGE>

Coast West Lease commenced on September 1, 1995, and expires on December 31,
2055. The lease contains three options, exercisable by Coast West, to extend the
term of the lease for 10 years each. The lease provided for monthly rental
payments of $166,667 for the year ending December 31, 1995. Thereafter, the
monthly rent increases by the amount of $5,000 in January of each year. The
landlord has the option to require Coast West to purchase the property at the
end of 2014, 2015, 2016, 2017 and 2018, at the fair market value of the real
property at the time the landlord exercises the option, provided that the
purchase price shall not be less than 10 times nor more than 15 times the annual
rent at such time. Based on the terms of the lease, the potential purchase price
commitment ranges from approximately $31.0 million to approximately $51.0
million in the years 2014 through 2018. Coast West has a right of first refusal
in the event the landlord desires to sell the property at any time during the
lease term.

     In March 1995, the Gold Coast Partnership purchased approximately 29.0
acres of undeveloped land located at the corner of Rancho Drive and Carey Avenue
in North Las Vegas in close proximity to the Fiesta Hotel and Casino and the
Texas Station Hotel and Casino. The site is zoned for gaming.



ITEM 3.  LEGAL PROCEEDINGS
         -----------------


     The Company and its subsidiaries are parties to various legal proceedings
arising in the ordinary course of business.  In the opinion of management, the
outcome of all pending claims in such matters will not have a material adverse
effect on the Company's financial position, results of operations or cash flows.

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

     No matters were submitted to the shareholders of the Company during the
quarter ended December 31, 1996.


                                    PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         -----------------------------------------------------------------
        MATTERS.
        --------

     No equity securities of the Company are being, or have been, publicly
offered by the Company and there is no public trading market for the Company's
common stock.  As of March 1, 1997 the Company had 59 shareholders.

     The Company was formed in September 1995 and has not declared or paid any
dividends.  The Company intends to retain future earnings for use in the
development of its business and does not anticipate paying any cash dividends in
the foreseeable future.  The payment of all dividends will be at the discretion
of the Company's Board of Directors and will depend upon, among other things,
future earnings, operations, capital requirements, the general financial
condition of the Company and general business conditions.  As a holding company,
the Company is reliant upon the operations of its subsidiaries for cash flow.
The indenture under which the First Mortgage Notes were issued (the "Indenture")
(see -- "Liquidity and Capital Resources" in Item 7) restricts the ability of
Coast Hotels to pay dividends or make other distributions to the Company. (See
note 8 of "Notes to Consolidated Financial Statements.")

                                       11
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA.
         ------------------------

     The following Selected Financial Data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements and notes thereto
included elsewhere in this Form 10-K.  The consolidated statements of income
data for the five years ended December 31, 1992, 1993, 1994, 1995 and 1996 and
the balance sheet data as of December 31, 1993, 1994, 1995 and 1996 are derived
from the consolidated  financial statements of the Company which have been
audited by Coopers & Lybrand L.L.P., which financial statements are included in
this report on Form 10-K, except for the consolidated statements of income for
the years ended December 31, 1992 and 1993 and the consolidated balance sheets
as of December 31, 1993 and 1994. The balance sheet data as of December 31, 1992
has been derived from the financial statements of the Gold Coast Partnership and
the Barbary Coast Partnership which were audited by other auditors, whose
reports are not presented in this Form 10-K.


                            SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
                                                                YEARS ENDED DECEMBER 31,
                                                                ------------------------
                                              1992          1993          1994          1995        1996 (1)
                                           -------------------------------------------------------------------
                                                                 (DOLLARS IN THOUSANDS)
<S>                                        <C>           <C>           <C>           <C>           <C>
STATEMENTS OF INCOME DATA:
Net revenues............................   $  169,251    $  169,573    $  172,573    $  174,756    $  195,987
Departmental operating expenses (2).....      105,037       108,662       115,028       114,253       118,563
General and administrative expenses.....       30,290        32,402        32,940        34,186        39,085
Guaranteed payments to former
     partners (3).......................        2,762         2,485         2,672           858            --
Pre-opening and development expenses....           --            --            --           515         9,185
Deferred (non-cash) rent expense........           --            --            --           431         1,760
Depreciation and amortization...........        8,492         7,822         6,766         7,280         7,883
Operating income........................       22,670        18,202        15,167        17,233        19,511
Interest expense, net...................       (1,852)         (837)         (227)       (3,545)       (9,981)
Other income............................          128             3            23            92            58
                                           ----------    ----------    ----------    ----------    ----------
Net income before income taxes..........       20,946        17,368        14,963        13,780         9,588
Provision for income taxes..............           --            --            --            --         5,952
                                           ----------    ----------    ----------    ----------    ----------
Net income..............................   $   20,946    $   17,368    $   14,963    $   13,780    $    3,636
                                           ==========    ==========    ==========    ==========    ==========

Net income per share of common stock....   $       --    $       --    $       --    $       --         $2.47
                                           ==========    ==========    ==========    ==========    ==========

Weighted average common shares
 outstanding............................           --            --            --            --     1,472,742
                                           ==========    ==========    ==========    ==========    ==========
PRO FORMA INFORMATION TO REFLECT
CHANGE IN TAX STATUS (4):
Provision for income taxes..............        7,333         6,117         5,251         4,823         3,452
                                           ----------    ----------    ----------    ----------    ----------
Net income..............................   $   13,613    $   11,251    $    9,712    $    8,957    $    6,136
                                           ==========    ==========    ==========    ==========    ==========

Net income per share of common stock....       $13.61        $11.25         $9.71         $8.96         $4.17
                                           ==========    ==========    ==========    ==========    ==========

Weighted average common shares
 outstanding............................    1,000,000     1,000,000     1,000,000     1,000,000     1,472,742
                                           ==========    ==========    ==========    ==========    ==========
OTHER DATA:
EBITDA (5)..............................   $   31,162    $   26,024    $   21,933    $   24,944    $   36,279
Capital expenditures....................   $    2,104    $    2,736    $    5,514    $   32,331    $  126,133
Distributions to partners (6)...........   $   11,250    $   11,500    $   25,823    $   58,660    $       --
SEE FOOTNOTES TO SELECTED FINANCIAL DATA
</TABLE>
SEE FOOTNOTES TO SELECTED FINANCIAL DATA

                                       12
<PAGE>

                      SELECTED FINANCIAL DATA (CONTINUED)
<TABLE>
<CAPTION>
                                                     AS OF DECEMBER 31,
                                   -----------------------------------------------------
                                     1992       1993       1994       1995     1996 (1)
                                   -------    --------   --------   -------   ----------
                                                  (DOLLARS IN THOUSANDS)
<S>                                <C>        <C>        <C>        <C>        <C>
BALANCE SHEET DATA:
Cash and cash equivalents (7)...   $ 11,152   $ 14,788   $ 16,967   $ 14,543   $ 61,567
Total assets....................    125,029    123,570    134,295    152,363    372,246
Total long-term debt (8)........     11,783      1,464     11,776     83,357    195,764
Stockholder's equity............     92,760     98,628     87,781     42,888     99,049
---------------------------------------------------------------------------------------
</TABLE>
------------


FOOTNOTES TO SELECTED FINANCIAL DATA

(1)  On December 18, 1996, The Orleans commenced operations in Las Vegas,
     Nevada.
(2)  Includes casino, food and beverage, hotel and other expenses.
(3)  Prior to the Reorganization (as defined herein), the Predecessor
     Partnerships (as defined herein) made guaranteed payments to partners
     pursuant to the terms of their respective partnership agreements.  In
     connection with the Reorganization, such guaranteed payments were
     eliminated and replaced with annual compensation (reflected in general and
     administrative expenses) to Michael J. Gaughan and certain other former
     partners of the Predecessor Partnerships who are executive officers of the
     Company. See "The Reorganization" and  "Management's Discussion and
     Analysis of Financial Condition and Results of Operations."
(4)  The Gold Coast Partnership and the Barbary Coast Partnership operated as
     partnerships and were not subject to federal income taxes. As a result of
     the Reorganization, the operations of the Gold Coast and the Barbary Coast
     are being conducted by the Company, which has been formed as a "C
     Corporation" and, therefore, is subject to federal income taxes. A pro
     forma provision for federal income taxes has been made, and pro forma net
     income has been calculated, for the historical financial statements for all
     periods presented as if the Gold Coast Partnership and the Barbary Coast
     Partnership had been treated as a C corporation during those periods.
(5)  EBITDA is defined as earnings before interest, taxes, depreciation,
     amortization, non-cash rent expense and pre-opening expenses. 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.

     (6) Because the Gold Coast Partnership and the Barbary Coast Partnership
     were partnerships during these periods, a substantial portion of their net
     income was distributed to the partners. In 1994, the Barbary Coast
     Partnership distributed $11.0 million of partners' capital in the form of
     notes payable and, in 1995, the Gold Coast Partnership distributed $50.0
     million of partners' capital in the form of notes payable. Such
     distributions represented previously taxed but undistributed earnings of
     the Predecessor Partnerships. See Note 10 of Notes to Financial Statements
     and "Management's Discussion and Analysis of Financial Condition and
     Results of Operations."
(7)  Cash and cash equivalents at December 31, 1996 includes approximately $8.2
     million in cash restricted to pay for construction of The Orleans.
(8)  Excludes current maturities.

                                       13
<PAGE>

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

     Prior to the reorganization on January 1, 1996, the Gold Coast and the
Barbary Coast were operated separately by the Predecessor Partnerships. As a
result of the Reorganization, the Company is a holding company which conducts
its operations through Coast Hotels, which owns and operates the Gold Coast, the
Barbary Coast and The Orleans. The Company also owns Coast West, which leases
certain real property. See "The Reorganization."

RESULTS OF OPERATIONS

     The following table sets forth, for the periods indicated, certain
financial information regarding the historical results of the Company.

<TABLE>
<CAPTION>


                                               YEAR ENDED DECEMBER 31,
                                         ------------------------------------
                                            1994         1995         1996
                                         ----------   ----------   ----------
<S>                                      <C>          <C>          <C>
NET REVENUES
  Gold Coast..........................    $128,494     $130,695     $140,548
  Barbary Coast.......................      44,079       44,061       49,419
  The Orleans.........................          --           --        6,020
                                      --------------------------------------
     Total Net Revenues...............    $172,573     $174,756     $195,987
                                      ======================================

OPERATING INCOME
  Gold Coast..........................    $ 16,412     $ 17,933     $ 28,975
  Barbary Coast.......................      (1,245)         246        4,155
  The Orleans.........................          --           --        1,266
  Pre-opening expenses, The Orleans...          --           --       (7,125)
  Corporate expenses(1)...............          --        ( 946)      (7,760)
                                      --------------------------------------
    Total Operating Income............    $ 15,167     $ 17,233     $ 19,511
                                      ======================================
</TABLE>
(1)  Corporate expenses include Coast West rent expenses, amortization of debt
issuance costs and corporate general and administrative expenses.


FISCAL 1996 COMPARED TO 1995

     Consolidated net revenues were $196.0 million for the year ended December
31, 1996, an increase of 12.1% over 1995 net revenues of $174.8 million.  The
increase was due, in part, to the opening of The Orleans on December 18, 1996,
contributing $6.0 million in net revenues.  Gold Coast net revenues increased
7.5% over 1995, primarily due to an increase in casino revenues.  Barbary Coast
net revenues increased 12.2%, primarily due to an increase in race and sports
book revenues.

     Consolidated operating income rose 13.2% in 1996 to $19.5 million from
$17.2 million in 1995.  The increases in revenues described above were partially
offset by pre-opening costs of $7.1 million in the fourth quarter related to the
opening of  The Orleans.  Additionally corporate expenses increased to $7.8
million in 1996 compared to $946,000 in 1995.  Rent expense on land held for
future development was $3.8 million in 1996, representing a full year's rent
compared to $946,000 in 1995 when rent was paid for one quarter.  Corporate
general and administrative expenses were $2.2 million in 1996, the corporation's
first full year of operation.  Amortization of bond costs related to the
issuance of the First Mortgage Notes was $1.0 million in 1996.  Net income
declined 73.6% in 1996, primarily due to increased interest expense as a result
of the issuance of $175.0 million principal amount of First Mortgage Notes.
Additionally, the Company had income tax expense of $6.0 million in 1996,
including $2.5 million relating to the recognition of deferred taxes in
connection with the change in tax status from

                                       14
<PAGE>
partnerships to a "C" corporation, but had no income tax in 1995 since, prior to
the reorganization, the Company's entities reported income as partnerships.

     Gold Coast. Net revenues for the year ended December 31, 1996 increased
7.5% compared to the same period in 1995.  Casino revenues increased 10.4% in
1996, primarily due to a 13.0% increase in slot machine revenues which
management attributes to an upgrade of  slot equipment completed in December
1995.  Additionally, race and sports book revenues  increased 25.0% in 1996 due
to higher wagering volume.  Table games revenues remained relatively flat
compared to 1995, with a 4.3 % increase in gross wagering (drop) offset by a
slightly lower win percentage.  Food and beverage revenues decreased .8% in 1996
due to lower customer volume partially offset by higher prices than in 1995.
Hotel revenues increased 6.4% primarily due to increased room rates.

     Gold Coast operating income in 1996 increased 61.6%  compared to 1995,
primarily due to the increased revenues discussed above.  As casino revenues
increased, casino expenses increased 3.3%, primarily as a result of a 2.3%
increase in wages expense and a 9.5% increase in gaming taxes related to the
higher revenues.  Food and beverage expenses decreased 7.0%, primarily due to a
9.9% decrease in cost of sales attributable to lower customer volume which
management believes is a result of higher prices and increased competition.
Additionally, depreciation and amortization expense decreased 15.1% due to
certain items becoming fully depreciated.

     Barbary Coast.   Net revenues for the year ended December 31, 1996
increased 12.2% compared to the same period in 1995.  Casino revenues increased
12.7%, primarily due to an increase in race and sports book revenues
attributable to higher wagering volume.  Additionally, slot revenues increased
9.7%, due to higher wagering volume which management believes is due primarily
to an upgrade of slot machine equipment and increased promotional activity.
Hotel revenues increased 14.8% primarily due to higher room rates.

     Barbary Coast operating income increased to $4.2 million in the year ended
December 31, 1996, compared to $246,000 in the same period in 1995, primarily
due to the increased revenues discussed above.  Casino expenses increased 7.8%
in line with the increase in casino revenues.  Depreciation and amortization
decreased 9.7% due to certain items becoming fully depreciated.

     The Orleans.  The Orleans was opened on December 18, 1996.  Net revenues
for the fourteen days was $6.0 million.  Operating income before pre-opening
expenses of $7.1 million was $1.3 million.


FISCAL 1995 COMPARED TO 1994

     Consolidated net revenues were $174.8 million for the year ended December
31, 1995, an increase of 1.3% over 1994 revenues of $172.6 million.  The
increase was  primarily due to increased slot, hotel and food and beverage
revenues at the Gold Coast.

     Consolidated operating income rose 13.6% to $17.2 million in 1995 compared
to $15.2 million in 1994, primarily as a result of the increased revenues
discussed above.  An increase in casino expenses was offset by a decrease in
food and beverage expenses. Net income declined 7.9%, primarily due to an
increase in interest expense as a result of the issuance of $61.0 million in
notes to former partners of the Gold Coast and the Barbary Coast.

     Gold Coast.  Net revenues increased 1.7% in 1995 compared to 1994.  Food
and beverage revenues increased 4.9%, primarily as a result of higher prices.
An increase in hotel room rates resulted in a 7.2% increase in hotel revenues.
Casino revenues increased .9% in 1995.  A higher hold percentage contributed to
an increase of 1.5% in table games revenue, while an increase in wagering volume
resulted in a 1.8% increase in slot machine revenues for the year. Race and
sports book, poker and keno revenues all declined for the year due to lower
wagering volume.

     Gold Coast operating income in 1995 increased 9.3% compared to 1994,
primarily due to the 1.7% increase in net revenues discussed above and an
increase in operating expenses of only .6%.  Increased payroll costs as a result
of annual raises were largely offset by decreases in food and beverage cost of
sales as a result of a focus on more efficient purchasing.

                                       15
<PAGE>

     Barbary Coast.  Net revenues for 1995 were relatively unchanged from 1994.
Casino revenues decreased slightly while food and beverage, hotel and other
operating revenues increased slightly.   Casino revenues were $35.3 million in
1995 compared to $35.6 million in 1994.  Race book revenue increased 69.6% in
1995 due to a 57.3% increase in wagering.  Table games revenues decreased 4.6%
due to a slight decrease in table games drop and a slightly lower win
percentage.  Sports book revenue decreased 45.7% compared to 1994 due to a 23.1%
decrease in wagering and a lower win percentage.  Slot machine revenues also
declined slightly.  Food and beverage revenues increased 3.1% due to higher food
and beverage prices.  Higher hotel room rates contributed to an 11.1% increase
in hotel revenues over 1994.  Other revenues increased 8.5% over the previous
year.

     Operating income increased to $246,000 in 1995, compared to a loss of $1.2
million in 1994.  Casino expenses increased 7.4% due to increased race book and
table games promotions expenses.  The increase in casino expenses was offset by
decreases in food and beverage and hotel expenses.  Additionally, general and
administrative expenses decreased 16.7% due to reduced guaranteed payments to
former general partners of the Barbary Coast.  Depreciation and amortization
expense decreased 11.6% in 1995 as a result of certain assets becoming fully
depreciated.


LIQUIDITY AND CAPITAL RESOURCES

     The Company's principal sources of liquidity have consisted of cash
provided by operating activities and, until termination of a bank credit
facility in January 1996, bank financing.  On January 30, 1996, the Company
issued $175.0 million principal amount  of 13% first mortgage notes due 2002
("First Mortgage Notes").  The net proceeds from the issuance, after deducting
discounts and commissions, were approximately $164.1 million.  Of that amount,
approximately $29.2 million was used by the Company to repay all outstanding
indebtedness under the Company's revolving credit facility, which was terminated
, $19.3 million was deposited into an escrow account to fund the Company's first
two semi-annual interest payments on the First Mortgage Notes, and approximately
$114.8 million was applied to the cost of developing The Orleans.  The balance
of approximately $800,000 was used to pay, in part, the offering expenses of
approximately  $2.4 million.  Additionally, approximately $30 million of
equipment for the Orleans project was financed through a capital leasing
company. The Company is permitted by the Indenture pursuant to which the First
Mortgage Notes were issued to borrow up to an additional $20 million for working
capital purposes.

     The Company's consolidated cash requirements, in addition to debt service
on the First Mortgage Notes,  include lease payments for properties (see Note 5
to Notes to Consolidated Financial Statements) and ongoing maintenance capital
expenditures at its existing facilities as well as periodic enhancements to
those facilities. Net cash provided by operating activities was approximately
$ 24.9 million for 1996 compared to $22.5 million in 1995. The Company's capital
expenditures (exclusive of those associated with the development and
construction of The Orleans) for 1996 were approximately $6.2 million, most of
which related to normal maintenance capital expenditures. Management expects
that maintenance capital expenditures for 1997 will be approximately $7.0
million. The Company has begun construction in the first quarter of 1997 on
Phase Two of The Orleans. The project, which is expected to include twelve movie
theaters, a child care facility and restaurant and gaming space, is expected to
cost approximately $35 million. In addition, the Company has begun construction
in the first quarter of 1997 of a new restaurant at the Barbary Coast, estimated
to cost $1.3 million. The Company expects to finance the capital projects with
existing cash reserves, on-going cash from operations and, to the extent
required, debt and/or equity financing. No assurance can be given that cash from
operations, in combination with cash reserves, will be sufficient for the second
phase of The Orleans and the Barbary Coast restaurant, or that debt and/or
equity financing will be obtainable.

IMPACT OF INFLATION

     Absent changes in competitive and economic conditions or in specific prices
affecting the industry, the Company does not expect that inflation will have a
significant impact on the Company's operations. Change in specific prices, such
as fuel and transportation prices, relative to the general rate of inflation may
have a material adverse effect on the hotel and casino industry.

                                       16
<PAGE>

CERTAIN ACCOUNTING PRINCIPLES


     The Financial Accounting Standards Board has issued Statement No. 123,
"Accounting for Stock-based Compensation" ("SFAS No. 123").  This statement
defines a fair value based method of accounting for an employee stock option in
which companies account for stock options by recognizing, as compensation
expense in the statement of operations, the fair value of stock options granted
over the vesting period of the option.  The statement also permits companies to
continue accounting for stock options under Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" ("APB No. 25").  Upon the
issuance of stock options, the Company will account for such stock options under
APB No. 25 and will disclose the pro-forma impact on net income and earnings per
share as if the Company had used the fair value method recommended by SFAS No.
123.

     In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 "Earnings Per Share" ("SFAS No. 128").
SFAS No. 128 establishes new accounting standards for the computation and
financial statement presentation of earnings per share data.  SFAS No. 128 is
effective for statements issued for periods ending after December 15, 1997 and
earlier implementation is not permitted.  The Company expects that there will be
no material effect upon implementing SFAS No. 128 on its earnings per share
calculations.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
         --------------------------------------------

     The report of independent accountants, consolidated financial statements
and financial statement schedules listed in the accompanying index at Item
14(a) are filed as part of this report. See "Index to Financial
Statements" on page 23.


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

     The consolidated financial statements of the Company for the fiscal years
ended December 31, 1993, 1994, 1995 and 1996 were audited by Coopers & Lybrand
L.L.P. ("Coopers & Lybrand"), which was first engaged by such entities effective
September 6, 1995. Prior to the engagement of Coopers & Lybrand, the firm of
Conway, Stuart & Woodbury ("CSW") served as the sole independent accounting firm
of the Predecessor Partnerships for purposes of performing audits required under
the Nevada gaming laws and bank credit facilities. The change in accountants
from CSW to Coopers & Lybrand (or, in the case of the Company, the initial
selection of Coopers & Lybrand) was made upon the determination of the partners
of the Predecessor Partnerships in contemplation of the issuance of the First
Mortgage Notes.

     The reports of Coopers & Lybrand with respect to the financial statements
of the Company for the fiscal years ended December 31, 1993, 1994, 1995 and 1996
did not contain any adverse opinion or disclaimer of opinion, and were not
qualified or modified as to uncertainty, audit scope or accounting principles,
other than for a change in accounting principles for marketable securities and
for depreciation in 1994.  During the fiscal year ended December 31, 1992 and
prior to the termination of CSW as the Predecessor's sole independent accounting
firm, there were no disagreements between the Predecessor Partnerships and CSW,
on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedures, which disagreements, if not resolved
to the satisfaction of CSW, would have caused it to make reference to the
subject matter thereof in connection with any of its reports.

                                       17
<PAGE>

                                    PART III

ITEM 10.  EXECUTIVE OFFICERS AND DIRECTORS OF THE REGISTRANT.
          ---------------------------------------------------

     The information required by Item 10 will be set forth in the Proxy
Statement under the caption "Directors and Executive Officers" and is
incorporated herein by reference.

ITEM 11.  EXECUTIVE COMPENSATION.
          -----------------------

     The information required by Item 11 will be set forth in the Proxy
Statement under the caption "Executive Compensation" and is incorporated herein
by this reference.

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

     The information required by Item 12 will be set forth in the Proxy
Statement under the caption "Security Ownership of Certain Beneficial Owners and
Management" and is incorporated herein by this reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
          -----------------------------------------------

     The information required by Item 13 will be set forth in the Proxy
Statement under the caption "Certain Relationships and Related Transactions" and
is incorporated herein by this reference.

                                       18
<PAGE>

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K.
          -----------------------------------------------------------------
    (a) Financial Statements, Financial Statement Schedules, and Exhibits
        Financial Statements Index
                                                                           Page
                                                                           ----
1.  Financial Statements
Report of Independent Statements........................................... 24
Audited Financial Statements
   Consolidated Balance Sheets as of December 31, 1995 and 1996............ 25
   Consolidated Statements of Income for the years ended December 31,
    1994, 1995 and 1996.................................................... 26
   Consolidated Statements of Stockholders' Equity for the years
    ended December 31, 1994, 1995 and 1996................................. 27
   Consolidated Statements of Cash Flows for the years ended December
    31, 1994, 1995 and 1996................................................ 28
 Notes to Consolidated Financial Statements.............   ................ 29

2.  Financial Statement Schedules
     I.  Condensed Financial Information of the Company.................... 47
     II. Valuation and Qualifying Accounts................................. 50

3.  Exhibit Index

                                       19
<PAGE>

                                 EXHIBIT INDEX


Exhibit Number   Decription of Exhibit
--------------   ---------------------
*2.1             Agreement and Plan of Reorganization dated as of September 29,
                 1995, among Coast Resorts, Inc., the Gold Coast Hotel and
                 Casino, a Nevada limited partnership, the Barbary Coast Hotel
                 and Casino, a Nevada general partnership, and Gaughan-Herbst,
                 Inc., a Nevada corporation

**2.2            Supplement to Agreement and Plan of Reorganization dated as of
                 December 22, 1995, among Coast Resorts, Inc., the Gold Coast
                 Hotel and Casino, a Nevada limited partnership, the Barbary
                 Coast Hotel and Casino, a Nevada general partnership, and
                 Gaughan-Herbst, Inc., a Nevada corporation

*3.1             Articles of Incorporation of Coast Resorts, Inc.

*3.2             Bylaws of Coast Resorts, Inc.

***10.1          Indenture dated as of January 30, 1996, among Coast Hotels and
                 Casinos, Inc., the Guarantors, and American Bank National
                 Association, as Trustee.

***10.2          Registration Rights Agreement dated as of January 30, 1996
                 among Coast Hotels and Casinos, Inc., the Guarantors, and Bear,
                 Stearns & Co. Inc. and BA Securities, Inc.

***10.3          Form of Note (included in Exhibit 4.1)

***10.4          Note Guarantee of Coast Resorts, Inc.

***10.5          Note Guarantee of Coast West, Inc.

***10.6          Leasehold Deed of Trust, Assignment of Rents, Leases and
                 Security Agreement dated January 30, 1996 of Coast Hotels and
                 Casinos, Inc.

***10.7          Leasehold Deed of Trust, Assignment of Rents, Leases and
                 Security Agreement dated January 30, 1996 of Coast West, Inc.

***10.8          Security Agreement dated January 30, 1996 (Coast Hotels and
                 Casinos, Inc.)

***10.9          Security Agreement dated January 30, 1996 (Coast West, Inc.)

***10.10         Stock Pledge and Security Agreement dated January 30, 1996
                 (Coast Resorts, Inc.)

***10.11         Disbursement and Escrow Agreement dated January 30, 1996

***10.12         Pledge and Escrow Agreement dated January 30, 1996

***10.13         Collateral Assignment of Contracts dated January 30, 1996

***10.14         Escrow Agreement dated January 30, 1996

                                       20
<PAGE>

***10.15         Unsecured Environmental Indemnification Agreement (Coast Hotels
                 and Casinos, Inc.)

***10.16         Unsecured Environmental Indemnification Agreement (Coast West,
                 Inc.)

***10.17         Tax Sharing Agreement dated as of January 30, 1996

***10.18         Agreement Between Owner and Contractor dated as of January 24,
                 1996, between J.A. Tiberti Construction Co., Inc. and Coast
                 Hotels and Casinos, Inc.

*10.19           Ground Lease dated as of October 1, 1995, between The Tiberti
                 Company, a Nevada general partnership, and Coast Hotels and
                 Casinos, Inc. (as successor of Gold Coast Hotel and Casino, a
                 Nevada limited partnership)

*10.20           Lease Agreement dated May 1, 1992, by and between Empey
                 Enterprises, a Nevada general partnership, as lessor, and the
                 Barbary Coast Hotel & Casino, a Nevada general partnership, as
                 lessee

*10.21           Ground Lease Agreement dated October 28, 1994 by and among 21
                 Stars, Ltd., a Nevada limited liability company, as landlord,
                 Barbary Coast Hotel & Casino, a Nevada general partnership, as
                 tenant, Wanda Peccole, as successor trustee of the Peccole 1982
                 Trust dated February 15, 1982 ("Trust), and The William Peter
                 and Wanda Ruth Peccole Family Limited Partnership, a Nevada
                 limited partnership ("Partnership"), and, together with Trust,
                 as owner, as amended

***10.22         Form of Subordination Agreement with former Gold Coast partners
                 that hold Subordinated Notes

*10.23           Lease dated as of November 1, 1982, by and between Nevada Power
                 Company, a Nevada Corporation as landlord, and Barbary Coast
                 Hotel and Casino, a Nevada general partnership

*10.24           Leasehold Deed of Trust, Assignment of Rents and Security
                 Agreement dated February 13, 1991, by and between the Barbary
                 Coast Hotel and Casino, a Nevada general partnership, First
                 American Title Company of Nevada, and Exber, Inc., a Nevada
                 corporation

*16              Letter re Change in Certifying Accountant

*21              List of Subsidiaries of Coast Resorts, Inc.

27               Financial Data Schedule
-------------------------
*   Previously filed as an exhibit to the Registrant's Form 10 General Form For
Registration of Securities, as amended, originally filed on October 3, 1995 (the
"Registration Statement")

**  Previously filed as an exhibit to Amendment No. 2 to the Registration
Statement, filed on January 12, 1996

*** Previously filed as an exhibit to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1995.


(b)  REPORTS ON FORM 8-K

     The Company filed no Reports on Form 8-K during the last quarter of the
1996 fiscal year.

                                       21
<PAGE>

                                   SIGNATURES


Pursuant to the requirements of Section 13 or Section 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form
10-K to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Las Vegas, State of Nevada, on March 31, 1997.

                              COAST RESORTS, INC.



                              By:   /s/ MICHAEL J. GAUGHAN
                                    _________________________
                                      Michael J. Gaughan
                                      Chief Executive Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual
Report on Form 10-K has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

SIGNATURE                        TITLE                          DATE
-----------------------------    ----------------------------   ---------------

/s/   MICHAEL J. GAUGHAN         Chairman of the Board of        March 31, 1997
-----------------------------    Directors and Chief Executive
Michael J. Gaughan               Officer (Principal Executive
                                 Officer)

/s/  GAGE PARRISH                Director and Chief Financial    March 31, 1997
-----------------------------    Officer
Gage Parrish                     (Principal Financial and
                                 Accounting Officer)

/s/  HARLAN D. BRAATEN           Director                        March 31, 1997
-----------------------------
Harlan D. Braaten

/s/  JERRY HERBST                Director                        March 31, 1997
-----------------------------
Jerry Herbst

/s/  J. TITO TIBERTI             Director                        March 31, 1997
-----------------------------
J. Tito Tiberti

/s/  CHARLES SILVERMAN           Director                        March 31, 1997
-----------------------------
Charles Silverman

/s/  MICHAEL CORRIGAN            Director                        March 31, 1997
-----------------------------
Michael Corrigan

/s/  JOSEPH A. BLASCO            Director                        March 31, 1997
-----------------------------
Joseph A. Blasco


                                       22
<PAGE>

                         INDEX TO FINANCIAL STATEMENTS
                              COAST RESORTS, INC.

Report of Independent Accountants.........................................  23

Consolidated Balance Sheets of Coast Resorts, Inc. as of December 31,
 1995 and 1996 ...........................................................  24

Consolidated Statements of Income of Coast Resorts, Inc. for the years
 ended December 31, 1994, 1995 and 1996...................................  25

Consolidated Statements of Stockholders' Equity of Coast Resorts,
 Inc. for the years ended December 31, 1994, 1995 and 1996................  26

Consolidated Statements of Cash Flows of Coast Resorts, Inc. for the years
 ended December 31, 1994, 1995 and 1996...................................  27

Notes to Consolidated Financial Statements................................  28


                                       23
<PAGE>

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Directors and Stockholders of
 Coast Resorts, Inc. and Subsidiaries

  We have audited the consolidated financial statements and financial statement
schedules of Coast Resorts, Inc. and subsidiaries as listed in item 14(a) of
this Form 10K. These financial statements and financial statement schedules are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and financial statement schedules 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 consolidated financial position of Coast Resorts,
Inc. as of December 31, 1995 and 1996 and the consolidated results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996 in conformity with generally accepted accounting principles.
In addition, in our opinion, the financial statement schedules referred to
above, when considered in relation to the basic financial statements taken as a
whole, present fairly, in all material respects, the information required to be
included therein.

  As more fully explained in Note 2, the Company changed its method of
accounting for marketable securities and depreciation in 1994.



COOPERS & LYBRAND L.L.P.

Las Vegas, Nevada
February 21, 1997

                                       24
<PAGE>

                      COAST RESORTS, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1995 AND 1996
                   (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

                                     ASSETS

<TABLE>
<CAPTION>

ASSETS:                                      1995        1996
                                        ------------------------
<S>                                        <C>         <C>
  CURRENT ASSETS:
  Cash and cash equivalents, including
   restricted cash of $8,186 in 1996....    $ 14,543    $ 61,567
  Accounts receivable, less allowance
   for doubtful accounts
     of $374 (1995) and $379 (1996).....       1,990       3,659
  Inventories...........................       4,079       6,364
  Refundable income taxes...............          --       1,384
  Prepaid expenses and other............       2,427       5,912
                                            --------    --------
    TOTAL CURRENT ASSETS................      23,039      78,886
  PROPERTY AND EQUIPMENT, net...........     125,155     286,580
  OTHER ASSETS..........................       4,169       6,780
                                            --------    --------

                                            $152,363    $372,246
                                            ========    ========

                LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable......................    $  6,507    $ 13,479
  Accrued liabilities...................      16,308      23,864
  Construction accounts payable.........          --      23,517
  Current portion of long-term debt.....       1,591       6,781
                                            --------    --------
    TOTAL CURRENT LIABILITIES...........      24,406      67,641
                                            --------    --------
LONG-TERM DEBT, less current portion....      83,357     195,764
DEFERRED INCOME TAXES...................          --       4,863
DEFERRED RENT...........................       1,712       4,929
                                            --------    --------
TOTAL LIABILITIES.......................     109,475     273,197

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
  Preferred Stock, $.01 par value,
   500,000 shares authorized,
    no shares issued and outstanding....          --          --
  Common stock, $.01 par value,
   2,000,000 shares authorized,
    1,000,000 shares (1995) and
     1,494,353 (1996) issued
    and outstanding.....................          10          15
  Additional paid-in capital............      19,340      95,398
  Retained earnings.....................      23,538       3,636
                                            --------    --------
    TOTAL STOCKHOLDERS' EQUITY..........      42,888      99,049
                                            --------    --------
                                            $152,363    $372,246
                                            ========    ========
</TABLE>

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

                                       25
<PAGE>

                      COAST RESORTS, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF INCOME
              FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>

                                              1994          1995          1996
                                           -----------   -----------   -----------
<S>                                        <C>           <C>           <C>
OPERATING REVENUES:
   Casino...............................   $  129,086    $  129,675    $  148,509
   Food and Beverage....................       36,824        38,468        39,517
   Hotel................................       12,232        13.233        14,700
   Other................................        9,386         9,968        10,635
                                           ----------    ----------    ----------
     GROSS OPERATING REVENUES...........      187,528       191,344       213,361
   Less:  promotional allowances........      (14,955)      (16,588)      (17,374)
                                           ----------    ----------    ----------
     NET OPERATING REVENUES.............      172,573       174,756       195,987
                                           ----------    ----------    ----------

OPERATING EXPENSES:
   Casino...............................       65,376        67,782        72,849
   Food and beverage....................       34,461        31,242        30,768
   Hotel................................        6,934         6,692         6,921
   Other................................        8,257         8,537         8,025
   General and administrative...........       32,940        34,186        39,085
   Pre-opening expenses.................           --            --         7,125
   Land leases..........................           --           515         2,060
   Guaranteed payments to former                2,672           858            --
    partners............................
   Deferred (non-cash) rent.............           --           431         1,760
   Depreciation and amortization........        6,766         7,280         7,883
                                           ----------    ----------    ----------
     TOTAL OPERATING EXPENSES...........      157,406       157,523       176,476
                                           ----------    ----------    ----------
     OPERATING INCOME...................       15,167        17,233        19,511
                                           ----------    ----------    ----------

OTHER INCOME (EXPENSES):
   Interest expense:
      Related parties...................         (169)       (3,126)         (160)
      Other.............................         (176)         (760)      (22,076)
   Interest income......................          118           106         4,791
   Interest capitalized.................           --           235         7,464
   Gain on disposal of equipment........           23            92            58
                                           ----------    ----------    ----------
       TOTAL OTHER INCOME (EXPENSES)....         (204)       (3,453)       (9,923)
                                           ----------    ----------    ----------
NET INCOME BEFORE INCOME TAXES..........       14,963        13,780         9,588
PROVISION FOR INCOME TAXES..............          ---           ---         5,952
                                           ----------    ----------    ----------
NET INCOME..............................   $   14,963    $   13,780    $    3,636
                                           ==========    ==========    ==========

NET INCOME PER SHARE OF COMMON STOCK....   $       --    $       --         $2.47
                                           ==========    ==========    ==========
WEIGHTED AVERAGE SHARES OUTSTANDING.....           --            --     1,472,742
                                           ==========    ==========    ==========

UNAUDITED PRO FORMA DATA (Reflecting
 reorganization and   change in tax
 status)
   Provision for income taxes...........        5,251         4,823         3,452
                                           ----------    ----------    ----------
     Net Income.........................   $    9,712    $    8,957    $    6,136
                                           ==========    ==========    ==========

Net income per share of common stock....        $9.71         $8.96         $4.17
                                           ==========    ==========    ==========
Weighted average shares outstanding.....    1,000,000     1,000,000     1,472,742
                                           ==========    ==========    ==========
</TABLE>
  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                       26
<PAGE>

                      COAST RESORTS, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>

                                                Common Stock
                                                ------------            Additional      Unrealized      Retained
                                             Shares        Amount     Paid-In Capital   Gains(Losses)   Earnings      Total
                                           ---------------------------------------------------------------------------------
<S>                                        <C>          <C>               <C>             <C>         <C>         <C>
Balance at January 1, 1994..............    1,000,000               $10        $19,340        $ 27    $ 79,278    $ 98,655
   Net income...........................                                                                14,963      14,963
  Change in unrealized gains (losses)
     on marketable securities...........                                                       (14)                    (14)
  Distributions to former partners......                                                               (25,823)    (25,823)
                                           -------------------------------------------------------------------------------
Balances at December 31, 1994...........    1,000,000                10         19,340          13      68,418      87,781
  Net income............................                                                                13,780      13,780
  Change in unrealized gains (losses)
     on marketable securities...........                                                       (13)                    (13)
  Distributions to former partners......                                                               (58,660)    (58,660)
                                           -------------------------------------------------------------------------------
Balances at December 31, 1995...........    1,000,000                10         19,340          --      23,538      42,888
  Exchange of notes payable of
     subsidiary for common stock........      494,353                 5         52,520                              52,525
  Reclassification of undistributed
     earnings to additional paid-in
     capital upon termination of
     partnership status.................                                        23,538                 (23,538)
  Net income............................                                                                 3,636       3,636
                                           -------------------------------------------------------------------------------
Balances at December 31, 1996...........    1,494,353               $15        $95,398        $ --    $  3,636    $ 99,049
                                           ===============================================================================

</TABLE>


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

                                       27
<PAGE>

                      COAST RESORTS, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>


                                             1994        1995         1996
                                           --------    --------    ---------
<S>                                        <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net Income...........................   $ 14,963    $ 13,780    $   3,636
                                           --------    --------    ---------
   ADJUSTMENTS TO RECONCILE NET INCOME
    TO NET CASH
      PROVIDED BY OPERATING ACTIVITIES:
          Depreciation and amortization.      6,766       7,280        7,883
          Provision for bad debt........        452         411           94
          Gain on disposal of equipment         (23)        (92)         (58)
           and securities...............
          Deferred Income taxes.........         --          --        4,234
          Deferred rent expense.........         --         431        1,760
          Amortization of original               --          --          497
           issue discount...............
          Other non-cash expenses.......         --         162           --
          (Increase) decrease in
           operating assets:
              Accounts receivable.......       (163)       (267)      (1,608)
              Income tax receivable.....         --          --       (1,384)
              Inventories...............       (553)        854       (2,286)
              Prepaid expenses and other       (461)         85       (1,395)
          Increase (decrease) in
           operating liabilities
             Accounts payable...........        868      (1,057)       5,952
             Accrued expenses...........        723         902        7,559
                                           --------    --------    ---------
               TOTAL ADJUSTMENTS........      7,609       8,709       21,248
                                           --------    --------    ---------
               NET CASH PROVIDED BY
                OPERATING ACTIVITIES         22,572      22,489       24,884
                                           --------    --------    ---------
CASH FLOWS FROM INVESTING ACTIVITIES
   Capital expenditures, net of amounts
    in accounts payable.................     (5,514)    (32,331)    (126,133)
   Proceeds from sale of equipment and
    securities..........................        160         219           20
   Issuance of notes receivable.........       (500)         --           --
   Principal payment from notes
    receivable..........................        345          --           --
                                           --------    --------    ---------
              NET CASH USES BY
               INVESTING ACTIVITIES          (5,509)    (32,112)    (126,113)
                                           --------    --------    ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from issuance of long-term
    debt, net of discounts and
    commissions.........................         --       4,500      164,133
   Proceeds from capital lease                   --          --       15,437
    borrowings..........................
   Proceeds from borrowings under bank        6,250      26,941        1,045
    lines of credit.....................
   Principal payments on bank lines of
    credit..............................     (4,100)     (4,000)     (29,200)
   Principal payments on long-term debt.     (2,211)    (10,413)      (1,826)
   Payments for debt issue costs........                 (1,169)      (1,336)
   Distributions to former partners.....    (14,823)     (8,660)          --
                                           --------    --------    ---------
              NET CASH PROVIDED BY
               (USED IN) FINANCING
               ACTIVITIES...............    (14,884)      7,199      148,253
                                           --------    --------    ---------
NET INCREASE (DECREASE) IN CASH & CASH
 EQUIVALENTS............................      2,179      (2,424)      47,024
CASH AND CASH EQUIVALENTS, at beginning
 of year................................     14,788      16,967       14,543
                                           --------    --------    ---------
CASH AND CASH EQUIVALENTS, at end of
 year...................................   $ 16,967    $ 14,543    $  61,567
                                           ========    ========    =========

</TABLE>
  The accompanying notes are an integral part of these consolidated financial
                                  statements.


                                       28
<PAGE>

                              COAST RESORTS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1--BACKGROUND INFORMATION AND BASIS OF PRESENTATION

 Background Information

  Coast Resorts, Inc. (the "Company") is a Nevada corporation and serves as a
holding company for Coast Hotels and Casinos, Inc. ("Coast Hotels") and Coast
West, Inc. ("Coast West"), also Nevada corporations.  Through Coast Hotels, the
Company owns and operates the following hotel-casinos in Las Vegas, Nevada:

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

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

         - The Orleans Hotel and Casino which is located approximately one mile
     west of the Las   Vegas Strip on Tropicana Avenue, opened for business on
     December 18, 1996.

  Prior to the Reorganization described below, the existing hotel-casinos had
previously been operated independently by Gold Coast Hotel and Casino, a Nevada
limited partnership organized in 1986 ("Gold Coast") and Barbary Coast Hotel and
Casino, a Nevada partnership organized in 1979 ("Barbary Coast").

  On January 1, 1996, the partners of Gold Coast and Barbary Coast (the
"Predecessor Partnerships") completed a reorganization (the
"Reorganization") with Coast Resorts. Coast Resorts was formed in September
1995 for the purpose of effecting such Reorganization of the Predecessor
Partnerships. Coast Resorts, Gold Coast and Barbary Coast were all related
through common ownership and management control.

  In the Reorganization, the partners of the Predecessor Partnerships each
transferred to Coast Resorts, by assignment or through the merger of Gaughan-
Herbst, Inc., a Nevada corporation, the sole general partner of the Gold Coast,
their respective partnership interests in the Predecessor Partnerships in
exchange for an aggregate of 1,000,000 shares of common stock, par value $.01
per share, of Coast Resorts. The partners of the Gold Coast (or their
principals) received in the aggregate 65% of such shares of common stock of
Coast Resorts, and the partners of the Barbary Coast received in the aggregate
35% of such shares. The shares of common stock were issued to the respective
partners (or their principals) of each such Predecessor Partnership based upon
such partners' pro rata interests in such Predecessor Partnership.

  Concurrently with the exchange of the partners' interests in the Predecessor
Partnerships and the merger of Gaughan-Herbst, Inc. into Coast Resorts, Coast
Resorts became the sole partner of each of the Predecessor Partnerships, and
each Predecessor Partnership dissolved and terminated. Immediately upon such
dissolution and termination, all of the assets and liabilities of the
Predecessor Partnerships became the assets and liabilities of Coast Resorts.
Coast Resorts immediately contributed to Coast Hotels all of the assets of the
Predecessor Partnerships other than those relating to a certain ground lease
(the "Coast West Lease"), which Coast Resorts contributed to Coast West.  In
addition, Coast Hotels assumed, jointly and severally with Coast Resorts, all of
the liabilities of the Predecessor Partnerships other than (i) obligations under
a portion of the subordinated notes payable to former partners and $1,500,000
principal amount of demand notes payable to a related party which were retained
by Coast Resorts and were exchanged for shares of Coast Resorts Common Stock (as
defined below), and (ii) those liabilities incident to the Coast West Lease, and
Coast West assumed, jointly and severally with Coast Resorts, all of the
liabilities of the Predecessor Partnerships incident to the Coast West Lease.

                                       29
<PAGE>

                              COAST RESORTS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -(CONTINUED)

NOTE 1--BACKGROUND INFORMATION AND BASIS OF PRESENTATION--(CONTINUED)


  Coast Resorts retained the liability for an aggregate principal amount of
$51,025,000 in notes payable to former partners and retained the liability for
$1,500,000 relating to demand notes due to a related party (the "Exchange
Liabilities"). On January 16, 1996, the Exchange Liabilities were exchanged for
494,353 shares of common stock, par value $.01 per share, of Coast Resorts (the
"Coast Resorts Common Stock"), based upon management's estimate of the fair
market value of such common stock.

  As a result of the Reorganization, the former partners of the Predecessor
Partnerships (or their principals) own all of the issued and outstanding shares
of capital stock of Coast Resorts, Coast Resorts owns all of the issued and
outstanding capital stock of Coast Hotels and Coast West, and Coast Hotels and
Coast West own and have assumed in the aggregate all of the assets and
liabilities of the Predecessor Partnerships (other than the Exchange Liabilities
that were exchanged for Coast Resorts Common Stock). Thereafter, Coast Hotels
and Coast West will carry on the prior business operations of the Predecessor
Partnerships.

  Coast West plans to hold the Coast West Lease for future development. Coast
West has had no source of income since its inception in September 1995. Coast
Hotels has agreed to provide Coast West with advances sufficient to make
payments on the Coast West Lease.

 Basis of Presentation

  Gold Coast and Barbary Coast  historically operated under a high degree of
common control. The former Managing General Partner of Gold Coast was also a
general partner, and the principal manager, of Barbary Coast. Due to the common
control of Gold Coast and Barbary Coast and the continuation of ownership by the
former partners, the Reorganization was accounted for as a reorganization of
entities under common control. Accordingly, the financial statements of the
Company for all periods are presented as if the Reorganization occurred at the
beginning of the earliest period presented and include the accounts of all
entities involved on a historical cost basis, in a manner similar to a pooling
of interests.  The Consolidated Financial Statements include the accounts of the
Company and all subsidiaries.  All intercompany balances and transactions have
been eliminated.

  The accompanying financial statements reflect the Exchange Liabilities as
obligations of the Company at December 31, 1995, as the exchange for Coast
Resorts Common Stock had not yet occurred. The exchange was accounted for
subsequent to the completion of the Reorganization, through the issuance of
Coast Resorts common stock in 1996 in the amount of $52,525,000, reflecting the
historical cost basis of the Exchange Liabilities.

                                       30
<PAGE>

                              COAST RESORTS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -(CONTINUED)


NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 Inventories

  Inventories, which consist primarily of food and beverage, liquor store, and
gift shop merchandise, are valued at the lower of cost (first-in, first-out) or
market value except for the base stocks of bar glassware and restaurant china
which are stated at original cost with subsequent replacements charged to
expense.

 Original Issue Discount and Debt Issue Costs

  Original issue discount is amortized over the life of the related indebtedness
using the effective interest method. Costs associated with the issuance of debt
are deferred and amortized over the life of the related indebtedness also using
the effective interest method.

 Property, Equipment and Depreciation

  Property and equipment are stated at cost. Expenditures for additions,
renewals and betterments are capitalized; expenditures for maintenance and
repairs are charged to expense as incurred. Upon retirement or disposal of
assets, the cost and accumulated depreciation are eliminated from the accounts
and the resulting gain or loss is included in income. Depreciation is computed
by the straight-line method over the estimated useful lives of property and
equipment, which range from 5 to 15 years for equipment and up to 40 years for
buildings and improvements.

  During 1994, the Company changed its method of accounting for depreciation for
property and equipment, to compute depreciation on the straight-line method. The
Company had used accelerated depreciation methods for computing depreciation
prior to such change. Although both methods are considered generally acceptable,
the straight-line method is more prevalent in the gaming industry and is
considered by management to therefore be preferable. The change in accounting
has been retroactively reflected in the Company's financial statements.

 Pre-opening and related promotional expense

  Costs associated with the opening of new hotel-casinos, including personnel,
training, certain marketing and other costs, are capitalized and charged to
expense over management's estimate of the period of economic benefit associated
with such costs. Management believes that such period, with respect to major
hotel-casinos, is within one fiscal quarter of the date of opening.

 Advertising Costs

  Costs for advertising are expensed as incurred, except costs for direct-
response advertising, which are capitalized and amortized over the period of the
related program. Capitalized advertising costs were immaterial at December 31,
1995 and 1996. Advertising expense was $3,669,000, $4,281,000 and $3,759,000 for
the years ended December 31, 1994, 1995 and 1996, respectively.

 Marketable Securities

  During the year ended December 31, 1994, the Company adopted Statement of
Financial Accounting Standards No. 115 ("SFAS 115"), "Accounting for Certain
Investments in Debt and Equity Securities."  The adoption of SFAS 115 resulted
in an increase in stockholders' equity of approximately $27,000 to reflect a net
unrealized holding gain at the beginning of the year.  No marketable securities
were outstanding  at December 31, 1995 and 1996.

  Marketable equity securities have been categorized as available for sale and
as a result are stated at fair value, as determined by market quotations on a
national stock exchange.  Realized gains and losses are charged to income while
unrealized holding gains and losses are included as a component of stockholders'
equity until realized.

                                       31
<PAGE>

                              COAST RESORTS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -(CONTINUED)

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

 Casino Revenue

  In accordance with common industry practice, the Company recognizes as casino
revenue the net win from gaming activities which is the difference between
amounts wagered and amounts paid to winning patrons.

 Deferred Revenue
  Wagers received on all sporting events are recorded as a liability until the
final outcome of the event when the payoffs, if any, can be determined.

 Progressive Jackpot Payouts

  The Company has a number of progressive slot machines, progressive poker games
and a progressive keno game. As coins are played on the progressive slot
machines, the amount available to win increases, to be paid out when the
appropriate jackpot is hit. The keno game and poker game payout also increases
with the amount of play, to be paid out when hit. In accordance with common
industry practice, the Company has recorded the progressive jackpot as a
liability with a corresponding charge against casino revenue.

 Promotional Allowances

  The retail value of hotel accommodations and food and beverage items provided
to customers without charge is included in gross revenues and then deducted as
promotional allowances, to arrive at net revenues.

  The estimated cost of providing these complimentary services is as follows:
<TABLE>
<CAPTION>
                                                    DECEMBER 31,
                                           ------------------------------
                                             1994       1995       1996
                                           --------   --------   --------
<S>                                        <C>        <C>        <C>
                                           (IN THOUSANDS)
      Hotel.............................    $ 1,350    $ 1,426    $ 1,804
      Food and beverage.................     14,465     14,704     14,725
                                            -------    -------    -------
      Total cost of promotional             $15,815    $16,130    $16,529
       allowances.......................    =======    =======    =======
</TABLE>
  The cost of promotional allowances has been allocated to expense as
follows:
<TABLE>
<CAPTION>
                                                    DECEMBER 31,
                                            -----------------------------
                                             1994       1995       1996
                                            -------    -------    -------
      <S>                                  <C>         <C>        <C>
                                           (IN THOUSANDS)
      Casino............................    $14,693    $15,232    $15,361
      Other.............................      1,122        898      1,168
                                            -------    -------    -------
                                            $15,815    $16,130    $16,529
                                            =======    =======    =======

</TABLE>

                                       32
<PAGE>

                              COAST RESORTS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -(CONTINUED)

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)


 Slot Club Promotion

  The Company has established promotional slot clubs to encourage repeat
business from frequent and active slot customers. Members in the clubs earn
points based on slot activity accumulated in the members' account. Points can be
redeemed for certain consumer products (typically household appliances), travel,
and food and beverage. The Company accrues for slot club points expected to be
redeemed in the future based on the average cost of items expected to be
redeemed.

 Income Taxes

  Prior to the Reorganization, the Company operated as individual partnerships
which did not pay federal income taxes. The partners of Gold Coast and Barbary
Coast were taxed on their proportionate share of each of their respective
partnership's taxable income or loss. Therefore, these statements do not include
any provision or liability for corporate income taxes prior to January 1, 1996.

  In connection with the Reorganization, effective January 1, 1996, the Company
adopted Statement of Financial Accounting Standards No. 109 "Accounting for
Income Taxes" ("SFAS 109").  Under SFAS 109 deferred tax assets and liabilities
are recognized for the expected future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases.  Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled.  Under SFAS 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.  The adoption of SFAS 109 on January 1, 1996
resulted in the recognition in the 1996 financial statements of net deferred tax
liabilities and a corresponding charge to earnings through the income tax
provision of approximately $2,500,000.  In addition, upon termination of the
partnership tax status on January 1, 1996, all undistributed earnings of the
predecessor partnerships were reclassified to additional paid-in capital.

 Cash and Cash Equivalents

  The Company considers all highly liquid investments with a remaining maturity
at acquisition of three months or less to be cash equivalents. Cash in excess of
daily requirements is typically invested in U.S. Government-backed repurchase
agreements with maturities of 30 days or less. Such investments are generally
made with major financial institutions having a high credit quality. At times,
the Company's cash deposited in financial institutions may be in excess of
federally insured limits.

 Net Income Per Common Share

  Net income per common share for the year ended December 31, 1996 is computed
by dividing net income by the weighted average number of shares of common stock
outstanding, which weighted average totaled 1,472,742 shares.  Net income per
common share for the years ended December 31, 1994 and 1995 has not been
presented as the Company operated as individual partnerships prior to the
Reorganization and no common stock was outstanding.  Unaudited pro-forma net
income per common share has been presented for the years ended December 31, 1994
and 1995 assuming that the Reorganization occurred on January 1, 1994.

  In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings Per Share."  SFAS
128 establishes new accounting standards for the computation and financial
statement presentation of earnings per share data.  SFAS 128 is effective for
statements issued for periods ending after December 15, 1997 and earlier
implementation is not permitted.  The Company expects that there will be no
material effect upon implementing SFAS 128 on its earnings per share
calculations.

                                       33
<PAGE>

                              COAST RESORTS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -(CONTINUED)

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

 Concentration of Credit Risk

  The Company extends credit to patrons throughout the world after background
checks and investigations of creditworthiness and does not require collateral.
The Company records provisions for potential credit losses and such losses have
been within management's expectations. Management believes that as of December
31, 1996, no significant concentration of credit risk exists for which an
allowance has not already been determined and recorded.

 Use of Estimates in the Preparation of Financial Statements

  The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.

 Reclassifications
  Certain amounts in the 1994 and 1995 financial statements have been
reclassified to conform with the 1996 presentation.


NOTE 3--MARKETABLE SECURITIES

  At December 31, 1994, marketable equity securities includes gross unrealized
holding gains and losses of $27,000 and $14,000, respectively. The net
unrealized holding gain of $13,000 as of December 31, 1994, has been included as
a separate component of stockholders' equity. For the year ended December 31,
1994, an unrealized holding loss was recognized, in the amount of $14,000.

  During 1995, all marketable equity securities were sold by the Company and, as
a result, the Company recorded a total realized gain of approximately $16,000.
Gross realized gains and losses on the sales of marketable equity securities,
based on the cost of such securities, were $27,900 and $11,900, respectively.

                                       34
<PAGE>

                              COAST RESORTS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -(CONTINUED)



NOTE 4--PROPERTY AND EQUIPMENT

  Major classes of property and equipment consist of the following:
<TABLE>
<CAPTION>
                                              DECEMBER, 31
                                         ----------------------
                                           1995         1996
                                         ---------   ----------
<S>                                      <C>         <C>
                                            (IN THOUSANDS)
      Building........................   $ 86,564     $191,464
      Furniture and fixtures..........     55,889      133,694
      Building improvements...........     10,128       13,118
                                         --------     --------
                                          152,581      338,276
      Less accumulated depreciation...    (62,709)     (68,058)
                                         --------     --------
                                           89,872      270,218
      Land............................     15,230       15,232
      Construction in progress........     20,053        1,130
                                         --------     --------
      Net property and equipment......   $125,155     $286,580
                                         ========     ========

</TABLE>

   Net property and equipment includes furniture and fixtures leased under
capital leases amounting to $241,000 and $30,215,000 less accumulated
depreciation of $21,000 and $229,000 at December 31, 1995 and 1996,
respectively.



NOTE 5--LEASES

  The Barbary Coast building is located on land which is leased. The lease term
runs through May 2003 with a purchase option and two 30 year renewal options. In
addition, the parking lot adjacent to the building is being leased under a 10
year lease which runs through December 2003.

  During December 1995, the Company entered into a ground lease for the land
underlying the Orleans. The land is owned by The Tiberti Company, a Nevada
general partnership, of which a stockholder of Coast

                                       35
<PAGE>

                              COAST RESORTS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -(CONTINUED)


NOTE 5- LEASES -(CONTINUED)

Resorts is the managing partner. The stockholder is also the president and a
director and stockholder of the general contractor for the construction of the
Orleans, as more fully described in Note 12. The lease provides for an initial
term of fifty years with a twenty-five year renewal option and includes a
purchase option, exercisable by the Company, at fair market value during the
twentieth and twenty-first years of the lease.   Lease payments range from
$175,000 to $250,000 per month during the first sixteen years of the lease
increasing by 3% per annum thereafter. The total amount of the base rent
payments on the Orleans lease is being charged to expense on the straight-line
method over the term of the lease. The Company has recorded deferred rent to
reflect the excess of rent expense over cash payments since inception of the
lease.

   In  September 1995, the Company entered into the Coast West Lease for a
parcel of land located in the western area of Las Vegas to be used for future
development opportunities.  The Coast West Lease term runs through December 31,
2055, with three 10-year renewal options.  Monthly payments started at $166,667
for the year ended December 31, 1995.  Thereafter, the monthly rent increases by
the amount of $5,000 in January of each year.  The lease includes a put option
exercisable by the landlord requiring the purchase of the land at fair market
value at the end of the 20th through 24th years of the lease, provided that the
purchase price shall not be less than ten times, nor more than fifteen times,
the annual rent at such time.  Based on the terms of the lease, the potential
purchase price commitment ranges from approximately $31,000,000 to approximately
$51,000,000 in the years 2014 through 2018.  The total amount of the base rent
payments on the Coast West Lease are being charged to expense on the straight-
line method over the term of the lease.  The Company has recorded deferred rent
to reflect the excess of rent expense over cash payments since the inception of
the lease.

 Future Minimum Lease Payments

  The following is an annual schedule of future minimum lease payments required
under operating leases that have initial or remaining noncancelable terms in
excess of one year as of December 31, 1996:
<TABLE>
<CAPTION>

           OPERATING LEASES
             (thousands)
<S>                               <C>
 1997..........................           $  4,520
 1998..........................              4,580
 1999..........................              4,890
 2000..........................              5,000
 2001..........................              5,060
 Later years...................            426,961
                                          --------
Total minimum lease payments...           $451,011
                                          ========
</TABLE>

                                       36
<PAGE>

                              COAST RESORTS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -(CONTINUED)

NOTE 5- LEASES -(CONTINUED)


Rental Expense
  Rent expense for the years ended December 31, 1994, 1995 and 1996 is as
follows:
<TABLE>
<CAPTION>

                                DECEMBER 31,
                          -------------------------
                          1994     1995      1996
                          -----   -------   -------
                               (IN THOUSANDS)
      <S>                 <C>     <C>       <C>
      Occupancy rentals   $ 300    $1,559    $8,597
      Other equipment..     171       262       414
                       ----------------------------
                          $ 471    $1,821    $9,011
                       ============================
</TABLE>



NOTE 6--ACCRUED LIABILITIES

  Major classes of accrued liabilities consist of the following:
<TABLE>
<CAPTION>

                                                                DECEMBER 31,
                                                              -----------------
                                                               1995      1996
                                                              -------   -------
                                                               (IN THOUSANDS)
      <S>                                                     <C>       <C>
      Slot club liability..................................   $ 4,813   $ 5,010
      Compensation and benefits............................     3,850     7,535
      Progressive jackpot payouts..........................     3,841     4,124
      Customer deposits and unpaid winners.................     1,509     2,256
      Deferred sports book revenue.........................       736       675
      Taxes................................................       699       975
      Accrued interest expense.............................       487     1,116
      Other................................................       373     2,173
                                                              -------   -------
                                                              $16,308   $23,864
                                                              =======   =======
</TABLE>

                                       37
<PAGE>

                              COAST RESORTS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -(CONTINUED)


NOTE 7--BANK LINES OF CREDIT

  Gold Coast and Barbary Coast previously maintained separate revolving line of
credit agreements with Bank of America Nevada which provided for maximum
borrowings of $25,000,000 and $3,000,000, respectively, through October 31,
1995. Interest on borrowings outstanding under the lines was payable monthly at
the bank's reference rate plus 1.125% (8.5% at December 31, 1994).

    During November 1995, in connection with the Reorganization, the revolving
bank lines of credit maintained by the Predecessor Partnerships were canceled
and replaced by a new revolving line of credit with Bank of America Nevada (the
"New Revolving Facility") maintained by Coast Resorts, Coast Hotels and the
Predecessor Partnerships (the "Borrowers"). The New Revolving Facility provided
for maximum borrowings of $37,500,000 through February 1996. At December 31,
1995, the Borrowers had approximately $28,155,000 outstanding under the New
Revolving Facility. Interest on outstanding borrowings was payable monthly at
the bank's reference rate.

  As more fully explained in Note 8, in January 1996, the New Revolving Facility
was canceled and repaid with a portion of the proceeds from the Company's
issuance of $175,000,000, First Mortgage Notes due 2002. Accordingly, all
borrowings under the New Revolving Facility have been classified as long-term
debt at December 31, 1995.

                                       38
<PAGE>

                              COAST RESORTS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -(CONTINUED)



NOTE 8 - LONG-TERM DEBT
Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                                           DECEMBER 31,
                                                                           ------------
                                                                       1995            1996
                                                                       ---------------------
                                                                          (in thousands)

<S>                                                                    <C>         <C>
Bank line of credit classified as long-term (See Note 7)               $ 28,155      $     --
--------------------------------------------------------

Related parties:
----------------

Uncollateralized note payable in monthly installments of $175,000
  principal and interest until said balance is paid in full.  The Note
  is payable to Exber, Inc. (See Note 12).  The effective rate of
  interest at December 31, 1996 was 8.5%;  repaid in 1996.                1,256            --

7.5% notes, payable in monthly installments of interest only, with all
  principal and any unpaid interest due December 31, 2001.  The
  notes are unsecured and are payable to the former partners of
  Barbary Coast and the Gold Coast.  Approximately $51,025,000
  of the notes were exchanged for Coast Resorts Common Stock
  on January 16, 1996 as more fully described in Note 1.                 53,000         1,975

6% uncollateralized note payable to related party due on demand.
  As more fully descrobed in Note 1, the note was exchanged for
  Coast Resorts Common Stock on January 16, 1996.
                                                                          1,500            --


Non-related parties:
--------------------

13% First Mortgage Notes due December 15, 2002, with interest
   payable semiannually on June 15 and December 15, net of
   original issue discount of $5,293                                         --       169,707


9.19% capital lease, payable in 60 monthly installments of
   approximately $750,000, principal and interest, collateralized
   by certain gaming and other equipment.                                    --        29,974

6% note, due February 1999, payable in 60 monthly installments
   of $13,000 principal and interest.  The note is collateralized
   by gaming equipment.                                                     414           284

Other notes payable and capital leases                                      269           605
                                                                        ---------------------
                                                                         84,594       202,545
Less current portion                                                      1,591         6,781
                                                                        ---------------------
                                                                        $83,003      $195,764
                                                                        =====================
</TABLE>

                                       39
<PAGE>

                              COAST RESORTS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -(CONTINUED)



NOTE 8--LONG-TERM DEBT--(CONTINUED)

   On January 30, 1996, Coast Hotels completed a private placement of $175
million principal amount of 13% First Mortgage Notes Due December 15, 2002 (the
"First Mortgage Notes"). Interest on the First Mortgage Notes is payable semi-
annually on June 15 and December 15, 1996. The First Mortgage Notes are
unconditionally guaranteed by Coast Resorts, Coast West and certain future
Subsidiaries of Coast Hotels. Net proceeds from the offering (after deducting
original issue discount and commissions) were approximately $164.1 million. Of
that amount, (i) approximately $114.8 million was deposited in a construction
disbursement account restricted for use by Coast Hotels to finance in part the
cost of developing, constructing, equipping and opening the Orleans, (ii)
approximately $19.3 million was used by Coast Hotels purchase U.S. Government
Obligations which were deposited into an interest escrow account restricted to
fund the interest payable on the First Mortgage Notes through December 15, 1996
and (iii) approximately $29.2 million was used by Coast Hotels to repay all
outstanding indebtedness under the Company's New Revolving Facility, which
facility was terminated. The balance of approximately $800,000 was used to pay,
in part, the estimated offering expenses of $2.4 million.

  The First Mortgage Notes are redeemable at the option of the Company at
106.50% and 103.25% of the principal amount thereof during the twelve month
periods beginning December 15, 2000 and 2001, respectively.  In addition, on or
before December 15, 1998, the Company may redeem up to $57.25 million aggregate
principal amount of First Mortgage Notes at 110% of the principal amount thereof
with the net proceeds of a public offering of Coast Resorts Common Stock subject
to certain limitations as outlined in the indenture.

   The indenture governing the Notes contains covenants that, among other
things, limit the ability of Coast Hotels to pay dividends or make advances to
Coast Resorts, repay existing indebtedness, incur additional indebtedness, or
sell material assets as defined in the indenture. Additionally, if on the
twentieth day of the month following the first month in which the Orleans Hotel
and Casino has been operating for 18 months, the Fixed Charge Coverage Ratio (as
defined in the indenture) of Coast Hotels for the most recently ended four full
fiscal quarters is less than 1.5 to 1, Coast Hotels shall consummate an asset
sale of the Barbary Coast within one year. The proceeds from such asset sale
shall be used by Coast Hotels to repurchase Notes at a price equal to 101% of
the principal amount of such Notes.

  Maturities on long-term debt are as follows:
<TABLE>
<CAPTION>

      YEAR ENDING DECEMBER 31,     MATURITIES
      ------------------------   --------------
                                 (IN THOUSANDS)
      <S>                        <C>
           1997................       $  6,781
           1998................          7,384
           1999................          7,890
           2000................          8,650
           2001................          2,086
           Thereafter..........        175,047
                                      --------
                                      $207,838
                                      ========
</TABLE>

                                       40
<PAGE>

                              COAST RESORTS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

NOTE 9-INCOME TAXES

      As discussed in Note 1, prior to the Reorganization, the Company operated
as individual partnerships which did not pay federal income taxes.  Therefore,
these statements do not include any provision or liability for corporate income
taxes prior to January 1, 1996.  Effective January 1, 1996, the Company adopted
SFAS 109 on January 1, 1996.  The adoption of SFAS 109 resulted in the
recognition in the 1996 financial statements of net deferred tax liabilities and
a corresponding charge to earnings through the income tax provision of
approximately $2,500,000.

      The components of the income tax provision for the year ended December 31,
1996 was as follows:
            Federal:
             Current                             $1,716
             Deferred                             4,236
                                                 ------
                                                 $5,952
                                                 ======

      The income tax provision for the year ended December 31, 1996 differs from
that computed at the federal statutory corporate tax rate as follows:

            Federal statutory rate                     34.0%
            Recognition of deferred income taxes
                       upon change of tax status       26.1%
             Other, net                                 2.0%
                                                       ----
            Effective tax rate                         62.1%
                                                      =====

      The tax effects of significant temporary differences representing net
deferred tax assets and liabilities at December 31, 1996 are as follows:
<TABLE>
Deferred tax assets:
Current:
<S>                                        <C>
      Accrued vacation..................    $   226
      Allowance for doubtful accounts...        133
      Accrued medical and other benefits        188
      Other.............................         80
                                            -------
           Total Current................        627
                                            -------

   Non-current:
      Deferred rent.....................      1,726
      Accrued slot club points..........        717
      Progressive liabilities...........      1,059
                                            -------
          Total non-current.............      3,502
                                            -------
Total deferred tax assets...............      4,129
                                            -------

Deferred tax liabilities:
   Non-current:
      Property, plant and equipment.....     (8,365)
                                            -------
Total deferred tax liabilities..........     (8,365)
                                            -------

Net deferred tax liability..............    $(4,236)
                                            =======
</TABLE>

                                       41
<PAGE>

                              COAST RESORTS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)




NOTE 10--FAIR VALUE OF FINANCIAL INSTRUMENTS

  The following estimated fair value of the Company's financial instruments have
been determined by the Company using available market information and
appropriate valuation methodologies. The carrying amounts of cash and cash
equivalents, accounts receivable, and accounts payable approximate fair values
due to the short-term maturities of these instruments. The carrying amounts and
estimated fair values of the Company's other financial instruments at December
31, 1996 are as follows:


<TABLE>
<CAPTION>

                                                          Carrying       Fair
                                                           Amount        Value
                                                         ----------   -----------
                                                              (Thousands)
                                <S>                      <C>          <C>
                                Liabilities:
                                Current portion of         $  6,781      $  6,781
                                long-term debt
                                First Mortgage Notes       $169,707      $194,650
                                Other long-term debt       $ 26,057      $ 25,669
</TABLE>
  The methods and assumptions are summarized as follows:

  For current portion of long-term debt, the carrying amount approximates fair
value due to the short-term nature of such debt.  The fair market value of the
first mortgage notes were determined based upon market quotes.  For all other
long-term debt, the fair value is estimated using a discounted cash flow
analysis, based on the incremental borrowing rates currently available to the
Company for debt with similar terms and maturity.


NOTE 11--CONTINGENCIES AND COMMITMENTS

   In the first quarter of 1997, the Company began construction on the second
phase of The Orleans.  The project, with an anticipated cost of approximately
$35.0 million, is expected to include twelve movie theaters, a child care
facility, retail space and additional restaurant, entertainment and gaming
facilities.  The project will contain approximately 180,000 square feet on two
levels.

  The Company is involved in various legal actions arising in the ordinary
course of business. In the opinion of management, the ultimate disposition of
these matters will not have a material adverse effect on the financial position,
results of operations or cash flows of the Company.

                                       42
<PAGE>

                              COAST RESORTS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)



NOTE 12--RELATED PARTY TRANSACTIONS

  The Company's advertising services are provided by LGT Advertising, a Company
owned by several stockholders of The Company. Advertising expense amounted to
approximately $2,276,000, $2,841,000, and $3,759,000 for the years ended
December 31, 1994, 1995 and 1996, respectively.

  The Company received laundry services from Exber, Inc. (dba El Cortez Hotel &
Casino). A major stockholder-officer of Exber, Inc. is the father of a major
stockholder of The Company.  Laundry expense payable to Exber, Inc. was
approximately $1,016,000, $1,065,000 and $864,000 for the years ended December
31, 1994, 1995, and 1996, respectively.  The Company discontinued its laundry
service from Exber, Inc. in October 1996.

  Included in operating expenses are guaranteed payments of $2,200,000 and
$398,000 to the former partners of Barbary Coast (now stockholders of the
Company) for the years ended December 31, 1994, and 1995, respectively. Also
included in operating expenses are guaranteed payments to the former Managing
Partner of Gold Coast (now a stockholder of the Company) of $472,000 and
$460,000 for the years ended December 31, 1994, and 1995. Guaranteed payments to
the Gold Coast Hotel and Casino's Managing Partner were based on a minimum
salary plus 1% of Gold Coast Hotel and Casino's profits as required under the
partnership agreement. Subsequent to the consummation of the Reorganization, the
guaranteed payment requirements of the Predecessor Partnerships have been
terminated.

  The Company purchases certain of its equipment and inventory for its
operations from RJS, a company owned by the father of a major stockholder and
director of the Company and the Company's restaurant manager.  RJS invoices the
Company based on actual costs incurred.  For the fiscal years ended December 31,
1994, 1995 and 1996, the Company incurred expense payable to RJS of
approximately $646,000, $388,000 and $4,075,000, respectively.

  A director of the Company is the President and sole stockholder of Yates -
Silverman, Inc. which has been retained by the Company as the designer of The
Orleans.  For the fiscal years ended December 31, 1994, 1995 and 1996, the
Company incurred expense payable to Yates-Silverman of approximately $0,
$409,000 and $508,000, respectively.

  The Company maintains numerous racetrack dissemination contracts with Las
Vegas Dissemination, Inc. ("LVD").  The son of a major stockholder and director
of the Company is the president and sole shareholder of LVD.  LVD has been
granted a license by the Nevada gaming authorities to disseminate live racing
for those events and tracks for which it contracts and has been granted the
exclusive right to disseminate all pari-mutuel services and race wire services
in the State of Nevada.  Under these dissemination contracts, the Company pays
to LVD an amount based on the wagers accepted for races held at the racetracks
covered by the respective contracts.  The Company also pays to LVD a monthly fee
for race wire services.  For the fiscal years ended December 31, 1994, 1995 and
1996, the Company incurred expenses payable to LVD of approximately $214,000,
$149,000 and $889,000, respectively.

                                       43
<PAGE>

                              COAST RESORTS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -(CONTINUED)


NOTE 12--RELATED PARTY TRANSACTIONS (CONTINUED)


  In February 1991, the Company borrowed $7,500,000 from Exber, Inc., in the
form of a collateralized note. On January 25, 1995, the Company borrowed
approximately $3,000,000 through an uncollateralized note payable to Exber,
Inc., a portion of which was used to pay off the balance due on the 1991
collateralized note payable to Exber, Inc. The amounts outstanding relating to
these notes was $1,256,000 at December 31, 1995.  The note was repaid during
1996.   Interest expense for the years ended December 31, 1994, 1995 and 1996 on
these notes amounted to $105,000, $181,000, and $37,000, respectively.

  In December 1994, $11,000,000 was distributed to the former partners of
Barbary Coast in the form of notes payable. In June 1995, $50,000,000 was
distributed to the former partners of Gold Coast in the form of notes payable.
In December 1995, Gold Coast repaid $8,000,000 of such notes. As more fully
described in Note 1, on January 16, 1996, approximately $51,025,000 of such
notes payable to former partners were exchanged for shares of Coast Resorts
Common Stock. Interest expense for the years ended December 31, 1994, 1995 and
1996 on these notes amounted to $0, $2,856,250, and $315,000 respectively.

  The Company has commenced construction of the second phase of The Orleans.
J.A. Tiberti Construction Company ("Tiberti Construction") is serving as the
general contractor for the second phase. Tiberti Construction also served as the
general contractor for the original construction of the Gold Coast and for
certain expansions thereof, for the original construction of the Barbary Coast
and all expansions thereof and for the original construction of The Orleans. The
President of Tiberti Construction is a stockholder and director of the Company
and Coast Hotels. For the years ended December 31, 1994, 1995, and 1996, the
Company incurred expenses of approximately $328,000, $10,906,000, and
$80,346,000, respectively, to Tiberti Construction in connection with such
construction services.

  As more fully described in Note 5, in December 1995, the Company has entered
into a ground lease with The Tiberti Company, with respect to the land
underlying The Orleans.  The President of The Tiberti Company is a director and
shareholder of the Company.  Amounts paid to the Tiberti Company with respect to
the lease were $3,021,000 for the year ended December 31, 1996.


NOTE 13--BENEFIT PLANS

401(k) Plans

   In November 1993, the Company adopted separate defined contribution 401(k)
plans for eligible employees of the Gold Coast and the Barbary Coast.  During
1996, the separate plans were consolidated into one plan.  All employees of the
Gold Coast and The Orleans are eligible to participate,  All employees of the
Barbary Coast not covered by a collective bargaining agreement are eligible to
participate. The employees may elect to defer up to 15% of their yearly
compensation, subject to statutory limits. The Company contributes 1% of the
employees' eligible compensation and also makes matching contributions of 50% of
the first 4% of the employees' contribution. Contribution expense was
$1,207,000, $1,224,000, and $1,176,000 for the years ended December 31, 1994,
1995, and 1996, respectively.

Defined Benefit Plan

  Beginning in 1993, certain employees at the Barbary Coast became covered by a
union-sponsored, collectively bargained, multi-employer, defined benefit pension
plan. The Barbary Coast contributed $293,000 $312,000 and $274,000 during the
years ended December 31, 1994, 1995, and 1996, respectively, for the plan. These
contributions are determined in accordance with the provisions of negotiated
labor contracts and generally are based on the number of hours worked.

                                       44
<PAGE>

                              COAST RESORTS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)


NOTE 13--BENEFIT PLANS (CONTINUED)

Stock Compensation Plan

  In December 1996, the Board of Directors adopted the 1996 Stock Incentive Plan
(the "Plan") which authorizes the issuance of (i) shares of Coast Resorts Common
Stock or any other class of security of the Company which is convertible into
shares of Coast Resorts Common Stock or (ii) a right or interest with an
exercise or conversion privilege at a price related to Coast Resorts Common
Stock or with a value derived from the value of such common stock. Awards under
the Plan are not restricted to any specified form or structure and may include,
without limitation, sales or bonuses of stock, restricted stock, stock options,
reload stock options, stock purchase warrants, other rights to acquire stock,
securities convertible into or redeemable for stock, stock appreciation rights,
limited stock appreciation rights, phantom stock, dividend equivalents,
performance units or performance shares. Officers, key employees, directors
(whether employee directors or non-employee directors) and consultants of the
Company and its subsidiaries are eligible to participate in the Plan.

  Under the terms of the Plan, the aggregate number of shares issued and
issuable pursuant to all awards (including all incentive stock options) granted
under the Plan shall not exceed 220,000 at any time.  In addition, the aggregate
number of shares subject to awards granted during any calendar year to any one
eligible person (including the number of shares involved in awards having a
value derived from the value of shares) shall not exceed 40,000.

  No awards shall be made under the Plan after the tenth anniversary of the
adoption of the Plan.  Although shares may be issued after the tenth anniversary
of the adoption of the Plan pursuant to awards made prior to such date, no
shares shall be issued under the Plan after the twentieth anniversary of
adoption of the Plan.  As of December 31, 1996, no awards have been made under
the Plan.

  The Financial Accounting Standards Board has issued Statement No. 123,
"Accounting for Stock-Based Compensation" ("SFAS No. 123").  This Statement
defines a fair value based method of accounting for an employee stock option in
which companies account for stock options by recognizing, as compensation
expense in the statement of operations, the fair value of stock options granted
over the vesting period of the option.  The statement also permits companies to
continue accounting for stock options under Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" ("APB No. 25").  Upon the
issuance of stock options, the Company has elected to account for stock options
under APB No. 25 and will disclose the pro forma impact on net income and
earning per share as if the Company had used the fair value method recommended
by SFAS No. 123.


                                       45
<PAGE>

                              COAST RESORTS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)



NOTE 14--SUPPLEMENTAL CASH FLOWS INFORMATION
<TABLE>
<CAPTION>

                                                   DECEMBER 31,
                                           ----------------------------
                                            1994      1995       1996
                                           -------   -------   --------
<S>                                        <C>       <C>       <C>
                                           (IN THOUSANDS)
Interest paid...........................   $   345   $ 3,164    $21,607
                                           =======   =======    =======
Income taxes paid.......................   $    --   $    --    $ 3,100
                                           =======   =======    =======

Supplemental schedule of non-cash
 investing and financing activities:

    Property and equipment asset
     acquisitions included in
     accounts payable or financed
     through capital leases ............   $ 9,042   $ 3,101    $38,918
                                           =======   =======    =======

    Distribution to former
     partners by issuance of
     notes payable............             $11,000   $50,000   $    --
                                           =======   =======   ========

     Conversion of notes
      payable to Coast Resorts             $    --   $    --   $52,525
      Common Stock.............            =======   =======   =======

</TABLE>


NOTE 15 - REGULATION OF GAMING OPERATIONS

   The gaming operations of the Company are subject to the licensing and
regulatory control of the Nevada Gaming Commission (the Nevada Commission), the
Nevada State Gaming Control Board (the Nevada Control Board) and the Clark
County Liquor and Gaming Board (the Clark County Board) (collectively, the
Nevada Gaming Authorities).  These agencies issue gaming licenses based upon,
among other considerations, evidence that the character and reputation of
principal owners, officers, directors, and certain other key employees are
consistent with regulatory goals.  The necessary licenses have been secured by
the Company.  The licenses are not transferable and must be renewed periodically
upon the payment of appropriate taxes and license fees.  The Nevada Gaming
Authorities have broad discretion with regard to the renewal of the licenses
which may at any time revoke, suspend, condition, limit or restrict a license
for any cause deemed reasonable by the issuing agency.  Officers, directors and
key employees of the Company must be approved by the Nevada Control Board and
licensed by the Nevada Commission and Clark County Board.


NOTE 16 - UNAUDITED PRO FORMA DATA

   Prior to the Reorganization, the Company operated as individual partnerships
which did not pay federal income taxes.  The partners of Gold Coast and Barbary
Coast were taxed on their proportionate share of each of their respective
partnership's taxable income or loss.  The pro forma provision for income taxes
and the related pro forma net income and pro forma net income per common share
are unaudited and reflect adjustments to income taxes assuming that the change
in corporate income tax status occurred as of January 1, 1994.

                                       46
<PAGE>

                                                                      SCHEDULE I


                      COAST RESORTS, INC. AND SUBSIDIARIES

                 CONDENSED FINANCIAL INFORMATION OF THE COMPANY


The following condensed financial statements reflect the parent company (Coast
Resorts, Inc.) only, accounting for its wholly owned subsidiaries on the equity
method of accounting.  All footnote disclosures have been omitted since the
information has been included in the Company's consolidated financial statements
included elsewhere in this Form 10-K.


                              COAST RESORTS, INC.
                             (PARENT COMPANY ONLY)

                                 BALANCE SHEETS
                   (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
                                           DECEMBER 31,   DECEMBER 31,
                                           ------------   -------------
                                               1995           1996
                                           ------------   -------------
<S>                                        <C>            <C>
                 ASSETS
CURRENT ASSETS:
Cash and cash equivalents...............        $     3        $     3
                                                -------        -------
  TOTAL CURRENT ASSETS..................              3              3
                                                -------        -------
INVESTMENT IN SUBSIDIARIES..............         42,888         99,102
                                                -------        -------
                                                $42,891        $99,105
                                                =======        =======

     LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Due to affiliates.......................              3             56
                                                -------        -------
  TOTAL CURRENT LIABILITIES.............        $     3        $    56
                                                -------        -------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value,
 500,000 shares authorized, none issued
 and outstanding........................             --
Common stock, $.01 par value, 2,000,000
 shares authorized, 1,000,000
 (1995) and 1,494,353 (1996)
 issued and outstanding.................             10             15
Additional paid-in capital..............         19,340         95,398
Retained earnings.......................         23,538          3,636
                                                -------        -------
  TOTAL STOCKHOLDERS' EQUITY............         42,888         99,049
                                                -------        -------
                                                $42,891        $99,105
                                                =======        =======

</TABLE>


                                       47
<PAGE>

                                                          SCHEDULE I (CONTINUED)


                              COAST RESORTS, INC.
                             (PARENT COMPANY ONLY)
                              STATEMENTS OF INCOME
                   (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>

                                                  Year Ended December 31,
                                           ------------------------------------
                                              1994         1995         1996
                                           ----------   ----------   ----------
<S>                                        <C>          <C>          <C>
Equity interest in income from             $   14,963   $   13,780   $    3,689
 subsidiaries...........................
General and administrative expenses.....           --           --           81
Income before income taxes..............       14,963       13,780        3,608
Income tax provision (benefit)..........           --           --          (28)

                                           ----------   ----------   ----------
NET INCOME..............................   $   14,963   $   13,780   $    3,636
                                           ==========   ==========   ==========
Net income per share of common stock....   $       --   $       --   $     2.47


Weighted average common shares
 outstanding............................           --           --    1,472,472


UNAUDITED PRO FORMA DATA (reflecting
 reorganization and change in tax
  status of subsidiaries):
Income before income taxes..............   $    9,712   $    8,957   $    6,108

Provision (benefit) for income taxes....           --           --          (28)
Net income..............................   $    9,712   $    8,957   $    6,136
                                           ==========   ==========   ==========
Net income per share of common stock....   $     9.71   $     8.96   $     4.17
                                           ==========   ==========   ==========
Weighted average common shares              1,000,000    1,000,000    1,472,472
 outstanding............................   ==========   ==========   ==========
</TABLE>

                                       48
<PAGE>

                                                          SCHEDULE I (CONTINUED)



                              COAST RESORTS, INC.
                             (PARENT COMPANY ONLY)

                            STATEMENTS OF CASH FLOWS

                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>



                                                YEAR ENDED DECEMBER 31,
                                           ---------------------------------
                                             1994        1995        1996
                                           ---------   ---------   ---------
<S>                                        <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income............................   $ 14,963    $ 13,780    $  3,636
                                           --------    --------    --------
  ADJUSTMENTS TO RECONCILE NET INCOME
    TO NET CASH PROVIDED BY OPERATING
    ACTIVITIES:
     Equity interest in net income from
      subsidiaries......................    (14,963)    (13,780)     (3,689)
     Net increase due from affiliates...         --          --          53
                                           --------    --------    --------
        TOTAL ADJUSTMENTS...............    (14,963)    (13,780)     (3,636)
                                           --------    --------    --------
        NET CASH PROVIDED BY
          OPERATING ACTIVITIES..........         --          --          --
                                           --------    --------    --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of common stock         --           4          --
  Cash used to purchase subsidiaries'            --          (1)         --
   stock................................   --------    --------    --------
        NET CASH USED BY FINANCING
          ACTIVITIES....................         --           3          --
                                           --------    --------    --------
NET INCREASE (DECREASE) IN CASH AND CASH
 EQUIVALENTS............................         --           3          --
                                           --------    --------    --------
CASH AND CASH EQUIVALENTS, at beginning
 of year................................         --          --           3
                                           --------    --------    --------
CASH AND CASH EQUIVALENTS, at end of
 year...................................   $     --    $      3    $      3
                                           ========    ========    ========
</TABLE>

                                       49
<PAGE>

                                                                     SCHEDULE II


                      COAST RESORTS, INC. AND SUBSIDIARIES

                       VALUATION AND QUALIFYING ACCOUNTS
              FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
                                (IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                     ADDITIONS
                                                                     ---------
                                    BALANCE AT         CHARGED TO COSTS       CHARGED TO OTHER                     BALANCE AT END OF

DESCRIPTION                      BEGINNING OF YEAR       AND EXPENSES             ACCOUNTS         DEDUCTIONS(A)          YEAR
------------------------------------------------------------------------------------------------------------------------------------

<S>                             <C>                   <C>                   <C>                    <C>             <C>

 Allowance for doubtful accounts
      Year ended December
       31, 1994                      $143                    $452                     --$        $213                    $382
                                    =====                   =====                    ====       =====                   =====
      Year ended December
       31, 1995                      $382                    $423                     --$        $431                    $374
                                    =====                   =====                    ====       =====                   =====
      Year ended December
       31, 1996                      $374                    $ 94                     --$        $ 89                    $379
                                    =====                   =====                    ====       =====                   =====
</TABLE>
(A) Accounts written off

                                       50