<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, D.C.

                                   FORM 10-Q

(Mark One)

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

    For the quarterly period ended SEPTEMBER 30, 2004

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

For the transition period from                    to
                               -----------------     --------------------

                                        333-110484
Commission file number                  333-110485
                       ---------------------------------------------------------

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.
                                ACE GAMING, LLC
--------------------------------------------------------------------------------
          (Exact name of each Registrant as specified in its charter)

           DELAWARE                                        54-2131349
         NEW JERSEY                                        54-2131351
---------------------------------                       --------------------
(States or other jurisdictions of                        (I.R.S. Employer
  incorporation or organization)                        Identification Nos.)

               C/O SANDS HOTEL & CASINO
         INDIANA AVENUE & BRIGHTON PARK
              ATLANTIC CITY, NEW JERSEY                       08401
-----------------------------------------------  -------------------------------
   (Address of principal executive offices)                (Zip Code)

(Registrants" telephone number, including area code):      (609) 441-4633
                                                      --------------------------


                                (NOT APPLICABLE)
--------------------------------------------------------------------------------
             (Former name, former address, and former fiscal year,
                         if changed since last report.)

      Indicate by check mark whether each of the Registrants (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
Registrants were 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 has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. YES   X       NO
                           ---         ---

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

         REGISTRANT                CLASS         OUTSTANDING AT NOVEMBER 9, 2004
----------------------------  -----------------  -------------------------------
Atlantic Coast Entertainment     Common stock,           2,882,932 shares
        Holdings, Inc.         $.01 par value
       ACE Gaming, LLC



                                       1
<PAGE>

PART I: FINANCIAL INFORMATION

ITEM I: FINANCIAL STATEMENTS

           ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC. AND SUBSIDIARY

                     CONDENSED CONSOLIDATED BALANCE SHEETS

                                     ASSETS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                      SEPTEMBER 30,     DECEMBER 31,
                                                          2004             2003
                                                      -------------    -------------
<S>                                                  <C>              <C>
Current Assets:
       Cash and cash equivalents                      $  19,164,000    $       1,000
       Accounts receivable, net of allowances
          of $4,175,000                                   4,534,000             --
       Inventories                                        2,311,000             --
       Prepaid expenses and other current assets          6,318,000             --
                                                      -------------    -------------
          Total current assets                           32,327,000            1,000
                                                      -------------    -------------

Property and Equipment:
       Land                                              54,344,000             --
       Buildings and improvements                        88,512,000             --
       Equipment                                         74,787,000             --
       Construction in progress                           1,177,000             --
                                                      -------------    -------------
                                                        218,820,000             --
       Less - accumulated depreciation and
          amortization                                  (50,877,000)            --
                                                      -------------    -------------
       Property and equipment, net                      167,943,000             --
                                                      -------------    -------------

Other Assets:
       Obligatory investments, net of allowances of
         $12,222,000                                     11,369,000             --
       Other assets                                       6,256,000             --
                                                      -------------    -------------
          Total other assets                             17,625,000             --
                                                      -------------    -------------
                                                      $ 217,895,000    $       1,000
                                                      =============    =============
</TABLE>

         The accompanying notes to the unaudited condensed consolidated
          financial statements are an integral part of these condensed
                       consolidated financial statements.


                                       2
<PAGE>

           ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC. AND SUBSIDIARY


                     CONDENSED CONSOLIDATED BALANCE SHEETS

                      LIABILITIES AND SHAREHOLDER'S EQUITY
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                          SEPTEMBER 30,     DECEMBER 31,
                                                               2004             2003
                                                          -------------    -------------
<S>                                                      <C>              <C>
Current Liabilities:
     Accounts payable                                     $   5,761,000    $        --
     Accrued liabilities -
        Salaries and wages                                    4,287,000             --
        Gaming obligations                                    3,473,000             --
        Self-insurance                                        4,177,000             --
        Other                                                 3,184,000             --
                                                          -------------    -------------
     Total current liabilities                               20,882,000             --
                                                          -------------    -------------

Long-Term Debt

     3% Notes due September 30, 2008                         66,259,000             --
                                                          -------------    -------------

Other Non-current Liabilities:                                4,346,000             --
                                                          -------------    -------------

Commitments and Contingencies

Shareholder's Equity:
     Common Stock, $.01 par value per share; 20,000,000            --               --
       shares authorized; 2,882,938 shares outstanding
       in 2004 and 1 share outstanding in 2003                   29,000             --
     Additional paid-in capital                              86,467,000            1,000
     Warrants outstanding                                    43,587,000             --
     Accumulated deficit                                     (3,675,000)            --
                                                          -------------    -------------
        Total shareholder's equity                          126,408,000            1,000
                                                          -------------    -------------
                                                          $ 217,895,000    $       1,000
                                                          =============    =============
</TABLE>


         The accompanying notes to the unaudited condensed consolidated
          financial statements are an integral part of these condensed
                       consolidated financial statements.


                                       3
<PAGE>

           ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC. AND SUBSIDIARY


                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED
                                                                SEPTEMBER 30, 2004
                                                                ------------------
<S>                                                               <C>
Revenues:
     Casino                                                        $ 34,176,000
     Rooms                                                            2,496,000
     Food and beverage                                                4,410,000
     Other                                                              683,000
                                                                   ------------
                                                                     41,765,000
     Less - promotional allowances                                  (10,179,000)
                                                                   ------------
             Net revenues                                            31,586,000
                                                                   ------------
Expenses:
     Casino                                                          25,132,000
     Rooms                                                              592,000
     Food and beverage                                                1,577,000
     Other                                                              832,000
     General and administrative                                       2,527,000
     Depreciation and amortization,
             including provision for obligatory investments           3,194,000
     Gain on disposal of assets                                          (3,000)
                                                                   ------------
             Total expenses                                          33,851,000
                                                                   ------------
Loss from operations                                                 (2,265,000)
                                                                   ------------
Non-operating income (expense):
     Interest income                                                     63,000
     Interest expense                                                  (786,000)
     Debt restructuring costs                                          (469,000)
                                                                   ------------
     Total non-operating expense, net                                (1,192,000)
                                                                   ------------
Loss before income taxes                                             (3,457,000)
     Income tax provision                                              (217,000)
                                                                   ------------
Net loss                                                           $ (3,674,000)
                                                                   ============
Basic and diluted loss per common share                            $      (1.65)
                                                                   ============
Basic and diluted weighted average common shares outstanding          2,224,872
                                                                   ============
</TABLE>

         The accompanying notes to the unaudited condensed consolidated
          financial statements are an integral part of these condensed
                       consolidated financial statements.


                                       4
<PAGE>

           ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC. AND SUBSIDIARY


                CONDENSED CONSOLIDATED STSTEMENTS OF OPERATIONS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                NINE MONTHS ENDED
                                                                SEPTEMBER 30, 2004
                                                                ------------------
<S>                                                               <C>
Revenues:
        Casino                                                     $ 34,176,000
        Rooms                                                         2,496,000
        Food and beverage                                             4,410,000
        Other                                                           683,000
                                                                   ------------
                                                                     41,765,000
        Less - promotional allowances                               (10,179,000)
                                                                   ------------
            Net revenues                                             31,586,000
                                                                   ------------
Expenses:
        Casino                                                       25,132,000
        Rooms                                                           592,000
        Food and beverage                                             1,577,000
        Other                                                           832,000
        General and administrative                                    2,528,000
        Depreciation and amortization, including provision
            for obligatory investments                                3,194,000
        Gain on disposal of assets                                       (3,000)
                                                                   ------------
            Total expenses                                           33,852,000
                                                                   ------------
Loss from operations                                                 (2,266,000)
                                                                   ------------
Non-operating income (expense):
        Interest income                                                  63,000
        Interest expense                                               (786,000)
        Debt restructuring costs                                       (469,000)
                                                                   ------------
        Total non-operating expense, net                             (1,192,000)
                                                                   ------------
Loss before income taxes                                             (3,458,000)
        Income tax provision                                           (217,000)
                                                                   ------------
Net loss                                                           $ (3,675,000)
                                                                   ============
Basic and diluted loss per common share                            $      (4.92)
                                                                   ============
Basic and diluted weighted average common shares outstanding            747,038
                                                                   ============
</TABLE>

         The accompanying notes to the unaudited condensed consolidated
        financial statements are an integral part of these consolidated
                             financial statements.


                                       5
<PAGE>

           ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC. AND SUBSIDIARY

                       CONSOLIDATED STATEMENTS OF CHANGES
                       IN SHAREHOLDERS' EQUITY (DEFICIT)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004

<TABLE>
<CAPTION>
                                                                                   ADDITIONAL
                                                COMMON STOCK                         PAID-IN       ACCUMULATED
                                            SHARES        AMOUNT      WARRANTS       CAPITAL         DEFICIT            TOTAL
                                        -------------   ---------   -----------   -------------   --------------    --------------

<S>                                     <C>           <C>          <C>             <C>            <C>            <C>
BALANCE, DECEMBER 31, 2003                       1    $        -   $          -    $      1,000   $         -    $        1,000
         Capital contributions from
            GB Holdings, Inc.                    -             -              -     134,789,000             -       134,789,000
         Issue of common shares          2,882,937        29,000              -         (29,000)            -                 -
         Warrants exercisable
           for 2,750,000
           common shares                         -             -     43,587,000     (43,587,000)            -                 -
         Return of  Capital to
           GB Holdings, Inc.                     -             -              -      (4,707,000)            -        (4,707,000)
         Net Loss                                -             -              -               -    (3,675,000)       (3,675,000)
                                        -----------   -----------  -------------   -------------  ------------   -----------------

BALANCE, SEPTEMBER 30, 2004              2,882,938    $   29,000   $ 43,587,000    $ 86,467,000   $(3,675,000)   $  126,408,000
                                        ===========   ===========  =============   =============  ============   =================
</TABLE>



                                       6
<PAGE>

           ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC. AND SUBSIDIARY


                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                     NINE MONTHS ENDED
                                                                       SEPTEMBER 30,
                                                                     -----------------
                                                                           2004
                                                                       -------------
<S>                                                                   <C>
OPERATING ACTIVITIES:
     Net loss                                                          $  (3,675,000)
     Adjustments to reconcile net loss to net cash
          used in operating activities:
          Depreciation and amortization, including provision
            for obligatory investments                                     3,194,000
          Gain on disposal of assets                                          (3,000)
          Provision for doubtful accounts                                     93,000
          Decrease in accounts receivable                                    265,000
          Decrease in accounts payable
            and accrued liabilities                                       (2,334,000)
          Decrease in other current assets                                    68,000
          Increase in noncurrent assets                                      300,000
          Increase in noncurrent liabilities                                 424,000
                                                                       -------------
                    Net cash used in operating activities                 (1,668,000)
                                                                       -------------
INVESTING ACTIVITIES:
     Purchase of property and equipment                                   (2,307,000)
     Proceeds from disposition of assets                                       3,000
                                                                       -------------
          Net cash used in investing activities                           (2,304,000)
                                                                       -------------
FINANCING ACTIVITIES:
     Proceeds from capital contributions from GB Holdings, Inc.           34,468,000
     Cost of issuing long-term debt                                       (6,626,000)
     Return of capital to GB Holdings, Inc.                               (4,707,000)
                                                                       -------------
          Net cash provided by financing activities                       23,135,000
                                                                       -------------
          Net increase in cash and cash equivalents                       19,163,000
                    Cash and cash equivalents at beginning of period           1,000
                                                                       -------------
                    Cash and cash equivalents at end of period         $  19,164,000
                                                                       =============
SUPPLEMENTAL CASH FLOW INFORMATION:
     Non-cash capital contribution from GB Holdings, Inc.              $  99,810,000
                                                                       =============
     Interest capitalized                                              $      18,000
                                                                       =============
     Warrants in Atlantic Coast Entertainment Holdings, Inc.           $  43,587,000
                                                                       =============
</TABLE>

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


                                       7

<PAGE>

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.


         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1:            DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

         Atlantic Coast Entertainment Holdings, Inc. ("Atlantic Holdings" or the
"Company") is a Delaware corporation formed in November 2003 and was a
wholly-owned subsidiary of Greate Bay Hotel and Casino, Inc. ("GBHC") which was
a wholly-owned subsidiary of GB Holdings, Inc ("GB Holdings"). Until July 22,
2004, GBHC was the owner and operator of The Sands Hotel and Casino in Atlantic
City ("The Sands"). ACE Gaming LLC ("ACE"), a New Jersey limited liability
company and a wholly owned subsidiary of Atlantic Holdings was formed in
November 2003. Atlantic Holdings and ACE were formed in connection with a
transaction (the "Transaction"), in which Atlantic initiated the exchange of
$110 million of 11% Notes due 2005 (the "11% Notes"), issued by GB Property
Funding Corp.("Property"), a wholly owned subsidiary of GB Holdings for
$110 million 3% Notes due 2008 (the "3% Notes"), issued by Atlantic Holdings.
The Transaction included, among other things, the transfer of substantially all
of the assets of GB Holdings to Atlantic Holdings. The 3% Notes are guaranteed
on a joint and several basis by ACE. Atlantic Holdings and its subsidiary, ACE
had limited operating activities prior to July 22, 2004.

         In connection with the Consent Solicitation and Offer to Exchange, an
aggregate principal amount of $66,258,970 of 11% Notes, representing 60.2% of
the outstanding 11% Notes, were tendered to Atlantic Holdings, on a dollar for
dollar basis, in exchange for an aggregate principal amount of $66,258,970 of 3%
Notes. At the election of the holders of a majority in principal amount of the
outstanding 3% Notes, each $1,000 principal amount of 3% Notes is payable in or
convertible into 65.909 shares of common stock, par value $.01 per share
("Atlantic Holdings Common Stock") of Atlantic Holdings, subject to adjustments
for stock dividends, stock splits, recapitalizations and the like. Holders of
the 11% Notes that tendered in the Consent solicitation and offer to Exchange
also received their pro rata share of the aggregate consent fees ($6.6 million)
at the rate of $100 per $1,000 principal amount of the 11% Notes tendered, plus
accrued interest ($2.3 million) on the 11% Notes tendered, which amounts were
paid at the consummation of the transaction. As indicated in the Consent
solicitation and offer to Exchange, as part of the Transaction, an aggregate of
10,000,000 warrants were distributed on a pro rata basis to the stockholders of
GB Holdings upon the consummation of the Transaction. Such Warrants allow the
holders to purchase, at an exercise price of $.01 per share, an aggregate of
2,750,000 shares of Atlantic Holdings Common Stock and are only exercisable
following the earlier of (a) either the 3% Notes being paid in cash or upon
conversion, in whole or in part, into Atlantic Holdings Common Stock, (b)
payment in full of the outstanding principal of the 11% Notes not exchanged, or
(c) a determination by a majority of the board of directors of Atlantic Holdings
(including at least one independent director of Atlantic Holdings) that the
Warrants may be exercised. Also on July 22, in connection with the consummation
of the Transaction and the Consent Solicitation and Offer to Exchange, Property
and GBHC, merged into GB Holdings, with GB Holdings as the surviving entity. All
references to GB Holdings refer to such entities as they existed following the
consummation of the Transaction. In connection with the transfer of the assets
and certain liabilities of GB Holdings including those of GBHC, Atlantic
Holdings issued 2,882,938 shares of Atlantic Holdings Common Stock to GBHC which
following the merger of GBHC became the sole asset of GB Holdings. Substantially
all of the assets, liabilities and operations of GB Holdings and GBHC (with the
exception of the remaining 11% Notes due 2005 and accrued interest thereon, the
Atlantic Holdings Common Stock, and the related pro rata share of deferred
financing costs) were transferred to Atlantic Holdings or ACE. The Sands New
Jersey gaming license was transferred to ACE in accordance with the approval of
the New Jersey Casino Control Commission. The transfer of net assets has been
accounted for as an exchange of net assets between entities under common
control, whereby the entity receiving the net assets shall initially recognize
the assets and liabilities transferred at their historical carrying amount in
the accounts of the transferring entity at the date of transfer. No gain or loss
was recorded relating to the transfer.


                                       8
<PAGE>

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.


   NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


       All significant intercompany transactions and balances have been
eliminated in consolidation. In management's opinion, all adjustments
(consisting only of normal recurring accruals) necessary for a fair presentation
of the condensed consolidated financial position as of September 30, 2004 and
the condensed consolidated results of operations for the three and nine months
ended September 30, 2004 and 2003 have been made. The results set forth in the
condensed consolidated statement of operations for the three and nine months
ended September 30, 2004 are not necessarily indicative of the results to be
expected for the full year.

       In connection with the Consent Solicitation and Exchange Offer described
above, holders of $66,258,970 of 11% Notes exchanged such notes for an equal
principal amount of 3% Notes. As a result $43,741,030 of principal amount of the
11% Notes remain outstanding and mature in September 2005. GB Holdings' ability
to pay interest on such outstanding 11% Notes is dependent upon receipt of funds
from Atlantic Holdings in amounts sufficient to make such interest payments, and
such disbursements are subject to (i) a number of conditions, including that
such payment by Atlantic Holdings is required to be made only in respect of
interest due prior to the maturity of the 11% Notes and that at the time of
such payment and after giving effect thereto, no event of default exists and no
event that could result in an event of default has occurred or is incipient
under the Indenture for the 3% Notes and (ii) Atlantic Holdings being able to
make such payments.

       The Company is responsible for the unaudited condensed consolidated
financial statements included in this document. As these are condensed
consolidated financial statements, they should be read in conjunction with the
consolidated financial statements and notes included in the Company's
registration statements with Registration Number 333-110484 and Registration
Number 333-110485 on Form S-4.

 (2)    LONG-TERM DEBT

        Long-term debt is comprised of $66,258,970 of 3% Notes due September 29,
2008.

       On July 22, 2004, Atlantic Holdings consummated the Consent solicitation
and Offer to Exchange which it commenced and in which Atlantic Holdings offered
to exchange its 3% Notes due 2008 for 11% Notes due 2005, issued by Property.
Pursuant to the Consent Solicitation and Offer to Exchange, an aggregate
principal amount of $66,258,970 of 11% Notes, representing 60.2% of the
outstanding 11% Notes, were tendered to Atlantic Holdings, on a dollar for
dollar basis, in exchange for an aggregate principal amount of $66,258,970 of 3%
Notes. At the election of the holders of a majority in principal amount of the
outstanding 3% Notes, each $1,000 principal amount of 3% Notes is payable in or
convertible into 65.909 shares of common stock, par value $.01 per share
("Atlantic Holdings Common Stock") of Atlantic Holdings, subject to adjustments
for stock dividends, stock splits, recapitalizations and the like. Holders of
the 11% Notes that tendered in the Consent solicitation and Offer to Exchange
also received their pro rata share of the aggregate consent fees ($6.6 million)
at the rate of $100 per $1,000 principal amount of the 11% Notes tendered, plus
accrued interest ($2.3 million) on the 11% Notes tendered, which amounts were
paid at the consummation of the Transaction. The exchange is being accounted for
as a modification of debt. The consent fees paid are being amortized over the
term of the 3% Notes using the effective yield method. All external costs
associated with the issuance of the 3% Notes have been expensed. As indicated in
the Consent Solicitation and Offer to Exchange, an aggregate of 10,000,000
warrants were distributed on a pro rata basis to the shareholders of GB Holdings
upon the consummation of the transaction. Such Warrants allow the holders to
purchase, at an exercise price of $.01 per share, an aggregate of 2,750,000
shares of Atlantic Holdings Common Stock. The fair value of the warrants as of
July 22, 2004 (date of issuance) was $43,587,000 (as determined by a third party
valuation). An additional $468,000 in state transfer fees were expended related
to the Transaction, and charged to debt restructuring costs during 2004.


                                       9
<PAGE>

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.


   NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


(3)     INCOME TAXES

        Federal and State income tax benefits or provisions are based upon the
results of operations for the current period and the estimated adjustments for
income tax purposes of certain nondeductible expenses.

        Due to recurring losses, the Company has not recorded a Federal or State
income tax benefit for the three and nine months ended September 30, 2004.
Management is unable to determine that realization of the Company's deferred tax
assets are more likely than not, and, thus has provided a valuation allowance
for the entire amount. The State income tax provision of $217,000 for the three
and nine months ended September 30, 2004, is comprised of applying the statutory
alternative minimum assessment rate of 0.4% to gross receipts, as defined in the
Business Tax Reform Act ($129,000) plus a quarterly installment payment of the
Casino Income Tax ($88,000).

(4)     TRANSACTIONS WITH RELATED PARTIES

        The Company's rights to the trade name "Sands" (the "Trade Name") were
derived from a license agreement with an unaffiliated third party. Amounts
payable by the Company for these rights were equal to the amounts paid to the
unaffiliated third party. The rights were assigned to the Company by High River
Limited Partnership ("High River"), which obtained the rights under a certain
agreement with the owner of the Trade Name to use the Trade Name as of September
29, 2000 through May 19, 2086 subject to termination rights for a fee after a
certain minimum term. High River is an entity controlled by Carl C. Icahn (the
Company's chairman and majority shareholder). High River received no payments
for its assignment of these rights. Payment is made directly to the owner of the
Trade Name. Such charges amounted to $59,000 for the three and nine months ended
September 30, 2004. On or about July 14, 2004, GBHC entered into a license
agreement with Las Vegas Sands, Inc., for the use of the trade name "Sands"
through May 19, 2086, subject to termination rights for a fee after a certain
minimum term. This new license agreement superseded and replaced the
above-mentioned trade name rights assigned to the Company by High River. By
operation of the Consent Solicitation and Offer to Exchange discussed above, the
July 14, 2004 license agreement was assigned to ACE as of July 22, 2004.

        The Stratosphere Casino Hotel & Tower (the "Stratosphere"), an entity
controlled by Carl C. Icahn, allocates a portion of certain executive salaries
as well as charges for tax preparation to the Company. Payments for charges
incurred from the Stratosphere for the three and nine months ended September 30,
2004 were $35,000.


                                       10
<PAGE>


                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.


   NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


        On February 28, 2003, the Company entered into a two year agreement with
XO New Jersey, Inc. a long-distance phone carrier controlled by Carl C. Icahn.
The agreement can be extended beyond the minimum two year term on a
month-to-month basis. Payments for charges incurred for the three and nine
months ended September 30, 2004 were $43,000.

         In connection with the consummation of the Transaction, GB Holdings,
GBHC, Atlantic Holdings, and ACE entered into a Contribution Agreement, pursuant
to which GB Holdings and GBHC agreed to contribute substantially all of their
assets and certain liabilities to Atlantic Holdings, in exchange for Atlantic
Holdings and ACE agreeing to, among other things, (i) issue to GBHC (a) warrants
exercisable for 2, 750,000 shares of Atlantic Holdings Common Stock and (b)
2,882,938 shares of Atlantic Holdings Common Stock and (ii) undertake to provide
GB Holdings funds to pay (a) the interest due on the outstanding 11% Notes prior
to the maturity date of the 11% Notes, (b) normal, ordinary course operating
expenses (including legal and accounting costs, directors' and officers'
insurance premiums and fees for SEC filings) not to exceed in the aggregate
$250,000 in any 12 month period, without the consent of the holders of a
majority of the aggregate principal amount outstanding of the 3% Notes, and (c)
any amount other than interest or principal due on the 11% Notes that is
required to be paid or reimbursed to the trustee under the indenture governing
the 11% Notes; such disbursements are subject to (i) a number of conditions,
including that such payment by Atlantic Holdings is required to be made only in
respect of the interest due prior to the maturity of the 11% Notes is required
to be made prior to maturity of the 11% Notes and that at the time of such
payment and after giving effect thereto, no event of default exists and no event
that could result in an event of default has occurred or is incipient under the
Indenture for the 3% Notes and (ii) Atlantic Holdings being able to make such
payments.

(5)     LEGAL PROCEEDINGS

        Tax appeals on behalf of the Company and the City of Atlantic City
challenging the amount of the Company's real property assessments for tax years
1996 through 2003 are pending before the NJ Tax Court.

        By letter dated January 23, 2004, Sheffield Enterprises, Inc. asserted
potential claims against The Sands under the Lanham Act for permitting a show
entitled The Main Event, to run at The Sands during 2001. Sheffield also asserts
certain copyright infringement claims growing out of the Main Event
performances. It has not yet been determined whether or not the claims made by
Sheffield would, if adversely determined, materially impact the financial
position or results of operations of the Company.

        The Company is a party in various legal proceedings with respect to the
conduct of casino and hotel operations and has been receiving employee related
claims. Although a possible range of losses cannot be estimated, in the opinion
of management, based upon the advice of counsel, the Company does not expect
settlement or resolution of these proceedings or claims to have a material
adverse impact upon their consolidated financial position or results of
operations, but the outcome of litigation and the resolution of claims is
subject to uncertainties and no assurances can be given. The consolidated
financial statements do not include any adjustments that might result from these
uncertainties.

(6)     LOSS PER SHARE

        Statement of Financial Accounting Standards No. 128: "Earnings Per
Share", requires, among other things, the disclosure of basic and diluted
earnings per share for public companies. The capital structure of the Company
includes potentially dilutive securities in the form of 10,000,000 warrants
convertible to 2,750,000 shares of Atlantic Holdings and the 3% Notes
Convertible to 65.909 shares per $1,000 of principal amount or 4,367,062 shares.
Since the Company performed at a loss for the periods presented and including
the fully diluted shares in calculating loss per share would be anti-dilutive,
basic and diluted loss per share are the same. Basic and diluted loss per share
is computed by dividing net loss by the weighted average number of common shares
outstanding.

                                       11
<PAGE>

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.


   NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


(7)      COMMITMENTS AND CONTINGENCIES

         In April 2004, the casino industry, the Casino Reinvestment and
Development Authority ("CRDA") and the New Jersey Sports and Exposition
Authority agreed to a plan regarding New Jersey video lottery terminals
("VLTs"). Under the plan, casinos will pay a total of $96 million over a period
of four years, of which $10 million will fund, through project grants, North
Jersey CRDA projects and $86 million will be paid to the New Jersey Sports and
Exposition Authority which will then subsidize certain New Jersey horse tracks
to increase purses and attract higher-quality races that would allow them to
compete with horse tracks in neighboring states. In return, the race tracks and
New Jersey have committed to postpone any attempts to install VLTs for at least
four years. $52 million of the $86 million would be donated by the CRDA from the
casinos' North Jersey obligations and $34 million would be paid by the casinos
directly. It is currently estimated that The Sands current CRDA deposits for
North Jersey projects are sufficient to fund The Sands proportionate obligations
with respect to the $10 million and $52 million commitments. The Sands
proportionate obligation with respect to the $34 million commitment is estimated
to be approximately $1.3 million payable over a four year period in annual
installments due October 15th ranging from $278,000 to $398,000 per year. The
Sands proportionate obligation with respect to the combined $10 million and $52
million commitment is estimated to be approximately $2.5 million payable over a
four year period. The amounts will be charged to operations, on a straight-line
basis, through January 1, 2009. The Sands made its initial cash payment of
$278,000 in satisfaction of this obligation during October 2004.

(8)      CASINO LICENSE PROCEEDINGS

         Pursuant to New Jersey law, the corporate owner of the Sands is
required to maintain a casino license in order to operate The Sands. The gaming
licenses required to own and operate The Sands were required to be renewed in
2004, which required that the New Jersey Casino Control Commission ("CCC")
determine that among other things, Atlantic Holdings and ACE are financially
stable. In order to be found "financially stable" under the New Jersey Casino
Control Act ("NJCCA"), Atlantic Holdings and ACE must demonstrate among other
things, their ability to pay, exchange, or refinance debts that mature or
otherwise become due and payable during the license term, or to otherwise manage
such debts. During July 2004, The Sands filed a timely renewal application of
its casino license for a four year term. The CCC approved The Sands casino
license renewal application for a four year term on September 29, 2004 with
certain conditions, including monthly written reports on the status of the 11%
Notes, and a definitive plan to address the maturity of the 11% Notes to be
submitted no later than August 1, 2005 as well as other standard industry
reporting requirements.

(9)      SUBSEQUENT EVENTS

         On November 12, 2004, Atlantic Holdings and ACE entered into a Loan and
Security Agreement (the "Loan Agreement"), by and among Atlantic Holdings, as
borrower, ACE, as guarantor, and Fortress Credit Corp. ("Fortress"), as lender,
and certain related ancillary documents, pursuant to which, Fortress agreed to
make available to Atlantic a senior secured revolving credit line providing for
working capital loans of up to $10 million (the "Loans"), to be used for working
capital purposes in the operation of The Sands, located in Atlantic City, New
Jersey.

         The Loan Agreement and the Loans thereunder have been designated by the
Board of Directors of Atlantic Holdings and the Manager of ACE, as Working
Capital Indebtedness (as that term is defined in the Indenture) (the
"Indenture"), dated as of July 22, 2004, among Atlantic Holdings, as issuer,
ACE, as guarantor, and Wells Fargo Bank, National Association, as trustee (the
"Trustee").

                                       12
<PAGE>

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.


   NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


         The aggregate amount of the Loans shall not exceed $10 million plus
interest. All Loans under the Loan Agreement are payable in full by no later
than the day immediately prior to the one-year anniversary of the Loan
Agreement, or any earlier date on which the Loans are required to be paid in
full, by acceleration or otherwise, pursuant to the Loan Agreement.

         The outstanding principal balance of the Loan Agreement will accrue
interest at a fixed rate to be set monthly which is equal to one month LIBOR
(but not less than 1.5%), plus 8% per annum. In addition to interest payable on
the principal balance outstanding from time to time under the Loan Agreement,
Atlantic Holdings is required to pay to Fortress an unused line fee for each
preceding three-month period during the term of the Loan Agreement in an amount
equal to .35% of the excess of the available commitment over the average
outstanding monthly balance during such preceding three-month period.

         The Loans are secured by a first lien and security interest on all of
Atlantic Holdings and ACE's personal property and a first mortgage on The Sands
Hotel & Casino. Fortress entered into an Intercreditor Agreement, dated as of
November 12, 2004, with the Trustee pursuant to the Loan Agreement. The Liens
(as that term defined in the Indenture) of the Trustee on the Collateral (as
that term is defined in the Indenture), are subject and inferior to Liens which
secure Working Capital Indebtedness such as the Loans.

         Fortress may terminate its obligation to advance and declare the unpaid
balance of the Loans, or any part thereof, immediately due and payable upon the
occurrence and during the continuance of customary defaults which include
payment default, covenant defaults, bankruptcy type defaults, attachments,
judgments, the occurrence of certain material adverse events, criminal
proceedings, and defaults by Atlantic Holdings or ACE under certain other
agreements.




                                       13
<PAGE>

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.


            ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


       This Quarterly Report on Form 10-Q contains forward-looking statements
about the business, financial condition and prospects of Atlantic Coast
Entertainment Holdings, Inc. ("Atlantic Holdings") and ACE Gaming, LLC ("ACE")
and collectively with Atlantic Holdings (the "Company"). The actual results
could differ materially from those indicated by the forward-looking statements
because of various risks and uncertainties. Such risks and uncertainties are
beyond management's ability to control and, in many cases, cannot be predicted
by management. When used in this Quarterly Report on Form 10-Q, the words
"believes", "estimates", "anticipates", "expects", "intends" and similar
expressions as they relate to Atlantic Holdings, ACE or its management are
intended to identify forward-looking statements (see "Private Securities
Litigation Reform Act" below).

         OVERVIEW

        Atlantic Holdings is a Delaware corporation and was a wholly-owned
subsidiary of Greate Bay Hotel and Casino Inc. ("GBHC") which was a wholly-owned
subsidiary of GB Holdings, Inc. ("GB Holdings"). Until July 22, 2004, GBHC was
the owner and operator of The Sands Hotel and Casino in Atlantic City ("The
Sands"). ACE a New Jersey limited liability company and a wholly-owned
subsidiary of Atlantic Holdings was formed in November 2003. Atlantic Holdings
and ACE were formed in connection with a transaction (the "Transaction"), in
which Atlantic exchanged $66.3 million of 11% Notes due 2005 (the "11% Notes"),
issued by GB Property Funding Corp. ("Property"), a wholly-owned subsidiary of
GB Holdings, for $66.3 million 3% Notes due 2008 (the "3% Notes"), issued by
Atlantic Holdings. The Transaction included, among other things, the transfer of
substantially all of the assets of GB Holdings to Atlantic Holdings. The
transfer of net assets has been accounted for as an exchange of net assets
between entities under common control, whereby the entity receiving the net
assets shall initially recognize the assets and liabilities transferred at their
historical carrying amount in the accounts of the transferring entity at the
date of transfer. No gain or loss was recorded relating to the transfer. The 3%
Notes are guaranteed on a joint and several basis by ACE. Atlantic Holdings and
its subsidiary, ACE had limited operating activities prior to July 22, 2004.
Also on July 22, in connection with the consummation of the Transaction and the
Consent Solicitation and Offer to Exchange, Property and GBHC, merged into GB
Holdings, with GB Holdings as the surviving entity. All references to GB
Holdings and the Company refer to such entities as they existed following the
consummation of the Transaction. In connection with the transfer of the assets
and certain liabilities of GB Holdings, including the assets and certain
liabilities of GBHC, Atlantic Holdings issued 2,882,938 shares of common stock,
par value $.01 per share (the "Atlantic Holdings Common Stock") of Atlantic
Holdings to GBHC which following the merger of GBHC became the sole asset of GB
Holdings. Substantially all of the assets, liabilities and operations of GB
Holdings and GBHC (with the exception of the remaining 11% Notes due 2005 and
accrued interest thereon, the Atlantic Holdings Common Stock and the related pro
rata share of deferred financing costs, were transferred to Atlantic Holdings or
ACE. As indicated in the Consent Solicitation and Offer to Exchange, as part of
the Transaction an aggregate of 10,000,000 warrants were distributed on a pro
rata basis to the stockholders of GB Holdings upon the consummation of the
Transaction. Such Warrants allow the holders to purchase, at an exercise price
of $.01 per share, an aggregate of 2,750,000 shares of Atlantic Holdings Common
Stock and are only exercisable following the earlier of (a) either the 3% Notes
being paid in cash or upon conversion, in whole or in part, into Atlantic
Holdings Common Stock, (b) payment in full of the outstanding principal of the
11% Notes exchanged, or (c) a determination by a majority of the board of
directors of Atlantic Holdings (including at least one independent director of
Atlantic Holdings) that the Warrants may be exercised. The Sands New Jersey
gaming license was transferred to ACE in accordance with the approval of the New
Jersey Casino Control Commission.



                                       14
<PAGE>

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


        The Sands primarily generates revenues from gaming operations in its
Atlantic City facility. Although The Sands' other business segments including
rooms, entertainment, retail store, food and beverage operations also generate
some cash sales, these revenues are nominal in comparison to the casino
operations. The non-casino operations primarily support the casino operation by
providing complimentary goods and services to deserving casino customers. The
Company competes in a capital intensive industry that requires continual
reinvestment in its facility and technology.

        The Company faces a number of competitive challenges during fiscal 2004,
including increased competition from the Borgata, increased competition from
other existing casinos that invested in capital improvements, and a
corresponding increase in competition for both table game and slot machine
players.

         Pursuant to New Jersey law, the corporate owner of the Sands is
required to maintain a casino license in order to operate The Sands. The gaming
licenses required to own and operate The Sands were required to be renewed in
2004, which required that the New Jersey Casino Control Commission ("CCC")
determine that among other things, Atlantic Holdings and ACE are financially
stable. In order to be found "financially stable" under the New Jersey Casino
Control Act ("NJCCA"), Atlantic Holdings and ACE must demonstrate among other
things, their ability to pay, exchange, or refinance debts that mature or
otherwise become due and payable during the license term, or to otherwise manage
such debts. During July 2004, The Sands filed a timely renewal application of
its casino license for a four year term. The CCC approved The Sands casino
license renewal application for a four year term on September 29, 2004 with
certain conditions, including monthly written reports on the status of the 11%
Notes, a definitive plan to address the maturity of the 11% Notes, to be
submitted no later than August 1, 2005 as well as other standard industry
reporting requirements.

LIQUIDITY AND CAPITAL RESOURCES

        SUMMARY

         During 2004, management anticipates making tax payments of
approximately $260,000 to the State of New Jersey. Management believes that cash
flows generated from operations during 2004, as well as available cash reserves,
will be sufficient to meet its operating plan. Based upon expected cash flow
generated from operations, management determined that it would be prudent for
the Company to obtain a line of credit to provide additional cash availability,
to meet the Company's working capital needs, in the event that anticipated cash
flow is less than expected or expenses exceed those anticipated. As a result of
this determination, on November 12, 2004, Atlantic Holdings and ACE entered into
a senior secured revolving credit facility providing for working capital loans
of up to $10 million, to be used for working capital purposes in the operation
of The Sands Hotel and Casino, located in Atlantic City, New Jersey.

                                       15
<PAGE>

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


        OPERATING ACTIVITIES

        At September 30, 2004, the Company had cash and cash equivalents of
$19.2 million. The Company used $1.7 million of net cash from operations
during the nine months ended September 30, 2004. There was no operations during
2003.

        INVESTING ACTIVITIES

        Capital expenditures at The Sands for the nine months ended September
30, 2004 amounted to approximately $9.4 million ($2.3 million occurred after the
July 22, 2004 Transaction and is included in the Company's cash flow) compared
to $10.6 million in 2003. In order to enhance its competitive position in the
market place, The Sands may determine to incur additional substantial costs and
expenses to maintain, improve and expand its facilities and operations. GB
Holdings Management has approval from its Board of Directors for a 2004 capital
expenditure plan of up to $23.6 million, which includes a renovation of one
floor of standard hotel rooms to suites, new slot machines, casino and hotel
renovations as well as replacement and upgrades to infrastructure and
technology. However, in order to avoid disruption of its operations during the
peak summer season and based upon operating results and available cash,
management deferred some slot machine replacements and casino renovations to the
latter half of 2004 and beyond, thereby reducing capital expenditures for 2004.
Accordingly, additional financing requirements could be reduced significantly.

        The Sands is required by the Casino Act to make certain quarterly
deposits based on gross revenue with the Casino Reinvestment Development
Authority ("CRDA") in lieu of a certain investment alternative tax. Deposits for
the nine months ended September 30, 2004 and 2003 amounted to $1.6 million and
$1.7 million, respectively.

        FINANCING ACTIVITIES

        In connection with the Consent Solicitation and Exchange Offer described
above, holders of $66,258,970 of 11% Notes exchanged such notes for an equal
principal amount of 3% Notes. As a result, $43,741,030 of principal amount of
the 11% Notes remain outstanding and mature in September 2005. GB Holdings'
ability to pay interest on such outstanding 11% Notes is dependent upon receipt
of funds from Atlantic Holdings in amounts sufficient to make such interest
payments, and such disbursements are subject to (i) a number of conditions,
including that such payment by Atlantic Holdings is required to be made only in
respect of interest due prior to the maturity of the 11% Notes and that at
the time of such payment and after giving effect thereto, no event of default
exists and no event that could result in an event of default has occurred or is
incipient under the Indenture for the 3% Notes and (ii) Atlantic Holdings being
able to make such payments.

         On July 22, in connection with the consummation of the Transaction,
Atlantic Holdings issued warrants which will initially be exercisable for an
aggregate of 2,750,000 shares of Atlantic Holdings Common Stock to GB Holdings
which GB Holdings then distributed to its stockholders. The warrants are
exercisable at an exercise price of $.01 per share and expire seven years from
date of issuance on July 22, 2011. The Warrants will become exercisable, at the
election of the holders, following the earlier of (i) the payment in cash or
Atlantic Holdings Common Stock for the 3% Notes or conversion, in whole or in
part, of any of the 3% Notes into Atlantic Holdings Common Stock as full
satisfaction of the principal and accrued interest due pursuant to such 3%
Notes; (ii) a determination by a majority of the Board of Directors of Atlantic
Holdings (including at least one independent director) that the Warrants may be
exercised; or (iii) payment in full of the outstanding principal of the 11%
Notes which have not been exchanged for the 3% Notes. Atlantic Holdings cannot
make an accurate prediction as to exactly when or whether the first of these
conditions will be satisfied.

                                       16
<PAGE>

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


         On November 12, 2004, Atlantic Holdings and ACE entered into a Loan and
Security Agreement (the "Loan Agreement"), by and among Atlantic Holdings, as
borrower, ACE, as guarantor, and Fortress Credit Corp. ("Fortress"), as lender,
and certain related ancillary documents, pursuant to which, Fortress agreed to
make available to Atlantic a senior secured revolving credit line providing for
working capital loans of up to $10 million (the "Loans"), to be used for working
capital purposes in the operation of The Sands, located in Atlantic City, New
Jersey.

         The Loan Agreement and the Loans thereunder have been designated by the
Board of Directors of Atlantic Holdings and the Manager of ACE, as Working
Capital Indebtedness (as that term is defined in the Indenture) (the
"Indenture"), dated as of July 22, 2004, among Atlantic Holdings, as issuer,
ACE, as guarantor, and Wells Fargo Bank, National Association, as trustee (the
"Trustee").

         The aggregate amount of the Loans shall not exceed $10 million plus
interest. All Loans under the Loan Agreement are payable in full by no later
than the day immediately prior to the one-year anniversary of the Loan
Agreement, or any earlier date on which the Loans are required to be paid in
full, by acceleration or otherwise, pursuant to the Loan Agreement.

         The outstanding principal balance of the Loan Agreement will accrue
interest at a fixed rate to be set monthly which is equal to one month LIBOR
(but not less than 1.5%), plus 8% per annum. In addition to interest payable on
the principal balance outstanding from time to time under the Loan Agreement,
Atlantic Holdings is required to pay to Fortress an unused line fee for each
preceding three-month period during the term of the Loan Agreement in an amount
equal to .35% of the excess of the available commitment over the average
outstanding monthly balance during such preceding three-month period.

         The Loans are secured by a first lien and security interest on all of
Atlantic Holdings and ACE's personal property and a first mortgage on The
Sands Hotel. Fortress entered into an Intercreditor Agreement, dated as of
November 12, 2004, with the Trustee pursuant to the Loan Agreement. The Liens
(as that term defined in the Indenture) of the Trustee on the Collateral (as
that term is defined in the Indenture), are subject and inferior to Liens which
secure Working Capital Indebtedness such as the Loans.

         Fortress may terminate its obligation to advance and declare the unpaid
balance of the Loans, or any part thereof, immediately due and payable upon the
occurrence and during the continuance of customary defaults which include
payment default, covenant defaults, bankruptcy type defaults, attachments,
judgments, the occurrence of certain material adverse events, criminal
proceedings, and defaults by Atlantic or ACE under certain other agreements.

        Pursuant to New Jersey law, the corporate owner of The Sands is required
to maintain a casino license in order to operate The Sands. The gaming licenses
required to own and operate The Sands were required to be renewed in 2004, which
required that the CCC determine that among other things, Atlantic Holdings and
ACE are financially stable. In order to be found "financially stable" under
NJCCA, Atlantic Holdings and ACE had to demonstrate among other things, its
ability to pay, exchange, or refinance debts that mature or otherwise become due
and payable during the license term, or to otherwise manage such debts. During
July 2004, the Sands filed a timely renewal application of its casino license
for a four year term. The CCC approved the Sands casino license renewal
application on September 29, 2004 with certain conditions, including monthly
written reports on the status of the 11% Notes, a definitive plan to address the
maturity of the 11% Notes, to be submitted no later than August 1, 2005 as well
as other standard industry reporting requirements.

                                       17
<PAGE>

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


      CRITICAL ACCOUNTING POLICIES AND ESTIMATES

      The Company's discussion and analysis of its results of operations and
financial condition are based upon its condensed consolidated financial
statements that have been prepared in accordance with accounting principles
generally accepted in the United States of America ("USA GAAP"). The preparation
of financial statements in conformity with USA GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses, and the disclosure of contingent assets and
liabilities. Estimates and assumptions are evaluated on an ongoing basis and are
based on historical and other factors believed to be reasonable under the
circumstances. The results of these estimates may form the basis of the carrying
value of certain assets and liabilities and may not be readily apparent from
other sources. Actual results, under conditions and circumstances different from
those assumed, may differ from estimates. The impact and any associated risks
related to estimates, assumptions, and accounting policies are discussed within
Management's Discussion and Analysis of Results of Operations and Financial
Condition, as well as in the Notes to the Condensed Consolidated Financial
Statements, if applicable, where such estimates, assumptions, and accounting
policies affect the Company's reported and expected financial results.

          The Company believes the following accounting policies are critical to
its business operations and the understanding of results of operations and
affect the more significant judgments and estimates used in the preparation of
its condensed consolidated financial statements:

      Allowance for Doubtful Accounts - The Company maintains accounts
receivable allowances for estimated losses resulting from the inability of its
customers to make required payments. Additional allowances may be required if
the financial condition of the Company's customers deteriorates.

Commitments and Contingencies - Litigation - On an ongoing basis, the Company
assesses the potential liabilities related to any lawsuits or claims brought
against the Company. While it is typically very difficult to determine the
timing and ultimate outcome of such actions, the Company uses its best judgment
to determine if it is probable that it will incur an expense related to the
settlement or final adjudication of such matters and whether a reasonable
estimation of such probable loss, if any, can be made. In assessing probable
losses, the Company makes estimates of the amount of insurance recoveries, if
any. The Company accrues a liability when it believes a loss is probable and the
amount of loss can be reasonably estimated. Due to the inherent uncertainties
related to the eventual outcome of litigation and potential insurance recovery,
it is possible that certain matters may be resolved for amounts materially
different from any provisions or disclosures that the Company has previously
made.

Impairment of Long-Lived Assets - The Company periodically reviews long-lived
assets for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. Assumptions and
estimates used in the determination of impairment losses, such as future cash
flows and disposition costs, may affect the carrying value of long-lived assets
and possible impairment expense in the Company's condensed consolidated
financial statements.

                                       18
<PAGE>

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


Self-Insurance - The Company retains the obligation for certain losses related
to customer's claims of personal injuries incurred while on the Company property
as well as workers compensation claims and major medical claims for non-union
employees. The Company accrues for outstanding reported claims, claims that have
been incurred but not reported and projected claims based upon management's
estimates of the aggregate liability for uninsured claims using historical
experience, an adjusting company's estimates and the estimated trends in claim
values. Although management believes it has the ability to adequately project
and record estimated claim payments, it is possible that actual results could
differ significantly from the recorded liabilities.

Allowance for Obligatory Investments - The Company maintains obligatory
investment allowances for its investments made in satisfaction of its CRDA
obligation. The obligatory investments may ultimately take the form of CRDA
issued bonds, which bear a below market rate of interest, direct investments or
donations. Management bases its reserves on the type of investments the
obligation has taken or is expected to take. CRDA bonds bear interest at
approximately one-third below market rates. Donations of The Sands' quarterly
deposits to the CRDA have historically yielded a 51% future credit or refund of
obligations. Recently, however, CRDA donations have not yielded a specific
future credit percentage. Certain donations have made the Sands eligible for a
100% return of existing investments under certain conditions. Other donations
have little or no future credit value. Management has reserved the predominant
balance of its obligatory investments at between 33% and 49%.

        RESULTS OF OPERATIONS

      The Results of Operations section represents that of GB Holdings for the
three and nine month periods ended September 30, 2004, as Management believes
this to be the most informative discussion of the continuing operations as all
of GB Holdings operations have been transferred to Atlantic Holdings. Since
Atlantic Holdings was not formed until November of 2003 and the Transaction did
not consummate until July 22, 2004, there is no period for which to compare the
2004 results of operations of Atlantic Holding.

        Gaming Operations

        Information contained herein, regarding Atlantic City casinos other than
the Sands, was obtained from reports filed with the CCC.



                                       19
<PAGE>

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


        The following table sets forth certain unaudited financial and operating
data relating to the Sands' and all other Atlantic City casinos' capacities,
volumes of play, hold percentages and revenues:

<TABLE>
<CAPTION>
                                                                          THREE MONTHS ENDED             NINE MONTHS ENDED
                                                                             SEPTEMBER 30,                 SEPTEMBER 30,
                                                                      --------------------------    --------------------------
                                                                         2004           2003           2004           2003
                                                                      -----------    -----------    -----------    -----------
                                                                        (Dollars in Thousands)        (Dollars in Thousands)
<S>                                               <C>                <C>            <C>            <C>            <C>
UNITS: (AT END OF PERIOD)
     Table Games     - Sands                                                   76             71             76             71
                     - Atlantic City (ex. Sands)                            1,352          1,304          1,352          1,304
     Slot Machines   - Sands                                                2,190          2,205          2,190          2,205
                     - Atlantic City (ex. Sands)                           39,984         40,185         39,984         40,185

GROSS WAGERING (1)
     Table Games     - Sands                                          $    61,990    $    63,826    $   181,602    $   162,141
                     - Atlantic City (ex. Sands)                        2,135,833      1,981,991      5,730,494      5,115,909
     Slot Machines   - Sands                                              466,255        517,397      1,379,681      1,511,277
                     - Atlantic City (ex. Sands)                       11,748,661     11,136,772     32,077,869     29,670,141

HOLD PERCENTAGES (2)
     Table Games     - Sands                                                14.72%         13.67%         15.71%         14.30%
                     - Atlantic City (ex. Sands)                            14.52%         15.27%         15.35%         16.10%
     Slot Machines   - Sands                      (accrual basis)            8.24%          7.70%          8.18%          7.80%
                     - Sands                      (cash basis)               8.34%          7.84%          8.35%          8.00%
                     - Atlantic City (ex. Sands)  (accrual basis)             N/A            N/A            N/A            N/A
                     - Atlantic City (ex. Sands)  (cash basis)               8.18%          8.23%          8.17%          8.15%

REVENUES (2)
     Table Games     - Sands                                          $     9,123    $     8,725    $    28,530    $    23,129
                     - Atlantic City (ex. Sands)                          310,137        302,590        879,381        822,834
     Slot Machines   - Sands                      (accrual basis)          38,414         39,857        112,871        118,278
                     - Sands                      (cash basis)             38,882         40,562        115,183        120,893
                     - Atlantic City (ex. Sands)  (accrual basis)             N/A            N/A            N/A            N/A
                     - Atlantic City (ex. Sands)  (cash basis)            961,311        916,919      2,620,881      2,416,733
     Other (3)       - Sands                                                  397            325          1,094            786
                     - Atlantic City (ex. Sands)                           18,070         13,561         45,992         33,600
</TABLE>

----------
(1)      Gross wagering consists of the total value of chips purchased for table
         games (excluding poker) and keno wagering (the "Drop") and coins
         wagered in slot machines (the "Handle").

(2)      Casino revenues consist of the portion of gross wagering that a casino
         retains and, as a percentage of gross wagering, is referred to as the
         "hold percentage." The Sands' hold percentages and revenues are
         reflected on an accrual basis. Comparable accrual basis data for the
         remainder of the Atlantic City gaming industry as a whole is not
         available; consequently, industry hold percentages and revenues are
         based on information available from the Commission.

                                       20
<PAGE>

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


     PATRON GAMING VOLUME

        Information contained herein, regarding Atlantic City casinos other than
the Sands, was obtained from reports filed with the Commission.

        For the three months ended September 30, 2004 the table game drop
decreased $1.8 million (2.9%) and increased $19.5 million (12.0%) for the nine
months ended September 30, 2004, compared to the comparable periods in 2003.
These results are compared to the Atlantic City Industry table drop results,
which increased $611.9 million (5.5%) and $2.41 billion (8.1%) for the three
months and nine months ended September 30, 2004 respectively compared to the
same periods in 2003. Despite the impact of a major new competitor in the
Atlantic City market, the Sands maintained its table game market share (3.1%)
for the nine months ended September 30, 2004 compared to the same prior year
period. Competition for the table game market has intensified since the Borgata,
opened in July 2003 and has negatively impacted the Sands table game market
share for the three months ended September 30, 2004 compared to the same prior
year period (2.8% in 2004 vs 3.1% in 2003). Resorts completed a property
expansion project in June 2004 that included approximately 400 additional rooms
and further intensified the competition in the table game market. Table game
hold percentage for the Sands increased by 1.0 percentage points to 14.7% and
1.4 percentage points to 15.7% for the three and nine month periods ended
September 30, 2004, respectively, compared to the same periods in 2003. The
number of table games in operation, as of September 30, 2004, was 76 compared to
71 at the same time in 2003. For all other Atlantic City Casinos, the number of
table games increased by 48 units or 3.7% to 1,352 at September 30, 2004
compared to 2003.

        Slot machine handle for the Sands decreased $51.1 million (9.9%) and
$131.6 million (8.7%) for the three and nine month periods ended September 30,
2004, respectively, compared to the same periods in 2003. By comparison, the
percentage change in slot machine handle for all other Atlantic City casinos
during these periods in 2004 compared to the same prior year periods was a 5.5%
increase for the three month period and a 8.1% increase for the nine month
period. The Sands' 2004 decrease in handle was primarily due to the
competitive impact of Borgata on the Atlantic City market. The Borgata added
3,510 units to Atlantic City's slot market. In addition, Resorts expanded their
casino floor by 22,000 square feet and added 638 slot machines in June of 2004.
The Sands decrease in slot machine handle was offset by an increase in the hold
percentage of 0.5 percentage points to 8.2% and 0.4 percentage points to 8.2%
for the three and nine month periods ended September 30, 2004 compared to the
same periods in 2003. This positive variance in hold percentage was not enough
to offset the decrease in slot machine handle and resulted in a decrease in Slot
revenue of $1.4 million (3.6%) and $5.4 million (4.6%) for the three and nine
month periods ended September 30, 2004, respectively, compared to the periods in
2003. The number of slot machine units as of September 30, 2004 was 2,190
compared to 2,205 at the same time in 2003. For all other Atlantic City Casinos,
the number of slot machines decreased by 201 units or 0.5% to 39,984 at
September 30, 2004 compared to 2003.



                                       21
<PAGE>

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


        The following table sets forth the changes in operating revenues and
expenses (unaudited) for the three month and nine month periods ended September
30, 2004 and 2003:


        The following table sets forth the changes in operating revenues and
expenses (unaudited) for the three month and nine month periods ended September
30, 2004 and 2003:

<TABLE>
<CAPTION>
                                                              INCREASE (DECREASE)                              INCREASE (DECREASE)
                                       2004         2003          $          %          2004         2003          $           %
                                    ---------    ---------    ---------    ------    ---------    ---------    ---------    ------
                                                                          (DOLLARS IN THOUSANDS)
REVENUES:
<S>                                <C>          <C>          <C>          <C>       <C>          <C>          <C>          <C>
Casino                              $  47,934    $  48,907    $    (973)    (1.99)   $ 142,495    $ 142,193    $     302      0.21
Rooms                                   3,281        3,115          166      5.33        8,342        8,530         (188)    (2.20)
Food and Beverage                       5,687        6,627         (940)   (14.18)      16,472       16,802         (330)    (1.96)
Other                                     873        1,047         (174)   (16.62)       2,826        3,010         (184)    (6.11)

Promotional Allowances                 13,018       13,655         (637)    (4.66)      38,592       38,663          (71)    (0.18)

EXPENSES:
Casino                                 32,808       35,291       (2,483)    (7.04)      96,106      100,249       (4,143)    (4.13)
Rooms                                     781          605          176     29.09        2,113        1,635          478     29.24
Food and Beverage                       2,117        2,833         (716)   (25.27)       6,411        7,314         (903)   (12.35)
Other                                   1,083          992           91      9.17        2,458        2,380           78      3.28
General and Administrative              3,164        2,630          534     20.30        9,042        7,891        1,151     14.59
Depreciation and
Amortization                            4,092        3,975          117      2.94       11,905       11,376          529      4.65
Loss (gain) on disposal of assets          (7)        (107)        (100)    93.46          (38)        (104)         (66)   (63.46)

INCOME FROM OPERATIONS                    719         (178)         897    503.93        3,546        1,131        2,415    213.53

Non-operating expense, net              3,626        3,006          620     20.63       11,571        8,880        2,691     30.30
Income Tax Provision                     (217)        (272)         (55)   (20.22)        (732)        (615)         117     19.02
Net income (loss)                      (3,124)      (3,456)        (332)    (9.61)      (8,757)      (8,364)         393      4.70
</TABLE>

        REVENUES

        Overall casino revenues decreased $973,000 (2.0%) and increased $302,000
(0.2%) for the three and nine month periods ended September 30, 2004,
respectively, compared to the same periods in 2003. The year-to-date increase in
casino revenues is attributable to the increases in table game revenue ($5.4
million) and other casino revenue ($308,000) offset by a decrease in slot
machine revenue ($5.4 million).

        Room revenue increased $166,000 (5.3%) and decreased $188,000 (2.2%) for
the three and nine month periods ended September 30, 2004, respectively,
compared to the same periods in 2003. The year-to-date decrease in room revenue
is directly attributable to the decrease in room occupancy for the three and
nine months ended September 30, 2004, respectively, compared to the same period
in 2003 (1,279 and 9,420 fewer occupied rooms, respectively). The decrease in
occupancy was primarily due to a reduction in complimentary promotional room
nights. The increase in room revenue for the comparative three month periods is
due to an increase in average room rate ($4.20) primarily due to increased rates
in group and transient sales.



                                       22
<PAGE>


                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


        Food and Beverage revenues decreased $940,000 (14.2%) and $330,000
(2.0%) for the three and nine month periods ended September 30, 2004,
respectively, compared to the same periods in 2003. These decreases were
primarily attributable to decreases in food revenue ($811,000 quarter-to-date
and $824,000 year-to-date, in high volume, non-gourmet outlets as a result of
discontinuing discount and coupon programs during the peak summer months. These
were offset by increases in beverage revenue ($131,000 quarter-to-date and
$492,000 year-to-date) as a result of the continued popularity of Swingers Bar.

        Other revenues decreased $174,000 (16.6%) and $184,000 (6.1%) for the
three and nine month periods ended September 30, 2004, respectively, compared to
the same periods in 2003. The decrease during the nine month periods is
primarily attributable to a reduction in the people-mover monthly rental with
Caesars Entertainment. The rent was lowered by $30,000 per month in July 2003,
according to the lease. The decrease during the three month periods is due to
reduced entertainment revenue due to fewer shows including the postponement of
headline artist engagement in September 2004.

        PROMOTIONAL ALLOWANCES

        Promotional allowances are comprised of (i) the estimated retail value
of goods and services provided free of charge to casino customers under various
marketing programs, (ii) the cash value of redeemable points earned under a
customer loyalty program based on the amount of slot play and (iii) coin and
cash coupons and discounts. The dollar amount of promotional allowances
decreased $637,000 (4.7%) and $71,000 (0.2%) for the three and nine month
periods ended September 30, 2004, respectively, compared to the same periods in
2003. As a percentage of casino revenues, promotional allowances decreased to
27.2% from 27.9% and 27.1 % from 27.2% for the three and nine month periods
ended September 30, 2004, respectively, compared to the same periods in 2003.
The decrease in this ratio is directly attributable to a decrease in
complimentaries and coupons during the Summer 2004.

        DEPARTMENTAL EXPENSES

        Casino expenses at the Sands decreased by $2.5 million (7.0%) and $4.1
million (4.1%), respectively, for the three and nine months ended September 30,
2004 compared to the same prior year period. The decrease in casino expenses is
primarily due to a reduction of allocable costs to the casino department for
overhead, marketing and complimentary expenses ($845,000 and $2.1 million,
respectively, for the three and nine months ended September 30, 2004 compared to
the same prior year periods). Payroll expenses decreased ($421,000 and $650,000
for the three and nine months ended September 30, 2004, respectively) due to the
reduction in personnel. The provision for doubtful accounts was reduced by
$256,000 and $477,000 for the three and nine months ended September 30, 2004,
respectively, as a result of less casino credit activity.

                                       23
<PAGE>

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


        Rooms expenses increased $176,000 (29.1%) and $478,000 (29.2%) for the
three and nine months ended September 30, 2004 compared to the same prior year
period. The increased rooms expenses are almost entirely due to a reduction of
allocable costs to the casino department for complimentary expenses ($111,000
and $612,000, respectively, for the three and nine months ended September 30,
2004 compared to the same prior year periods) as a result of fewer complimentary
promotional room nights in 2004 compared to 2003. These were offset slightly by
favorable variances in payroll and benefits ($97,000 and $325,000, respectively,
for the three and nine months primarily ended September 30, 2004 compared to the
same prior year period) due to reductions in staffing.

        Food and beverage expenses decreased $716,000 (25.3%) and $903,000
(12.4%), respectively, for the three and nine months ended September 30, 2004
compared to the same prior year period. The decreases were primarily due to
decreased payroll and benefits costs ($309,000 and $571,000 for the three and
nine months ended September 30, 2004, respectively, compared to the same prior
year periods as a result of lower staffing levels). Also contributing to the
decrease in food and beverage expense were decreases in food and beverage cost
of sales ($327,000 and $145,000 for the three and nine months ended September
30, 2004, respectively), which were a result of decreased sales.

        Other expenses increased $91,000 (9.2%) and $78,000 (3.3%) for the three
and nine months ended September 30, 2004, compared to the same prior year
periods. The increased costs were due to an unfavorable variance in allocable
costs to casino expense for complimentaries ($801,000 and $445,000 for the three
and nine months ended September 30, 2004, respectively). These were offset by
decreased payroll and benefits costs $228,000 and $529,000 for the three and
nine months ended September 30, 2004, respectively) due to reduced staffing.
Decreases in entertainment costs ($461,000 and $100,000 for the three and nine
months ended September 30, 2004, respectively) due to decreased headline
entertainment compared to the prior year periods.

        GENERAL AND ADMINISTRATIVE EXPENSES

        General and administrative expenses increased $534,000 (20.3%) and $1.2
million (14.6%), respectively, for the three and nine months ended September 30,
2004, compared to the same prior year periods. The increases were due to lower
allocable costs for property overhead to the casino department ($741,000 for the
nine months ended September 30, 2004) and the increased cost of electricity
($99,000 and $440,000 for the three and nine months ended September 30, 2004,
respectively, compared to the same prior year periods) due to increased energy
costs.

        DEPRECIATION AND AMORTIZATION, INCLUDING PROVISION FOR
OBLIGATORY INVESTMENTS

        Depreciation and amortization, including provision for obligatory
investments, increased $117,000 (2.9%) and $529,000 (4.7%), respectively, for
the three and nine month periods ended September 30, 2004, compared to the same
prior year periods due to an increase in depreciation expense ($109,000 and
$638,000 for the three and nine months ended September 30, 2004, respectively)
as a result of the continued investment in infrastructure and equipment during
the current and preceding year.



                                       24
<PAGE>

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


        INTEREST INCOME AND EXPENSE

        Interest income decreased by $51,000 (31.8%) and $185,000 (37.1%),
respectively, during the three and nine month periods ended September 30, 2004,
compared to the same prior year periods. The decrease was due to smaller
earnings on decreased cash reserves.

        Interest expense decreased $669,000 and $570,000, respectively, during
the three and nine month periods ended September 30, 2004, compared to the same
periods in 2003. The decrease is due to the exchange of $66.3 million in 11%
debt for an equal amount at 3%.

        DEBT RESTRUCTURING COSTS

        Debt Restructuring Costs amounted to $1.2 million and $3.1 million,
respectively, for the three and nine month periods ended September 30, 2004, as
a direct result of the Consent Solicitation and Offer to Exchange commenced by
Atlantic Holdings. There were no similar costs incurred during the same periods
in 2003.

        INCOME TAX PROVISION

        Federal and State income tax provisions are based upon the results of
operations for the current period and the estimated adjustments for income tax
purposes of certain nondeductible expenses.

        Due to recurring losses, Federal income tax has not been recorded for
the nine months ended September 30, 2004.

        The State income tax provision decreased $55,000 (20.2%) and increased
$117,000 (19.0%), respectively, for the three and nine months ended September
30, 2004 compared to the same prior year periods. The quarter-to-date decrease
is a result of the decrease in tax basis and an adjustment to tax rate. The
year-to-date increase is primarily attributable to the casino net income tax
enacted in July 2003.

        INFLATION

        Management believes that, in the near term, modest inflation and
increased competition within the gaming industry for qualified and experienced
personnel will continue to cause increases in operating expenses, particularly
labor and employee benefits costs.

        SEASONALITY

        Historically, the Sands' operations have been highly seasonal in nature,
with the peak activity occurring from May to September. Consequently, the
results of operations for the first and fourth quarters are traditionally less
profitable than the other quarters of the fiscal year. In addition, the Sands'
operations may fluctuate significantly due to a number of factors, including
chance. Such seasonality and fluctuations may materially affect casino revenues
and profitability.



                                       25
<PAGE>

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


        PRIVATE SECURITIES LITIGATION REFORM ACT

        The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in this
Form 10-Q and other materials filed or to be filed by the Company with the
Securities and Exchange Commission (as well as information included in oral
statements or other written statements made by such companies) contains
statements that are forward-looking, such as statements relating to future
expansion plans, future construction costs and other business development
activities including other capital spending, economic conditions, financing
sources, competition and the effects of tax regulation and state regulations
applicable to the gaming industry in general or Atlantic Holdings in particular.
Such forward-looking information involves important risks and uncertainties that
could significantly affect anticipated results in the future and, accordingly,
such results may differ from those expressed in any forward-looking statements
made by or on behalf of Atlantic Holdings. These risks and uncertainties
include, but are not limited to, those relating to development and construction
activities, dependence on existing management, leverage and debt service
(including sensitivity to fluctuations in interest rates), domestic or global
economic conditions, activities of competitors and the presence of new or
additional competition, fluctuations and changes in customer preference and
attitudes, changes in federal or state tax laws or the administration of such
laws and changes in gaming laws or regulations (including the legalization of
gaming in certain jurisdictions).


               RISK FACTORS RELATED TO THE BUSINESS OF THE COMPANY


THE COMPANY IS NEWLY FORMED AND HAS NO OPERATING HISTORY.

         The Company has no operating history nor historical financial results
for investors to evaluate except for GB Holdings' historical consolidated
financial results. On July 22, 2004, Atlantic Holdings and ACE consummated the
Consent Solicitation and Offer to Exchange and the Transaction. As a result, no
assurances can be given that the Company will be successful or profitable.

The Company's quarterly operating results are subject to fluctuations and
seasonality.

         The Company's quarterly operating results are expected to be highly
volatile and subject to unpredictable fluctuations due to unexpectedly high or
low losses, changing customer tastes and trends, unpredictable patron gaming
volume, the proportion of table game revenues to slot game revenues, weather and
discretionary decisions by The Sands' patrons regarding frequency of visits and
spending amounts.

THE COMPANY MAY NEED TO INCREASE CAPITAL EXPENDITURES TO COMPETE EFFECTIVELY.

        Capital expenditures, such as room refurbishments, amenity upgrades and
new gaming equipment, are necessary from time to time to preserve the
competitiveness of The Sands. The gaming industry market is very competitive and
is expected to become more competitive in the future. If cash from operations is
insufficient to provide for needed levels of capital expenditures, The Sands'
competitive position could deteriorate if Atlantic Holdings or ACE Gaming is
unable to generate or borrow funds required for such purposes. In addition, the
indentures governing the 3% Notes limit Atlantic Holdings' ability to borrow or
to make capital expenditures.


                                       26
<PAGE>

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


IF THE COMPANY FAILS TO OFFER COMPETITIVE PRODUCTS AND SERVICES OR MAINTAIN THE
LOYALTY OF THE SANDS PATRONS, ITS BUSINESS WILL BE ADVERSELY AFFECTED.

         In addition to capital expenditures, the Company is required to
anticipate the changing tastes of The Sands' patrons and offer both competitive
and innovative products and services to ensure that repeat patrons return and
new patrons visit The Sands. The demands of meeting the Company's debt service
payments and the need to make capital expenditures limits the available cash to
finance such products and services. In addition, the consequences of incorrect
strategic decisions may be difficult or impossible to anticipate or correct in a
timely manner.

INCREASED STATE TAXATION OF GAMING AND HOSPITALITY REVENUES COULD ADVERSELY
AFFECT THE COMPANY'S RESULTS OF OPERATIONS.

         The casino industry represents a significant source of tax revenues to
the various jurisdictions in which casinos operate. Gaming companies are
currently subject to significant state and local taxes and fees in addition to
normal federal and state corporate income taxes. For example, casinos in
Atlantic City pay for licenses as well as special taxes to the city and state.
New Jersey taxes annual gaming revenues at the rate of 8.0%. New Jersey also
levies an annual investment alternative tax of 2.5% on annual gaming revenues in
addition to normal federal and state income taxes. This 2.5% obligation,
however, can be satisfied by purchasing certain bonds or making certain
investments in the amount of 1.25% of annual gaming revenues. On July 3, 2002,
the State of New Jersey passed the New Jersey Business Tax Reform Act, which,
among other things, suspended the use of the New Jersey net operating loss carry
forwards for two years and introduced a new alternative minimum assessment under
the New Jersey corporate business tax based on gross receipts or gross profits.
For the three and nine months ended September 30, 2004, there was a charge to
income tax provision of $180,000 and $180,000, respectively, related to the
impact of the New Jersey Business Tax Reform Act.

         On July 1, 2003, the State of New Jersey amended the New Jersey Casino
Control Act (the "NJCCA") to impose various tax increases on Atlantic City
casinos, including The Sands. Among other things, the amendments to the NJCCA
include the following new tax provisions: (i) a new 4.25% tax on casino
complimentaries, with proceeds deposited to the Casino Revenue Fund; (ii) an 8%
tax on casino service industry multi-casino progressive slot machine revenue,
with the proceeds deposited to the Casino Revenue Fund; (iii) a 7.5% tax on
adjusted net income of licensed casinos in State fiscal years 2004 through 2006,
with the proceeds deposited to the Casino Revenue Fund; (iv) a fee of $3.00 per
day on each hotel room in a casino hotel facility that is occupied by a guest,
for consideration or as a complimentary item, with the proceeds deposited into
the Casino Revenue Fund in State fiscal years 2004 through 2006, and beginning
in State fiscal year 2007, $2.00 of the fee deposited into the Casino Revenue
Fund and $1.00 to be transferred to the Casino Reinvestment Development
Authority ("CRDA"); (v) an increase of the minimum casino hotel parking fee from
$1.50 to $3.00, with $1.50 of the fee to be deposited into the Casino Revenue
Fund in State fiscal years 2004 through 2006, and beginning in State fiscal year
2007, $0.50 to be deposited into the Casino Revenue Fund and $1.00 to be
transferred to the CRDA for its purposes pursuant to law, and for use by the
CRDA to post a bond for $30 million for deposit into the Casino Capital
Construction Fund, which was also created by the July 1, 2003 Act; and (vi) the
elimination of the deduction from casino licensee calculation of gross revenue
for uncollectible gaming debt. These changes to the NJCCA, and the new taxes
imposed on The Sands and other Atlantic City casinos, will reduce the Company's
profitability.

                                       27
<PAGE>

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


         Future changes in state taxation of casino gaming companies in New
Jersey where the Company operates cannot be predicted and any such changes could
adversely affect the Company's profitability.

GB HOLDINGS' FORMER USE OF ARTHUR ANDERSEN LLP AS ITS INDEPENDENT PUBLIC
ACCOUNTANTS MAY POSE RISKS TO THE COMPANY AND WILL LIMIT YOUR ABILITY TO SEEK
POTENTIAL RECOVERIES FROM ARTHUR ANDERSEN LLP RELATED TO THEIR WORK.

         Arthur Andersen LLP, independent certified public accountants, were
engaged as the principal accountants to audit GB Holdings and its subsidiaries'
(the "Parent Company") consolidated financial statements until the GB Holdings
Company dismissed them on May 16, 2002 and engaged KPMG LLP. In May 2002, Arthur
Andersen was convicted on a federal obstruction of justice charge. Some
investors, including institutional investors, may choose not to invest in or
hold securities of a company whose prior financial statements (or those of its
predecessor entity) were audited by Arthur Andersen, which may serve to, among
other things, suppress the price of Atlantic Holdings' securities. In addition,
rules promulgated by the Securities and Exchange Commission ("SEC") require the
Company to present its audited financial statements in various SEC filings,
along with Arthur Andersen's consent to inclusion of its audit report in those
filings. The SEC has provided temporary regulatory relief designed to allow
companies that file reports with them to dispense with the requirement to file a
consent of Arthur Andersen in certain circumstances. Notwithstanding the SEC's
temporary regulatory relief, the inability of Arthur Andersen to provide its
consent or to provide assurance services to the Company with regard to future
SEC filings could negatively affect the Company's ability to, among other
things, access capital markets. Any delay or inability to access capital markets
as a result of this situation could have a material adverse impact on the
business of the Company.

         The Company cannot assure you that they will be able to continue to
rely on the temporary relief granted by the SEC. If the SEC no longer accepts
financial statements audited by Arthur Andersen, requires audits of other
financial statements or financial information or requires changes to financial
statements previously audited by Arthur Andersen, this may affect ability to
access the public capital markets in the future, unless the Company's current
independent auditors or another independent accounting firm is able to audit the
consolidated financial statements originally audited by Arthur Andersen in a
timely manner. Any delay or inability to access the capital markets may have an
adverse impact on the business of the Company.

         Because Arthur Andersen ceased conducting business it is unlikely you
would be able to recover damages from Arthur Andersen for any claim against the.
In addition, any recovery you may have from Arthur Andersen related to any
claims that you may assert related to the financial statements audited by Arthur
Andersen may be limited as a result of the lack of Arthur Andersen's consent as
well as by the financial circumstances of Arthur Andersen.

                                       28
<PAGE>

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


ENERGY PRICE INCREASES MAY ADVERSELY AFFECT THE COMPANY'S COSTS OF OPERATIONS
AND REVENUES OF THE SANDS.

         The Sands uses significant amounts of electricity, natural gas and
other forms of energy. While no shortages of energy have been experienced,
substantial increases in the cost of forms of energy in the U.S. will negatively
affect the Company's operating results. The extent of the impact is subject to
the magnitude and duration of the energy price increases, but this impact could
be material. In addition, higher energy and gasoline prices which affect The
Sands' customers may result in reduced visitation to The Sands' properties and a
reduction in revenues.

A DOWNTURN IN GENERAL ECONOMIC CONDITIONS MAY ADVERSELY AFFECT THE COMPANY'S
RESULTS OF OPERATIONS.

         The Company's business operations are affected by international,
national and local economic conditions. A recession or downturn in the general
economy, or in a region constituting a significant source of customers for The
Sands' properties, could result in fewer customers visiting the Company's
property and a reduction in spending by customers who do visit the Company's
property, which would adversely affect the Company's revenues while some of its
costs remain fixed, resulting in decreased earnings.

         A majority of The Sands' patrons are from automobile travel and bus
tours. Higher gasoline prices could reduce automobile and bus travel to The
Sands' location and could increase bus fares to The Sands. In addition, adverse
winter weather conditions could reduce automobile travel to The Sands' location
and could reduce bus travel. Accordingly, the Company's business, assets,
financial condition and results of operations could be adversely affected by a
weakening of regional economic conditions and higher gasoline prices or adverse
winter weather conditions.

ACTS OF TERRORISM AND THE UNCERTAINTY OF THE OUTCOME AND DURATION OF THE
ACTIVITY IN IRAQ AND ELSEWHERE, AS WELL AS OTHER FACTORS AFFECTING DISCRETIONARY
CONSUMER SPENDING, HAVE IMPACTED THE GAMING INDUSTRY AND MAY HARM THE COMPANY'S
OPERATING RESULTS AND THE COMPANY'S ABILITY TO INSURE AGAINST CERTAIN RISKS.

       The terrorist attacks of September 11, 2001 had an immediate impact on
hotel and casino volume. The Sands hotel occupancy was down approximately ten
percentage points during the week that followed the attacks. Bus passenger
volume for The Sands was lower than normal, especially from those bus tours
originating from the New York metropolitan area. There were approximately 22.5%
less bus passengers at The Sands during September 2001 than during the same
month in the prior year. These events, the potential for future terrorist
attacks, the national and international responses to terrorist attacks and other
acts of war or hostility have created many economic and political uncertainties
which could adversely affect the Company's business and results of operations.
Future acts of terror in the U.S. or an outbreak of hostilities involving the
United States, may again reduce The Sands' guests' willingness to travel with
the result that the Company's operations will suffer.

THE COMPANY MAY INCUR LOSSES THAT WOULD NOT BE COVERED BY INSURANCE AND THE COST
OF INSURANCE WILL INCREASE.

         Although the Company has agreed in the Indenture governing the 3% Notes
to maintain insurance customary and appropriate for its business, the Company
cannot assure you that insurance will be available or adequate to cover all loss
and damage to which the Company's business or the Company's assets might be
subjected. In connection with insurance renewals subsequent to September 11,
2001, the insurance coverage for certain types of damages or occurrences has
been diminished substantially and is unavailable at commercial rates.
Consequently, the Company is self-insured for certain risks. The lack of
insurance for certain types or levels of risk could expose the Company to
significant losses in the event that an uninsured catastrophe occurred. Any
losses the Company incurs that are not covered by insurance may decrease its
future operating income, require it to find replacements or repairs for
destroyed property and reduce the funds available for payments of its
obligations on the 3% Notes.

                                       29
<PAGE>

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


THERE ARE RISKS RELATED TO THE CREDITWORTHINESS OF PATRONS OF THE CASINOS.

       The Sands is exposed to certain risks related to the creditworthiness of
its patrons. Historically The Sands has extended credit on a discretionary basis
to certain qualified patrons. For the nine months ended September 30, 2004,
gaming credit extended to Sands' table game patrons accounted for approximately
22.5% of overall table game wagering, and table game wagering accounted for
approximately 11.6% of overall casino wagering during the period. At September
30, 2004, gaming receivables amounted to $7.0 million before an allowance for
uncollectible gaming receivables of $3.8 million. There can be no assurance that
defaults in the repayment of credit by patrons of The Sands would not have a
material adverse effect on the results of operations of The Sands and,
consequently the Company.

THE COMPANY'S SUCCESS DEPENDS IN PART ON THE AVAILABILITY OF QUALIFIED
MANAGEMENT AND PERSONNEL AND ON THE COMPANY'S ABILITY TO RETAIN SUCH EMPLOYEES.

       The quality of individuals hired for positions in the hotel and gaming
operations will be critical to the success of the Company's business. It may be
difficult to attract, retain and train qualified employees due to the
competition for employees with other gaming companies and their facilities in
the Company's jurisdictions and nationwide. The Borgata, which opened in July
2003 and is located in the marina district of Atlantic City, has aggravated this
problem in Atlantic City. The Company cannot assure you that it will be
successful in retaining current personnel or in hiring or retaining qualified
personnel in the future. A failure to attract or retain qualified management and
personnel at all levels or the loss of any of the Company's key executives could
have a material adverse effect on the Company's financial condition and results
of operations.
                   RISK FACTORS RELATED TO THE GAMING INDUSTRY

THE GAMING INDUSTRY IS HIGHLY COMPETITIVE.

        The gaming industry is highly competitive and the Company's competitors
may have greater resources than the Company. If other properties operate more
successfully, if existing properties are enhanced or expanded, or if additional
hotels and casinos are established in and around the location in which the
Company conducts business, the Company may lose market share. In particular,
expansion of gaming in or near the geographic area from which the Company
attracts or expects to attract a significant number of customers could have a
significant adverse effect on the Company's business, financial condition and
results of operations. The Sands competes, and will in the future compete, with
all forms of existing legalized gaming and with any new forms of gaming that may
be legalized in the future. Additionally, the Company faces competition from all
other types of entertainment.

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<PAGE>

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


         On July 3, 2003, The Borgata, owned by Boyd Gaming Corporation and MGM
Mirage, opened in the marina district of Atlantic City. The Borgata features a
40-story tower with 2,010 rooms and suites as well as a 135,000 square-foot
casino, restaurants, retail shops, a spa and pool, and entertainment venues.
This project represents a significant increase in capacity in that market. In
addition, other of The Sands' competitors in Atlantic City have recently
completed expansions of their hotels or have announced expansion projects. For
example, Tropicana Atlantic City began constructing a 502-room hotel tower, a
25-room conference center, a 2,400 space parking garage, an expanded casino
floor and a 200,000 square foot themed shopping, dining and entertainment
complex called The Quarter. Tropicana intends to complete the project in the
fourth quarter of 2004. Resorts constructed a hotel room addition of
approximately 400 rooms, which opened in the second quarter of 2004. Our
business may be adversely impacted (i) by the additional gaming and room
capacity generated by this increased competition in Atlantic City and/or (ii) by
other projects not yet announced in New Jersey or in other markets (e.g.
Pennsylvania, New York and Connecticut).

GAMING IS A REGULATED INDUSTRY AND CHANGES IN THE LAW COULD HAVE A MATERIAL
ADVERSE EFFECT ON THE COMPANY'S ABILITY TO CONDUCT GAMING.

         Gaming in New Jersey is regulated extensively by federal and state
regulatory bodies, including the CCC and state and federal taxing, law
enforcement and liquor control agencies. The ownership and operation of The
Sands is subject to strict state regulation under the NJCCA. The Company and its
affiliates have received the licenses, permits and authorizations required to
operate The Sands. Failure to maintain or obtain the requisite casino licenses
would have a material adverse effect on the Company.

PENDING AND ENACTED GAMING LEGISLATION FROM NEIGHBORING STATES AND NEW JERSEY
MAY HARM THE SANDS.

         In the summer of 2003, the State of New Jersey considered approving
video lottery terminals ("VLT's") at the racetracks in the state and on July 1,
2003, the NJCCA was amended to impose various new and increased taxes on casino
license revenues. There is no guarantee that New Jersey will not consider
approving VLTs in the future, and if VLTs are approved, it could adversely
affect the Company's operations, and an increase in the gross gaming tax without
a significant simultaneous increase in revenue would adversely affect the
Company's results of operations.

         In April 2004, the casino industry, the CRDA and the New Jersey Sports
and Exposition Authority agreed to a plan regarding New Jersey video lottery
terminals ("VLTs"). Under the plan, casinos will pay a total of $96 million over
a period of four years, of which $10 million will fund, through project grants,
North Jersey CRDA projects and $86 million will be paid to the New Jersey Sports
and Exposition Authority who will then subsidize certain New Jersey horse tracks
to increase purses and attract higher-quality races that would allow them to
compete with horse tracks in neighboring states. In return, the race tracks and
New Jersey have committed to postpone any attempts to install VLTs for at least
four years. $52 million of the $86 million would be donated by the CRDA from the
casinos' North Jersey obligations and $34 million would be paid by the casinos
directly. It is currently estimated that The Sands current CRDA deposits for
North Jersey projects are sufficient to fund The Sands proportionate obligations
with respect to the $10 million and $52 million commitments. The Sands
proportionate obligation with respect to the $34 million commitment is estimated
to be approximately $1.3 million payable over a four year period. The Sands
proportionate obligation with respect to the combined $10 million and $52
million commitment is estimated to be approximately $2.5 million payable over a
four year period.

                                       31
<PAGE>

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


         The Sands also competes with legalized gaming from casinos located on
Native American tribal lands. In July 2004, the Appellate Division of the
Supreme Court of New York unanimously ruled that Native American owned casinos
could legally be operated in New York under the New York State law passed in
October 2001. That law permits three casinos in Western New York, all of which
would be owned by the Seneca Indian Nation. The law also permits up to three
casinos in the Catskills in Ulster and Sullivan Counties, also to be owned by
Native American Tribes. In addition, the legislation allows slot machines to be
placed in Native American-owned casinos. The court also ruled that New York
could participate in the Multi-State Mega Millions Lottery Game.

         The New York law had also permitted the installation of video lottery
terminals ("VLT's") at five racetracks situated across the State of New York. In
the July 2004 ruling, the Appellate Division ruled that a portion of the law was
unconstitutional because it required a portion of the VLT revenues to go to
horse-racing, breeding funds and track purses. It is anticipated that ruling
will be appealed.

         The Pennsylvania legislature passed and the governor signed a bill in
July 2004 that will allow for up to 61,000 slot machines state wide in up to 14
different locations, seven or eight of which would be racetracks plus four or
five slot parlors in Philadelphia and Pittsburgh and two small resorts.

         Maryland is among the other states contemplating some form of gaming
legislation. Maryland's proposed legislation would authorize VLT's at some of
Maryland's racing facilities. The Maryland Legislature did not enact any
legalized gaming legislation during their 2004 legislative sessions which ended
September 30, 2004.

         The Sands' market is primarily a drive-to market, and legalized
gambling in Pennsylvania, the Catskills and any other neighboring state within
close proximity to New Jersey could have a material adverse effect on the
Atlantic City gaming industry overall, including The Sands.

HOLDERS OF ATLANTIC HOLDINGS COMMON STOCK, WARRANTS, AND 3% NOTES ARE SUBJECT TO
THE CCC AND THE NJCCA.

        The holders of Atlantic Holdings Common Stock, the holders of the
Warrants, and the holders of the 3% Notes will be subject to certain regulatory
restrictions on ownership. While holders of publicly traded obligations such as
the 3% Notes are generally not required to be investigated and found suitable to
hold such securities, the CCC has the discretionary authority to (i) require
holders of securities of corporations governed by New Jersey gaming law to file
applications; (ii) investigate such holders; and (iii) require such holders to
be found suitable or qualified to be an owner or operator of a gaming
establishment. Pursuant to the regulations of the CCC such gaming corporations
may be sanctioned, including the loss of its approvals, if, without prior
approval of the CCC, it (i) pays to the unsuitable or unqualified person any
dividend, interest or any distribution whatsoever; (ii) recognizes any voting
right by such unsuitable or unqualified person in connection with the
securities; (iii) pays the unsuitable or unqualified person remuneration in any
form; or (iv) makes any payments to the unsuitable or unqualified person by way
of principal, redemption, conversion, exchange, liquidation, or similar
transaction. If Atlantic Holdings is served with notice of disqualification of
any holder, such holder will be prohibited by the NJCCA from receiving any
payments on, or exercising any rights connected to, the Atlantic Holdings Common
Stock, the Warrants, or the 3% Notes, as applicable.

                                       32
<PAGE>

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        Market risk is the risk of loss arising from changes in market rates and
prices, such as interest rates and foreign currency exchange rates. The Company
does not have securities subject to interest rate fluctuations and has not
invested in derivative-based financial instruments.

ITEM 4. CONTROLS AND PROCEDURES

       The Company's senior management is responsible for establishing and
maintaining a system of disclosure controls and procedures (as defined in Rule
13a-14 and 15d-14 under the Securities Exchange Act of 1934 (the "Exchange
Act")) designed to ensure that information required to be disclosed by the
Company in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the Securities and Exchange Commission's rules and forms. Disclosure controls
and procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by an issuer in the reports
that it files or submits under the Exchange Act is accumulated and communicated
to the issuer's management, including its principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, as appropriate to allow timely decisions regarding required
disclosure.

         In accordance with Exchange Act Rules 13a-15 and 15d-15, the Company
carried out an evaluation, with the participation of the Chief Executive Officer
and Chief Financial Officer, as well as other key members of the Company's
management, of the effectiveness of the Company's disclosure controls and
procedures as of the end of the period covered by this report. Based on that
evaluation, the Company's Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures were effective,
as of the end of the period covered by this report, to provide reasonable
assurance that information required to be disclosed in the Company's reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms.

        No change occurred in the Company's internal controls concerning
financial reporting during the fiscal quarter ended September 30, 2004 that has
materially affected, or is reasonably likely to materially affect, the Company's
internal controls over financial reporting.



                                       33
<PAGE>

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


PART II:  OTHER INFORMATION

ITEM 1.      LEGAL PROCEEDINGS

         Tax appeals on behalf of the Company and the City of Atlantic City
challenging the amount of the Company's real property assessments for tax years
1996 through 2003 are pending before the NJ Tax Court.

        By letter dated January 23, 2004, Sheffield Enterprises, Inc. asserted
potential claims against The Sands under the Lanham Act for permitting a show
entitled The Main Event, to run at The Sands during 2001. Sheffield also asserts
certain copyright infringement claims growing out of the Main Event
performances. It has not yet been determined whether or not the claims made by
Sheffield would, if adversely determined, materially impact the financial
position or results of operations of the Company.

        The Company is a party in various legal proceedings with respect to the
conduct of casino and hotel operations and has been receiving employee related
claims. Although a possible range of losses cannot be estimated, in the opinion
of management, based upon the advice of counsel, the Company does not expect
settlement or resolution of these proceedings or claims to have a material
adverse impact upon their consolidated financial position or results of
operations, but the outcome of litigation and the resolution of claims is
subject to uncertainties and no assurances can be given. The consolidated
financial statements do not include any adjustments that might result from these
uncertainties.

ITEM 5. OTHER INFORMATION

(a). During the quarter ended September 30, 2004, the Registrant did not file
any reports on form 8-K.


ITEM 6. EXHIBITS

31.1     Chief Executive Officer's Certification, pursuant to Section 302 of the
         Sarbanes-Oxley Act of 2002.

31.2     Chief Financial Officer's Certification, pursuant to Section 302 of the
         Sarbanes-Oxley Act of 2002.

32.1     Chief Executive Officer's Certification, pursuant to 18 U.S.C. Section
         1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
         2002.

32.2     Chief Financial Officer's Certification, pursuant to 18 U.S.C. Section
         1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
         2002.




                                       34
<PAGE>


SIGNATURES

        Pursuant to the requirements of the Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Atlantic City, State of New Jersey on November 18, 2004.


                                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.
                                                   ACE GAMING, LLC.
                                  --------------------------------------------
                                                     Registrant


Date:  November 18, 2004             /s/          Denise Barton
     ----------------------          -------------------------------------
                                                  Denise Barton
                                             Chief Financial Officer







                                       35