<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, 1997

                                      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, 1998 was 1,494,352.94. The aggregate market value of the Common Stock
held by non-affiliates of the Registrant, was $59,864,765 as of March 27, 1998.

                                  ___________

                      DOCUMENTS INCORPORATED BY REFERENCE

The following documents are incorporated by reference: In Part III, portions of
the Registrant's definitive Proxy Statement for the Registrant's 1998 Annual
Meeting of Stockholders, to be filed with the Securities and Exchange Commission
within 120 days of the end of the Registrant's fiscal year.
<PAGE>

                              COAST RESORTS, INC.

                               Table of Contents

                           Annual Report on Form 10-K
                  For the Fiscal Year Ended December 31, 1997

<TABLE>
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                                               PART I

Item 1.      Business...................................................................................  3
Item 2.      Properties.................................................................................  9
Item 3.      Legal Proceedings.......................................................................... 10
Item 4.      Submission of Matters to a Vote of Security Holders........................................ 10

                                              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................................................ 19
Item 9.      Changes in and Disagreements with Accountants on Accounting and Financial Disclosure....... 19

                                              PART III

Item 10.     Directors and Executive Officers of the Registrant......................................... 20
Item 11.     Executive Compensation..................................................................... 20
Item 12.     Security Ownership of Certain Beneficial Owners and Management............................. 20
Item 13.     Certain Relationships and Related Transactions............................................. 20

                                              PART IV

Item 14.     Exhibits, Financial Statements, Schedules and Reports on Form 8-K.......................... 21
</TABLE>

                                       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 2,050 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.

     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 and a showroom/dance hall featuring live
entertainment.  Other amenities include a gift shop, 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

                                       3
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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 and live entertainment in the showroom/dance hall.  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 Hilton 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 the
latter part of 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 524 slot machines, 41 table games, race and sports books
and other amenities. The Barbary Coast also features an 8-story tower with 197
hotel rooms. The Barbary Coast is furnished and decorated in an elegant turn-of-
the-century Victorian theme and includes three bars and three restaurants,
including Michael's gourmet restaurant, Drai's on the Strip (leased to a third
party) and the Victorian Room.

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 2,200 slot machines, 52 table games, a keno lounge, a poker parlor
and race and sports books.  The Orleans also includes an 827-seat theater that
features live entertainment and other special events.  In December 1997, the
Company completed and opened the second phase of The Orleans, including twelve
"stadium seating" movie theaters, a child care facility and video arcade.


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, 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 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

                                       4
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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 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.  Any future
development would be subject to, among other things, the Company's ability to
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 hotel-casinos' 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 Las Vegas area 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 1998 and 1999 with the
anticipated openings of properties such as Bellagio, Paris and the Venetian.
Management believes that 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

                                       5
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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.  In 1995, the Company completed Phase I environmental assessments at
the 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.


EMPLOYEES

     At March 1, 1998, the Company had approximately 4,900 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 are 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

                                       6
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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.

     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

                                       7
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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.

     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 has 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

                                       8
<PAGE>

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.

     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.


CERTAIN FORWARD-LOOKING STATEMENTS

     Certain information included in this Form 10-K and other materials filed or
to be filed by the Company with the Securities and Exchange Commission (as well
as information included in oral statements or other written statements made or
to be made by the Company) contains forward-looking statements, within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such statements include
information relating to plans for future expansion and other business
development activities as well as other capital spending, financing sources and
the effects of regulation ( including gaming and tax regulation) and
competition. Such forward-looking information involves important risks and
uncertainties that could significantly affect anticipated results in the future
and, accordingly, such results may differ from those expressed in any forward-
looking statements made by or on behalf of the Company. These risks and
uncertainties include, but are not limited to, those relating to development and
construction activities, dependence on existing management, leverage and debt
service (including sensitivity to fluctuations in interest rates), competition,
domestic or global economic conditions, pending litigation, changes in federal
or state tax laws or the administration of such laws and changes in gaming laws
or regulations (including the legalization of gaming in certain jurisdictions).


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

                                       9
<PAGE>

Tiberti Company, a Nevada general partnership of which J. Tito Tiberti, a
director of the Company, is managing partner (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 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 ended December 31, 1995. Thereafter, the monthly rent
increases by the amount of $5,000 in January of each year. The landlord has the
option to require 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, 1997.

                                       10
<PAGE>

                                    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, 1998 the Company had 71 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 indentures under which the 13% First Mortgage Notes and the 10 7/8% First
Mortgage Notes were issued (see "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources" in Item 7) restrict the ability of Coast Hotels to pay dividends or
make other distributions to the Company. (See note 6 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 financial statements and notes thereto included elsewhere in
this Form 10-K. The balance sheets and statements of income data as of and for
each of the five years in the period ended December 31, 1997 are derived from
the financial statements of the Company which have been audited by Coopers &
Lybrand L.L.P. The financial statements of the Company as of December 31, 1996
and 1997 and for each of the three years in the period ended December 31, 1997
are included in this report on Form 10-K.

<TABLE>
<CAPTION>
                                                                                      FOR YEARS ENDED DECEMBER 31,
                                                                                  ------------------------------------
                                                                 1993           1994           1995          1996(1)         1997
                                                             ----------------------------------------------------------------------
                                                                                       (DOLLARS IN THOUSANDS)
<S>                                                          <C>            <C>            <C>            <C>            <C>
Statements of Income Data:
Net revenues............................................     $  169,573     $  172,573     $  174,756     $  195,987     $  293,883
Departmental operating expenses (2).....................        108,662        115,028        114,253        118,563        191,849
General and administrative expenses.....................         32,402         32,940         34,186         39,085         57,877
Guaranteed payments to former
     partners (3).......................................          2,485          2,672            858             --             --
Cash land rent payments.................................             --             --            515          2,060          4,220
Deferred rent...........................................             --             --            431          1,760          4,078
Pre-opening.............................................             --             --             --          7,125             --
Depreciation and amortization...........................          7,822          6,766          7,280          7,883         18,278
                                                             ----------     ----------     ----------     ----------     ----------
Operating income........................................         18,202         15,167         17,233         19,511         17,581
Interest expense, net...................................           (837)          (227)        (3,545)        (9,981)       (25,225)

Other income............................................              3             23             92             58            919
                                                             ----------     ----------     ----------     ----------     ----------
Net income (loss) before income taxes...................         17,368         14,963         13,780          9,588         (6,725)

Provision (benefit) for income tax......................             --             --             --          5,952         (2,115)

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

Net income (loss).......................................     $   17,368     $   14,963     $   13,780     $    3,636     $   (4,610)

                                                             ==========     ==========     ==========     ==========     ==========


Net income per share of common stock....................     $       --     $       --     $       --     $     2.47     $    (3.08)
                                                             ==========     ==========     ==========     ==========     ==========


Weighted average common shares outstanding                           --             --             --      1,472,742      1,494,353

                                                             ==========     ==========     ==========     ==========     ==========


Pro Forma Information to Reflect
CHANGE IN TAX STATUS (4):
Provision (benefit) for income taxes....................          6,117          5,251          4,823          3,452         (2,115)

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

Net income (loss).......................................     $   11,251     $    9,712     $    8,957     $    6,136     $   (4,610)

                                                             ==========     ==========     ==========     ==========     ==========


Net income (loss) per share of common stock.............     $    11.25     $     9.71     $     8.96     $     4.17     $    (3.08)

                                                             ==========     ==========     ==========     ==========     ==========


Weighted average common shares outstanding                    1,000,000      1,000,000      1,000,000      1,472,742      1,494,353

                                                             ==========     ==========     ==========     ==========     ==========


Other Data:
EBITDA (5)..............................................     $   26,024     $   21,933     $   24,944     $   36,279     $   39,937

Capital expenditures....................................     $    2,736     $    5,514     $   32,331     $  126,133     $   58,912

Distributions to partners (6)...........................     $   11,500     $   25,823     $   58,660     $       --     $       --

</TABLE>
_____________________________

SEE FOOTNOTES TO SELECTED FINANCIAL DATA

                                       12
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA (CONTINUED)

<TABLE>
<CAPTION>
                                                                             AS OF DECEMBER 31,
                                                            ------------------------------------------------------
                                                             1993       1994       1995       1996(1)       1997
                                                            ------------------------------------------------------
<S>                                                        <C>        <C>        <C>        <C>           <C>
Balance Sheet Data (dollars in thousands):
Cash and cash equivalents (7)...........................   $ 14,788   $ 16,967   $ 14,543   $ 61,567      $ 29,430
Total assets............................................    123,570    134,295    152,363    374,022       366,619
Total long-term debt (8)................................      1,464     11,776     83,357    195,764       207,173
Stockholders' equity....................................     98,628     87,781     42,888     99,049        94,439
------------------------------------------------------------------------------------------------------------------
</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, deferred (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 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.  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,
                                                       -----------------------
                                                          1995              1996             1997
                                                     ---------------   ---------------   -------------
<S>                                                  <C>               <C>               <C>
Gold Coast
  Net operating revenues..........................          $130,695          $140,548        $126,490
  Operating income................................            17,933            28,975          22,603
  EBITDA (1)......................................            23,390            33,609          27,403

BARBARY COAST
  Net operating revenues..........................          $ 44,061          $ 49,419        $ 44,610
  Operating income................................               246             4,155           1,034
  EBITDA (1)......................................             2,069             5,800           2,627

THE ORLEANS
  Net operating revenues..........................                --          $  6,020        $122,783
  Operating income................................                --             1,266           3,098
  EBITDA (1)......................................                --             1,669          15,946
  EBITDAR (2).....................................                --             1,669          18,046

TOTAL (INCLUDING CORPORATE)
  Net operating revenues..........................          $174,756          $195,987        $293,883
  Operating income................................            17,233            19,511          17,581
  EBITDA (1)......................................            24,944            36,279          39,937
  EBITDAR (2).....................................            25,459            38,339          44,157
</TABLE>

(1)  "EBITDA" is defined as earnings before interest, taxes, depreciation,
     amortization, deferred rent and pre-opening  costs.
(2)  "EBITDAR" is defined as earnings before interest, taxes, depreciation,
     amortization, pre-opening  costs and rent expense (both cash rent and
     deferred rent).  EBITDA and EBITDAR should not be construed as alternatives
     to operating income as an indicator of the company's operating performance,
     or as alternatives to cash provided by operating activities as an indicator
     of cash flows or a measure of liquidity.  EBITDA and EBITDAR are presented
     solely as supplemental disclosure because management believes that they are
     widely used measures of financial performance in the gaming industry.


FISCAL 1997 COMPARED TO 1996

     Net revenues were $293.9 million for the year ended December 31, 1997, an
increase of 50.0% over 1996 net revenues of $196.0 million. The increase was due
primarily to the opening of The Orleans on December 18, 1996. Operating income
declined $1.9 million (9.7%) to $17.6 million in 1997 compared to $19.5 million
in 1996. The decline was primarily due to lower-than-expected revenues at the
Company's newest property, The Orleans, as well as decreased revenues at the
Company's other two hotel-casinos, the Gold Coast and the Barbary Coast
(discussed below). The lower operating income as well as increased interest
expense contributed to a net loss of $4.6 million in 1997 compared to net income
of $3.6 million in 1996.

                                       14
<PAGE>

     Gold Coast. Net revenues for the year ended December 31, 1997 decreased 10%
to $126.5 million compared to $140.5 million in 1996. Management attributes the
decrease primarily to increased competition from the opening of The Orleans
approximately one mile from the Gold Coast. Casino revenues declined 10.6% to
$93.1 million in 1997 compared to $104.2 million in 1996, due to lower customer
wagering volume. Food and beverage business decreased as a result of the reduced
customer traffic, causing revenues to decline 12.1% to $25.1 million in 1997
compared to $28.6 million in 1996. In 1997, an increased number of rooms in the
Las Vegas market led to a total room occupancy rate at the Gold Coast of 81.7%
compared to 92.3% in 1996, contributing to a $239,000 (2.3%) decline in hotel
revenues. Gold Coast operating expenses were $103.9 million in 1997, down $7.7
million (6.9%) from $111.6 million in 1996 primarily due to a $9.8 million
(16.5%) reduction in salaries and related costs as management reacted to the
reduced customer volume. Food and beverage expenses declined $3.2 million
(13.3%) and general and administrative expenses declined $3.0 million (11.6%).
Despite lower operating expenses, the reduced revenues contributed to a 22.0%
decrease in operating income to $22.6 million in 1997 compared to $29.0 million
in 1996.

     Barbary Coast. Net revenues for the year ended December 31, 1997 decreased
9.7% to $44.6 million compared to $49.4 million in 1996. Casino revenues
declined 13.1% to $34.6 million in 1997 compared to $39.8 million in 1996,
primarily as a result of decreased customer wagering volume on table games and
in the race book. Management attributes the decline to a reduction in foot
traffic since the January 1997 opening of New York, New York Hotel and Casino
one mile south of the Barbary Coast on the Las Vegas Strip as well as to
increased competition from other recently opened or expanded hotel-casinos
(including The Orleans). Food and beverage revenues increased $837,000 (8.6%) in
1997 primarily as a result of higher drink prices in the bars. The increase in
food and beverage revenues was partially offset by an increase in food and
beverage expenses of $664,000 (11.3%). Hotel room revenues declined $367,000
(9.1%) due primarily to lower average room rates as management reacted to
increasing competition. Operating income at the Barbary Coast declined 75.1% to
$1.0 million in 1997 compared to $4.2 million in 1996, primarily as a result of
the decreased revenues discussed above.

     The Orleans.  The year ended December 31, 1997 was the first full year of
operations for The Orleans, which opened on December 18, 1996.  Net revenues for
the fourteen days in 1996 were $6.0 million.  Operating income before pre-
opening expenses of $7.1 million was $1.3 million in 1996.

     For 1997, net revenues for The Orleans were $122.8 million.  Net revenues
were $27.4 million for the quarter ended March 31, 1997, the first full quarter
of operations.  Net revenues were $30.7 million in the second quarter, $29.6
million in the third quarter and $35.1 million in the quarter ended December 31,
1997.  Operating income for 1997 was $3.1 million, including a first-quarter
operating loss of $2.5 million, operating income of $1.3 million in the second
quarter, operating income of $245,000 in the third quarter and operating income
of $4.1 million in the fourth quarter ended December 31, 1997.  The increase in
revenues and operating income since the first quarter is due primarily to
increased casino activity, which management attributes to successful promotions
and an increasing target market familiarity with the property.  Table games
customer wagering volume was 9.2% higher in the fourth quarter than in the first
quarter and slot machine customer wagering volume was 31.0% higher in the fourth
quarter than in the first.

     As is more fully described in the Liquidity and Capital Resources section,
in the first quarter of 1997, Coast Hotels began construction on a series of
improvements at The Orleans which included twelve movie theaters, a child care
facility, arcade and additional slot machines. The related construction traffic
reduced access to the property, adversely affecting operating results at The
Orleans. Management believes that, upon completion in December 1997, the
improvements and lack of disruption from construction positively affected
operating results in the fourth quarter.

                                       15
<PAGE>

Other Factors Affecting Earnings

     Depreciation and amortization expense increased by 132.0% in 1997 compared
to 1996, principally due to the opening of The Orleans in December 1996. Net
interest expense increased 152.8% in 1997 primarily due to decreases in
capitalized interest and interest income. Capitalized interest was $7.5 million
in 1996 during the construction of The Orleans, but was only $1.0 million in
1997 during the construction of phase two of The Orleans. Additionally, the
proceeds from the sale of $175 million in 13% First Mortgage Notes earned
interest income of $4.8 million in 1996, but were substantially utilized by the
end of 1996.

     Gain on disposal of equipment was approximately $919,000 in 1997 compared
to $58,000 in 1996, primarily due to a crash of the Company's Beechcraft Super
King Air aircraft which, after receipt of insurance proceeds, resulted in a gain
of $785,000.


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 13% 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 13% First Mortgage Notes. The
Company incurred $22.2 million in interest expense which was partially offset by
$7.5 million in interest capitalized during the construction of The Orleans and
by $4.8 million in interest income earned on the proceeds from the sale of the
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 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% 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 0.8% in 1996 due to
lower customer volume partially offset by higher prices than in 1995. Hotel
revenues increased 6.3% 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 casino 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 12.6%,
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.

                                       16
<PAGE>

     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%, related to 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 were $6.0 million.  Operating income before pre-opening
expenses of $7.1 million was $1.3 million.


LIQUIDITY AND CAPITAL RESOURCES

     The Company's principal sources of liquidity have consisted of cash
provided by operating activities, bank financing and debt financing. Despite a
$10.1 million decrease in net income in 1996 compared to 1995, net cash provided
by operating activities increased $2.4 million (10.6%) primarily due to
increases in accounts payable and accrued liabilities relating to the opening of
the Company's newest hotel-casino, The Orleans, in 1996. In 1997, cash provided
by operating activities decreased $10.8 million (43.5%) from 1996 primarily due
to the decreased profitability discussed above as well as an increase in
receivables and a decrease in accounts payable.

     On January 30, 1996, Coast Hotels issued $175.0 million principal amount of
13% First Mortgage Notes Due 2002 ("13% 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 Coast Hotels'
then existing 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 13% 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 was financed through a note payable.  In August 1997,
Coast Hotels incurred an additional $3.2 million in equipment financing.  At
December 31, 1997, outstanding equipment financing totaled approximately $25.5
million.

     Coast Hotels is permitted by the indenture pursuant to which the 13% First
Mortgage Notes were issued (the "Indenture"), to borrow up to an additional $20
million for working capital purposes. In November 1997 Coast Hotels issued $16.8
million principal amount of 10 7/8% First Mortgage Notes Due November 1, 2001
("10 7/8% First Mortgage Notes"), the proceeds of which were used for working
capital purposes. The 10 7/8% First Mortgage Notes are collateralized on a pari
passu basis with the 13% First Mortgage Notes.

     As a holding company, the Company is reliant on the operations of its
subsidiaries for cash flow. The indentures under which the 13% First Mortgage
Notes and the 10 7/8% First Mortgage Notes were issued restrict the ability of
Coast Hotels to pay dividends or make other distributions to the Company. The
Company's other subsidiary, Coast West, is a development stage company that has
no operations.

     Additionally, the indentures under which the 13% First Mortgage Notes and
the 10 7/8% First Mortgage Notes were issued contain covenants that, among other
things, limit the ability of Coast Hotels to repay existing indebtedness, incur
additional indebtedness, or sell material assets as defined in the indentures.
Additionally, pursuant to the indentures, if on July 20, 1998, the Fixed Charge
Coverage Ratio (as defined in the indentures) of Coast Hotels for the most
recently ended four full fiscal quarters is less than 1.5 to 1, Coast Hotels
would be required to consummate an asset sale of the Barbary Coast within one
year. The proceeds from such asset sale would be required to be used by Coast
Hotels to repurchase 13% First Mortgage Notes at a price equal to 101% of the
principal amount of such Notes. As of December 31, 1997, the Fixed Charge
Coverage Ratio was 1.53 to 1. Based upon recent operating results, management
believes that, for the applicable period, the Fixed Charge Coverage Ratio will
equal or exceed 1.5 to 1, although no assurance can be given that such Fixed
Charge Coverage Ratio will be achieved.

     In the first quarter of 1997, the Company began construction of Phase Two
of The Orleans.  The first part of the project was completed and opened in
December 1997 at a cost of approximately $27 million and includes twelve movie
theaters, a child care facility, an arcade and additional slot machines.  The
project is designed to include additional restaurant, entertainment and gaming
facilities, the construction of which is expected to begin in the near future
with financing out of cash flow from operations.  In October 1997 the Company
completed and opened a new restaurant at the Barbary Coast which has a total
cost of approximately $1.9 million.  Both The Orleans and Barbary Coast projects
were financed with existing cash reserves and cash from operations.

     The Company's consolidated cash requirements, in addition to debt service
on the 10 7/8% First Mortgage Notes, the 13% First Mortgage Notes and equipment
notes payable which is anticipated to be approximately $28.0 million in 1998,
include land lease payments for its properties, ongoing maintenance capital
expenditures at its existing facilities and

                                       17

<PAGE>

periodic enhancements to those facilities. The Company's capital expenditures
(exclusive of those associated with the development and construction of The
Orleans and Barbary Coast projects) for 1997 were approximately $9.2 million,
most of which related to normal maintenance capital expenditures. Management
expects that maintenance capital expenditures for 1998 will be approximately
$7.7 million. Additional expenditures for capital projects, including additional
restaurant, entertainment and gaming facilities at The Orleans, are expected to
cost between $3 million and $5 million in 1998, although no final plans have
been developed concerning the scope or timing of those projects.

     Coast Hotels has agreed to provide advances to Coast West sufficient to
make payments on the Coast West Lease and other obligations, including project
development and site improvement. Pursuant to the indenture under which the 13%
First Mortgage Notes were issued, the advances to Coast West cannot exceed $8.0
million in aggregate principal amount at any time outstanding. As of December
31, 1997, Coast Hotels had advanced Coast West $6.4 million related to the Coast
West Lease and development activities. Based on the cash requirements of Coast
West for lease payments and anticipated development costs, it is likely that
during 1998 Coast West will require cash from Coast Hotels (or other sources)
that, when added to the outstanding advances from Coast Hotels, would exceed $8
million. Should Coast West not obtain financing from another source for its
cash needs in excess of the aggregate $8 million permitted to be advanced to it
by Coast Hotels, Coast Hotels would be permitted to continue to make advances to
Coast West in excess of $8 million if Coast West becomes a wholly-owned
subsidiary of Coast Hotels and remains a guarantor of the 13% First Mortgage
Notes. Coast West has no arrangements for financing any such costs in excess of
$8 million from other sources.

     Management believes that existing cash balances and operating cash flow
will provide the Company with sufficient resources to meet its existing debt
obligations and foreseeable capital expenditure requirements at the Company's
existing properties.

     The Company has no agreements, arrangements or understandings with respect
to financing the development of future properties (see Item 1 - Business -
Future Plans).  Any future development would be subject to, among other things,
the Company's ability to obtain necessary financing.

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.


REGULATION AND TAXES

     The Company is subject to extensive regulation by the Nevada gaming
authorities.  Changes in applicable laws or regulations could have a significant
impact on the Company's operations.  In 1996, legislation was enacted which
established a federal commission to study the gaming industry.

     The gaming industry represents a significant source of tax revenues,
particularly to the State of Nevada and its counties and municipalities.  From
time to time, various state and federal legislators and officials have proposed
changes in tax law, or in the administration of such law, affecting the gaming
industry.  Proposals in recent years that have not been enacted included a
federal gaming tax and increases in state or local taxes.

     Management believes that the Company's recorded tax balances are adequate.
However, it is not possible to determine with certainty the likelihood of
possible changes in tax law or in the administration of such law.  Such changes,
if adopted, could have a material adverse effect on the Company's operating
results.

     During 1997, the Company recorded a tax benefit of $2.1 million in relation
to its loss before income taxes of $6.7 million.  This benefit represents the
amount to be carried-back to prior taxable income.


IMPACT OF THE YEAR 2000 ISSUE

     The "Year 2000 Issue" is the result of computer programs being written
using two digits rather than four to define the applicable year. If a company's
date-sensitive computer programs should recognize a date "00" as the year 1900
rather than the year 2000, miscalculations or a system failure could occur,
causing disruptions of operations, including, among other things, a temporary
inability to process transactions, send invoices or engage in similar normal
business activities.

     The Company is currently reviewing all of its computer systems with regard
to the Year 2000 Issue and has determined that much of its software is already
compliant. For those systems not already compliant, the Company will utilize
both internal and external resources to reprogram, replace and test the software
for the Year 2000 modifications so that its computer systems will properly
recognize and utilize the dates beyond December 31, 1999. Management believes
that expenditures for these modifications will not be material. However, the
Company may be adversely affected to the extent that vendors and other entities
with which it does business are unable to achieve Year 2000 compliance by
December 31, 1999.

                                       18
<PAGE>

CERTAIN ACCOUNTING PRONOUNCEMENTS

     In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
130"), which establishes standards for reporting and display of comprehensive
income and its components. SFAS 130 requires a separate statement to report
components of comprehensive income for each period presented. The provisions of
SFAS 130 are effective for fiscal years beginning after December 15, 1997.
Management believes that the Company currently does not have items that would
require presentation in a separate statement of comprehensive income.

     In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS 131"), which supersedes FASB
Statement No. 14, "Financial Reporting for Segments of a Business Enterprise."
SFAS 131 establishes standards for the way that public business enterprises
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to shareholders.  SFAS 131 is
effective for fiscal years beginning after December 15, 1997 and requires
restatement of earlier periods presented.  SFAS 131 will not have a material
effect on the Company's financial statements as the required information is
either currently being presented by the Company or it is not applicable to the
Company.

     In April 1997, the American Institute of Certified Public Accountants
issued an exposure draft of a proposed Statement of Position (SOP), Reporting on
the Costs of Start-up Activities. If issued in its current form, the proposed
SOP would require that the Company expense its pre-opening and related
promotional expense as incurred rather than capitalize it and amortize it over
the estimated period of economic benefit of such costs as is the Company's
current policy.

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
are filed as part of this report. See "Index to Financial Statements."



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

     None.

                                       19
<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 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 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 reference.

                                       20
<PAGE>

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
          ---------------------------------------------------------------
(a) Financial Statements, Financial Statement Schedules and Exhibits

<TABLE>
<CAPTION>
1.  Financial Statements Index
<S>                                                                                   <C>
                                                                                      Page
                                                                                      ----
    Report of Independent Accountants                                                  27
    Audited Financial Statements
         Consolidated Balance Sheets as of December 31, 1996 and 1997                  28
         Consolidated Statements of Income (Loss) for the years ended December
          31, 1995, 1996 and 1997                                                      29
         Consolidated Statements of Stockholders' Equity for the years ended
          December 31, 1995, 1996 and 1997                                             30
         Consolidated Statements of Cash Flows for the years ended December 31,
          1995, 1996 and 1997                                                          31
         Notes to Consolidated Financial Statements                                    32

2.  Financial Statement Schedules Index
         Schedule I - Condensed Financial Information of the Company                   49
         Schedule II - Valuation and Qualifying Accounts                               53

3.  Exhibits Index

</TABLE>

                                       21
<PAGE>

                                 EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number      Description of Exhibit
--------------      -----------------------------------------------------------------------------------
<C>                 <S>
       *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

</TABLE>

                                       22
<PAGE>

<TABLE>
<CAPTION>
Exhibit Number      Description of Exhibit
--------------      -----------------------------------------------------------------------------------
<C>                 <S>
   ***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

      10.25         10 7/8% First Mortgage Note due 2001, dated November 21, 1997

      10.26         Indenture dated as of November 21, 1997 among Coast Hotels and Casinos, Inc., the
                    Guarantors, and Firstar Bank of Minnesota, N.A., as Trustee

      10.27         Note Guarantee of Coast Resorts, Inc.

      10.28         Purchase Agreement dated November 21, 1997

      10.29         Security Agreement dated November 21, 1997 (Coast Hotels and Casinos, Inc.)

      10.30         Deed of Trust, Assignment of Rents, Leases and Security Agreement dated November
                    21, 1997

      10.31         Stock Pledge and Security Agreement dated November 21, 1997 (Coast Resorts, Inc.)

      10.32         Pari Passu Intercreditor Agreement dated November 21, 1997
</TABLE>

                                       23
<PAGE>

<TABLE>
<CAPTION>
Exhibit Number      Description of Exhibit
--------------      -----------------------------------------------------------------------------------
<C>                 <S>
        *16         Letter re Change in Certifying Accountant

        *21         List of Subsidiaries of Coast Resorts, Inc.

         27         Financial Data Schedule
</TABLE>

-------------------------------------
*   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.

                                       24
<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, 1998.

                              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.

<TABLE>
<CAPTION>
SIGNATURE                                    Title                                               Date
------------------------------------------   ------------------------------------------------    ----------------------
<S>                                          <C>                                                 <C>
/s/  MICHAEL J. GAUGHAN                       Chairman of the Board of Directors and Chief        March 31, 1998
------------------------------------------    Executive Officer (Principal Executive Officer)
Michael J. Gaughan

/s/ GAGE PARRISH                                   Director and Chief Financial Officer           March 31, 1998
------------------------------------------     (Principal Financial and Accounting Officer)
Gage Parrish

/s/ HARLAN D. BRAATEN                                            Director                         March 31, 1998
------------------------------------------
Harlan D. Braaten

/s/ JERRY HERBST                                                 Director                         March 31, 1998
------------------------------------------
Jerry Herbst

/s/ J. TITO TIBERTI                                              Director                         March 31, 1998
------------------------------------------
J. Tito Tiberti

/s/ CHARLES SILVERMAN                                            Director                         March 31, 1998
------------------------------------------
Charles Silverman

/s/ MICHAEL CORRIGAN                                             Director                         March 31, 1998
------------------------------------------
Michael Corrigan

/s/ JOSEPH A. BLASCO                                             Director                         March 31, 1998
------------------------------------------
Joseph A. Blasco
</TABLE>

                                       25
<PAGE>

                         INDEX TO FINANCIAL STATEMENTS
                              COAST RESORTS, INC.
<TABLE>
<S>                                                                                                         <C>
Report of Independent Accountants........................................................................    27

Consolidated Balance Sheets of Coast Resorts, Inc. as of December 31, 1996 and 1997......................    28


Consolidated Statements of Income (Loss) of Coast Resorts, Inc. for the years ended December 31, 1995,
 1996 and 1997...........................................................................................    29


Consolidated Statements of Stockholders' Equity of Coast Resorts, Inc. for the years ended December 31,
 1995, 1996 and 1997...................................................................................      30

Consolidated Statements of Cash Flows of Coast Resorts, Inc. for the years ended December 31, 1995,
 1996 and 1997.........................................................................................      31

Notes to Consolidated Financial Statements...............................................................    32
</TABLE>

                                       26
<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 of this
Form 10-K.  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, 1996 and 1997 and the consolidated results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1997 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.





COOPERS & LYBRAND L.L.P.

Las Vegas, Nevada
March 13, 1998

                                       27
<PAGE>

                      COAST RESORTS, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                           December 31, 1996 and 1997
                   (Dollars in thousands, except share data)

                                     ASSETS

<TABLE>
<CAPTION>
ASSETS:                                                                          1996                    1997
                                                                        -------------------      -----------------
<S>                                                                        <C>                      <C>
CURRENT ASSETS:
  Cash and cash equivalents, including restricted cash of $8,186 in 1996           $ 61,567               $ 29,430
  Accounts receivable, less allowance for doubtful accounts
     of $379 (1996) and $194 (1997).....................................              3,659                  5,617
  Inventories...........................................................              6,364                  5,085
  Refundable income taxes...............................................              1,384                  1,772
  Prepaid expenses and other............................................              7,688                 11,118
                                                                        -------------------      -----------------
    TOTAL CURRENT ASSETS................................................             80,662                 53,022
  PROPERTY AND EQUIPMENT, net...........................................            286,580                307,151
  OTHER ASSETS..........................................................              6,780                  6,446
                                                                        -------------------      -----------------

                                                                                   $374,022               $366,619
                                                                        ===================      =================

                            LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable......................................................           $ 11,834               $  9,107
  Accrued liabilities...................................................             25,509                 27,681
  Construction accounts payable.........................................             23,517                  2,491
  Current portion of long-term debt.....................................              6,781                  8,076
                                                                        -------------------      -----------------
    TOTAL CURRENT LIABILITIES...........................................             67,641                 47,355
LONG-TERM DEBT, less current portion....................................            195,764                207,173
DEFERRED INCOME TAXES...................................................              6,639                  8,645
DEFERRED RENT...........................................................              4,929                  9,007
                                                                        -------------------      -----------------
TOTAL LIABILITIES.......................................................            274,973                272,180
                                                                        -------------------      -----------------

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,
    1,494,353 issued and outstanding....................................                 15                     15
  Additional paid-in capital............................................             95,398                 95,398
  Retained earnings (deficit)...........................................              3,636                   (974)
                                                                         -------------------      -----------------
    TOTAL STOCKHOLDERS' EQUITY..........................................             99,049                 94,439
                                                                        -------------------      -----------------
                                                                                   $374,022               $366,619
                                                                        ===================      =================
</TABLE>



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

                                       28
<PAGE>

                      COAST RESORTS, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF INCOME (LOSS)
              For the Years Ended December 31, 1995, 1996 and 1997
                 (Dollars in thousands except per share data)

<TABLE>
<CAPTION>
                                                                      1995                        1996                    1997
                                                                      ----                        ----                    ----
OPERATING REVENUES:
<S>                                                        <C>                       <C>                       <C>
   Casino...............................................           $  129,675                  $  148,509               $  211,026
   Food and beverage....................................               38,468                      39,517                   61,724
   Hotel................................................               13,233                      14,700                   28,095
   Other................................................                9,968                      10,635                   19,994
                                                        ---------------------       ---------------------    ---------------------
     GROSS OPERATING REVENUES...........................              191,344                     213,361                  320,839
   Less:  promotional allowances........................              (16,588)                    (17,374)                 (26,956)
                                                        ---------------------       ---------------------    ---------------------
     NET OPERATING REVENUES.............................              174,756                     195,987                  293,883
                                                        ---------------------       ---------------------    ---------------------

OPERATING EXPENSES:
   Casino...............................................               67,782                      72,849                  113,391
   Food and beverage....................................               31,242                      30,768                   48,968
   Hotel................................................                6,692                       6,921                   12,034
   Other................................................                8,537                       8,025                   17,456
   General and administrative...........................               34,186                      39,085                   57,877
   Pre-opening expenses.................................                   --                       7,125                       --
   Land leases..........................................                  515                       2,060                    4,220
   Deferred (non-cash) rent.............................                  431                       1,760                    4,078
   Guaranteed payments to former partners...............                  858                          --                       --
   Depreciation and amortization........................                7,280                       7,883                   18,278
                                                        ---------------------       ---------------------    ---------------------
     TOTAL OPERATING EXPENSES...........................              157,523                     176,476                  276,302
                                                        ---------------------       ---------------------    ---------------------
     OPERATING INCOME...................................               17,233                      19,511                   17,581
                                                        ---------------------       ---------------------    ---------------------

OTHER INCOME (EXPENSES):
   Interest expense:
      Related parties...................................               (3,126)                       (160)                    (148)
      Other.............................................                 (760)                    (22,076)                 (26,191)
   Interest income......................................                  106                       4,791                       98
   Interest capitalized.................................                  235                       7,464                    1,016
   Gain on disposal of equipment........................                   92                          58                      919
                                                        ---------------------       ---------------------    ---------------------
       TOTAL OTHER INCOME (EXPENSES)....................               (3,453)                     (9,923)                 (24,306)
                                                        ---------------------       ---------------------    ---------------------

NET INCOME (LOSS) BEFORE INCOME TAXES...................               13,780                       9,588                   (6,725)
PROVISION (BENEFIT) FOR INCOME TAXES....................                   --                       5,952                   (2,115)
                                                        ---------------------       ---------------------    ---------------------
NET INCOME (LOSS).......................................           $   13,780                  $    3,636               $   (4,610)
                                                        =====================       =====================    =====================

BASIC AND DILUTED NET INCOME (LOSS) PER SHARE OF COMMON
 STOCK..................................................           $       --                       $2.47                   $(3.08)
                                                        =====================       =====================    =====================
WEIGHTED AVERAGE SHARES OUTSTANDING.....................                   --                   1,472,742                1,494,353
                                                        =====================       =====================    =====================

UNAUDITED PRO FORMA DATA (Reflecting reorganization and
 change in tax status)
   Provision (benefit) for income taxes.................                4,823                       3,452                   (2,115)
                                                        ---------------------       ---------------------    ---------------------
   Net Income (loss)....................................           $    8,957                  $    6,136               $   (4,610)
                                                        =====================       =====================    =====================

Basic and diluted net income (loss) per share of common
 stock..................................................           $     8.96                  $     4.17                   $(3.08)
                                                        =====================       =====================    =====================
Weighted average shares outstanding.....................            1,000,000                   1,472,742                1,494,353
                                                        =====================       =====================    =====================
</TABLE>

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

                                       29
<PAGE>

                      COAST RESORTS, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              For the Years Ended December 31, 1995, 1996 and 1997
                             (Dollars in thousands)



<TABLE>
<CAPTION>
                                               Common Stock              Additional                Retained
                                               ------------               Paid-In    Unrealized    Earnings
                                             Shares        Amount         Capital   Gains(Losses) (Deficit)    Total
                                        -----------------------------------------------------------------------------
<S>                                        <C>          <C>          <C>             <C>         <C>         <C>
Balances at January 1, 1995.............    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
  Net income (loss).....................                                                           (4,610)     (4,610)
                                        -----------------------------------------------------------------------------
Balances at December 31, 1997...........    1,494,353          $15        $95,398        $ --     $  (974)   $ 94,439
                                        =============================================================================
</TABLE>



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

                                       30
<PAGE>

                      COAST RESORTS, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
              For the Years Ended December 31, 1995, 1996 and 1997
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                             1995                   1996                    1997
                                                                     ----------------       -----------------       ----------------

<S>                                                                     <C>                    <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income (loss).................................................        $ 13,780               $   3,636              $ (4,610)
                                                                     ----------------       -----------------       ----------------
   ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
      PROVIDED BY OPERATING ACTIVITIES:
          Depreciation and amortization..............................           7,280                   7,883                18,278
          Provision for bad debts....................................             411                      94                  (185)

          Gain on disposal of equipment and securities...............             (92)                    (58)                 (919)

          Deferred income taxes......................................              --                   4,234                  (402)

          Deferred rent expense......................................             446                   1,760                 4,078
          Amortization of original issue discount....................              --                     497                   616
          Other non-cash expenses....................................             147                      --                    --
          (Increase) decrease in operating assets:
              Accounts receivable....................................            (267)                 (1,608)               (1,773)

              Income taxes receivable................................              --                  (1,384)                 (388)

              Inventories............................................             854                  (2,286)                1,279
              Prepaid expenses and other.............................              85                  (1,395)               (1,370)

          Increase (decrease) in operating liabilities:
             Accounts payable........................................          (1,057)                  4,307                (2,727)

             Accrued liabilities.....................................             902                   9,204                 2,172
                                                                     ----------------       -----------------       ----------------
              TOTAL ADJUSTMENTS......................................           8,709                  21,248                18,659
                                                                     ----------------       -----------------       ----------------
              NET CASH PROVIDED BY OPERATING ACTIVITIES..............          22,489                  24,884                14,049
                                                                     ================       =================       ================
CASH FLOWS FROM INVESTING ACTIVITIES
   Capital expenditures, net of amounts in accounts payable..........         (32,331)               (126,133)              (58,912)

   Proceeds from sale of equipment and securities....................             219                      20                 1,070
                                                                     ----------------       -----------------       ----------------
              NET CASH USED BY INVESTING ACTIVITIES..................         (32,112)               (126,113)              (57,842)
                                                                     ----------------       -----------------       ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from issuance of long-term debt, net of
       discounts and commissions.....................................           4,500                 179,570                19,569
   Proceeds from borrowings under bank lines of credit...............          26,941                   1,045                    --
   Principal payments on bank lines of credit........................          (4,000)                (29,200)                   --
   Principal payments on long-term debt..............................         (10,413)                 (1,826)               (7,913)

   Payments for debt issue costs.....................................          (1,169)                 (1,336)                   --
   Distributions to former partners..................................          (8,660)                     --                    --
                                                                     ----------------       -----------------       ----------------
              NET CASH PROVIDED BY FINANCING ACTIVITIES..............           7,199                 148,253                11,656
                                                                     ----------------       -----------------       ----------------
NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS...................          (2,424)                 47,024               (32,137)

CASH AND CASH EQUIVALENTS, at beginning of year......................          16,967                  14,543                61,567
                                                                     ----------------       -----------------       ----------------
CASH AND CASH EQUIVALENTS, at end of year............................        $ 14,543               $  61,567              $ 29,430
                                                                     ================       =================       ================

</TABLE>


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

                                       31
<PAGE>

                              COAST RESORTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--BACKGROUND INFORMATION AND BASIS OF PRESENTATION

Background Information

  Coast Resorts, Inc. ("Coast Resorts" or 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 Gold Coast Hotel and Casino
and the Barbary Coast Hotel and Casino 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.

                                       32
<PAGE>

                              COAST RESORTS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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).

  Coast West holds 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 and to fund development costs, up to a maximum of $8.0
million.

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.

                                       33
<PAGE>

                              COAST RESORTS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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 or market value (which is
determined using the first-in, first-out and the average cost methods) 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.

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.

  In April 1997, the American Institute of Certified Public Accountants issued
an exposure draft of a proposed Statement of Position (SOP), Reporting on the
Costs of Start-Up Activities. If issued in its current form, the proposed SOP
would require that the Company expense its pre-opening and related promotional
expense as incurred rather than capitalize it and amortize it over the estimated
period of economic benefit of such costs as is the Company's current policy.

 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,
1996 and 1997. Advertising expense was $4.3 million, $3.8 million and $7.5
million for the years ended December 31, 1995, 1996 and 1997, respectively.

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.

                                       34
<PAGE>

                              COAST RESORTS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


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,
                                                      ---------------------------------
                                                        1995        1996        1997
                                                      ---------   ---------   ---------
<S>                                                   <C>         <C>         <C>
                                                               (in thousands)
      Hotel........................................    $ 1,426     $ 1,804      $ 2,023
      Food and beverage............................     14,704      14,725       23,187
                                                       -------     -------      -------
      Total cost of promotional allowances.........    $16,130     $16,529      $25,210
                                                       =======     =======      =======
</TABLE>



The cost of promotional allowances has been allocated to expense as follows:

<TABLE>
<CAPTION>
                                                                 December 31,
                                                      ----------------------------------
                                                         1995        1996        1997
                                                      ----------   ---------   ---------
<S>                                                   <C>          <C>         <C>
                                                                (in thousands)
   Casino..........................................      $15,232     $15,361     $22,280
   Other...........................................          898       1,168       2,930
                                                         -------     -------     -------
                                                         $16,130     $16,529     $25,210
                                                         =======     =======     =======
</TABLE>

                                       35
<PAGE>

                              COAST RESORTS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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,
food and beverage and cash. 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 rating. At times,
the Company's cash deposited in financial institutions may be in excess of
federally insured limits.

Net Income (Loss) Per Common Share

  Net income per common share for the years ended December 31, 1996 and December
31, 1997 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 and 1,494,353 shares, respectively.  Net income per common share for the
year ended December 31, 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 year ended December 31, 1995 assuming that the Reorganization occurred
on January 1, 1994.

  In February 1997, the Financial Accounting Standard Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128").  SFAS
128 is effective for periods ending after December 15, 1997 and replaces
previously reported earnings per share with "basic", or undiluted, earnings per
share and "diluted" earnings per share.  Basic earnings per share is computed
based on weighted average shares outstanding while diluted earnings per share
reflects the additional dilution for all potential dilutive securities, such as
stock options and warrants.

     The Company has adopted the provisions of SFAS 128 in its fiscal 1997
financial statements. The retroactive adoption had no impact on the Company's
operating results for the year ended December 31, 1996.

                                       36
<PAGE>

                              COAST RESORTS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Concentration of Credit Risk

  The Company extends credit to casino patrons 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, 1997, 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.

Accounting Pronouncements

  In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
130"), which establishes standards for reporting and display of comprehensive
income and its components.  SFAS 130 requires a separate statement to report
components of comprehensive income for each period presented.  The provisions of
SFAS 130 are effective for fiscal years beginning after December 15, 1997.
Management believes that the Company currently does not have items that would
require presentation in a separate statement of comprehensive income.

  In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS 131"), which supersedes FASB
Statement No. 14, "Financial Reporting for Segments of a Business Enterprise."
SFAS 131 establishes standards for the way that public business enterprises
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to shareholders.  SFAS 131 is
effective for fiscal years beginning after December 15, 1997 and requires
restatement of earlier periods presented.  SFAS 131 will not have a material
effect on the Company's financial statements as the required information is
either currently being presented by the Company or it is not applicable to the
Company.

Reclassifications

  Certain amounts in the 1995 and 1996 financial statements have been
reclassified to conform with the 1997 presentation.

                                       37
<PAGE>

                              COAST RESORTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3--PROPERTY AND EQUIPMENT

  Major classes of property and equipment consist of the following:


<TABLE>
<CAPTION>
                                                                     DECEMBER 31,
                                                  -----------------------------------------------
                                                            1996                       1997
                                                  --------------------       --------------------
                                                                    (IN THOUSANDS)
<S>                                                  <C>                        <C>

Building..........................................            $204,582                   $232,661
Furniture and fixtures............................             133,694                    139,022
                                                  --------------------       --------------------
                                                               338,276                    371,683
Less accumulated depreciation.....................             (68,058)                   (81,733)
                                                  --------------------       --------------------
                                                               270,218                    289,950
Land..............................................              15,232                     15,232
Construction in progress..........................               1,130                      1,969
                                                  --------------------       --------------------
Net property and equipment........................            $286,580                   $307,151
                                                  ====================       ====================
</TABLE>

                                       38
<PAGE>

                              COAST RESORTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4--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.  Annual rental payments under these
leases total $300,000.

  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 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, 1997:

                      OPERATING LEASES
                       (in thousands)
<TABLE>
      <S>                                  <C>
      1998.........................          $  4,580
      1999.........................             4,890
      2000.........................             5,000
      2001.........................             5,060
      2002.........................             5,120
      Later years..................           426,387
                                             --------
   Total minimum lease payments....          $451,037
                                             ========
</TABLE>

                                       39
<PAGE>

                              COAST RESORTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 -- LEASES -(Continued)


Rental Expense

  Rent expense for the years ended December 31, 1995, 1996 and 1997 is as
follows:

<TABLE>
<CAPTION>
                                                                    December 31,
                                                       -------------------------------------
                                                          1995          1996         1997
                                                       -----------   ----------   ----------
                                                                  (in thousands)
<S>                                                    <C>           <C>          <C>
Occupancy rental....................................        $1,559       $8,597       $8,597
Other equipment.....................................           262          414          900
                                                    ----------------------------------------
                                                            $1,821       $9,011       $9,497
                                                    ========================================
</TABLE>


NOTE 5 -- ACCRUED LIABILITIES

  Major classes of accrued liabilities consist of the following:

<TABLE>
<CAPTION>
                                                                           December 31,
                                                                      -----------------------
                                                                         1996         1997
                                                                      ----------   ----------
                                                                        (in thousands)
<S>                                                                 <C>          <C>
Slot club liability...............................................      $ 5,010    $6,475
Compensation and benefits.........................................        7,535     8,207
Progressive jackpot payouts.......................................        4,124     4,101
Customer deposits and unpaid winners..............................        2,726     5,069
Deferred sports book revenue......................................          675       871
Taxes.............................................................          975     1,046
Accrued interest expense..........................................        1,116     1,354
Other.............................................................        3,348       558
                                                                        -------   -------
                                                                        $25,509   $27,681
                                                                        =======   =======
</TABLE>

                                       40
<PAGE>

                              COAST RESORTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 6 - LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                                                       December 31,
                                                                        ----------------------------------------
                                                                                1996                1997
                                                                        ----------------------------------------
                                                                                     (in thousands)
<S>                                                                        <C>                   <C>
Related parties:
----------------

7.5% notes, payable in monthly installments of interest only, with all
 principal and any unpaid interest due December 31, 2001.  The notes
 are uncollateralized and are payable to the former partners of Barbary
 Coast and 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..............................................       $  1,975              $  1,975

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 $5,293,000 in 1996 and $4,677,000 in 1997...................        169,707               170,323

10 7/8% First Mortgage Notes due November 1, 2001, with interest
payable quarterly on March 15, June 15, September 15 and December 15.                 -                16,800

9.19% note payable, payable in 60 monthly installments of approximately
$750,000, including  principal and interest, collateralized by certain
gaming and other equipment..............................................         29,974                22,481

8.6% note due August 11, 2007, payable in monthly installments of
$26,667 principal plus interest on remaining principal balance,
collateralized by 1980 Hawker aircraft..................................              -                 3,067

Other notes payable.....................................................            889                   603
                                                                         -------------------------------------
                                                                                202,545               215,249
Less:  current portion..................................................          6,781                 8,076
                                                                        --------------------------------------
                                                                               $195,764              $207,173
                                                                        ======================================
</TABLE>


  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
"13% First Mortgage Notes"). Interest on the 13% First Mortgage Notes is
payable semi-annually commencing June 15, 1996. The 13% First Mortgage Notes are
unconditionally guaranteed by the Company, Coast West and certain future
Subsidiaries of the Company. 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 the Company to finance in part the
cost of developing, constructing, equipping and opening The Orleans, (ii)
approximately $19.3 million was used by the Company to purchase U.S. Government
Obligations which were deposited into an interest escrow account restricted to
fund the interest payable on the 13% First Mortgage Notes through December 15,
1996 and (iii) approximately $29.2 million was used by the Company 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.

                                       41
<PAGE>

                              COAST RESORTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 -- LONG-TERM DEBT (CONTINUED)

  The 13% 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 13% 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 13% First Mortgage Notes (the "Indenture")
contains covenants that, among other things, limit the ability of Coast Hotels
to pay dividends or make advances to the Company, repay existing indebtedness,
incur additional indebtedness, or sell material assets as defined in the
Indenture.  Additionally, pursuant to the Indenture, if on July 20, 1998 (the
twentieth day of the month following the first month in which The Orleans 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, the Company would be required to consummate an
asset sale of the Barbary Coast within one year. The proceeds from such asset
sale would be required to be used by the Company to repurchase Notes at a price
equal to 101% of the principal amount of such Notes.  As of December 31, 1997,
the Fixed Charge Coverage Ratio was 1.53 to 1. Based upon recent operating
results, management believes that, for the applicable period, the Fixed Charge
Coverage Ratio will equal or exceed 1.5 to 1, although no assurance can be given
that such Fixed Charge Coverage Ratio will be achieved.

  Coast Hotels has agreed to provide advances to Coast West sufficient to make
payments on the Coast West Lease and other obligations, including project
development and site improvement.  The advances to Coast West are non-interest
bearing and, pursuant to the Indenture, cannot exceed $8.0 million in aggregate
principal amount at any time outstanding.  As of December 31, 1996 and 1997,
Coast Hotels had advanced Coast West an aggregate total of $3.2 million and $6.4
million, respectively.

Based on the cash requirements of Coast West for lease payments and anticipated
development costs, it is likely that during 1998 Coast West will require cash
from advances from Coast Hotels (or from other sources) that, when added to the
outstanding advances from Coast Hotels, would exceed the maximum $8.0 million of
advances from Coast Hotels permitted under the terms of the Indenture. Should
Coast West not obtain financing from another source for its cash needs in excess
of the $8.0 million, Coast Hotels would be permitted to continue to make
advances to Coast West in excess of $8.0 million, provided that Coast West
becomes wholly-owned subsidiary of Coast Hotels and remains a guarantor of the
13% First Mortgage Notes.

  Coast Hotels is permitted by the Indenture governing the 13% First Mortgage
Notes to borrow up to an additional $20 million for working capital purposes.
In November 1997, Coast Hotels issued $16.8 million principal amount of 10 7/8%
first mortgage notes due November 1, 2001 ("10 7/8% First Mortgage Notes").  The
10 7/8% First Mortgage Notes are collateralized on a pari passu basis with the
13% First Mortgage Notes. Interest on the 10 7/8% First Mortgage Notes is
payable quarterly on March 15, June 15, September 15 and December 15. The 10
7/8% First Mortgage Notes are unconditionally guaranteed by the Company and
certain future subsidiaries. Net proceeds from the offering (after deducting
commissions) were approximately $16.5 million and were used for working capital
purposes.

  The 10 7/8% First Mortgage Notes are redeemable at any time prior to November
1, 2001 at a redemption price equal to the principal amount thereof, plus any
accrued and unpaid interest plus an "Applicable Premium" as defined in the
indenture governing the 10 7/8% First Mortgage Notes.  That indenture contains
covenants that, among other things, limit the ability of Coast Hotels to pay
dividends to the Company, repay existing indebtedness, incur additional
indebtedness or sell material assets.


  Maturities on long-term debt are as follows:
<TABLE>
<CAPTION>
Year ending December 31,                        Maturities
-----------------------                      ----------------
                                              (in thousands)
          <S>                                 <C>
          1998............................           $  8,076
          1999............................              7,905
          2000............................              7,918
          2001............................             19,196
          2002............................            175,323
          Thereafter......................              1,508
                                          -------------------
                                                     $219,926
                                          ===================
</TABLE>

                                       42
<PAGE>

                              COAST RESORTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 -- 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 (benefit) for the years ended
December 31, 1996 and 1997 were as follows:

<TABLE>
<CAPTION>
                                                                                 DECEMBER 31,
                                                                         -------------------------
                                                                             1996           1997
                                                                         ----------      ---------
Federal:                                                                       (IN THOUSANDS)
<S>                                                                      <C>              <C>
     Current.............................................................    $1,716        $(1,713)
     Deferred............................................................     4,236           (402)
                                                                         ----------      ---------
                                                                             $5,952        $(2,115)
                                                                         ==========      =========
</TABLE>

     The income tax provision (benefit) for the years ended December 31, 1996
and 1997 differs from that computed at the federal statutory corporate tax rate
as follows:

<TABLE>
<CAPTION>
                                                                            1996             1997
                                                                         ----------       ----------
                                                                                (IN THOUSANDS)
<S>                                                                       <C>              <C>
Federal statutory rate...................................................      34.0%           (34.0%)
Establishment of deferred taxes..........................................      26.1%              --
Other....................................................................       2.0%             2.5%
                                                                         ----------       ----------
     Effective tax rate..................................................      62.1%           (31.5%)
                                                                         ==========       ==========
</TABLE>

                                       43
<PAGE>

                              COAST RESORTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 7 -- INCOME TAXES (Continued)

The tax effects of significant temporary differences representing net deferred
tax assets and liabilities at December 31, 1996 and 1997 are as follows:


<TABLE>
<CAPTION>
                                                                             DECEMBER 31,
                                                                -------------------------------------
                                                                      1996                  1997
                                                                ---------------       ---------------
                                                                             (IN THOUSANDS)
<S>                                                                <C>                   <C>
Deferred tax assets:
Current:
      Accrued vacation..........................................       $    226              $    565
      Allowance for doubtful accounts...........................            133                   138
      Accrued slot club points..................................            717                   902
      Progressive liabilities...................................          1,059                 1,025
      Accrued medical and other benefits........................            188                   131
      Tax credit................................................             --                   398
      NOL carryforward..........................................             --                 1,617
      Other.....................................................             80                    35
                                                                ---------------       ---------------
           Total Current........................................          2,403                 4,811
                                                                ---------------       ---------------

   Non-current:
      Deferred rent.............................................          1,726                 3,152
                                                                ---------------       ---------------
           Total non-current....................................          1,726                 3,152
                                                                ---------------       ---------------
Total deferred tax assets.......................................          4,129                 7,963
                                                                ---------------       ---------------

Deferred tax liabilities:
   Non-current:
      Property, plant and equipment.............................         (8,365)              (11,797)
                                                                ---------------       ---------------
      Total deferred tax liabilities............................         (8,365)              (11,797)
                                                                ---------------       ---------------

Net deferred tax liability......................................       $ (4,236)             $ (3,834)
                                                                ===============       ===============
</TABLE>

  As of December 31, 1997, the Company had a net operating loss carryforward of
$4,620,000 which expires in 2012 and a tax credit of $398,000 which the Company
can carryforward indefinitely.

                                       44
<PAGE>

                              COAST RESORTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 8 -- FAIR VALUE OF FINANCIAL INSTRUMENTS

  The following estimated fair values 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, 1997 are as follows:


<TABLE>
<CAPTION>
                                                           CARRYING       FAIR
                                                            AMOUNT        VALUE
                                                           ----------------------
                                                               (in thousands)
                <S>                                        <C>            <C>
                Liabilities:
                Current portion of long-term debt          $  8,076       $  8,076
                First Mortgage Notes                       $170,323       $198,625
                Other long-term debt                       $ 36,850       $ 36,400
</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 value of the 13%
First Mortgage Notes was 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 9 -- CONTINGENCIES AND COMMITMENTS

  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.

                                       45
<PAGE>

                              COAST RESORTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 -- RELATED PARTY TRANSACTIONS

  The Company's advertising services are provided by LGT Advertising, a Company
owned by several stockholders of Coast Resorts. Advertising expense amounted to
approximately $2.8 million, $3.8 million and $7.5 million  for the years ended
December 31, 1995, 1996 and 1997, 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 Coast Resorts. Laundry expense payable to Exber, Inc. was
approximately $1.1 million and $864,000 for the years ended December 31, 1995
and 1996, respectively.  The Company discontinued its laundry service from
Exber, Inc. in October 1996.

  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 Coast Resorts and by the Company's restaurant manager.  RJS invoices
the Company based on actual costs incurred.  For the fiscal years ended December
31, 1995, 1996 and 1997, the Company incurred expense payable to RJS of
approximately $388,000, $4.1 million and $1.4 million, respectively.

  The Company purchases wallboards and parlay cards for its race and sports
books from Nevada Wallboards, Inc.  A major stockholder and director of Coast
Resorts is the majority stockholder of Nevada Wallboards, Inc. For the fiscal
years ended December 31, 1995, 1996 and 1997, the Company incurred expenses
payable to Nevada Wallboards of approximately $123,000, $145,000 and $198,000,
respectively.

  A director of the Company is the President and sole stockholder of Yates-
Silverman, Inc. which was retained by the Company as the designer of The Orleans
and the Coast West project.  For the fiscal years ended December 31, 1995, 1996
and 1997, the Company incurred expense payable to Yates-Silverman of
approximately $409,000, $508,000 and $177,000, respectively.

  The Company maintains numerous racetrack dissemination contracts with Las
Vegas Dissemination, Inc. ("LVD").  The son of a major stockholder and director
of Coast Resorts 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, 1995, 1996 and
1997, the Company incurred expenses payable to LVD of approximately $149,000,
$889,000 and $1.1 million, respectively.

  J.A. Tiberti Construction Company ("Tiberti Construction") has 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 and Phase II
expansion of The Orleans. The President of Tiberti Construction is a stockholder
and director of Coast Resorts and Coast Hotels. For the years ended December 31,
1995, 1996 and 1997, the Company paid approximately $10.9 million, $80.3 million
and $26.2 million, respectively, to Tiberti Construction in connection with such
construction services.

  As more fully described in Note 5, in December 1995, the Company 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
Coast Resorts.  Amounts paid to the Tiberti Company with respect to the lease
were $3.0 million and $2.1 million for the years ended December 31, 1996 and
1997, respectively.

                                       46
<PAGE>

                              COAST RESORTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 -- 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 makes matching
contributions of 50% of the first 6% of the employees' contribution.
Contribution expense was $1,224,000, $1,176,000 and $842,000 for the years ended
December 31, 1995, 1996, and 1997, 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 $312,000, $274,000 and $313,000 during the
years ended December 31, 1995, 1996, and 1997, 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.

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, 1997, 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.

                                       47
<PAGE>

                              COAST RESORTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 12 -- SUPPLEMENTAL CASH FLOWS INFORMATION

<TABLE>
<CAPTION>
                                                                                             December 31,
                                                                              ------------------------------------------
                                                                                  1995            1996           1997
                                                                              ------------   --------------   ----------
<S>                                                                           <C>            <C>              <C>
                                                                                            (In Thousands)
Interest paid..............................................................        $ 3,164       $21,607         $25,488
                                                                                   =======       =======         =======
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 notes payable............        $ 3,101       $38,918         $ 2,491
                                                                                   =======       =======         =======

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

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

NOTE 13 -- 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 14 -- 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.

                                       48
<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
                           December 31, 1996 and 1997
                   (Dollars in thousands, except share data)

<TABLE>
<CAPTION>
                                                                                             December 31,
                                                                                       -----------------------
                                                                                     1996                  1997
                                                                                ------------           ------------
                                   ASSETS
<S>                                                                            <C>                     <C>
CURRENT ASSETS:
Cash and cash equivalents...................................................           $     3                 $     3
                                                                            ------------------      ------------------
  TOTAL CURRENT ASSETS......................................................                 3                       3
INVESTMENT IN SUBSIDIARIES..................................................            99,102                  94,767
                                                                            ------------------      ------------------
                                                                                       $99,105                 $94,770
                                                                            ==================      ==================

                     LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Due to affiliates...........................................................           $    56                 $   301
Accrued liabilities.........................................................                --                      30
                                                                            ------------------      ------------------
  TOTAL CURRENT LIABILITIES.................................................                56                     331
                                                                            ------------------      ------------------

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, 1,494,353
 shares issued and outstanding..............................................                15                      15

Additional paid-in capital..................................................            95,398                  95,398
Retained earnings (deficit).................................................             3,636                    (974)
                                                                            ------------------      ------------------
  TOTAL STOCKHOLDERS' EQUITY................................................            99,049                  94,439
                                                                            ------------------      ------------------
                                                                                       $99,105                 $94,770
                                                                            ==================      ==================
</TABLE>

                                       49
<PAGE>

                                                                     SCHEDULE  I

                              COAST RESORTS, INC.
                             (Parent Company Only)
                          STATEMENTS OF INCOME (LOSS)
             For the Years Ended December 31, 1995, 1996 and 1997
                   (Dollars in thousands, except share data)

<TABLE>
<CAPTION>
                                                                       For the year ended December 31,
                                                         --------------------------------------------------------
                                                           1995                   1996                    1997
                                                        ----------             -----------             -----------

 <S>                                                   <C>                  <C>                    <C>
Equity interest in income (loss) from subsidiaries.   $      13,780            $       3,689           $      (4,335)
General and administrative expenses................              --                      (81)                   (261)
                                                      -------------            -------------           -------------
Income (loss) before income taxes..................          13,780                    3,608                  (4,596)
Income tax provision (benefit).....................              --                      (28)                     14
                                                      -------------            -------------           -------------

NET INCOME (LOSS)..................................   $      13,780            $       3,636           $      (4,610)
                                                      =============            =============           =============

Basic and diluted net income (loss) per share of
 common stock......................................   $          --            $        2.47           $       (3.08)
                                                      =============            =============           =============

Weighted average common shares outstanding.........              --                1,472,742               1,494,353
                                                      =============            =============           =============


UNAUDITED PRO FORMA DATA (reflecting
   reorganization and change in tax status of
    subsidiaries):
Income (loss) before income taxes..................           8,957                    6,108                  (4,596)
Provision (benefit) for income taxes...............              --                      (28)                     14
                                                      -------------            -------------           -------------
Net income (loss)..................................   $       8,957            $       6,136           $      (4,610)
                                                      =============            =============           =============

Basic and diluted net income (loss) per share of
 common stock......................................   $        8.96            $        4.17           $       (3.08)
                                                      =============            =============           =============

Weighted average common shares outstanding.........       1,000,000                1,472,742               1,494,353
                                                      =============            =============           =============
</TABLE>

                                       50
<PAGE>

                                                                      SCHEDULE I

                              COAST RESORTS, INC.
                             (Parent Company Only)
                       STATEMENTS OF STOCKHOLDER'S EQUITY
              For the Years Ended December 31, 1995, 1996 and 1997
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                  Common Stock          Additional                      Retained
                                           -------------------------     Paid-In         Unrealized     Earnings
                                              Shares        Amount       Capital        Gains(Losses)   (deficit)     Total
                                           ----------------------------------------------------------------------------------
<S>                                        <C>            <C>          <C>              <C>             <C>         <C>
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
  Net (loss)............................                                                                  (4,610)     (4,610)
                                        ------------------------------------------------------------------------------------
Balances at December 31, 1997...........      1,494,353     $15           $95,398           $ --        $   (974)   $ 94,439
                                        ====================================================================================
</TABLE>

                                       51
<PAGE>

                                                                      SCHEDULE I

                              COAST RESORTS, INC.
                             (Parent Company Only)
                            STATEMENTS OF CASH FLOWS
             For the Years Ended December 31, 1995, 1996 and 1997
                             (Dollars in thousands)


<TABLE>
<CAPTION>
                                                                              Year Ended December 31,
                                                              --------------------------------------------------------
                                                                   1995                  1996                1997
                                                              ---------------       --------------       -------------
<S>                                                           <C>                   <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)........................................         $ 13,780              $ 3,636             $(4,610)
                                                              --------------        -------------        ------------
  ADJUSTMENTS TO RECONCILE NET INCOME
    (LOSS) TO NET CASH PROVIDED BY
    OPERATING ACTIVITIES:
     Equity interest in net (income) loss from
      subsidiaries.........................................          (13,780)              (3,689)              4,335

     Due to affiliates.....................................               --                   53                 245

                                                              --------------        -------------        ------------
        TOTAL ADJUSTMENTS..................................          (13,780)              (3,636)              4,610
                                                              --------------        -------------        ------------
        NET CASH PROVIDED BY
          OPERATING ACTIVITIES.............................               --                   --                  --
                                                              --------------        -------------        ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of common stock...................                4                   --                  --
  Cash used to purchase subsidiaries' stock................               (1)                  --                  --
                                                              --------------        -------------        ------------
        NET CASH PROVIDED BY FINANCING
          ACTIVITIES.......................................                3                   --                  --
                                                              --------------        -------------        ------------
NET INCREASE IN CASH AND CASH
 EQUIVALENTS...............................................                3                   --                  --
CASH AND CASH EQUIVALENTS, at beginning of year............               --                    3                   3
                                                              --------------        -------------        ------------
CASH AND CASH EQUIVALENTS, at end of year..................         $      3              $     3             $     3
                                                              ==============        =============        ============
</TABLE>

                                       52
<PAGE>

                                                                     SCHEDULE II


                              COAST RESORTS, INC.
                       VALUATION AND QUALIFYING ACCOUNTS
              For the Years Ended December 31, 1995, 1996 and 1997
                                 (in thousands)

<TABLE>
<CAPTION>
                                                              Additions          Additions
                                          Balance at         Charged to         Charges to
                                           Beginning          Costs and            Other             Deductions         Balance at
              DESCRIPTION                   of Year           Expenses           Accounts               (a)             End of Year
-----------------------------------------------------     --------------     --------------      --------------       --------------

<S>                                       <C>                <C>                <C>                 <C>                  <C>
Allowance for doubtful accounts
 (casino receivables)
  Year ended December 31, 1995.........          $382               $423        $       --                 $431                 $374
                                       ==============     ==============     ==============      ==============       ==============


  Year ended December 31, 1996.........          $374               $ 94        $       --                 $ 89                 $379
                                       ==============     ==============     ==============      ==============       ==============


  Year ended December 31, 1997.........          $379               $448        $       --                 $633                 $194
                                       ==============     ==============     ==============      ==============       ==============

</TABLE>

                                       53