|SECURITIES AND
EXCHANGE COMMISSION


Washington, D.C. 20549

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

|      |                                                                                            | 
|----- | ------------------------------------------------------------------------------------------ | 
|[X]   | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE                                    | 
|      | SECURITIES EXCHANGE ACT OF 1934For the Quarterly Period Ended March 31, 2003               | 
|      | OR                                                                                         | 
|[   ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE                                   | 
|      | SECURITIES EXCHANGE ACT OF 1934For the Transition Period from ____________ to ____________ | 

|Commission file number
0-26922


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

|                                                                                                       |                                                 
|------------------------------------------------------------------------------------------------------ | ------------------------------------------------
|Nevada(State or other jurisdiction ofincorporation or organization)                                    | 88-0345704(I.R.S. employeridentification number)
|4500 West Tropicana Avenue, Las Vegas, Nevada 89103(Address of principal executive offices) (Zip code)

|(702) 365-7000Registrants telephone number, including area code)None
(Former name, former address and former fiscal year, if changed since last report.)


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


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


APPLICABLE ONLY TO
CORPORATE ISSUERS:


Indicate
the number of shares outstanding of each of the issuers classes of common stock, as
of the latest practicable date.


Shares
of Common Stock outstanding as of May 13, 2003: 1,461,178


     Part I  FINANCIAL
INFORMATION


Item 1.  Financial
Statements



COAST CASINOS, INC. AND SUBSIDIARY 
CONDENSED CONSOLIDATED BALANCE SHEETS(dollars in thousands, except share data)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                            | March 31,2003 |  | December 31, 2002 |        
|----------------------------------------------------------- | ------------- |  | ----------------- | -------
|                                                            | (unaudited)   |  |                   |        
|                                                            |               |  |                   |        
|ASSETS                                                      |               | 
|CURRENT ASSETS:                                             |               | 
|Cash and cash equivalents                                   |               |  | $                 | 41,042 
|Accounts receivable, net                                    |               |  |                   | 5,767  
|Other current assets                                        |               |  |                   | 22,283 
|                                                            |               |  |                   |        
|TOTAL CURRENT ASSETS                                        |               |  |                   | 69,092 
|PROPERTY AND EQUIPMENT, net                                 |               |  |                   | 741,956
|OTHER ASSETS                                                |               |  |                   | 7,987  
|                                                            |               |  |                   |        
|                                                            |               |  | $                 | 819,035
|                                                            |               |  |                   |        
|LIABILITIES AND                                             |               | 
|STOCKHOLDERS' EQUITY                                        |               | 
|CURRENT LIABILITIES:                                        |               | 
|Accounts payable                                            |               |  | $                 | 13,812 
|Accrued liabilities                                         |               |  |                   | 55,558 
|Construction accounts payable                               |               |  |                   | 5,291  
|Current portion of long-term debt                           |               |  |                   | 27,797 
|                                                            |               |  |                   |        
|TOTAL CURRENT LIABILITIES                                   |               |  |                   | 102,458
|LONG-TERM DEBT, less current portion                        |               |  |                   | 454,654
|DEFERRED INCOME TAXES                                       |               |  |                   | 32,109 
|DEFERRED RENT                                               |               |  |                   | 27,875 
|                                                            |               |  |                   |        
|TOTAL LIABILITIES                                           |               |  |                   | 617,096
|                                                            |               |  |                   |        
|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 1,461,178 shares outstanding    |               |  |                   | 15     
|Treasury stock (33,175 shares)                              |               |  |                   | (3,333 
|Additional paid-in capital                                  |               |  |                   | 95,398 
|Retained earnings                                           |               |  |                   | 109,859
|                                                            |               |  |                   |        
|TOTAL STOCKHOLDERS' EQUITY                                  |               |  |                   | 201,939
|                                                            |               |  |                   |        
|                                                            |               |  | $                 | 819,035
|                                                            |               |  |                   |        
|                                                            |               | 

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


1


COAST CASINOS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months Ended March 31, 2003 and 2002
(dollars in thousands, except share and per share data)(unaudited)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                             | Three Months EndedMarch 31, | 
|-------------------------------------------- | --------------------------- | 
|
|
|
|OPERATING REVENUES:                          |                             | 
|Casino                                       |                             | 
|Food and beverage                            |                             | 
|Hotel                                        |                             | 
|Other                                        |                             | 
|                                             |                             | 
|GROSS OPERATING REVENUES                     |                             | 
|Less:  promotional allowances                |                             | 
|                                             |                             | 
|NET OPERATING REVENUES                       |                             | 
|                                             |                             | 
|OPERATING EXPENSES:                          |                             | 
|Casino                                       |                             | 
|Food and beverage                            |                             | 
|Hotel                                        |                             | 
|Other                                        |                             | 
|General and administrative                   |                             | 
|Deferred rent                                |                             | 
|Depreciation and amortization                |                             | 
|                                             |                             | 
|TOTAL OPERATING EXPENSES                     |                             | 
|                                             |                             | 
|OPERATING INCOME                             |                             | 
|                                             |                             | 
|OTHER INCOME (EXPENSES):                     |                             | 
|Interest expense, net                        |                             | 
|Interest capitalized                         |                             | 
|Loss on disposals of assets                  |                             | 
|                                             |                             | 
|TOTAL OTHER INCOME (EXPENSES)                |                             | 
|                                             |                             | 
|INCOME BEFORE INCOME TAXES                   |                             | 
|Income tax provision                         |                             | 
|                                             |                             | 
|NET INCOME                                   |                             | 
|                                             |                             | 
|PER SHARE INFORMATION:                       |                             | 
|Basic net income per share of common stock   |                             | 
|                                             |                             | 
|Diluted net income per share of common stock |                             | 
|                                             |                             | 
|Basic weighted-average shares outstanding    |                             | 
|                                             |                             | 
|Diluted weighted-average shares outstanding  |                             | 
|                                             |                             | 

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


2


COAST CASINOS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSFor the Three Months Ended March 31, 2003 and 2002
(dollars in thousands)(unaudited)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                      | Three Months EndedMarch 31, | 
|--------------------------------------------------------------------- | --------------------------- | 
|
|
|
|CASH FLOWS FROM OPERATING ACTIVITIES:                                 |                             | 
|Net income                                                            |                             | 
|                                                                      |                             | 
|ADJUSTMENTS TO RECONCILE NET INCOME TO                                |                             | 
|NET CASH PROVIDED BY OPERATING ACTIVITIES:                            |                             | 
|Depreciation and amortization                                         |                             | 
|Net amortization of debt offering costs and original issue premium    |                             | 
|Loss on disposals of assets                                           |                             | 
|Deferred income taxes                                                 |                             | 
|Deferred rent                                                         |                             | 
|Changes in assets and liabilities:                                    |                             | 
|Net decrease (increase) in accounts receivable and other assets       |                             | 
|Net increase in accounts payable and accrued liabilities              |                             | 
|                                                                      |                             | 
|TOTAL ADJUSTMENTS                                                     |                             | 
|                                                                      |                             | 
|NET CASH PROVIDED BY OPERATING ACTIVITIES                             |                             | 
|                                                                      |                             | 
|CASH FLOWS FROM INVESTING ACTIVITIES:                                 |                             | 
|Capital expenditures, net of amounts in construction accounts payable |                             | 
|Proceeds from sale of assets                                          |                             | 
|                                                                      |                             | 
|NET CASH USED IN INVESTING ACTIVITIES                                 |                             | 
|                                                                      |                             | 
|CASH FLOWS FROM FINANCING ACTIVITIES:                                 |                             | 
|Proceeds from issuance of long-term debt, including original issue    |                             | 
|premium, net of financing costs                                       |                             | 
|Principal payments on long-term debt                                  |                             | 
|Proceeds from borrowings under bank line of credit                    |                             | 
|Repayments of borrowings under bank line of credit                    |                             | 
|                                                                      |                             | 
|NET CASH PROVIDED BY  FINANCING ACTIVITIES                            |                             | 
|                                                                      |                             | 
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                  |                             | 
|CASH AND CASH EQUIVALENTS, at beginning of period                     |                             | 
|                                                                      |                             | 
|CASH AND CASH EQUIVALENTS, at end of period                           |                             | 
|                                                                      |                             | 

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


3


COAST CASINOS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1  GENERAL


Background Information


Coast
Casinos, Inc. (Coast Casinos or the Company) is a Nevada
corporation with no independent assets or operations and serves only as a holding company
for Coast Hotels and Casinos, Inc. (Coast Hotels), which is also a Nevada
corporation. Coast Casinos changed its name from Coast Resorts, Inc. on July 2, 2002.
Through its wholly owned subsidiary, Coast Hotels, the Company owns and operates four Las
Vegas hotel-casinos:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

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

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

|Basis of Presentation


The
accompanying condensed consolidated interim financial statements are unaudited and have
been prepared in accordance with generally accepted accounting principles for interim
financial information and with Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. The year-end balance sheet data was derived
from audited financial statements, but does not include all disclosures required by
generally accepted accounting principles. The unaudited consolidated financial statements
should be read in conjunction with the audited consolidated financial statements and
footnotes included in our annual report on Form 10-K for the year ended December 31, 2002.
In the opinion of management, all adjustments and normal recurring accruals considered
necessary for a fair presentation of the results for the interim periods have been
included. The interim results reflected in the unaudited consolidated financial statements
are not necessarily indicative of expected results for the full year.


4


COAST CASINOS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1  GENERAL
(continued)



Stock Options


The
Financial Accounting Standards Board has issued Statement No. 123, Accounting for
Stock-Based Compensation (SFAS 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). The Company has elected to account for stock options under APB
No. 25 and to disclose the pro forma impact on net income and earnings per share as if the
Company had used the fair value method recommended by SFAS 123, as amended by Statement
No. 148, Accounting for Stock-Based Compensation  Transition and Disclosure
 an amendment of FAS 123. The following table illustrates the effect on net
income and earnings per share if the Company had applied the fair value recognition
principles of SFAS 123 to stock-based compensation (in thousands, except per share data):
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                         | Three Months EndedMarch 31, | 
|------------------------------------------------------------------------ | --------------------------- | 
|
|
|
|Net income, as reported                                                  |                             | 
|Deduct: Total stock-based employee compensation expense determined under |                             | 
|the minimum value method for all awards, net of related tax effects      |                             | 
|                                                                         |                             | 
|Pro forma net income                                                     |                             | 
|                                                                         |                             | 
|Basic earnings per share-as reported                                     |                             | 
|                                                                         |                             | 
|Basic earnings per share -pro forma                                      |                             | 
|                                                                         |                             | 
|Diluted earnings per share -as reported                                  |                             | 
|                                                                         |                             | 
|Diluted earnings per share -pro forma                                    |                             | 
|                                                                         |                             | 

|The
fair value for the options was estimated at the date of grant to be $20.90 using the
minimum value method (which is appropriate for valuing options of companies without
publicly traded stock) with the following weighted-average assumptions: risk-free rate of
return of approximately 5.0%, expected life of the options of five years and a 0% dividend
yield. For purposes of pro forma disclosures, the estimated fair value of the options is
amortized over the respective vesting periods of the options.


5


COAST CASINOS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2  LONG-TERM
DEBT


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

|                                                                                                                                                                                                        | March 31,2003  |  | December 31,2002 |        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------- |  | ---------------- | -------
|
|                                                                                                                                                                                                        | (in thousands) | 
|9.5% senior subordinated notes due April 2009, with interest payable     semi-annually on April 1 and October 1, including  unamortized     original issue premium of $4,234 in 2003 and $4,412 in 2002 |                |  | $                | 329,234
|                                                                                                                                                                                                        |                |  |                  |        
|Senior secured credit facility due September 2004, collateralized     by substantially all of the assets of Coast Hotels and Casinos, Inc.                                                              |                |  |                  | 135,000
|                                                                                                                                                                                                        |                |  |                  |        
|Variable-rate note due March 2009, collateralized by 1996 Canadair      Challenger aircraft                                                                                                             |                |  |                  | 18,000 
|                                                                                                                                                                                                        |                |  |                  |        
|Other notes payable                                                                                                                                                                                     |                |  |                  | 217    
|                                                                                                                                                                                                        |                |  |                  |        
|                                                                                                                                                                                                        |                |  |                  | 482,451
|Less: current portion                                                                                                                                                                                   |                |  |                  | 27,797 
|                                                                                                                                                                                                        |                |  |                  |        
|                                                                                                                                                                                                        |                |  | $                | 454,654
|                                                                                                                                                                                                        |                |  |                  |        

|In
March 1999, Coast Hotels issued $175.0 million principal amount of 9.5% senior
subordinated notes with interest payable on April 1 and October 1 beginning October 1,
1999 and entered into a $75.0 million senior secured credit facility due 2004 to
facilitate a refinancing. Availability under the credit facility was increased to $200.0
million in September 1999. Coast Casinos is a full and unconditional guarantor of the
indebtedness under both of these debt agreements. Borrowings under the credit facility
bear interest, at Coast Hotels option, selected monthly, at a premium over the one-,
two-, three- or six-month London Interbank Offered Rate (LIBOR). The premium
varies depending on a certain financial ratio and can vary between 125 and 250 basis
points. As of March 31, 2003, the premium over LIBOR was 2.25% (225 basis points) and the
interest rate was 3.56%. For the quarter ended March 31, 2003, the weighted average
interest rate for the senior secured credit facility was 3.43%. Coast Hotels incurs a
commitment fee, payable quarterly in arrears, on the unused portion of the credit
facility. This variable fee is currently at the maximum rate of 0.5% per annum times the
average unused portion of the facility.


In
accordance with the terms of the senior secured credit facility, the availability under
the facility has been reduced quarterly since September 30, 2001. Through March 31, 2003,
total availability has been reduced to $150.5 million with additional quarterly reductions
in availability of $8.5 million on June 30, 2003 and of $11.5 million on each of September
30, 2003, December 31, 2003, March 31, 2004 and June 30, 2004. Advances under the facility
may be used for working capital, general corporate purposes, and certain improvements to
our existing properties. As of March 31, 2003, there was $135.0 million outstanding under
the senior secured credit facility with $14.8 million of availability remaining (net of
letters of credit of approximately $700,000).


6


COAST CASINOS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2  LONG-TERM
DEBT (continued)


On
February 2, 2001, Coast Hotels issued $50.0 million additional principal amount of senior
subordinated notes. The net proceeds of approximately $49.1 million were used to reduce
borrowings under its senior secured credit facility. On March 19, 2002, Coast Hotels
issued $100.0 million additional principal amount of senior subordinated notes. The notes
were issued at a $5.0 million premium to par value and the net proceeds of approximately
$103.2 million were used to reduce borrowings under its senior secured credit facility.
The notes that were issued in 2001 and 2002 were issued under the same indenture and have
the same terms, interest rate and maturity date as the Companys $175.0 million
principal amount of senior subordinated notes issued in 1999.


The
loan agreement governing the senior secured credit facility contains covenants that, among
other things, limit the ability of Coast Hotels to pay dividends or make advances to Coast
Casinos, to make certain capital expenditures, to repay certain existing indebtedness, to
incur additional indebtedness or to sell material assets of Coast Hotels. Additionally,
the loan agreement requires that Coast Hotels maintain certain financial ratios with
respect to its leverage and fixed charge coverage. The agreement was amended in December
2001, March 2002, January 2003 and February 2003 to increase the limitations of the
Company to make certain capital expenditures and to allow for additional indebtedness. The
Company is also subject to certain covenants associated with the indenture governing the
senior subordinated notes, including, in part, limitations on certain restricted payments,
the incurrence of additional indebtedness and asset sales. As of March 31, 2003, the net
assets of Coast Hotels amounted to $206.1 million, of which $190.6 million was restricted
under the terms of the indenture governing the senior subordinated notes. Management
believes that, at March 31, 2003, the Company was in compliance with all covenants and
required ratios.


In
February 2003, the Company borrowed $18.0 million under a secured loan agreement,
collateralized by a Company-owned aircraft. The proceeds were used to reduce borrowings
under the senior secured credit facility. The loan bears interest at a premium of 2.25%
over the 30-day LIBOR rate, which is adjusted monthly. As of March 31, 2003, the interest
rate was 3.59%, and for the three months ended March 31, 2003, the weighted average
interest rate was 3.58%. Payments of interest only are required during the first twelve
months. Commencing on March 28, 2004, the Company will be required to make monthly
principal payments of $120,000 plus interest on the unpaid balance. A balloon payment of
the remaining principal balance is due in February 2009.


On
March 28, 2003, the Company entered into an unsecured $20.0 million revolving bridge line
of credit (bridge facility) with a participant in its senior secured credit
facility. Borrowings under the bridge facility will bear interest at a premium of 3.5%
over one-, two-, three-week or one month LIBOR. The bridge facility will expire on June
26, 2003, but management anticipates it will extend the bridge facility beyond that date.


As
of May 13, 2003, the Company had $139.5 million outstanding under the senior secured
credit facility and no outstanding borrowings under the bridge facility. The Company is
currently in negotiations with its bank group to amend or replace its senior secured
credit facility during 2003 so that borrowings under the facility, in conjunction with
existing cash balances and anticipated cash flow from operations would provide sufficient
resources to meet its debt and lease payment obligations, operating needs and budgeted
capital expenditure requirements at its hotel-casino properties for at least the next
twelve months. There are no assurances that the Company will be able to amend or replace
its credit facility, in which case it will have to limit its future capital expenditures.


7


COAST CASINOS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3  PROMOTIONAL
ALLOWANCES


The
retail value of hotel accommodations and food and beverage items provided to customers
without charge is included in gross revenues and then deducted as promotional allowances,
to arrive at net revenues. The following is a breakdown of these complimentary revenues
for the three months ended March 31, 2003 and 2002:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        | Three Months EndedMarch 31, | 
|----------------------- | --------------------------- | 
|
|
|
|Complimentary revenues: |                             | 
|Food and beverage       |                             | 
|Hotel                   |                             | 
|Other                   |                             | 
|                        |                             | 
|Promotional allowances  |                             | 
|                        |                             | 

|The
estimated cost of providing these complimentary services is as follows for the three
months ended March 31, 2003 and 2002:
|------------------------------------------------------------------------------------------------------------------------------

|                  | Three Months EndedMarch 31, | 
|----------------- | --------------------------- | 
|
|
|
|Food and beverage |                             | 
|Hotel             |                             | 
|Other             |                             | 
|                  |                             | 
|                  |                             | 
|                  |                             | 

|The
cost of promotional allowances has been allocated to expense as follows for the three
months ended March 31, 2003 and 2002:
|-------------------------------------------------------------------------------------------------------------------------------

|                           | Three Months EndedMarch 31, | 
|-------------------------- | --------------------------- | 
|
|
|
|Casino                     |                             | 
|General and administrative |                             | 
|                           |                             | 
|                           |                             | 
|                           |                             | 

|8


COAST CASINOS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 4  EARNINGS
PER SHARE


Basic
net income per common share excludes dilution and is computed by dividing income
applicable to common shareholders by the weighted-average number of common shares
outstanding. Diluted net income per common share is computed based on the weighted-average
number of common shares outstanding after consideration of the dilutive effect of stock
options.


The
computations of basic net income per common share and diluted net income per common share,
for the three months ended March 31, 2003 and 2002, are as follows (in thousands, except
share and per share data):
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                             | Three Months EndedMarch 31, | 
|------------------------------------------------------------ | --------------------------- | 
|
|
|
|Net income applicable to computations                        |                             | 
|                                                             |                             | 
|Weighted-average common shares                               |                             | 
|applicable to net income per common share                    |                             | 
|Effect of dilutive securities:                               |                             | 
|Stock option incremental shares                              |                             | 
|                                                             |                             | 
|Weighted-average common shares                               |                             | 
|applicable to net income per common share, assuming dilution |                             | 
|                                                             |                             | 
|Basic net income per share of common stock                   |                             | 
|                                                             |                             | 
|Diluted net income per share of common stock                 |                             | 
|                                                             |                             | 

|9


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


Critical Accounting
Policies and Estimates


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


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

| | o | We
recognize revenue as net wins and losses occur in our casinos, upon the occupancy of our
hotel rooms, upon the delivery of food, beverage and other services, and upon performance
for entertainment revenue. Wagers received on all sporting events are recorded as a
liability until the final outcome of the event when the payoffs, if any, can be
determined. Effective January 1, 2001, we adopted Emerging Issues Task Force Issue 00-22
(the Issue), which requires that cash discounts and certain other cash
incentives related to gaming play be recorded as a reduction to gross casino revenues.
The Issue requires that prior periods be restated. We previously recorded incentives as
an operating expense and have reclassified prior period amounts.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

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

|10


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


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

| | o | At
March 31, 2003, we had net property and equipment of $742.0 million, representing 90% of
our total assets. We depreciate the property and equipment on a straight-line basis over
their estimated useful lives. The estimated useful lives are based on the nature of the
assets as well as our current operating strategy. Future events, such as property
expansions, property developments, new competition and new regulations, could result in a
change in the manner in which we are using certain assets, requiring a change in the
estimated useful lives of such assets. In assessing the recoverability of the carrying
value of property and equipment, if events and circumstances warrant such an assessment,
we must make assumptions regarding estimated future cash flows and other factors. If
these estimates or the related assumptions change, we may be required to record an
impairment loss for these assets. Such an impairment loss would be recognized as a
non-cash component of operating income.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

|Results of Operations


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

|                                      | Three Months Ended March 31, | 
|------------------------------------- | ---------------------------- | 
|
|
|
|                                      | (in thousands)               | 
|Net operating revenues                |                              | 
|Operating expenses                    |                              | 
|                                      |                              | 
|Operating income                      |                              | 
|                                      |                              | 
|Net income                            |                              | 
|                                      |                              | 
|Cash provided by operating activities |                              | 
|                                      |                              | 
|Cash used in investing activities     |                              | 
|                                      |                              | 
|Cash provided by financing activities |                              | 
|                                      |                              | 

|11


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


Three Months Ended March
31, 2003 Compared to Three Months Ended March 31, 2002


In
the quarter ended March 31, 2003, revenues, operating income and net income all increased
compared to the quarter ended March 31, 2002. Net revenues were $146.4 million in the
quarter, an increase of 8.4% over net revenues of $135.1 million in the first quarter of
2002, primarily due to a 17.3% increase in revenues at The Orleans as a result of new
hotel rooms, casino space and other amenities added in the recent expansion. Net revenues
at the Suncoast, Gold Coast and Barbary Coast also increased in the quarter. Operating
income in the first quarter of 2003 was $29.7 million compared to $24.3 million in the
first quarter of 2002, an increase of 22.3% due primarily to increased customer visitation
and wagering volume at The Orleans and the Suncoast. Operating income also increased at
the Gold Coast but was down slightly at the Barbary Coast. Net income was $13.7 million in
the quarter compared to $11.4 million in the first quarter of 2002, an increase of 20.4%.


     Casino.  
Casino revenues were $107.9 million in the first quarter of 2003 compared to
$100.9 million in the same period in 2002, an increase of 7.0% due primarily to
a 12.0% increase at The Orleans, which experienced higher customer visitation
and wagering volume after the recent expansion. The Gold Coast also experienced
the positive effects of completing its expansion and interior redesign with
casino revenues increasing by 4.8% in the quarter. The Suncoast continued to
attract increasing numbers of customers in the fast-growing west end of the Las
Vegas valley, with casino revenues increasing by 3.7%. Barbary Coast casino
revenues increased 3.9% in the period due to increased customer wagering volume.
Casino expenses decreased by $1.1 million (2.4%) in the first quarter, primarily
due to a reduction in promotional expenses.


Food
and Beverage.  Food and beverage revenues were $28.5 million in the first quarter of 2003
compared to $28.0 million in 2001, an increase of 2.0%, primarily due to increases at The
Orleans resulting from increased customer traffic after the recent expansion. Food and
beverage expenses were $21.0 million in the first quarter of 2003 compared to $20.7
million in the first quarter of 2002, an increase of 1.8%, in line with the increase in
revenues.


     Hotel.  
Hotel room revenues were $13.2 million in the first quarter of 2003 compared to
$10.1 million in 2002, an increase of 30.6%. Total occupied rooms increased by
28.5% in the quarter because of the opening of 586 additional rooms at The
Orleans in August 2002. Room occupancy percentage declined slightly in the first
quarter, from 87.7% in 2002 to 86.1% in 2003 because of the increased room
inventory, but the average daily room rates remained unchanged at $61. In the
three months ended March 31, 2003, hotel expenses increased by 30.0% due to the
additional rooms at The Orleans, and in line with the corresponding increase in
revenues.


     Other.  
Other revenues are derived primarily from our bowling, retail, entertainment and
leased facilities. In the three months ended March 31, 2003, other revenues were
$10.0 million compared to $9.3 million in 2002, an increase of 6.9% due
primarily to the increased customer visitation at The Orleans.


12


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


Three Months
Ended March 31, 2003 Compared to Three Months Ended March 31, 2002 (continued)


General
and Administrative.  General and administrative expenses were $27.1 million in the
first quarter of 2003 compared to $24.8 million in 2002, an increase of 9.4%, primarily
due to increases in payroll and related costs of $1.3 million (9.8%), utilities of
$373,000 (12.2%), property taxes of $232,000 (16.9%), and insurance costs of $108,000
(18.8%). Payroll and related costs were affected by increased staffing levels at The
Orleans and the Gold Coast due to the recent expansions at those properties, as well as
third quarter 2002 pay raises. Utilities expenses in the quarter increased by 30.6% at
The Orleans and 8.2% at the Gold Coast, respectively, due primarily to the recently
completed expansions at those properties. The expansions also contributed to increases in
property taxes of 36.0% at The Orleans and 30.5% at the Gold Coast. Property and casualty
insurance costs were higher in the quarter, primarily due to the expansion at The
Orleans.


Depreciation
and Amortization.  Depreciation and amortization expense was $11.4 million in the first
quarter of 2003 compared to $9.3 million in 2002. The increase was due primarily to the
completion of the expansion projects at the Gold Coast and The Orleans.


Other
Income (Expenses).  Net interest expense was $9.3 million in the first quarter of 2003
compared to $7.2 million in the first quarter of 2002, an increase of 29.2%. The increase
is due to higher aggregate indebtedness related to the expansion projects at The Orleans
and the Gold Coast. Capitalized interest was $883,000 in the first quarter, compared to
$588,000 in the first quarter of 2002 due to the ongoing construction of the special
events arena at The Orleans, scheduled to open in May 2003. The loss on the disposal of
equipment was $344,000 in the first quarter of 2003 compared to a loss of $318,000 in the
first quarter of 2002.


Aggregate Indebtedness
and Fixed Payment Obligations


Our
total long-term indebtedness (including current maturities) and fixed payment obligations
on the land leases for the twelve-month periods ending March 31 are summarized by year
below:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                           | 2004 |  | 2005 |        | 2006 |   | 2007    |  | 2008 |       | Thereafter |   | Total | 
|-------------------------- | ---- |  | ---- | ------ | ---- | - | ------- |  | ---- | ----- | ---------- | - | ----- | 
|
|Long-Term Indebtedness     |      |  |      |        |      |   |         |  |      |       |            |   |       | 
|Senior subordinated notes  |      |  | $    | --     |      | $ | --      |  | $    | --    |            | $ | --    | 
|Bank credit facility(1)    |      |  |      | 27,500 |      |   | 107,500 |  |      | --    |            |   | --    | 
|Secured aircraft loan      |      |  |      | 120    |      |   | 1,440   |  |      | 1,440 |            |   | 1,440 | 
|Other                      |      |  |      | 177    |      |   | 3       |  |      | 3     |            |   | 3     | 
|                          
|Fixed Payment Obligations  |      | 
|for Land Leases            |      | 
|Barbary Coast - land lease |      |  |      | 189    |      |   | 190     |  |      | 190   |            |   | 190   | 
|The Orleans - land lease   |      |  |      | 2,700  |      |   | 2,700   |  |      | 2,725 |            |   | 3,000 | 
|Suncoast - land lease      |      |  |      | 2,495  |      |   | 2,555   |  |      | 2,615 |            |   | 2,675 | 
|                           |      |  |      |        |      |   |         |  |      |       |            |   |       | 
|Total Indebtedness and     |      | 
|Fixed Payment Obligations  |      |  |      | 33,181 |      | $ | 114,388 |  | $    | 6,973 |            | $ | 7,308 | 
|                           |      |  |      |        |      |   |         |  |      |       |            |   |       | 

|(1) | The
terms of the senior secured credit facility provide that availability will be reduced on a quarterly basis. See Liquidity and Capital Resources.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------

|13


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


Aggregate Indebtedness
and Fixed Payment Obligations (continued)


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


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


The
Barbary Coast occupies approximately 1.8 acres at the intersection of Flamingo Road and
the Strip that we lease pursuant to a lease dated May 1, 1993. The lease provides for
rental payments of $175,000 per year during the initial term of the lease that expires on
May 1, 2003. We have exercised the first of two 30-year options, with rental payments
increasing to $190,000 per year during the first ten years of the renewal period. In
January 2003, we purchased the approximately 2.5 additional acres of real property located
adjacent to the Barbary Coast which we previously leased for approximately $18.1 million.
We use the 2.5-acre property as a parking lot for our employees and for valet parking.


14


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


Liquidity and Capital
Resources


Our
principal sources of liquidity have consisted of cash provided by operating activities and
debt financing. Cash provided by operating activities was $35.7 million in the three
months ended March 31, 2003, compared to $25.0 million in the same period in 2002.


Cash
used in investing activities was primarily for capital expenditures and was $48.8 million
in the first three months of 2003, compared to $55.8 million in 2002. In the first three
months of 2003, cash used for capital expenditures was $48.8 million, including $24.6
million for the expansion projects at The Orleans and the Gold Coast, $18.1 million for
the purchase of land at the Barbary Coast, $883,000 for capitalized interest and
approximately $5.2 million for maintenance capital expenditures. In the first three months
of 2002, cash used for capital expenditures was primarily for the expansion projects at
The Orleans and the Gold Coast.


Cash
provided by financing activities was $16.7 million in the three months ended March 31,
2003, primarily from $17.8 million in net proceeds from the financing of our aircraft and
$20.0 million in proceeds from borrowings under the senior secured credit facility, offset
by $21.0 million in repayments of borrowings under the credit facility. In the first
quarter of 2002, cash provided by financing activities was $23.5 million, primarily from
$103.2 million in net proceeds from the issuance of long-term debt and $25.0 million of
proceeds from borrowings under the senior secured credit facility, offset, in part, by
$104.5 million in repayments of borrowings under the credit facility.


In
March 1999, Coast Hotels issued $175.0 million principal amount of 9.5% senior
subordinated notes due in 2009 with interest payable on April 1 and October 1 beginning
October 1, 1999 and entered into a $75.0 million senior secured credit facility due 2004
to facilitate a refinancing. Availability under the credit facility was increased to
$200.0 million in September 1999, subject to automatic reductions in availability from
September 2001 through June 2004, as described below. Coast Casinos is a guarantor of the
indebtedness under both of these debt agreements. Borrowings under the credit facility
bear interest, selected monthly at our option, at a premium over the one-, two-, three- or
six-month London Interbank Offered Rate (LIBOR). The premium varies depending
on a certain financial ratio and can vary between 125 and 250 basis points. As of March
31, 2003, the premium over LIBOR was 2.25% (225 basis points) and the interest rate was
3.56%. For the three months ended March 31, 2003, the weighted average interest rate for
the senior secured credit facility was 3.43%. We incur a commitment fee, payable quarterly
in arrears, on the unused portion of the credit facility. This variable fee is currently
at the maximum rate of 0.5% per annum times the average unused portion of the facility.


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


15


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


Liquidity and Capital
Resources (continued)


The
availability under the senior secured credit facility has been reduced quarterly since
September 30, 2001. On March 31, 2003, total availability was reduced to $150.5 million
with an additional quarterly reduction in availability of $8.5 million on June 30, 2003
and $11.5 million on each of September 30, 2003, December 31, 2003, March 31, 2004 and
June 30, 2004. Advances under the facility may be used for working capital, general
corporate purposes, and certain improvements to our existing properties. As of March 31,
2003, we had $135.0 million outstanding under the senior secured credit facility with
$14.8 million of availability remaining (net of letters of credit of approximately
$700,000).


The
loan agreement governing the senior secured credit facility contains covenants that, among
other things, limit the ability of Coast Hotels to pay dividends or make advances to Coast
Casinos, to make certain capital expenditures, to repay certain existing indebtedness, to
incur additional indebtedness or to sell material assets. Additionally, the loan agreement
requires that we maintain certain financial ratios with respect to leverage and fixed
charge coverage. We are also subject to certain covenants associated with the indenture
governing our senior subordinated notes, including, in part, limitations on certain
restricted payments, the incurrence of additional indebtedness and asset sales. At March
31, 2003, we were in compliance with all covenants and required ratios.


The
senior secured credit facility was amended in December 2001, March 2002, January 2003 and
February 2003 to increase the limitations on certain capital expenditures and to allow for
additional indebtedness.


In
February 2003, we borrowed $18.0 million under a secured loan agreement, collateralized by
our Canadair Challenger aircraft. The proceeds were used to reduce borrowings under the senior
secured credit facility. The loan bears interest at a premium of 2.25% over the 30-day
LIBOR rate, which is adjusted monthly. As of March 31, 2003, the interest rate was 3.59%,
and for the three months ended March 31, 2003, the weighted average interest rate was
3.58%. Payments of interest only are required during the first twelve months. Commencing
on March 28, 2004, we will be required to make monthly principal payments of $120,000 plus
interest on the unpaid balance. A balloon payment of the remaining principal balance is
due in February 2009.


On
March 28, 2003, we entered into an unsecured $20.0 million revolving bridge line of credit
(bridge facility) with a participant in our senior secured credit facility.
Borrowings under the bridge facility bear interest at a premium of 3.5% over one-, two-,
three-week or one month LIBOR. The bridge facility expires on June 26, 2003, but
management anticipates it will extend the bridge facility beyond that date.


As
of May 13, 2003, we had $139.5 million outstanding under the senior secured credit
facility and no outstanding borrowings under the bridge facility. We are currently in
negotiations with our bank group to amend or replace our senior secured credit facility
during 2003 so that borrowings under the facility, in conjunction with existing cash
balances and anticipated cash flow from operations would provide sufficient resources to
meet our debt and lease payment obligations, operating needs and budgeted capital
expenditure requirements at our hotel-casino properties for at least the next twelve
months. There are no assurances that we will be able to amend or replace our credit
facility, in which case we will have to limit our future capital expenditures.


16


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


Capital Expenditures


In
January 2001, we commenced an expansion of The Orleans. The expansion project included a
special-events arena, a 586-room hotel tower, a 2,600-car parking garage, six additional
movie theaters, two restaurants, an Irish pub and approximately 40,000 square feet of new
gaming area and public space. Through March 31, 2003, we had completed all but the arena
and had spent $157.9 million. We expect to open the arena in May 2003 with additional
project expenditures of approximately $10.6 million.


In
the fourth quarter of 2000, we commenced an expansion and remodel of the Gold Coast. The
project included a new, expanded buffet restaurant, a sports bar, an Asian-themed
restaurant, an Italian restaurant, 10,000 square feet of additional meeting space, an
additional approximately 20,000 square feet of slot and table games area, a new bingo
room, an expanded porte-cochere and a parking garage. Through March 31, 2003, we had spent
$72.0 million and had completed substantially all of the project.


In
the fourth quarter of 2001 and the first quarter of 2002, we purchased land totaling
approximately 60 acres for possible future development. The land is located in a gaming
enterprise district on Las Vegas Boulevard South, adjacent to Interstate 15 and
approximately six miles south of Tropicana Avenue. Subject to market conditions,
availability of financing and receipt of required governmental approvals, we intend to
develop a hotel-casino on the site. We are currently in the conceptual stage of the
project and have not developed any plans, but anticipate beginning construction of the
hotel in the first half of 2004 and opening in the second half of 2005. There are no
assurances that we will actually develop the project.


In
the ordinary course of operating our hotel-casinos, it is necessary to upgrade or replace
fixtures and equipment and to make improvements that will extend the life of our physical
plants. We anticipate that these maintenance capital expenditures will total approximately
$25.0 million in 2003.


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

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

| | o | change
orders and plan or specification modifications;
| | - | ------------------------------------------------------

| | o | changes
and concessions required by governmental or regulatory authorities;
| | - | ---------------------------------------------------------------------------

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

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

|17


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


Other Matters


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


In
April 2002, the Financial Accounting Standards Board issued Statement No. 145 (SFAS
145) Rescission of FASB Statements Nos. 4, 44 and 64 and Amendment of FASB
Statement No. 13. SFAS 145 addresses the presentation for losses on early
retirements of debt in the statement of operations. Upon adoption of SFAS 145, we might
not be allowed to present losses on early retirements of debt as an extraordinary item.
Additionally, prior period extraordinary losses may be required to be reclassified to
conform to this new presentation.


In
June 2002, the Financial Accounting Standards Board issued Statement No. 146 (SFAS
146) Accounting for Costs Associated with Exit or Disposal Activities.
The provisions of SFAS 146 become effective for exit or disposal activities commenced
subsequent to December 31, 2002.


The
adoptions of SFAS 143, 145, and 146 had no material impact on our financial position,
results of operations or cash flows.


In
December 2002, the Financial Accounting Standards Board issued Statement No. 148
(SFAS 148) Accounting for Stock-Based Compensation. The provisions
of SFAS 148 became effective December 15, 2002. We adopted the disclosure requirements of
SFAS 148, and there was no impact on our financial position, results of operations or cash
flows.


In
November 2002, the Financial Accounting Standards Board issued FASB Interpretation No. 45
(FIN 45), Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others. This
interpretation elaborates on the disclosures to be made by a guarantor in its interim and
annual financial statements about its obligations under certain guarantees that it has
issued. It also clarifies (for guarantees issued after January 1, 2003) that a guarantor
is required to recognize, at the inception of a guarantee, a liability for the fair value
of the obligations undertaken in issuing the guarantee. At December 31, 2002, we do not
have any outstanding guarantees and accordingly do not expect the adoption of FIN 45 to
have a material impact on our financial position, results of operations or cash flows.


In
January 2003, the Financial Accounting Standards Board issued FASB Interpretation No. 46
(FIN 46), Consolidation of Variable Interest Entities. This
interpretation addresses the requirements for business enterprises to consolidate related
entities in which they are determined to be the primary economic beneficiary as a result
of their variable economic interests. The interpretation is intended to provide guidance
in judging multiple economic interests in an entity and in determining the primary
beneficiary. The interpretation outlines disclosure requirements for VIEs created after
January 31, 2003. We have reviewed our major relationships and our overall economic
interests with other companies consisting of related parties, companies in which we have
an equity position, and other suppliers to determine the extent of our variable economic
interest in these parties. The adoption of FIN 46 will not have a material impact on our
financial position, results of operations or cash flows.


18


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


Certain Forward-Looking
Statements


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

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

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

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

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

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

| | o | uncertainties
related to the economy;
| | - | -------------------------------------

| | o | uncertainties
related to the effects of possible future terrorist activities; and
| | - | ---------------------------------------------------------------------------------

| | o | uncertainties
related to the effects of the war with Iraq.
| | - | ----------------------------------------------------------

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


19


Item 3.  Quantitative and
Qualitative Disclosures about Market Risk


Market Risk


Market
risk is the risk of loss arising from adverse changes in market rates and prices, such as
interest rates, foreign currency exchange rates and commodity prices. Our primary exposure
to market risk is interest rate risk associated with our long-term debt. We attempt to
limit our exposure to interest rate risk by managing the mix of our long-term fixed-rate
borrowings and short-term borrowings under our revolving bank credit facility. Assuming
that the amount of our variable rate debt remained constant at $153.0 million during the
next twelve months, a hypothetical 1% increase in our variable interest rate would
increase our interest expense by $1.5 million. As of March 31, 2003, we did not have any
investments in derivative- or foreign currency-based financial instruments.


The
table below provides information about our financial instruments that are sensitive to
changes in interest rates. For debt obligations, the table presents notional amounts and
weighted average interest rates by contractual maturity dates for the twelve-month period
ended March 31,:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                         | 2004                   |  | 2005 |        | 2006 |   | 2007    |   | 2008 |       | Thereafter |   | Total |   | FairValue (1) |      
|------------------------ | ---------------------- |  | ---- | ------ | ---- | - | ------- | - | ---- | ----- | ---------- | - | ----- | - | ------------- | -----
|
|                         | (dollars in thousands) | 
|LIABILITIES              |                        |  |      |        |      |   |         |   |      |       |            |   |       |   |               |      
|Short-term debt          |                       
|Fixed rate               |                        |  | $    | 177    |      | $ | --      |   | $    | --    |            | $ | --    |   | $             | --   
|Average interest rate(2) |                        |  |      | 9.50   | %    |   | --      |   |      | --    |            |   | --    |   |               | --   
|Variable rate            |                        |  | $    | 27,620 |      | $ | --      |   | $    | --    |            | $ | --    |   | $             | --   
|Average interest rate(2) |                        |  |      | 3.57   | %    |   | --      |   |      | --    |            |   | --    |   |               | --   
|                         |                        | 
|Long-term debt           |                        | 
|Fixed rate               |                        |  | $    | --     |      | $ | 3       |   | $    | 3     |            | $ | 3     |   | $             | 3    
|Average interest rate(2) |                        |  |      | --     |      |   | 9.50    | % |      | 9.50  | %          |   | 9.50  | % |               | 9.50 
|Variable rate            |                        |  | $    | --     |      | $ | 108,940 |   | $    | 1,440 |            | $ | 1,440 |   | $             | 1,440
|Average interest rate(2) |                        |  |      | --     |      |   | 3.57    | % |      | 3.57  | %          |   | 3.57  | % |               | 3.57 

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

|(2) | Based
upon contractual interest rates for fixed indebtedness or the LIBOR rate           plus a
premium of 2.25% at March 31, 2003 for variable rate indebtedness.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

|20


Item 4. Controls and
Procedures


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


Within
90 days prior to the filing date of this report, we carried out an evaluation, under the
supervision and with the participation of management, including our Chief Executive
Officer along with our Chief Financial Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-14
and 15d-14(c). Based upon the foregoing, our Chief Executive Officer along with our Chief
Financial Officer concluded that our disclosure controls and procedures are effective.
There have been no significant changes in our internal controls or in other factors, which
could significantly affect internal controls subsequent to the date we carried out our
evaluation. Additionally, no significant deficiencies or material weaknesses in such
internal controls requiring corrective actions were identified.


21


PART II.  OTHER
INFORMATION


Item 1. Legal Proceedings.


Not
applicable.


Item 2. Changes in Securities.


None.


Item 3. Defaults Upon Senior
Securities.


None.


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


Not
applicable.


Item 5. Other Information.


None.


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

| | (a) | Exhibits.
| | --- | ---------

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

| |  | 99.1 |  Certifications
of Chief Executive Officer and Chief Financial Officer pursuant to § 906 of the
Sarbanes-Oxley Act of 2002.
| |  | ---- | ----------------------------------------------------------------------------------------------------------------------------

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

| | On
January 28, 2003, the Company filed a Form 8-K under Item 5, Other Events, with respect
to Harlan Braaten, the Companys President and Chief Operating Officer, speaking at
the 2003 JP Morgan Annual High Yield Conference in New Orleans and the availability of
selected slides from his presentation on the Companys website,
www.coastcasinos.com.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
March 21, 2003, the Company filed a Form 8-K under Item 5, Other Events, with respect to
Harlan Braaten, the Companys President and Chief Operating Officer, speaking at the
2003 Lehman Brothers High Yield Bond and Syndicated Loan Conference in Orlando and the
availability of selected slides from his presentation on the Companys website,
www.coastcasinos.com.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|22


SIGNATURES


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

|                    |                                          |                                                       
|------------------- | ---------------------------------------- | ------------------------------------------------------
|Date:  May 13, 2003 | COAST CASINOS, INC.,a Nevada corporation
|                    | By:                                      | /s/  Gage Parrish                                     
|                    |                                          | Gage ParrishVice President and Chief Financial Officer

|23


CERTIFICATIONS


I, Michael J. Gaughan, certify that:


     1.    
          I have reviewed this quarterly report on Form 10-Q of Coast Casinos, Inc.;


     2.    
          Based on my knowledge, this quarterly report does not contain any untrue
          statement of a material fact or omit to state a material fact necessary to make
          the statements made, in light of the circumstances under which such statements
          were made, not misleading with respect to the period covered by this quarterly
          report;


     3.    
          Based on my knowledge, the financial statements, and other financial information
          included in this quarterly report, fairly present in all material respects the
          financial condition, results of operations and cash flows of the registrant as
          of, and for, the periods presented in this quarterly report;


     4.    
          The registrants other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as defined in
          Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | designed
such disclosure controls and procedures to ensure that material           information
relating to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this quarterly
report is being prepared;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | evaluated
the effectiveness of the registrants disclosure controls and
               procedures as of a date within 90 days prior to the filing date of
this                quarterly report (the Evaluation Date); and
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) | presented
in this quarterly report our conclusions about the effectiveness of                the
disclosure controls and procedures based on our evaluation as of the
               Evaluation Date;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5.     The
registrants other certifying officer and I have disclosed, based on
               our most recent evaluation, to the registrants auditors and the
audit                committee of registrants board of directors (or persons
performing the                equivalent function):
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | all
significant deficiencies in the design or operation of internal controls
               which could adversely affect the registrants ability to record,
process,                summarize and report financial data and have identified for the
               registrants auditors any material weaknesses in internal controls;
and
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | any
fraud, whether or not material, that involves management or other employees
               who have a significant role in the registrants internal controls;
and
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6.     The
registrants other certifying officer and I have indicated in this
               quarterly report whether or not there were significant changes in internal
               controls or in other factors that could significantly affect internal
controls                subsequent to the date of our most recent evaluation, including
any corrective                actions with regard to significant deficiencies and
material weaknesses.



Date: May 13, 2003
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                    | 
|------------------------------------------------------------------- | 
|/s/  Michael J. Gaughan                                             | 
|Michael J. GaughanChairman of the Board and Chief Executive Officer | 

|24


I, Gage Parrish, certify
that:


     1.    
          I have reviewed this quarterly report on Form 10-Q of Coast Casinos, Inc.;


     2.    
          Based on my knowledge, this quarterly report does not contain any untrue
          statement of a material fact or omit to state a material fact necessary to make
          the statements made, in light of the circumstances under which such statements
          were made, not misleading with respect to the period covered by this quarterly
          report;


     3.    
          Based on my knowledge, the financial statements, and other financial information
          included in this quarterly report, fairly present in all material respects the
          financial condition, results of operations and cash flows of the registrant as
          of, and for, the periods presented in this quarterly report;


     4.    
          The registrants other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as defined in
          Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | designed
such disclosure controls and procedures to ensure that material           information
relating to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this quarterly
report is being prepared;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | evaluated
the effectiveness of the registrants disclosure controls and
               procedures as of a date within 90 days prior to the filing date of
this                quarterly report (the Evaluation Date); and
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) | presented
in this quarterly report our conclusions about the effectiveness of                the
disclosure controls and procedures based on our evaluation as of the
               Evaluation Date;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5.     The
registrants other certifying officer and I have disclosed, based on
               our most recent evaluation, to the registrants auditors and the
audit                committee of registrants board of directors (or persons
performing the                equivalent function):
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | all
significant deficiencies in the design or operation of internal controls
               which could adversely affect the registrants ability to record,
process,                summarize and report financial data and have identified for the
               registrants auditors any material weaknesses in internal controls;
and
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | any
fraud, whether or not material, that involves management or other employees
               who have a significant role in the registrants internal controls;
and
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6.     The
registrants other certifying officer and I have indicated in this
               quarterly report whether or not there were significant changes in internal
               controls or in other factors that could significantly affect internal
controls                subsequent to the date of our most recent evaluation, including
any corrective                actions with regard to significant deficiencies and
material weaknesses.


Date: May 13, 2003
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                       | 
|------------------------------------------------------ | 
|/s/  Gage Parrish                                      | 
|Gage ParrishVice President and Chief Financial Officer | 

25