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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

FORM 10-K

|                                            |  |                                                                                         
|------------------------------------------- |  | ----------------------------------------------------------------------------------------
|(Mark One)                                 
|[X]                                         |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
|                                           
|For the fiscal year ended December 31, 2002
|                                           
|or                                         
|                                           
|[   ]                                       |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number: 0-22494

AMERISTAR CASINOS, INC.(Exact Name of Registrant as Specified in Its Charter)

|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Nevada                                                         |  | 88-0304799                          
|(State or Other Jurisdiction of
Incorporation or Organization) |  | (I.R.S. Employer Identification No.)

3773 Howard Hughes Parkway
Suite 490 South
Las Vegas, Nevada 89109
(Address of Principal Executive Offices)

Registrants Telephone Number, including area code: (702) 567-7000

Securities registered pursuant to Section 12(b) of the Act:None
(Title of Class)

Securities registered pursuant to Section 12(g) of the Act:Common Stock, $.01 par value
(Title of Class)

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

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

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes [X]
No [   ]

The aggregate market value of the registrants common equity held by
non-affiliates of the registrant as of June 28, 2002 (the last business day of
the registrants most recently-completed second fiscal quarter) was
approximately $308,704,903, based on the last reported sale price of the
registrants Common Stock on the Nasdaq National Market System on such date.

As of March 12, 2003, 26,271,749 shares of Common Stock of the registrant were
outstanding.

Portions of the registrants definitive Proxy Statement for its July 18, 2003
Annual Meeting of Stockholders (which has not been filed as of the date of this
filing) are incorporated by reference into Part III.

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TABLE OF CONTENTS



|                |                                                                                                         |  |  |  |  |  |  | 
|--------------- | ------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I         
|                | Item 1. Business                                                                                       
|                | Item 2. Properties                                                                                     
|                | Item 3. Legal Proceedings                                                                              
|                | Item 4. Submission of Matters to a Vote of Security Holders.                                           
|PART II        
|                | Item 5. Market for Registrants Common Equity and Related Stockholder Matters                          
|                | Item 6. Selected Financial Data                                                                        
|                | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations          
|                | Item 7A. Quantitative and Qualitative Disclosures About Market Risk                                    
|PART III       
|                | Item 8. Financial Statements and Supplementary Data                                                    
|                | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.          
|                | Item 10. Directors and Executive Officers of the Registrant                                            
|                | Item 11. Executive Compensation                                                                        
|                | Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|                | Item 13. Certain Relationships and Related Transactions                                                
|PART IV        
|                | Item 14. Controls and Procedures                                                                       
|                | Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K                               
|SIGNATURES     
|Exhibit 10.1(g)
|Exhibit 10.3(c)
|Exhibit 10.4(c)
|Exhibit 10.15  
|Exhibit 23.1   
|Exhibit 99.2   
|Exhibit 99.3   



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Unless the context indicates otherwise, all references in this Annual
Report on Form 10-K to Ameristar or ACI refer to Ameristar Casinos, Inc.
and all references to the Company, we, our, ours or us refer to
Ameristar and its consolidated subsidiaries. This Report contains certain
forward-looking statements, including managements plans and objectives for our
business, operations and economic performance. These forward-looking
statements generally can be identified by the context of the statement or the
use of forward-looking terminology such as believes, estimates,
anticipates, intends, expects, plans, is confident that or words of
similar meaning, with reference to us or our management. Similarly, statements
that describe our future plans, objectives, strategies, financial results,
financial position, operational expectations or goals are forward-looking
statements. Although management believes that the assumptions underlying the
forward-looking statements are reasonable, these assumptions and the
forward-looking statements are subject to various factors, risks and
uncertainties, many of which are beyond our control. Accordingly, actual
results could differ materially from those contemplated by any forward-looking
statements. In addition to the other cautionary statements relating to certain
forward-looking statements throughout this Report, attention is directed to
Item 1. Business  Risk Factors and Item 7. Managements Discussion and
Analysis of Financial Condition and Results of Operations for a discussion of
some of the factors, risks and uncertainties that could materially affect the
outcome of future results contemplated by forward-looking statements.




PART I




Item 1. Business

Introduction

We are a leading multi-jurisdictional developer, owner and operator of
casinos and related hotel and entertainment facilities in local markets. We
own six properties in five markets located in Missouri, Iowa, Mississippi and
Nevada catering to customers primarily residing within a 100-mile radius of our
properties. Our properties enjoy leading positions in markets with significant
barriers to entry, and all of our properties are high-quality assets. We
continually evaluate the opportunity to increase our revenues, cash flow and
earnings through internal growth initiatives, including the expansion of our
existing properties, targeted marketing programs and the strategic acquisition
or development of properties in attractive local gaming markets.

Our gaming revenues are derived, and are expected to continue to be
derived, from a broad base of customers, and we do not depend upon high-stakes
players. We emphasize slot machine play at our properties and invest on an
ongoing basis in new slot equipment and technology to promote customer
satisfaction and loyalty. We are an industry leader in the implementation of
cashless slot technology and new-generation multi-coin nickel and penny
denomination slot machines. All of our properties also offer table games such
as blackjack, craps and roulette. In addition, Ameristar St. Charles,
Ameristar Kansas City and Cactus Petes offer poker, keno and sports book
wagering. We generally emphasize competitive minimum and maximum betting
limits based on each market. We extend credit to our Mississippi and Nevada
gaming customers only in limited circumstances and limited amounts

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on a
short-term basis and in accordance with the credit restrictions imposed by
gaming regulatory authorities. The Missouri and Iowa gaming statutes prohibit
the issuance of casino credit.

The following table presents selected statistical and other information
concerning our properties as of March 24, 2003.

|                                |  |                                                         |           |                                                                                                                                                                            |  |                                                                                                                                                                                                            |           |                                         |  |                                                                                                                                                                  |          |     |  |  |        |  |  |  |         | 
|------------------------------- |  | ------------------------------------------------------- | --------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------- | --------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- | --- |  |  | ------ |  |  |  | ------- | 
|                                |  | Ameristar                                               |           | Ameristar                                                                                                                                                                  |  | Ameristar                                                                                                                                                                                                  |           | Ameristar                               |  | The Jackpot                                                                                                                                                     
|                                |  | St. Charles                                             |           | Kansas City                                                                                                                                                                |  | Council Bluffs                                                                                                                                                                                             |           | Vicksburg                               |  | Properties (1)                                                                                                                                                  
|                                |  |                                                         |           |                                                                                                                                                                            |  |                                                                                                                                                                                                            |           |                                         |  |                                                                                                                                                                 
|Opening Date                    |  |                                                         | 1994      | (2)                                                                                                                                                                        |  |                                                                                                                                                                                                            | 1997      |                                         |  |                                                                                                                                                                  | 1996     |     |  |  | 1994   |  |  |  | 1956    | 
|Casino Square
Footage (approx.) |  |                                                         | 130,000   |                                                                                                                                                                            |  |                                                                                                                                                                                                            | 130,000   |                                         |  |                                                                                                                                                                  | 38,500   |     |  |  | 42,000 |  |  |  | 29,000  | 
|Slot Machines
(approx.)         |  |                                                         | 3,330     |                                                                                                                                                                            |  |                                                                                                                                                                                                            | 2,990     |                                         |  |                                                                                                                                                                  | 1,550    |     |  |  | 1,370  |  |  |  | 1,020   | 
|Table Games                     |  |                                                         | 95        |                                                                                                                                                                            |  |                                                                                                                                                                                                            | 95        |                                         |  |                                                                                                                                                                  | 42       |     |  |  | 34     |  |  |  | 37      | 
|Hotel Rooms                     |  |                                                         |          |                                                                                                                                                                            |  |                                                                                                                                                                                                            | 184       |                                         |  |                                                                                                                                                                  | 444      | (3) |  |  | 150    |  |  |  | 420     | 
|Restaurants/Bars                |  |                                                         | 7/6       |                                                                                                                                                                            |  |                                                                                                                                                                                                            | 9/9       | (4)                                     |  |                                                                                                                                                                  | 4/4      |     |  |  | 3/3    |  |  |  | 5/4     | 
|Restaurant/Bar
Seating Capacity |  |                                                         | 1,577/132 |                                                                                                                                                                            |  |                                                                                                                                                                                                            | 1,733/408 | (4)                                     |  |                                                                                                                                                                  | 1,059/61 |     |  |  | 789/32 |  |  |  | 534/126 | 
|Guest Parking
Spaces (approx.)  |  |                                                         | 4,000     |                                                                                                                                                                            |  |                                                                                                                                                                                                            | 7,150     |                                         |  |                                                                                                                                                                  | 3,000    |     |  |  | 1,700  |  |  |  | 1,130   | 
|Other Amenities                 |  | Gift Shop;
300-Seat VIP
Players' Club;
Amusement
Arcade |           | Kids Quest
Children's
Activity
Center(5);
1,384-Seat
Entertainment
Facility;
18-Screen
Movie
Theater(5);
Gift Shop;
Amusement Arcade;
Cigar Bar;
85-seat VIP
Players' Club |  | Kids Quest
Children's
Activity
Center(5);
3,000-Seat
Outdoor
Entertainment
Facility;
Meeting Space;
Indoor Swimming
Pool  & Spa;
Exercise
Facility;
Gift Shop;
Amusement
Arcade;
75-seat VIP
Players' Club |           | Gift Shop;
Swimming
Pool;
Meeting
Space |  | 356-Seat
Showroom;
Sports Book;
Meeting
Space;
RV Park;
Swimming Pool;
Gift Shop;
General Store;
Service Station;
Amusement
Arcade;
Styling Salon;
Tennis Courts



---

|(1) |  | Includes the operations of Cactus Petes Resort Casino and The Horseshu
Hotel & Casino.                                                           
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | We opened the new Ameristar St. Charles facility on August 6, 2002.                                                                              
|   
|   
|   
|   
|(3) |  | Includes 284 rooms operated by affiliates of Kinseth Hospitality
Corporation and located on land owned by us and leased to affiliates of
Kinseth.
|   
|   
|   
|   
|(4) |  | Includes a 52-seat food court
leased to and operated by third parties.                                                                           
|   
|   
|   
|   
|(5) |  | Leased to and operated by a third party.                                                                                                         

Ameristar St. Charles.Ameristar St. Charles is located immediately north
of the Interstate 70 bridge in the St. Louis metropolitan area, strategically
situated to attract customers from the St. Charles and greater St. Louis area,
as well as tourists from outside the region. The property is a master-planned
gaming and entertainment facility located on approximately 52 acres and
features an historic Missouri riverboat theme. Interstate 70 is a 10-lane,
east-west freeway offering quick and easy accessibility to, and direct
visibility of, the Ameristar St.

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Charles site. The property features an
elevated roadway and a 4,000-space, five-story parking structure located above
the existing flood plain, providing improved access to the facility and
allowing it to operate even when the Missouri River floods.

The original casino at Ameristar St. Charles opened in 1994. Prior to the
opening of the new facility, Ameristar St. Charles included approximately
45,000 square feet of gaming space, 1,900 slot machines and 30 table games. On
August 6, 2002, we opened a new casino and entertainment complex that includes
approximately 130,000 square feet of gaming space on two levels with
approximately 3,330 slot machines and 95 table games, including a 12-table
poker room. In addition, the new facility features a 74,000-square-foot porte
cochere, an historical streetscape reminiscent of St. Charles past, a
two-story fountain, seven diverse restaurants, a 300-seat VIP players club,
live entertainment, a retail gift shop and a video game arcade, all of which
significantly expanded the breadth of non-gaming amenities available to guests.
The facility offers the following dining choices: the 360-seat Bottleneck
Blues Bar, featuring Southern cuisine and live entertainment; the 200-seat 47
Port Street Grill steakhouse, featuring exhibition cooking with a 20-seat
private dining room; the 47-seat King Cat Club, a martini bar; the 250-seat
Amerisports Bar & Grill, which houses a 34-foot-long video wall and two
high-tech, giant video screens; the 475-seat state-of-the-art Landmark Buffet
with multiple serving stations; the 190-seat 24-hour Falcon Diner; and the
eclectic southern-style 102-seat Pearls Oyster Bar.

We invested approximately $210 million (excluding capitalized interest) in
this project in addition to the $140 million the former owner had invested
prior to suspending construction in 1997. We believe the new casino and
entertainment complex at St. Charles is the premier gaming facility in the St.
Louis area and is well-positioned to benefit from growth in this market.
Ameristar St. Charles market share (based on gross gaming revenues) increased
from 21.3% in July 2002, immediately prior to the opening of the new facility,
to 29.7% in February 2003, which was approximately three percentage points
ahead of its principal competitor. The new facility at Ameristar St. Charles was chosen as Best Casino by
Riverfront Timesin its 2002 Best of St. Louis issue. The property was also
named Most Improved Casino in the March 2003 issue of
Wheremagazine highlighting The Ultimate St. Louis.

Ameristar Kansas City.Ameristar Kansas City is a fully-integrated
gaming, dining, lodging and entertainment complex in a spacious, land-based
atmosphere. Located seven miles from downtown Kansas City, Missouri, Ameristar
Kansas City is specifically designed to attract customers from the greater
Kansas City area, as well as strong visitor and overnight markets. The
property is located on approximately 183 acres adjacent to the Interstate 435
bridge. Interstate 435 is a six-lane, north-south expressway offering quick
and easy access to, and direct visibility of, Ameristar Kansas City.

The casino, which opened in 1997, features an historic Missouri riverboat
theme and is the newest and largest gaming facility in the Kansas City market.
The property was awarded the Gold Award for Best Casino in 2002 by Ingrams
Best of Business Editionand voted Best Casino in the 2002 Kansas City
MagazinesBest of Kansas City readers poll. In addition, the Midwest
Gaming and Travelreaders poll voted Ameristar Kansas City

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Favorite Casino in
Missouri, Friendliest Dealers, Best Selection of Slots, Favorite Casino
Hotel, Most Comfortable Rooms and Most Comfortable Pavilion.

The casino and entertainment complex currently includes a 130,000-square
foot casino on two levels with approximately 2,990 slot and video poker
machines and 95 table games (including poker), a 184-room hotel and other
related facilities. Ameristar Kansas City currently has 7,150 parking spaces,
including a new 2,650-space parking garage that was completed in July 2002. We
believe the addition of the parking garage will improve our competitive
position in the Kansas City market since Ameristar Kansas City had been the
only property in the market without covered parking.

Ameristar Kansas City provides a wide variety of dining and entertainment
options, boasting nine food outlets ranging from upscale restaurants to express
food outlets and nine bars/lounges. The 154-seat Bugattis Little Italy Café, which offers
authentic and creative Italian cuisine, was recognized as a Dont Miss Dining
Venue in the Zagat Surveyand was also voted Best Italian restaurant in the
riverboat category by Casino Player Magazinereaders in July 2001. The Star
Pavilion seats 1,384 guests and plays host to a variety of headline
entertainers and sporting events. Live entertainment is also offered at Depot
No. 9, a saloon and stage that hosts local and regional bands and is connected
to an historical Pullman railroad car. An 85-seat VIP players club, a
state-of-the-art 18-screen movie theater complex, gift shop, video
game arcade and
Kids Quest activity center are also located at Ameristar Kansas City.

To enhance the competitive position of Ameristar Kansas City and in line
with our business strategies described below,
we began a major renovation and enhancement project at Ameristar Kansas
City in 2002. As part of Phase I of this project, we opened three new dining
and entertainment venues in early January 2003: the 201-seat Great Plains
Cattle Co. steakhouse; the 207-seat Falcon Diner, a 24-hour casual dining
restaurant; and the 123-seat Depot No. 9 entertainment venue. Since opening,
these dining venues have been very popular with our guests. We also
constructed an open-seating food court, where we have leased space to three
nationally known brands: Burger King, which opened in December 2002; Sbarro
Pizza, which opened in February 2003; and Cold Stone Creamery, which is
expected to open in the second quarter of 2003.

Phase I of the project also includes
a comprehensive renovation of the Kansas City casino, which has been substantially completed.
We have opened up large sections of a wall dividing
the casino floor, added escalators in the central portions of the casino floor
to improve access to the second level, removed a large portion of the wall
that separated the casino from the streetscape to improve visibility into the
casino and replaced the carpet and other finishes throughout the casino.
As part of Phase I of the project, we also plan to relocate and
renovate the poker room and high-limit area. In addition, we will add slot machines to the half of the mezzanine level that was
previously not being used, which will bring the total slot count up to
approximately 3,150 machines. We expect these changes will substantially improve the
layout and flow and enhance the overall excitement of the casino.

We expect to begin construction of Phase II of the renovation
and enhancement project at Ameristar Kansas City in the second quarter of 2003.
We plan to convert the Hofbrauhaus Brewery into a 330-seat Amerisports Brew
Pub featuring state-of-the-art video and audio technology. Amerisports will
also feature two large video walls, another large

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projection television and a
variety of menu items with exhibition cooking. The Brew Pub will retain the
existing exhibition brewery where customers can observe the production of
Ameristars private label beers. In addition, we plan to remodel Pearls Oyster Bar, construct a cabaret in the casino area and upgrade certain common
areas throughout the Ameristar Kansas City property. We will take the necessary steps to isolate the construction areas in
order to minimize disruption associated with Phase II of the project. We expect to complete
Phase II of the project in August 2003.

Ameristar Council Bluffs.Ameristar Council Bluffs is a riverboat casino
and houses land-based hotel and other facilities located in Council Bluffs,
Iowa on the bank of the Missouri River across from Omaha, Nebraska. The
property is adjacent to the Nebraska Avenue exit on Interstate 29 immediately
north of the junction of Interstate 29 and Interstate 80.

Ameristar Council Bluffs features the largest riverboat in Iowa, which
includes approximately 38,500 square feet of gaming space,
approximately 1,550
slot machines and 42 table games. The Council Bluffs property also offers four
restaurants and 444 hotel rooms. The 160-room hotel owned and operated by
Ameristar Council Bluffs boasts the prestigious Four Diamond designation from
the AAA. The property has undergone substantial expansion and renovation since
it opened in 1996. In late 1999, we added a third level to the riverboat
casino, and in early 2000, we added a 1,000-space parking garage. In the first
quarter of 2001, we completed a renovation and enhancement project at the
property that included enhancements to the land-based amenities and the total
renovation of the two initial casino floors, including the installation of
multimedia, high-definition plasma screens throughout the casino, the addition
of new-generation slot machines and the installation of a cashless slot system
designed to improve guest satisfaction.

The Council Bluffs casino features a three-level, richly appointed
cruising riverboat measuring 272 feet long by 98 feet wide (approximately
52,000 square feet). The high ceilings and width of the casino give it the
spacious feel of a land-based facility. We are required to make a two-hour
cruise a minimum of 100 days per year during the excursion season, which is
defined as April 1 through October 31. Guests may enter the riverboat from
shore via enclosed ramps from the Main Street Pavilion and the parking
garage.

The land-based facilities include the Ameristar Hotel and Main Street
Pavilion, where guests will find the 75-seat VIP players club, the 188-seat Waterfront Grill steakhouse, the 304-seat
Veranda Buffet, the recently renovated 395-seat Amerisports Bar and Cabaret and
the 172-seat Prairie Mill Cafe & Bakery, a 24-hour specialty restaurant. The
Waterfront Grill steakhouse was named one of the Omaha areas top-10
restaurants by the Omaha World-Heraldin 2002.The Council Bluffs property
also features a childrens activity center, fitness facility, indoor pool and
convention facilities, as well as the Star Arena, a 3,000-seat outdoor concert
venue.

Ameristar Vicksburg.Ameristar Vicksburg is located one-quarter mile
north of Interstate 20 in Vicksburg, Mississippi and caters primarily to guests from the
Vicksburg and Jackson, Mississippi and Monroe, Louisiana areas. Opened in
1994, Ameristar Vicksburg includes a riverboat-themed dockside casino, a
150-room hotel and other land-based facilities. The casino features
approximately 42,000 square feet of gaming space, approximately 1,370 slot
machines and 34 table games. The propertys restaurants provide casual dining
and regionally influenced menu selections at affordable prices. In July 2001,
we completed a capital improvement project at the property, including
renovating and expanding the casino; installing new generation slot machines;
adding a new VIP players lounge; replacing the showroom with the exciting
Bottleneck Blues Bar, an authentic club featuring live entertainment and
gaming; and adding

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new high-definition plasma screens for special event
viewing. In addition, approximately 600 parking spaces were added during 1999,
bringing the total number of guest parking spaces to approximately 1,700.

Ameristar Vicksburg is significantly wider than typical riverboat casinos,
giving the casino and restaurants the spacious feel of a land-based facility.
The hotel at Ameristar Vicksburg has a Three Diamond rating from the AAA. We
believe the overall range and quality of the facilities, food service and
entertainment at Ameristar Vicksburg are superior to those available at its
existing competitors.

The Jackpot Properties.Our Jackpot properties, Cactus Petes Resort
Casino and The Horseshu Hotel & Casino, are both located in Jackpot, Nevada, at
the Idaho border. The Jackpot properties have been operating since 1956 and
serve customers primarily from Idaho, Oregon, Washington, Montana, northern
California and the southwestern Canadian provinces.

Together, the Jackpot properties feature approximately 29,000 square feet
of gaming space, approximately 1,020 slot machines, 37 table games (including
poker), 420 hotel rooms (including 30 deluxe hot-tub suites), an Olympic-sized
pool, a heated spa, a styling salon, lighted tennis courts, a recreational
vehicle park, access to a nearby 18-hole golf course, a general store and a
service station. The food and beverage operations at the Jackpot properties
include a buffet, a fine dining restaurant, two 24-hour casual dining
restaurants, a coffee shop, a snack bar, a showroom that features nationally
known entertainment and cocktail lounges with entertainment. Cactus Petes and
The Horseshu have achieved Four Diamond and Three Diamond ratings,
respectively, from the AAA, and Cactus Petes was named Best Hotel/Resort in
rural Nevada in 2000 and 2001 by Nevada Magazine.

Our Business Strategies

Our key business
strategy is to develop high-quality gaming properties
that offer a diverse range of lodging, dining and entertainment options to
create a complete entertainment experience for our guests. The quality of our
properties derives from a variety of factors, including their design, size,
location, gaming technology and amenities. We also emphasize courteous and
efficient service that meets or exceeds the expectations of our guests. We
believe that the continued pursuit of these strategies will generate attractive
returns on our invested capital.

Some of the key components of our operating strategies to be implemented
in 2003 include the following:

Leading Slot Technology

We are an industry leader with respect to the implementation of cashless
slot technology at our properties. As of March 11, 2003, approximately 47% of
our slot machines provided cashless payouts utilizing ticket-in/ticket-out
technology. We were the first operator to introduce this technology in
Missouri and Iowa. As of March 11, 2003, the slot machines at the St. Charles,
Kansas City, Council Bluffs, Vicksburg and Jackpot properties were 88%, 34%,
19%, 32% and 18% ticket capable, respectively. Based on comments made by a
gaming equipment manufacturer in the February 2003 issue of Casino Journal, we
believe that only

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approximately 10% of the slot machines in North America have
ticketing capabilities. Our goal is to have approximately two-thirds of our
slot machines operating with ticketing capabilities by the end of 2003, subject
to the receipt of regulatory approvals by one of our equipment vendors. We are
continuing to upgrade our slot machines and slot systems to facilitate the
timely rollout of cashless technology in order to maintain and enhance our
competitive position.

We are also an industry leader with respect to the use of new generation
multi-coin nickel and penny denomination slot machines. The
implementation of these machines has generated a strong return on investment
and has proven to be an extremely successful strategy. In addition, we are
currently implementing an aggressive strategy to increase our higher
denomination play. We continuously evaluate the appropriate mix of our slot
product and invest in new slot products as appropriate to promote customer
satisfaction and loyalty and generate maximum profitability.

Profitable Use of Promotional Allowances

We have consistently pursued a strategy of marketing and promoting our
properties, including the targeted use of cash coupon offerings, in order to
attract and retain valued customers. We believe our promotional allowances as
a percentage of gross revenues on a consolidated basis are consistent with or
lower than those of our principal competitors.1 We adjust the amount of our
promotional offerings from time to time based on competitive conditions, such
as during periods of construction disruption similar to that currently
affecting Ameristar Kansas City and in order to promote our new and expanded
facilities and develop long-term customer loyalty. This strategy proved
successful during and following completion of the 2001 expansion projects at
Vicksburg and Council Bluffs, as evidenced by the substantial improvement in
operating performance at those properties from 2001 to 2002.

Our strategy has also begun to produce profitable growth at Ameristar St.
Charles as reflected by its assumption of the St. Louis market share lead
following the opening of the new facility in August 2002 and steadily improving
operating results since the opening of the property. In February 2003,
Ameristar St. Charles led this five-property market with a 29.7% market share,
approximately three percentage points ahead of its principal competitor. This
competitor has an advantage over us since we do not currently have a hotel at
the property and the competitor has 300 hotel rooms.

We believe similar positive results will be achieved at the Kansas City
property following the completion of the renovation of that property later in
2003.

Providing the Total Entertainment Experience

In addition to providing the latest gaming technology for an exciting
casino experience, our properties offer a wide variety of quality restaurants
and entertainment options as an integral part of our casino marketing strategy.
Some examples of our non-gaming amenities that have



---

|1 |  | Our competitors operate properties in various markets other than those in
which we operate, some of which have different competitive conditions that
affect the level of promotional spending. In addition, there may be
differences, even under generally accepted accounting principles, in
the items that are included in promotional allowances by different companies.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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proven successful are our
high-tech Amerisports Bars (Council Bluffs and St. Charles), our signature
steakhouses (company-wide) and our unique Bottleneck Blues Bars (Vicksburg and
St. Charles). In addition, we regularly present nationally known entertainers
to perform at our properties, including, for example, Randy Travis, Michael
Bolton, Paul Anka, Dionne Warwick, Julio Iglesias, Bob Newhart and Pat Benatar.

Future Expansion

We seek to expand our operations through a variety of means, including
entering new North American markets created by the legalization of casino
gaming, developing new casinos or buying existing casinos in established North
American casino gaming markets and expanding through continued growth at our
existing properties. Although our preference is to own and operate each of our
gaming properties, we also consider expansion opportunities involving
management contracts or joint ventures.

We continually evaluate the operating performance of each of our existing
properties and the feasibility of enhancing their performance through capital
expenditure programs. In doing so, we assess the anticipated relative costs
and benefits of the projects under consideration, the availability of
cash flows
and debt financing to fund capital expenditures and competitive and other
relevant factors. Currently, the only substantial expansion project under way
is the renovation and enhancement project at Ameristar Kansas City that began
in 2002. See Ameristar Kansas City above for further discussion.

Markets and Competition



| |  | St. Charles
| |  | -----------

Market.For the twelve months ended December 31, 2002, the St. Louis
gaming market reported gross gaming revenues of $804.9 million, an increase of
5.0% over $766.3 million for the twelve months ended December 31, 2001. Substantially all the growth in the St. Louis gaming market in 2002 is
attributable to the opening of the new facility at Ameristar St. Charles in
August 2002. The
St. Louis market, which overlaps two jurisdictions, Missouri and Illinois,
consists of five casinos, including Ameristar St. Charles. There are
approximately 1.8 million adults living within 50 miles and 3.7 million adults
living within 100 miles of St. Louis, making it the third largest gaming market
in the United States in terms of local population, and the St. Louis market is
insulated from other gaming markets.

Competition.Ameristar St. Charles competes primarily with four other
gaming operations located in metropolitan St. Louis. Two of these competitors
are located in Illinois. Unlike Missouri, Illinois does not impose a $500 per
person loss limit, does not require a mandatory identification card to enter a
casino and allows credit play. However, Illinois casinos are limited in the number of gaming positions allowed
and are subject to a higher rate of gaming taxes than Missouri
casinos. Our principal competition is a facility located
in Maryland Heights, Missouri that opened in April 1997 and is located five
miles from Ameristar St. Charles. Ameristar St. Charles experienced a decline
in revenues following the opening of the Maryland Heights facility. Prior to
Harrahs acquisition of Players International, Inc. on May 22, 2000, Harrahs
and Players operated separate but adjacent facilities at Maryland Heights.
Following Harrahs acquisition of Players, Harrahs consolidated both
facilities into one operation. In addition, Harrahs has announced its
intention to add an additional hotel and parking garage at Maryland Heights,
with a targeted completion date of mid- to late-2004. Gaming has also been
approved by local voters in other cities and counties along the Mississippi and
Missouri Rivers near St. Louis. In addition, the

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Missouri Gaming Commission is
currently accepting applications for an additional gaming license in the St.
Louis area, and the City of St. Louis and members of the Missouri Gaming Commission have expressed a desire
for the replacement of the President Casino in downtown St. Louis with an
improved facility. If an additional gaming license is granted or the President
Casino is replaced or upgraded, Ameristar St. Charles would face additional
competition.



| |  | Kansas City
| |  | -----------

Market.The Kansas City gaming market reported $612.1 million of gross
gaming revenues for the twelve months ended December 31, 2002, an increase of
5.2% over $582.0 million for the prior year. The Kansas City market consists
of four casinos located in the Kansas City metropolitan area, including
Ameristar Kansas City. A fifth casino is located approximately 50 miles north
in St. Joseph, Missouri (the Kansas City gaming market data included herein
does not give effect to this casino). The Kansas City market has over 1.4
million adults residing within a 50-mile radius and over 2.7 million adults
within a 100-mile radius. This market is insulated from other gaming markets,
with no significant competing markets within 100 miles. However, see Risk
Factors for information concerning current proposals to legalize casino gaming
in Kansas City, Kansas, which is in close proximity to Ameristar Kansas City.

Competition.Ameristar Kansas City competes primarily with three other
gaming operations located in and around Kansas City, Missouri. Gaming has been
approved by local voters in jurisdictions near Kansas City, including St.
Joseph, Missouri, which currently has one riverboat gaming operation.

In June 2001, Harrahs North Kansas City, located approximately five miles
from Ameristar Kansas City and currently the closest operating casino to
Ameristar Kansas City, completed an enhancement of its facilities and the
consolidation of its gaming space from two vessels onto one expanded vessel. In addition,
Argosy Casino is proceeding with its planned renovation project to replace its
existing riverboat with a single-level 58,000 square foot barge-based facility,
which will increase the number of gaming positions by 50%, and to renovate and
enhance its other amenities. The renovation is expected to be completed by the
end of 2003.



| |  | Council Bluffs
| |  | --------------

Market.Council Bluffs forms part of the greater Omaha, Nebraska/Council
Bluffs, Iowa metropolitan area, which has a population of approximately
720,000. Approximately 1.0 million people live within a 50-mile radius and
approximately 1.7 million people live within a 100-mile radius of Council
Bluffs. Based on available data, Council Bluffs is currently the largest
gaming market in Iowa. Gross gaming revenues in the Council Bluffs gaming
market for the twelve months ended December 31, 2002 were $383.8 million, an
increase of 7.0% over $358.5 million for the twelve months ended December 31,
2001.

Competition.Three gaming licenses have been issued for the Council
Bluffs gaming market to Iowa West Racing Association. We operate our casino at
Ameristar Council Bluffs pursuant to an operating agreement with Iowa West
Racing Association. The other casinos operating

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under these licenses are
Harrahs Council Bluffs, a riverboat casino, and Bluffs Run Casino, a dog track
and slots-only, land-based casino, both of which compete with Ameristar Council
Bluffs. In July 2001, Harrahs acquired both of these properties through its
acquisition of Harveys Casino Resorts. Since purchasing Harveys, Harrahs has
re-carpeted its casino floor, remodeled its VIP lounge and renovated
its buffet in 2002. Harrahs has announced its plans for an $8.5 million upgrade
to renovate its hotel and public areas, with completion slated for the third
quarter of 2003. In 2002, Bluffs Run Casino underwent renovations, including
new carpeting within the casino, the reconfiguration of parking dedicated for
VIP players and the construction of a VIP lounge.

In addition, the State of Nebraska is currently considering various
proposals to legalize gaming which if passed, could result in
increased
competition to Ameristar Council Bluffs. See Risk Factors below for
further discussion on the Nebraska proposals.



| |  | Vicksburg
| |  | ---------

Market.The primary market for Ameristar Vicksburg is residents of the
Jackson and Vicksburg, Mississippi and Monroe, Louisiana areas; tourists coming
to Vicksburg primarily to visit the Vicksburg National Military Park; and other
traffic traveling on Interstate 20, a major east-west thoroughfare that
connects Atlanta and Dallas. The Vicksburg National Military Park, located
within three miles of Ameristar Vicksburg, draws over 1 million registered
visitors a year. Vicksburg, with a population of approximately 30,000, is
located 45 miles west of Jackson, the capital of Mississippi. The Jackson and
Vicksburg metropolitan areas have a total population of approximately 490,000
persons. Approximately 1.5 million people lived within a 100-mile radius of
Vicksburg during 2001. Gross gaming revenues in the Vicksburg gaming market
for the twelve-month reporting period ended December 31, 2002 were
approximately $243.8 million, an increase of 4.8% over $232.7 million for the
twelve months ended December 31, 2001.

Competition.Ameristar Vicksburg is subject to competition from three
local competitors and from casinos in Shreveport and Bossier City, Louisiana.
Ameristar Vicksburg is also subject to competition from two casinos
owned by a Native American tribe in Philadelphia, Mississippi, located about 70 miles east of Jackson and 115 miles
east of Vicksburg. The Native American
tribe opened its second gaming and hotel facility near its existing property in
the third quarter of 2002, which in effect doubled the available gaming space
and hotel room count. Several potential gaming sites still exist in Warren
County and Vicksburg and from time to time potential competitors propose the
development of additional casinos in or near Vicksburg. Two developers recently announced their desire
to develop new casinos in Vicksburg, but neither has yet taken any affirmative
steps to proceed with its development. In addition, proposals have been made from time to time
to develop Native American casinos in Louisiana and Mississippi, some of which
could be competitive with the Vicksburg market if completed.



| |  | Jackpot
| |  | -------

Market.We believe that approximately 55% of the customer base of the
Jackpot properties consists of residents of Idaho who generally frequent the
properties on an overnight or turnaround basis. The primary markets are Twin
Falls (located approximately 45 miles north of Jackpot), Boise and Eastern
Idaho (both of which are approximately 150 miles from Jackpot). The balance of
the Jackpot properties customers come primarily from Oregon, Washington,
Montana, northern California and the southwestern Canadian provinces.

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Although
many of the customers from beyond southern Idaho are tourists traveling to
other destinations, a significant portion of these customers come to Jackpot as
a final destination.

Competition.We have developed a dominant share of the market capacity in
Jackpot. The Jackpot properties compete with four other hotels and motels
(three of which also have casinos). According to the Nevada State Gaming
Control Board and other sources, as of December 31, 2002, the Jackpot
properties accounted for approximately 56% of the lodging rooms, 63% of the
slot machines and 67% of the table games in Jackpot. We believe Cactus Petes
is the premier property in Jackpot, offering a more attractive environment and
a broader and higher-quality range of gaming and leisure activities than those
of its competitors. It has received designation by the AAA as a Four Diamond
property since 1992. We are not aware of any other expansion plans by existing
or potential competitors in Jackpot in the near future; however, casinos with
video lottery terminals (VLT) similar to slot machines are operated on Native
American land in Idaho, including one near Pocatello with approximately 200 VLT
machines that has been operated by the Shoshone-Bannock Tribes. In November
2002, the electorate passed Proposition 1, which legalized specific ticket-pay
gaming machines on Indian reservations in the state, along with a limited
growth plan allowing an increase of 5% in machine count per year, not to exceed
25% over the next 10 years, with a subsequent renegotiation of compacts
thereafter. A legal challenge to Proposition 1 has been filed and is currently
pending. Litigation is also pending concerning the scope of gaming permitted under
the compact between the State of Idaho and the Shoshone-Bannock
tribes. In addition, casino gaming on Native American lands in both western
Washington and northeast Oregon has been in operation for several years and
casinos also operate in Alberta, Canada.

Employees and Labor Relations

As of March 18, 2003, we employed approximately 7,000 employees. None of
our employees is employed pursuant to collective bargaining or other union
arrangements. We believe our employee relations are good.

Risk Factors



| |  | The gaming industry is very competitive and increased competition could have a
material adverse effect on our future operations.
| |  | --------------------------------------------------------------------------------------------------------------------------------

The gaming industry
is very competitive and we face dynamic competitive pressures
in each of our markets. Several of our competitors are larger than we are and
have greater financial and other resources than we do. We may be required to
take actions in response to competitors that may increase our marketing costs
and other operating expenses.

Our operating properties are located in jurisdictions that restrict gaming
to certain areas or are adjacent to states that prohibit or restrict gaming
operations. These restrictions and prohibitions provide substantial benefits to
our business and our ability to attract and retain customers. The legalization
or expanded legalization or authorization of gaming within or near a market
area of one of our properties could have a material adverse effect on our
business, financial condition and results of operations. Economic difficulties
faced by state governments could lead to intensified political pressure for the
expansion of legalized gaming.

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From time to time, legislation and ballot measures have been
unsuccessfully proposed in Kansas and Nebraska for the legalization of gaming,
and the legislatures of these states are currently considering various
proposals to legalize gaming that may be adopted. These proposals would
authorize gaming in or near, among other places, Omaha, Nebraska and Kansas
City, Kansas, in close proximity to our existing facilities in Council Bluffs,
Iowa and Kansas City, Missouri, respectively. The legalization of gaming in
these locations and the additional competition resulting from the subsequent
development of competing gaming properties could have a material adverse affect
on us. Even if the current proposals are unsuccessful, we expect similar
proposals will be made in the future and may be adopted. In addition, the
Missouri Gaming Commission is currently accepting applications for an
additional gaming license in the St. Louis area. Members of the Missouri
Gaming Commission have also stated that they would like to see a currently
operating casino in downtown St. Louis improved or replaced. If an additional
gaming license is granted or the competing facility in downtown St. Louis is
improved, Ameristar St. Charles would face additional competition. In
addition, two
developers recently announced their desire to develop new casinos in Vicksburg,
but neither has yet taken any affirmative steps to proceed with its
development.

In addition, the entry into our current markets of additional competitors
could have a material adverse effect on our business, financial condition and
results of operations, particularly if a competitor were to obtain a license to
operate a gaming facility in a superior location. Native American gaming
facilities in some instances operate under regulatory and financial requirements that are
less stringent than those imposed on state-licensed casinos, which could
provide them with a competitive advantage and lead to increased competition in
our markets. Furthermore, increases in the popularity of, and competition from,
Internet and other account wagering gaming services, which allow customers to
wager on a wide variety of sporting events and play Las Vegas-style casino
games from home, could have an adverse effect on our business, financial
condition, operating results and prospects.



| |  | If the jurisdictions in which we operate increase gaming taxes and fees, our
results could be adversely affected.
| |  | -----------------------------------------------------------------------------------------------------------------

State and local authorities raise a significant amount of revenue through
taxes and fees on gaming activities. From time to time, legislators and
government officials have proposed changes in tax laws, or in the
administration of such laws, affecting the gaming industry. Periods of
economic downturn and budget deficits such as currently exist in most states
may intensify the efforts of state and local governments to raise revenues
through increases in gaming taxes. In 2002, large gaming tax increases were
enacted in Illinois and Indiana.

The Governor of Missouri recently proposed a significant increase in
gaming taxes and admission fees and the elimination of the existing $500 loss
limit per two-hour cruise, although no bill has been
introduced to date in the 2003 legislature. A similar tax proposal was
defeated in the Missouri legislature in 2002. The Iowa Supreme Court ruled in
2002 that a differential in the gaming tax rate between slot operations at
racetracks (currently 32%, increasing over time to 36%) and riverboat casinos
(20%) violates the equal protection clauses of the Iowa and United States
constitutions, and a lower state court subsequently ruled that the racetracks
were due a refund of taxes paid in excess of a 20% rate for prior
periods. The Iowa Supreme Courts
ruling is currently on appeal to the United States Supreme Court, which

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is
expected to issue its decision by July 2003. If the Iowa Supreme Court decision
is not reversed or a settlement is not reached with the Iowa
racetracks, it is likely that the Iowa legislature will seek to increase
gaming taxes on riverboat casinos in order to overcome the budgetary
constraints resulting from this court decision.

If the jurisdictions in which we operate were to increase gaming taxes or
fees, depending on the magnitude of the increase and any offsetting factors
(such as the elimination of the loss limit in Missouri), our financial
condition and results of operations could be materially adversely affected.



| |  | Our business is subject to restrictions and limitations imposed by gaming
regulatory authorities that could adversely affect us.
| |  | --------------------------------------------------------------------------------------------------------------------------------

The ownership and operation of casino gaming facilities are subject to
extensive state and local regulation. The States of Missouri, Iowa, Mississippi
and Nevada and the applicable local authorities require various licenses,
findings of suitability, registrations, permits and approvals to be held by us
and our subsidiaries. The Missouri Gaming Commission, the Iowa Racing and
Gaming Commission, the Mississippi Gaming Commission and the Nevada Gaming
Commission may, among other things, limit, condition, suspend, revoke or not
renew a license or approval to own the stock of any of our Missouri, Iowa,
Mississippi or Nevada subsidiaries, respectively, for any cause deemed
reasonable by such licensing authority. Our licenses in Missouri need to be
renewed every two years, our gaming license in Iowa must be renewed or
continued every year, and our gaming license in Mississippi must be renewed
every three years. If we violate gaming laws or regulations, substantial fines
could be levied against us, our subsidiaries and the persons involved, and we
could be forced to forfeit portions of our assets. The suspension, revocation
or non-renewal of any of our licenses or the levy on us of substantial fines or
forfeiture of assets could have a material adverse effect on our business,
financial condition and results of operations.

To date, we have obtained all governmental licenses, findings of
suitability, registrations, permits and approvals necessary for the operation
of our currently operating gaming activities. However, gaming licenses and
related approvals are deemed to be privileges under Missouri, Iowa, Mississippi
and Nevada law. We cannot assure that our existing licenses, permits and
approvals will be maintained or extended. We also cannot assure that any new
licenses, permits and approvals that may be required in the future will be
granted to us.



| |  | Leverage may impair our financial condition and restrict our operations and we
may incur significant additional debt.
| |  | ---------------------------------------------------------------------------------------------------------------------

We have significant leverage and, in addition to our operating expenses,
we have substantial fixed debt service obligations. The degree to which we are
leveraged could have important adverse consequences to our business, including:



| |  |  | Increasing our vulnerability to general adverse economic and industry
conditions;                                                                               
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Limiting our ability to obtain additional financing to fund future
working capital, capital expenditures, acquisitions and other general
corporate requirements;

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| |  |  | Requiring a substantial portion of
our cash flows from operations for
the payment of interest on our debt and reducing our ability to use our
cash flows to fund working capital, capital expenditures, acquisitions
and general corporate requirements;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Limiting our flexibility in planning for, or reacting to, changes in
our business and the industry in which we operate; and                                                                                                                             
|
| |  |  | Placing us at a competitive disadvantage to less leveraged
competitors.                                                                                                                                                                                 

The terms of our senior credit facilities and the indenture governing our
senior subordinated notes contain covenants that may restrict our ability to,
among other things, borrow money, pay dividends and effect a consolidation,
merger or disposal of substantially all of our assets. Although the covenants
in our senior credit facilities and the indenture are subject to various
exceptions that are intended to allow us to operate without undue restraint in
certain anticipated circumstances, we cannot assure that these covenants will
not adversely affect our ability to finance future operations or capital needs
or to engage in other activities that may be in our best interest. In addition,
our long-term debt requires us to maintain specified financial ratios and
satisfy certain financial condition tests, which may require that we take
action to reduce our debt or to act in a manner contrary to our business
objectives. A breach of any of these covenants would result in a default under
our senior credit facilities and the indenture. If an event of default under
our senior credit facilities occurs, the lenders could elect to declare all
amounts outstanding thereunder, together with accrued interest, to be
immediately due and payable. In addition, our senior credit facilities are
secured by first priority security interests on substantially all of our real
and personal property, including the capital stock of our subsidiaries. If we
are unable to pay all amounts declared due and payable in the event of a
default, the lenders could foreclose on these assets.



| |  | Worsening economic conditions or geopolitical circumstances may adversely
affect our business.
| |  | ----------------------------------------------------------------------------------------------

Our business may be adversely affected by economic downturns and
instability, as we are dependent on discretionary spending by our customers.
Any worsening of current economic conditions could cause fewer people to spend
money at our properties and could adversely affect our revenues. Other
geopolitical events, such as the threat of terrorism, may deter customers from
visiting our properties.



| |  | Craig H. Neilsen owns a majority of our common stock and controls our affairs.
| |  | ------------------------------------------------------------------------------

Mr. Neilsen is our President, Chief Executive Officer and Chairman of the
Board and owns approximately 59% of our outstanding Common Stock. Accordingly,
Mr. Neilsen has the ability to control our operations and affairs, including
the election of the entire Board of Directors and, except as otherwise provided
by law, other matters submitted to a vote of the stockholders, including a
merger, consolidation or sale of assets. In addition, Mr. Neilsens
substantial ownership affects the liquidity in the market for our Common Stock.



| |  | A change in control could result in the acceleration of our debt obligations.
| |  | -----------------------------------------------------------------------------

Certain changes in control could result in the acceleration of our senior
credit facilities and our senior subordinated notes. This acceleration could be
triggered in the event Mr. Neilsen

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sells a significant portion of his stock or
upon his death if his estate, heirs and devisees must sell a substantial number
of shares of our Common Stock to obtain funds to pay estate tax liabilities. We
cannot assure that we would be able to repay any indebtedness that is
accelerated as a result of a change in control, and this would likely
materially adversely affect our financial condition.



| |  | Our business may be materially impacted by an act of terrorism or by
additional security requirements that may be imposed on us.
| |  | --------------------------------------------------------------------------------------------------------------------------------

The U.S. Department of Homeland Security has stated that places where
large numbers of people congregate, including hotels, are subject to a
heightened risk of terrorism. An act of terrorism affecting one of our
properties, whether or not covered by insurance, or otherwise affecting the
travel and tourism industry in the United States, may have a material adverse
effect on our business. Additionally, our business may become subject to
increased security measures designed to prevent terrorist acts. Recently, the
U.S. Coast Guard promulgated proposed regulations under the Maritime Transportation
Security Act of 2002, which would apply to all facilities and vessels on or near
navigable waterways. These regulations as currently proposed may, among other
measures, require patrons of some or all of our casinos to undergo security
screening and physical search and to produce photo identification. If these or
similar regulations become effective and applicable to our facilities,
compliance with the increased security measures would result in increased
operating costs and may reduce customer visitation, which could have a
material adverse effect on our business, financial condition and
results of operations.



| |  | Many factors, some of which are beyond our control, could adversely affect our
ability to successfully complete our construction and development projects as
planned.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

General Construction Risks  Delays and Cost Overruns.Construction and
expansion projects for our properties entail significant risks. These risks
include: (1) shortages of materials (including slot machines or other gaming
equipment); (2) shortages of skilled labor or work stoppages; (3) unforeseen
construction scheduling, engineering, environmental or geological problems; (4)
weather interference, floods, fires or other casualty losses; (5) unanticipated
cost increases; and (6) construction period disruption to existing operations.

Our anticipated costs and construction periods for construction projects
are based upon budgets, conceptual design documents and construction schedule
estimates prepared by us in consultation with our architects, consultants and
contractors. The cost of any construction project undertaken by us may vary
significantly from initial expectations, and we may have a limited amount of
capital resources to fund cost overruns on any project. If we cannot finance
cost overruns on a timely basis, the completion of one or more projects may be
delayed until adequate cash flows from operations or other financing is
available. The completion date of any of our construction projects could also
differ significantly from initial expectations for construction-related or
other reasons. We cannot assure that any project will be completed on time, if
at all, or within established budgets. Significant delays or cost overruns on
our construction projects could have a material adverse effect on our business,
financial condition and results of operations.

We employ fast-track design and construction methods in some of our
construction and development projects. This involves the design of future
stages of construction while earlier

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stages of construction are underway.
Although we believe that the use of fast-track design and construction methods
can reduce the overall construction time, these methods may not always result
in such reductions, may involve additional construction costs than otherwise
would be incurred and may increase the risk of disputes with contractors, all
of which could have a material adverse effect on our business, financial
condition and results of operations.

Construction Dependent upon Available Financing and Cash Flows from
Operations.The availability of funds under our senior credit facilities at
any time will be dependent upon, among other factors, the amount of our
consolidated earnings before interest, taxes, depreciation and
amortization expense (EBITDA) during the preceding
four full fiscal quarters. Our future operating performance will be subject to
financial, economic, business, competitive, regulatory and other factors, many
of which are beyond our control. Accordingly, we cannot assure that our future
consolidated EBITDA and the resulting availability of operating cash
flows or
borrowing capacity will be sufficient to allow us to undertake or complete
current or future construction projects.

As a result of operating risks, including those described in this section,
and other risks associated with a new venture, we cannot assure that, once
completed, any development project will increase our operating profits or
operating cash flows.



| |  | If our key personnel leaves us, our business will be significantly adversely
affected.
| |  | --------------------------------------------------------------------------------------

We depend on the continued performance of Craig H. Neilsen, our President,
Chief Executive Officer and Chairman, and his management team. Thomas M.
Steinbauer, Ameristars Senior Vice President of Finance, has announced his
intention to leave us, and we are currently seeking a replacement for Mr.
Steinbauer. If we lose the services of Mr. Neilsen, any of our other executive
officers or our senior property management personnel and cannot replace such
persons in a timely manner, it could have a material adverse effect on our
business.



| |  | The market for qualified property and corporate management personnel is
subject to intense competition.
| |  | -------------------------------------------------------------------------------------------------------

We have experienced and expect to continue to experience strong
competition in hiring and retaining qualified property and corporate management
personnel. Recruiting and retaining qualified management personnel is
particularly difficult at Ameristar Vicksburg and the Jackpot properties due to
local market conditions. If we are unable to successfully recruit and retain
qualified management personnel at our properties or at our corporate level, our
results of operations could be materially adversely affected.



| |  | Adverse weather conditions in the areas in which we operate could have an
adverse effect on our results of operations and financial condition.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------

Adverse weather conditions, particularly flooding, heavy snowfall and
other extreme conditions, can deter our customers from traveling or make it
difficult for them to frequent our properties. If any of our properties were to
experience prolonged adverse weather conditions, or if our Midwestern
properties were to simultaneously experience adverse weather conditions, our
results of operations and financial condition would be adversely affected.

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| |  | Any loss from service of our riverboat and dockside facilities for any reason
could materially adversely affect us.
| |  | -------------------------------------------------------------------------------------------------------------------

Our riverboat and dockside facilities in Missouri, Iowa and Mississippi
could be lost from service due to casualty, mechanical failure, extended or
extraordinary maintenance, floods or other severe weather conditions. Cruises
of the Council Bluffs casino vessel are subject to risks generally incident to
the movement of vessels on inland waterways, including risks of casualty due to
river turbulence and severe weather conditions. In addition, U.S. Coast Guard
regulations set limits on the operation of vessels and require that vessels be
operated by a minimum complement of licensed personnel.

The U.S. Coast Guard also requires all United States flagged-passenger
vessels operating exclusively in fresh water to conduct a thorough dry-dock
inspection of underwater machinery, valves and hull every five years. Less
stringent inspection requirements apply to permanently moored dockside vessels
like those at Ameristar Kansas City, Ameristar St. Charles and Ameristar
Vicksburg. The Ameristar Council Bluffs riverboat was due for its dry-dock
inspection in November 2000, but we have been accepted into a U.S. Coast Guard
program that has extended the dry-dock requirement to October 2005 by
undergoing a thorough underwater inspection. If we are unable to continue to
extend the dry-dock requirement by performing thorough underwater hull
inspections, the Council Bluffs casino would be out of service for a
substantial period of time for its dry-dock inspection. This could have a
material adverse effect on Ameristar Council Bluffs and on our business,
financial condition and results of operations. We cannot assure that we will
actually obtain any further extension of the dry-dock requirement or that
similar extensions will be obtained in the future.

The Ameristar Vicksburg site has experienced some instability that
requires periodic maintenance and improvements. Although in 1999 we reinforced
the cofferdam basin in which the vessel floats, further reinforcements may be
necessary. We are also monitoring the site to evaluate what further steps, if
any, may be necessary to stabilize the site to permit operations to continue. A
site failure would require Ameristar Vicksburg to limit or cease operations.

The loss of a riverboat or dockside facility from service for any period
of time likely would adversely affect our operating results and borrowing
capacity under our long-term debt facilities. It could also result in the
occurrence of an event of a default under our credit agreement.



| |  | We could face severe penalties and material remediation costs if we fail to
comply with applicable environmental regulations.
| |  | -----------------------------------------------------------------------------------------------------------------------------

As is the case with any owner or operator of real property, we are subject
to a variety of federal, state and local governmental regulations relating to
the use, storage, discharge, emission and disposal of hazardous materials.
Failure to comply with environmental laws could result in the imposition of
severe penalties or restrictions on operations by government agencies or
courts, which could adversely affect our operations. We do not have
environmental liability insurance to cover most such events, and the
environmental liability insurance coverage we maintain to cover certain events
includes significant limitations and exclusions. In addition, if we discover
any significant environmental contamination affecting any of our

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properties, we
could face material remediation costs or additional development costs for
future expansion activities.

Government Regulation

The ownership and operation of casino gaming facilities are subject to
extensive state and local regulation. We are required to obtain and maintain
gaming licenses in each of the jurisdictions in which we conduct gaming. The
limitation, conditioning or suspension of gaming licenses could (and the
revocation or non-renewal of gaming licenses, or the failure to reauthorize
gaming in certain jurisdictions, would) materially adversely affect our
operations in that jurisdiction. In addition, changes in law that restrict or
prohibit our gaming operations in any jurisdiction could have a material
adverse effect on us.

Missouri.The ownership and operation of riverboat and dockside gaming
facilities in Missouri are subject to extensive state and local regulation, but
primarily the licensing and regulatory control of the Missouri Gaming
Commission. The Missouri Riverboat Gaming Act (the Missouri Act) provides for
the licensing and regulation of riverboat and dockside gaming operations on the
Mississippi and Missouri Rivers in the State of Missouri and the licensing and
regulation of persons who distribute gaming equipment and supplies to gaming
licensees.

The Missouri Gaming Commission has discretion to approve gaming license
applications for both permanently moored (dockside) riverboat casinos and
powered (excursion) riverboat casinos and determine the number, location and
type of excursion gambling boats allowed each licensee. Due to safety concerns,
all gaming vessels on the Missouri River are permitted to be moored in moats
set back from the river. Gaming licenses are initially issued for two one-year
periods and must be renewed every two years thereafter. The gaming licenses at
Ameristar Kansas City and Ameristar St. Charles are next subject to renewal in
September 2004. No gaming licensee may pledge or transfer in any way any
license, or any interest in a license, issued by the Missouri Gaming
Commission. As a result, the gaming licenses of our wholly owned Missouri
subsidiaries were not pledged to secure our senior credit facilities.

The issuance, transfer and pledge of ownership interests in a gaming
licensee are also subject to strict notice and approval requirements. Missouri
Gaming Commission regulations prohibit a licensee from doing any of the
following without at least 60 days prior notice to the Missouri Gaming
Commission, and during such period, the Missouri Gaming Commission may
disapprove the transaction or require the transaction be delayed pending
further investigation:



| |  |  | any transfer or issuance of an ownership interest in a gaming
licensee that is not a publicly held entity or a holding company that is
not a publicly held entity, and              
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | any pledge or grant of a security interest in an ownership interest
in a gaming licensee that is not a publicly held entity or a holding
company that is not a publicly held entity;

provided that no ownership interest may be transferred in any way pursuant to
any pledge or security interest without separate notice to the Missouri Gaming
Commission at least 30 days

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prior to such transfer, which restriction must be
specifically included in the grant of a security interest.

Under the Missouri Act, all members of our Board of Directors, certain
members of our management and certain of our employees associated with our
gaming business are required to obtain and maintain occupational licenses.
Currently, all such persons required to obtain occupational licenses have
obtained them. The Missouri Gaming Commission may deny an application for a
license for any cause that it deems reasonable.

Substantially all loans, leases, sales of securities and similar financing
transactions by a gaming licensee must be reported to and approved by the
Missouri Gaming Commission. Missouri Gaming Commission regulations require a
licensee to notify the Missouri Gaming Commission of its intention to
consummate any of the following transactions at least 15 days prior to such
consummation, and the Missouri Gaming Commission may reopen the licensing
hearing prior to or following the consummation date to consider the effect of
the transaction on the licensees suitability:



| |  |  | any issuance of an ownership interest in a publicly held gaming
licensee or a publicly held holding company, if such issuance would
involve, directly or indirectly, an amount of ownership interest
equaling 5% or greater of the ownership interest in the gaming licensee
or holding company after the issuance is complete,
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | any private incurrence of debt equal to or exceeding $1 million by a
gaming licensee or holding company that is affiliated with the holder of
a license,                                                                                                                                                                       
|
| |  |  | any public issuance of debt by a gaming licensee or holding company
that is affiliated with the holder of a license, and                                                                                                                                                                                                       
|
| |  |  | any significant related party transaction as defined in the
regulations.                                                                                                                                                                                                                                                       

The Missouri Gaming Commission may waive or reduce the 15-day notice
requirement.

The Missouri Act imposes operational requirements on riverboat operators,
including a charge of $2 per gaming customer per two-hour cruise that
licensees must pay to the Missouri Gaming Commission, certain minimum payout
requirements, a 20% tax on adjusted gross receipts, prohibitions against
providing credit to gaming customers (except for the use of credit cards and
cashing checks) and a requirement that each licensee reimburse the Missouri
Gaming Commission for all costs of any Missouri Gaming Commission staff
necessary to protect the public on the licensees riverboat. Licensees must
also submit audited quarterly financial reports to the Missouri Gaming
Commission and pay the associated auditing fees. Other areas of operation which
are subject to regulation under Missouri rules are the size, denomination and
handling of chips and tokens, the surveillance methods and computer monitoring
of electronic games, accounting and audit methods and procedures, and approval
of an extensive internal control system. The Missouri rules also require that
all of an operators chips, tokens, dice, playing cards and electronic gaming
devices must be acquired from suppliers licensed by the Missouri Gaming
Commission, or another person or entity approved by the Missouri Gaming
Commission.

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The Missouri Act provides for a loss limit of $500 per person per two-hour
cruise. Although the Missouri Act provides no limit on the amount of
riverboat space that may be used for gaming, the Missouri Gaming Commission can
impose space limitations through the adoption of rules and regulations.
Additionally, United States Coast Guard safety regulations could affect the
amount of riverboat space that may be devoted to gaming. The Missouri Act also
includes requirements as to the form of riverboats, which must resemble
Missouris riverboat history to the extent practicable and include certain
non-gaming amenities. All licensees currently operating riverboat gaming
operations in Missouri are authorized to conduct all or a portion of their
operations on a dockside basis.

Missouri gaming regulations have been modified in recent years to benefit
gaming operations. In September 1999, the Missouri Gaming Commission began
allowing open and continuous boarding on the riverboats in the St. Louis market
and in November 1999 the Missouri Gaming Commission began allowing open and
continuous boarding on area riverboats in the Kansas City market. This change
eliminated the prior mandated two-hour simulated cruise times, which had
limited boarding at any gaming vessel to only 45 minutes at the beginning of
each two-hour period.

The Missouri Act requires each licensee to post a bond or other security
to guarantee that the licensee complies with its statutory obligations. The
Missouri Act also gives the Missouri Gaming Commission the authority to require
gaming licensees to post a bond or other form of security to the State of
Missouri to, among other things, guarantee the completion of an expansion of a
gaming facility within the later of a time period determined by the Missouri
Gaming Commission or August 28, 2003.

To promote safety, the Missouri Gaming Commission has required that gaming
entertainment barges obtain annual certification from the American Bureau of
Shipping.

If the Missouri Gaming Commission decides that a gaming subsidiary
violated a gaming law or regulation, the Missouri Gaming Commission could
limit, condition, suspend or revoke the license of the gaming subsidiary. In
addition, a gaming subsidiary, its parent company and the persons involved
could be subject to substantial fines for each separate violation. Limitation,
conditioning or suspension of any gaming license could (and revocation of any
gaming license would) materially adversely affect Ameristar and our gaming
subsidiaries gaming operations.

The Missouri Gaming Commission regulates the issuance of excursion liquor
licenses, which authorize the licensee to serve, offer for sale, or sell
intoxicating liquor aboard any excursion gambling boat, or facility immediately
adjacent to and contiguous with the excursion gambling boat, which is owned and
operated by the licensee. An excursion liquor license is granted for a one-year
term by the Missouri Gaming Commission and is renewable annually. The
Commission can discipline an excursion liquor licensee for any violation of
Missouri law or the Missouri Gaming Commissions rules. Licensees are
responsible for the conduct of their business and for any act or conduct of any
employee on the premises that is in violation of the Missouri Act or the rules
of the Missouri Gaming Commission. Missouri Gaming Commission liquor control
regulations also include prohibitions on certain intoxicating liquor promotions
and a ban on fees accepted for advertising products. Only Class A licensees can
obtain a liquor license from the Missouri Gaming Commission. Class A licenses
are licenses

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granted by the commission to allow the holder to conduct gambling
games on an excursion gambling boat and to operate an excursion gambling boat.

Iowa.Ameristars Council Bluffs operations are conducted by our wholly
owned subsidiary, Ameristar Casino Council Bluffs, Inc. (ACCBI), and are
subject to Chapter 99F of the Iowa Code and the regulations promulgated
thereunder. ACCBIs gaming operations are subject to the licensing and
regulatory control of the Iowa Racing and Gaming Commission (the Iowa Gaming
Commission).

Under Iowa law, wagering on a gambling game is legal when conducted by a
licensee on an excursion gambling boat. An excursion gambling boat is a
self-propelled excursion boat. Gambling game means any game of chance
authorized by the Iowa Gaming Commission. The excursion season is from April 1
through October 31 of each calendar year. The vessel must operate at least one
excursion each day for 100 days during the excursion season to operate during
the off season. Each excursion must consist of a minimum of two hours. ACCBI
has satisfied the requirements of Iowa law for the conduct of off-season
operations since 1997.

The legislation permitting riverboat gaming in Iowa authorizes the
granting of licenses to qualified sponsoring organizations. A qualified
sponsoring organization is defined as a person or association that can show to
the satisfaction of the Iowa Gaming Commission that the person or association
is eligible for exemption from federal income taxation under Section 501(c)(3),
(4), (5), (6), (7), (8), (10) or (19) of the Internal Revenue Code (hereinafter
not-for-profit corporation). The not-for-profit corporation is permitted to
enter into operating agreements with persons qualified to conduct riverboat
gaming operations. Such operators must be approved and licensed by the Iowa
Gaming Commission. On January 27, 1995, the Iowa Gaming Commission authorized
the issuance of a license to conduct gambling games on an excursion gambling
boat to Iowa West Racing Association, a not-for-profit corporation organized
for the purpose of facilitating riverboat gaming in Council Bluffs (the
Association). The Association has entered into an agreement with ACCBI
authorizing ACCBI to operate riverboat gaming operations in Council Bluffs
under the Associations gaming license (the Operators Contract), and the
Iowa Gaming Commission has approved this contract. The term of the Operators
Contract runs until March 31, 2010.

Under Iowa law, a license to conduct gambling games may be issued in a
county only if the county electorate has approved such gambling games. Although
the electorate of Pottawattamie County, which includes the City of Council
Bluffs, most recently reauthorized by referendum in 2002 the gambling games
conducted by ACCBI, a reauthorization referendum must be submitted to the
electorate in the general election to be held in 2010 and each eight years
thereafter. Each such referendum requires the affirmative vote of a majority of
the persons voting thereon. If any such reauthorization referendum is defeated,
Iowa law provides that any previously issued gaming license will remain valid
and subject to periodic renewal for a total of nine years from the date of
original issuance, subject to earlier revocation as discussed below. The
original issuance date of the gaming license for ACCBI was January 27, 1995.
In the event a reauthorization referendum is defeated in 2010 or thereafter,
the licenses granted to the Association and ACCBI would not be subject to
renewal and ACCBI would be required to cease conducting gambling games. After
a referendum has been held which defeated a proposal to conduct gambling games
on excursion gambling boats, another referendum on a

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proposal to conduct
gambling games on excursion gambling boats may not be held for at least two
years.

Substantially all of ACCBIs material transactions are subject to review
and approval by the Iowa Gaming Commission. Written and oral contracts and
business arrangements involving a related party or in which the term exceeds
three years or the total value exceeds $100,000 are agreements that qualify for
submission to and approval by the Iowa Gaming Commission (Qualifying
Agreements). Qualifying Agreements are limited to: (1) obligations that
expense, encumber or lend ACCBI assets to anyone other than a not-for-profit
entity or a unit of government for the payment of taxes and utilities; (2) any
disposal of ACCBI assets or the provision of goods and services at less than
market value to anyone other than a not-for-profit entity or a unit of
government; and (3) a previously approved Qualifying Agreement, if
consideration exceeds the approved amount by the greater of $100,000 or 25%.
Each Qualifying Agreement must be submitted to the Iowa Gaming Commission
within 30 days of execution. Iowa Gaming Commission approval must be obtained
prior to implementation, unless the Qualifying Agreement contains a written
clause stating that the agreement is subject to Iowa Gaming Commission
approval. Qualifying Agreements that are ongoing or open-ended need only be
submitted on initiation, unless there is a material change in terms or
noncompliance with the requirement that consideration be given to the use of
Iowa resources, goods and services. Additionally, contracts negotiated between
ACCBI and a related party must be accompanied by economic and qualitative
justification.

ACCBI is required to notify the Iowa Gaming Commission of the identity of
each director, corporate officer and owner, partner, joint venturer, trustee or
any other person who has a beneficial interest of 5% or more, direct or
indirect, in ACCBI. The Iowa Gaming Commission may require ACCBI to submit
background information on such persons. The Iowa Gaming Commission may require
ACCBI to provide a list of persons holding beneficial ownership interests in
ACCBI of less than 5%. For purposes of these rules, beneficial interest
includes all direct and indirect forms of ownership or control, voting power or
investment power held through any contract, lien, lease, partnership,
stockholding, syndication, joint venture, understanding, relationship, present
or reversionary right, title or interest or otherwise. The Iowa Gaming
Commission may suspend or revoke the license of a licensee in which a director,
corporate officer or holder of a beneficial interest includes or involves any
person or entity which is found to be ineligible as a result of want of
character, moral fitness, financial responsibility, professional responsibility
or due to failure to meet other criteria employed by the Iowa Gaming
Commission.

ACCBI must submit detailed financial, operating and other reports to the
Iowa Gaming Commission. ACCBI must file weekly and monthly gaming reports
indicating adjusted gross receipts received from gambling games and the total
number and amount of money received from admissions. Additionally, ACCBI must
file annual financial statements covering all financial activities related to
its operations for each fiscal year. ACCBI must also keep detailed records
regarding its equity structure and owners.

Iowa has a graduated wagering tax equal to 5% of the first $1.0 million of
annual adjusted gross receipts, 10% of the next $2.0 million of annual adjusted
gross receipts and 20% of annual adjusted gross receipts over $3.0 million. In
addition, the state charges other fees on a per-customer basis. Additionally,
ACCBI pays to the City of Council Bluffs a fee equal to

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$0.50 per passenger.
Under the Operators Contract, ACCBI also pays the Association a graduated fee
equal to 5% of the first $30 million of annual adjusted gross receipts, 4% of
the next $30 million of annual adjusted gross receipts, 3% of the next $30
million of annual adjusted gross receipts, 2% of the next $30 million of annual
adjusted gross receipts and 0.5% of the next $30 million of annual adjusted
gross receipts (up to $150,000,000 of annual adjusted gross receipts).

All persons participating in any capacity at a gaming facility, with the
exception of certified law enforcement officers while they are working for the
facility as uniformed officers, are required to obtain occupational licenses
from the Iowa Gaming Commission. All such licenses require annual renewal. The
Iowa Gaming Commission had broad discretion to deny or revoke any occupational
license.

If the Iowa Gaming Commission decides that a gaming law or regulation has
been violated, the Iowa Gaming Commission has the power to assess fines, revoke
or suspend licenses or to take any other action as may be reasonable or
appropriate to enforce the gaming rules and regulations.

ACCBI is subject to licensure by the Alcoholic Beverages Division (ABD)
of the Iowa Department of Commerce, which administers and enforces the laws of
the State of Iowa concerning alcoholic beverages. Additionally, ACCBI is
subject to liquor ordinances adopted by local authorities. A local authority
may adopt ordinances governing establishments which are located within their
jurisdiction. Local ordinances may be more restrictive than state law, but they
may not conflict with state law. The ABD and the local authorities have full
power to suspend or revoke any license for the serving of alcoholic beverages.

Mississippi.The ownership and operation of casino gaming facilities in
the State of Mississippi are subject to extensive state and local regulation,
but primarily the licensing and regulatory control of the Mississippi Gaming
Commission (the Mississippi Commission).

The Mississippi Gaming Control Act (the Mississippi Act) is similar to
the Nevada Gaming Control Act. The Mississippi Commission has adopted
regulations which are also similar in many respects to the Nevada gaming
regulations.

The laws, regulations and supervisory procedures of the Mississippi
Commission are based upon declarations of public policy that are concerned
with, among other things, (1) the prevention of unsavory or unsuitable persons
from having direct or indirect involvement with gaming at any time or in any
capacity; (2) the establishment and maintenance of responsible accounting
practices and procedures; (3) the maintenance of effective controls over the
financial practices of licensees, including the establishment of minimum
procedures for internal fiscal affairs and the safeguarding of assets and
revenues, providing for reliable record keeping and requiring the filing of
periodic reports with the Mississippi Commission; (4) the prevention of
cheating and fraudulent practices; (5) providing a source of state and local
revenues through taxation and licensing fees; and (6) ensuring that gaming
licensees, to the extent practicable, employ Mississippi residents. The
regulations are subject to amendment and interpretation by the Mississippi
Commission. We believe that our compliance with the licensing procedures and
regulatory requirements of the Mississippi Commission will not affect the
marketability of our securities. Changes in Mississippi laws or regulations may
limit or otherwise materially affect

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the types of gaming that may be conducted
and such changes, if enacted, could have an adverse effect on us and our
Mississippi gaming operations.

The Mississippi Act provides for legalized dockside gaming in each of the
fourteen counties that border the Gulf Coast or the Mississippi River, but only
if the voters in the county have not voted to prohibit gaming in that county.
In recent years, certain anti-gaming groups proposed for adoption through the
initiative and referendum process certain amendments to the Mississippi
Constitution which would prohibit gaming in the state. The proposals were
declared illegal by Mississippi courts on constitutional and procedural
grounds. The latest ruling was appealed to the Mississippi Supreme Court, which
affirmed the decision of the lower court. If another such proposal were to be
made and if a sufficient number of signatures were to be gathered to place a
legal initiative on the ballot, it would be possible for the voters of
Mississippi to consider such a proposal in November 2004. While we are unable
to predict whether such an initiative will appear on a ballot or the likelihood
of such an initiative being approved by the voters, if such an initiative were
approved and gaming were prohibited in Mississippi, it would have a significant
adverse effect on us and our operations.

As of March 1, 2003, dockside gaming was permissible in nine of the
fourteen eligible counties in the state and gaming operations had commenced in
seven counties. Under Mississippi law, gaming vessels must be located on the
Mississippi River or on navigable waters in eligible counties along the
Mississippi River or in the waters lying south of the counties along the
Mississippi Gulf Coast. The Mississippi Act permits unlimited stakes gaming on
permanently moored vessels on a 24-hour basis and does not restrict the
percentage of space which may be utilized for gaming. The Mississippi Act
permits substantially all traditional casino games and gaming devices.

We and any subsidiary of ours that operates a casino in Mississippi (a
Mississippi Gaming Subsidiary) are subject to the licensing and regulatory
control of the Mississippi Commission. As the sole stockholder of Ameristar
Casino Vicksburg, Inc. (ACVI), we are registered under the Mississippi Act as
a publicly traded corporation (a Registered Corporation). As a Registered
Corporation, we are required periodically to submit detailed financial and
operating reports to the Mississippi Commission and furnish any other
information which the Mississippi Commission may require. If we are unable to
continue to satisfy the registration requirements of the Mississippi Act, we
and any Mississippi Gaming Subsidiary cannot own or operate gaming facilities
in Mississippi. No person may become a stockholder of or receive any
percentage of profits from a Mississippi Gaming Subsidiary of a Registered
Corporation without first obtaining licenses and approvals from the Mississippi
Commission. We have obtained such approvals in connection with our ownership of
ACVI.

A Mississippi Gaming Subsidiary must maintain a gaming license from the
Mississippi Commission to operate a casino in Mississippi. Such licenses are
issued by the Mississippi Commission subject to certain conditions, including
continued compliance with all applicable state laws and regulations. There
are no limitations on the number of gaming licenses that may be issued in
Mississippi. Gaming licenses require the payment of periodic fees and taxes,
are not transferable, are issued for a three-year period (and may be continued
for two additional three-year periods) and must be renewed periodically
thereafter. ACVI was most recently granted a renewal of its gaming license by
the Mississippi Commission on December 18, 2002.

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Certain of our officers and employees and the officers, directors and
certain key employees of our Mississippi Gaming Subsidiary must be found
suitable or approved by the Mississippi Commission. We believe that we have
obtained, applied for or are in the process of applying for all necessary
findings of suitability with respect to such persons affiliated with Ameristar
or ACVI, although the Mississippi Commission, in its discretion, may require
additional persons to file applications for findings of suitability. In
addition, any person having a material relationship or involvement with us may
be required to be found suitable, in which case those persons must pay the
costs and fees associated with such investigation. The Mississippi Commission
may deny an application for a finding of suitability for any cause that it
deems reasonable. Changes in certain licensed positions must be reported to the
Mississippi Commission. In addition to its authority to deny an application for
a finding of suitability, the Mississippi Commission has jurisdiction to
disapprove a change in any persons corporate position or title and such
changes must be reported to the Mississippi Commission. The Mississippi
Commission has the power to require us and any Mississippi Gaming Subsidiary to
suspend or dismiss officers, directors and other key employees or sever
relationships with other persons who refuse to file appropriate applications or
whom the authorities find unsuitable to act in such capacities. Determinations
of suitability or questions pertaining to licensing are not subject to judicial
review in Mississippi.

At any time, the Mississippi Commission has the power to investigate and
require the finding of suitability of any record or beneficial stockholder of
Ameristar. The Mississippi Act requires any person who acquires more than 5%
of any class of voting securities of a Registered Corporation, as reported to
the Securities and Exchange Commission, to report the acquisition to the
Mississippi Commission, and such person may be required to be found suitable.
Also, any person who becomes a beneficial owner of more than 10% of any class
of voting securities of a Registered Corporation, as reported to the Securities
and Exchange Commission, must apply for a finding of suitability by the
Mississippi Commission and must pay the costs and fees that the Mississippi
Commission incurs in conducting the investigation. If a stockholder who must
be found suitable is a corporation, partnership or trust, it must submit
detailed business and financial information, including a list of beneficial
owners.

The Mississippi Commission generally has exercised its discretion to
require a finding of suitability of any beneficial owner of more than 5% of any
class of voting securities of a Registered Corporation. However, under certain
circumstances, an institutional investor, as defined in the Mississippi
Commissions regulations, which acquires more than 10%, but not more than 15%,
of the voting securities of a Registered Corporation may apply to the
Mississippi Commission for a waiver of such finding of suitability if such
institutional investor holds the voting securities for investment purposes
only. An institutional investor shall not be deemed to hold voting securities
for investment purposes unless the voting securities were acquired and are held
in the ordinary course of business as an institutional investor and not for the
purpose of causing, directly or indirectly, the election of a majority of the
members of the board of directors of the Registered Corporation, any change in
the corporate charter, bylaws, management, policies or operations of the
Registered Corporation or any of its gaming affiliates, or any other action
which the Mississippi Commission finds to be inconsistent with holding the
voting securities for investment purposes only. Activities which are not
deemed to be inconsistent with holding voting securities for investment
purposes include (1) voting on all matters voted on by stockholders; (2) making
financial and other inquiries of management of

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the type normally made by
securities analysts for informational purposes and not to cause a change in the
Registered Corporations management, policies or operations; and (3) such other
activities as the Mississippi Commission may determine to be consistent with
such investment intent.

Any person who fails or refuses to apply for a finding of suitability or a
license within thirty days after being ordered to do so by the Mississippi
Commission may be found unsuitable. The same restrictions apply to a record
owner if the record owner, after request, fails to identify the beneficial
owner. Any person found unsuitable and who holds, directly or indirectly, any
beneficial ownership of our securities beyond such time as the Mississippi
Commission prescribes may be guilty of a misdemeanor. We may be subject to
disciplinary action if, after receiving notice that a person is unsuitable to
be a stockholder or to have any other relationship with us or any Mississippi
Gaming Subsidiary owned by us, the company involved (1) pays the unsuitable
person any dividend or other distribution upon such persons voting securities;
(2) recognizes the exercise, directly or indirectly, of any voting rights
conferred by securities held by the unsuitable person; (3) pays the unsuitable
person any remuneration in any form for services rendered or otherwise, except
in certain limited and specific circumstances; or (4) fails to pursue all
lawful efforts to require the unsuitable person to divest himself of the
securities, including, if necessary, the immediate purchase of the securities
for cash at fair market value.

We may be required to disclose to the Mississippi Commission, upon
request, the identities of the holders of our debt or other securities. In
addition, under the Mississippi Act, the Mississippi Commission may, in its
discretion, require the holder of any debt security of a Registered Corporation
to file an application, be investigated and be found suitable to own the debt
security if the Mississippi Commission has reason to believe that the ownership
would be inconsistent with the declared policies of the State.

Although the Mississippi Commission generally does not require the
individual holders of obligations such as notes to be investigated and found
suitable, the Mississippi Commission retains the discretion to do so for any
reason, including but not limited to, a default, or where the holder of the
debt instruments exercises a material influence over the gaming operations of
the entity in question. Any holder of debt securities required to apply for a
finding of suitability must pay all investigative fees and costs of the
Mississippi Commission in connection with such an investigation.

If the Mississippi Commission determines that a person is unsuitable to
own a debt security, then the Registered Corporation may be sanctioned,
including the loss of its approvals, if without the prior approval of the
Mississippi Commission it (1) pays to the unsuitable person any dividend,
interest, or any distribution whatsoever; (2) recognizes any voting right by
the unsuitable person in connection with those securities; (3) pays the
unsuitable person remuneration in any form; or (4) makes any payment to the
unsuitable person by way of principal, redemption, conversion, exchange,
liquidation or similar transaction.

Each Mississippi Gaming Subsidiary must maintain in Mississippi a current
ledger with respect to the ownership of its equity securities and we must
maintain in Mississippi a current list of our stockholders which must reflect
the record ownership of each outstanding share of any class of our equity
securities. The ledger and stockholder lists must be available for inspection
by the Mississippi Commission at any time. If any securities are held in trust
by an

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agent or by a nominee, the record holder may be required to disclose the
identity of the beneficial owner to the Mississippi Commission. A failure to
make such disclosure may be grounds for finding the record holder unsuitable.
We must also render maximum assistance in determining the identity of the
beneficial owner.

The Mississippi Act requires that the certificates representing securities
of a Registered Corporation bear a legend indicating that the securities are
subject to the Mississippi Act and the regulations of the Mississippi
Commission. We have received from the Mississippi Commission a waiver of this
legend requirement. The Mississippi Commission has the power to impose
additional restrictions on the holders of our securities at any time.

Substantially all material loans, leases, sales of securities and similar
financing transactions by a Registered Corporation or a Mississippi Gaming
Subsidiary must be reported to or approved by the Mississippi Commission. A
Mississippi Gaming Subsidiary may not make a public offering of its securities,
but may pledge or mortgage casino facilities. A Registered Corporation may not
make a public offering of its securities without the prior approval of the
Mississippi Commission if any part of the proceeds of the offering is to be
used to finance the construction, acquisition or operation of gaming facilities
in Mississippi or to retire or extend obligations incurred for those purposes.
Such approval, if given, does not constitute a recommendation or approval of
the investment merits of the securities subject to the offering. We have
received a waiver of the prior approval requirement with respect to public
offerings and private placements of securities, subject to certain conditions,
including the ability of the Mississippi Commission to issue a stop order with
respect to any such offering if the staff determines it would be necessary to
do so.

Under the regulations of the Mississippi Commission, a Mississippi Gaming
Subsidiary may not guarantee a security issued by an affiliated company
pursuant to a public offering, or pledge its assets to secure payment or
performance of the obligations evidenced by the security issued by the
affiliated company, without the prior approval of the Mississippi Commission.
A pledge of the stock of a Mississippi Gaming Subsidiary and the foreclosure of
such a pledge are ineffective without the prior approval of the Mississippi
Commission. Moreover, restrictions on the transfer of an equity security issued
by a Mississippi Gaming Subsidiary and agreements not to encumber such
securities are ineffective without the prior approval of the Mississippi
Commission. We have obtained approvals from the Mississippi Commission for such
guarantees, pledges and restrictions in connection with offerings of
securities, subject to certain restrictions.

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

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The Mississippi legislature has declared that some corporate acquisitions
opposed by management, repurchases of voting securities and other corporate
defense tactics that affect corporate gaming licensees in Mississippi and
Registered Corporations may be injurious to stable and productive corporate
gaming. The Mississippi Commission has established a regulatory scheme to
ameliorate the potentially adverse effects of these business practices upon
Mississippis gaming industry and to further Mississippis policy to (1) assure
the financial stability of corporate gaming operators and their affiliates; (2)
preserve the beneficial aspects of conducting business in the corporate form;
and (3) promote a neutral environment for the orderly governance of corporate
affairs.

Approvals are, in certain circumstances, required from the Mississippi
Commission before a Registered Corporation may make exceptional repurchases of
voting securities (such as repurchases which treat holders differently) in
excess of the current market price and before a corporate acquisition opposed
by management can be consummated. Mississippis gaming regulations also require
prior approval by the Mississippi Commission of a plan of recapitalization
proposed by the Registered Corporations board of directors in response to a
tender offer made directly to the Registered Corporations stockholders for the
purpose of acquiring control of the Registered Corporation.

Neither we nor any Mississippi Gaming Subsidiary may engage in gaming
activities in Mississippi while also conducting gaming operations outside of
Mississippi without approval of the Mississippi Commission. The Mississippi
Commission may require determinations that, among other things, there are means
for the Mississippi Commission to have access to information concerning the
out-of-state gaming operations of us and our affiliates. We have previously
obtained a waiver of foreign gaming approval from the Mississippi Commission
for operations in other states in which we conduct gaming operations and will
be required to obtain the approval or a waiver of such approval from the
Mississippi Commission prior to engaging in any additional future gaming
operations outside of Mississippi.

If the Mississippi Commission determined that we or ACVI violated a gaming
law or regulation, the Mississippi Commission could limit, condition, suspend
or revoke our approvals and the license of ACVI, subject to compliance with
certain statutory and regulatory procedures. In addition, we, ACVI and the
persons involved could be subject to substantial fines for each separate
violation. Because of such a violation, the Mississippi Commission could
attempt to appoint a supervisor to operate the casino facilities. Limitation,
conditioning or suspension of any gaming license or approval or the appointment
of a supervisor could (and revocation of any gaming license or approval would)
materially adversely affect us, our gaming operations and our results of
operations.

License fees and taxes, computed in various ways depending on the type of
gaming or activity involved, are payable to the State of Mississippi and to the
counties and cities in which a Mississippi Gaming Subsidiarys operations are
conducted. Depending upon the particular fee or tax involved, these fees and
taxes are payable either monthly, quarterly or annually. Gaming taxes are
based upon the following: (1) a percentage of the gross gaming revenues
received by the casino operation; (2) the number of gaming devices operated by
the casino; or (3) the number of table games operated by the casino.

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The license fee payable to the State of Mississippi is based upon gaming
receipts (generally defined as gross receipts less payouts to customers as
winnings) and the current maximum tax rate imposed is 8% of all gaming receipts
in excess of $134,000 per month. The foregoing license fees we pay are allowed
as a credit against ACVIs Mississippi income tax liability for the year paid.
The gross revenues fee imposed by the City of Vicksburg equals approximately 4%
of gaming receipts.

The Mississippi Commissions regulations require as a condition of
licensure or license renewal that an existing licensed gaming establishments
plan include a 500-car parking facility in close proximity to the casino
complex and infrastructure facilities which amount to at least 25% of the
casino cost. The Mississippi Commission later adopted amendments to the
regulation that would increase the infrastructure development requirement from
25% to 100% for new casinos (or upon the acquisition of a closed casino), but
would grandfather existing licensees. We believe that ACVI is in compliance
with the previously existing infrastructure requirement and is not subject to
the increased infrastructure requirement.

Nevada.The ownership and operation of casino gaming facilities in Nevada
are subject to: (1) the Nevada Gaming Control Act and the regulations
promulgated thereunder (collectively, the Nevada Act); and (2) various local
regulations. Our operations are subject to the licensing and regulatory control
of the Nevada Gaming Commission (Nevada Commission), the Nevada State Gaming
Control Board (Nevada Board), and the Liquor Board of Elko County. The Nevada
Commission, the Nevada Board and the Liquor Board of Elko County are
collectively referred to in this section as the Nevada Gaming Authorities.

The laws, regulations and supervisory procedures of the Nevada Gaming
Authorities are based upon declarations of public policy which are concerned
with, among other things, (1) the prevention of unsavory or unsuitable persons
from having a direct or indirect involvement with gaming at any time or in any
capacity; (2) the establishment and maintenance of effective controls over the
financial practices of licensees, including the establishment of minimum
procedures for internal fiscal affairs and the safeguarding of assets and
revenues; (3) providing reliable record keeping and requiring the filing of
periodic reports with the Nevada Gaming Authorities; (4) the prevention of
cheating and fraudulent practices; and (5) providing a source of state and
local revenues through taxation and licensing fees. Change in such laws,
regulations and procedures could have an adverse effect on our gaming
operations.

Cactus Petes, Inc. (CPI), which owns and operates the Jackpot
properties, is required to be licensed by the Nevada Gaming Authorities. The
gaming licenses require the periodic payment of fees and taxes and are not
transferable. Ameristar is registered by the Nevada Commission as a publicly
traded corporation (a Registered Corporation) and has been found suitable to
own the stock of CPI, which is a corporate licensee (a Corporate Licensee)
under the terms of the Nevada Act. As a Registered Corporation, Ameristar is
required periodically to submit detailed financial and operating reports to the
Nevada Commission and furnish any other information that the Nevada Commission
may require. No person may become a stockholder of, or receive any percentage
of profits from, a Corporate Licensee without first obtaining licenses and
approvals from the Nevada Gaming Authorities. Ameristar and CPI have obtained
from the Nevada Gaming Authorities the various registrations, findings of
suitability, approvals, permits and licenses currently required in order to
engage in gaming activities in Nevada.

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

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

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

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

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

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The Nevada Act requires any person who acquires beneficial ownership of
more than 5% of a Registered Corporations voting securities to report the
acquisition to the Nevada Commission. The Nevada Act requires that beneficial
owners of more than 10% of a Registered Corporations voting securities apply
to the Nevada Commission for a finding of suitability within thirty days after
the Chairman of the Nevada Board mails the written notice requiring such
filing. Under certain circumstances, an institutional investor, as defined in
the Nevada Act, which acquires more than 10%, but not more than 15%, of a
Registered Corporations voting securities may apply to the Nevada Commission
for a waiver of such finding of suitability if such institutional investor
holds the voting securities for investment purposes only. An institutional
investor shall not be deemed to hold voting securities for investment purposes
unless the voting securities were acquired and are held in the ordinary course
of business as an institutional investor and not for the purpose of causing,
directly or indirectly, the election of a majority of the members of the board
of directors of the Registered Corporation, any change in the corporate
charter, bylaws, management, policies or operations of the Registered
Corporation or any of its gaming affiliates, or any other action which the
Nevada Commission finds to be inconsistent with holding the Registered
Corporations voting securities for investment purposes only. Activities which
are not deemed to be inconsistent with holding voting securities for investment
purposes only include (1) voting on all matters voted on by stockholders; (2)
making financial and other inquiries of management of the type normally made by
securities analysts for informational purposes and not to cause a change in its
management, policies or operations; and (3) such other activities as the Nevada
Commission may determine to be consistent with such investment intent. If the
beneficial holder of voting securities who must be found suitable is a
corporation, partnership or trust, it must submit detailed business and
financial information, including a list of beneficial owners. The applicant is
required to pay all costs of investigation.

Any person who fails or refuses to apply for a finding of suitability or a
license within 30 days after being ordered to do so by the Nevada Commission or
the Chairman of the Nevada Board may be found unsuitable. The same restrictions
apply to a record owner if the record owner, after request, fails to identify
the beneficial owner. Any stockholder found unsuitable and who holds, directly
or indirectly, any beneficial ownership of the common stock of a Registered
Corporation beyond such period of time as may be prescribed by the Nevada
Commission may be guilty of a criminal offense. Ameristar is subject to
disciplinary action if, after it receives notice that a person is unsuitable to
be a stockholder or to have any other relationship with Ameristar or CPI,
Ameristar (1) pays that person any dividend or interest upon voting securities
of Ameristar, (2) allows that person to exercise, directly or indirectly, any
voting right conferred through securities held by the person, (3) pays
remuneration in any form to that person for services rendered or otherwise, or
(4) fails to pursue all lawful efforts to require such unsuitable person to
relinquish his voting securities including, if necessary, the immediate
purchase of such voting securities by Ameristar for cash at fair market value.
Additionally, the Liquor Board of Elko County has the authority to approve all
persons owning or controlling the stock of any corporation controlling a gaming
license within its jurisdiction.

The Nevada Commission may, at its discretion, require the holder of any
debt security of a Registered Corporation to file applications, be investigated
and be found suitable to own the debt security of a Registered Corporation if
it has reason to believe that such holders acquisition of such ownership would
otherwise be inconsistent with the declared policy of the

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State of Nevada. If
the Nevada Commission determines that a person is unsuitable to own such
security, then pursuant to the Nevada Act, the Registered Corporation can be
sanctioned, including the loss of its approvals, if without the prior approval
of the Nevada Commission, it (1) pays to the unsuitable person any dividend,
interest, or any distribution whatsoever; (2) recognizes any voting right by
such unsuitable person in connection with such securities; (3) pays the
unsuitable person remuneration in any form; or (4) makes any payment to the
unsuitable person by way of principal, redemption, conversion, exchange,
liquidation or similar transaction.

Ameristar is required to maintain a current stock ledger in Nevada, which
may be examined by the Nevada Gaming Authorities at any time. If any securities
are held in trust by an agent or by a nominee, the record holder may be
required to disclose the identity of the beneficial owner to the Nevada Gaming
Authorities. A failure to make such disclosure may be grounds for finding the
record holder unsuitable. Ameristar is also required to render maximum
assistance in determining the identity of the beneficial owner. The Nevada
Commission has the power to require Ameristar stock certificates to bear a
legend indicating that the securities are subject to the Nevada Act. However,
to date, the Nevada Commission has not imposed such a requirement on Ameristar.

Ameristar may not make a public offering of its securities without the
prior approval of the Nevada Commission if the securities or the proceeds
therefrom are intended to be used to construct, acquire or finance gaming
facilities in Nevada, or to retire or extend obligations incurred for such
purposes. On March 20, 2003, the Nevada Commission granted us approval to make
public offerings for a period of two years, subject to specified conditions
(the Shelf Approval). The Shelf Approval also applies to any company we
wholly own that is a publicly traded corporation or would become a publicly
traded corporation pursuant to a public offering (Affiliate). The Shelf
Approval also includes approval for CPI to guarantee any security issued by,
and to hypothecate its assets to secure the payment or performance of any
obligations evidenced by a security issued by, us or an Affiliate in a public
offering. The Shelf Approval also includes approval to place restrictions upon
the transfer of, and enter into agreements not to encumber the equity
securities of, CPI. The Shelf Approval, however, may be rescinded for good
cause without prior notice upon the issuance of an interlocutory stop order by
the Chairman of the Nevada Board. The Shelf Approval does not constitute a
finding, recommendation or approval by the Nevada Commission or the Nevada
Board as to the accuracy or adequacy of the investment merits of the securities
offered. Any representation to the contrary is unlawful.

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

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The Nevada legislature has declared that some corporate acquisitions
opposed by management, repurchases of voting securities and corporate defense
tactics affecting Nevada Corporate Licensees, and Registered Corporations that
are affiliated with those operations, may be injurious to stable and productive
corporate gaming. The Nevada Commission has established a regulatory scheme to
ameliorate the potentially adverse effects of these business practices upon
Nevadas gaming industry and to further Nevadas policy to (1) assure the
financial stability of Corporate Licensees and their affiliates; (2) preserve
the beneficial aspects of conducting business in the corporate form; and (3)
promote a neutral environment for the orderly governance of corporate affairs.
Approvals are, in certain circumstances, required from the Nevada Commission
before the Registered Corporation can make exceptional repurchases of voting
securities above the current market price thereof and before a corporate
acquisition opposed by management can be consummated. The Nevada Act also
requires prior approval of a plan of recapitalization proposed by the
Registered Corporations board of directors in response to a tender offer made
directly to the Registered Corporations stockholders for the purposes of
acquiring control of the Registered Corporation.

License fees and taxes, computed in various ways depending on the type of
gaming or activity involved, are payable to the State of Nevada and to the
counties and cities in which the Nevada licensees respective operations are
conducted. Depending upon the particular fee or tax involved, these fees and
taxes are payable monthly, quarterly or annually and are based upon either (1)
a percentage of the gross revenues received; (2) the number of gaming devices
operated; or (3) the number of table games operated. A casino entertainment tax
is also paid by casino operations where entertainment is furnished in
connection with the selling or serving of food and refreshments, or the selling
of merchandise.

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

Other Jurisdictions.We expect to be subject to similar rigorous
regulatory standards in each jurisdiction in which we seek to conduct gaming
operations. There can be no assurance that statutes or regulations adopted or
fees and taxes imposed by other jurisdictions will permit us to operate
profitably.

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Federal Regulation of Slot Machines.We are required to make annual
filings with the U.S. Department of Justice in connection with the sale,
distribution or operation of slot machines. All requisite filings for the
current year have been made.

Non-Gaming Regulations.The sale of alcoholic beverages by us at our
Missouri properties is subject to licensing, control and regulation by the
Missouri Gaming Commission as described above and in Kansas City, Missouri by
Clay County. The sale of alcoholic beverages by us is subject to licensing,
control and regulation in Council Bluffs, Iowa by the ABD, in Vicksburg,
Mississippi by both the City of Vicksburg and the Alcoholic Beverage Control
Division of the Mississippi State Tax Commission and in Jackpot, Nevada by the
Liquor Board of Elko County. In Missouri, the applicable liquor laws allow us
to serve alcoholic beverages in the casino from 8 a.m. to 3 a.m. and in our
land-based facilities from 8 a.m. to 1 a.m. In Iowa, the applicable liquor
laws allow the sale of liquor during legal hours, which are Monday through
Saturday from 6 a.m. to 2 a.m. and Sunday from 8 a.m. to 2 a.m. In
Mississippi, Ameristar Vicksburg has been designated as a special resort area,
which allows ACVI to serve alcoholic beverages on a 24-hour basis. In Nevada,
the applicable liquor laws allow 24-hour service of alcoholic beverages without
any additional permits. All licenses are revocable and not transferable. The
liquor license authorities described above (the Liquor License Authorities)
have the full power to limit, condition, suspend or revoke any such license or
to place a liquor licensee on probation with or without conditions. Any such
disciplinary action could (and revocation would) have a material adverse effect
upon the operations of our business.

Certain officers and managers of ACVI must be investigated by the
applicable Liquor License Authorities in connection with its liquor permit. The
applicable Liquor License Authorities must approve any changes in licensed
positions.

All cruising vessels operated by us must comply with U.S. Coast Guard
requirements as to safety and must hold a Certificate of Inspection. These
requirements set limits on the operation of the vessel and require that each
vessel be operated by a minimum complement of licensed personnel. Loss of the
vessels Certificate of Inspection would preclude its use as a riverboat. Every
five years, United States flagged passenger vessels operating exclusively in
fresh water must conduct a thorough dry-dock inspection of underwater
machinery, valves and hull. The Ameristar Council Bluffs riverboat was due for
its dry-dock inspection in November 2000, but we have been accepted into a
United States Coast Guard program that has extended the dry-dock requirement to
October 2005 by undergoing a thorough underwater inspection. Currently,
Ameristar Council Bluffs is the only one of our properties that operates a
cruising vessel subject to these requirements. Less stringent rules apply to
permanently moored vessels.

In order to comply with the federal Merchant Marine Act of 1936, as
amended, and the federal Shipping Act of 1916, as amended, and applicable
regulations thereunder, Ameristars Bylaws contain provisions designed to
prevent persons who are not citizens of the United States from holding, in the
aggregate, more than 24.9% of Ameristars outstanding common stock.

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All of our shipboard employees employed on U.S. Coast Guard-approved
vessels, even those who have nothing to do with the actual operations of the
vessel, such as dealers, food and beverage servers, change attendants and
security personnel, may be subject to the Jones Act, which, among other things,
exempts those employees from state limits on workers compensation awards.

Web Access to Periodic Reports

Our Internet website address is www.ameristarcasinos.com. We make
available free of charge through our website our Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments
to those reports as soon as reasonably practicable after such material is
electronically filed with or furnished to the Securities and Exchange
Commission.




Item 2. Properties

Ameristar St. Charles.Ameristar St. Charles is located on approximately
52 acres which we own along the west bank of the Missouri River immediately
north of Interstate 70. Access to the property may be obtained via the Fifth
Street exit on Interstate 70.

Ameristar Kansas City.Ameristar Kansas City is located on approximately
183 acres of property which we own. The site is east of and adjacent to
Interstate 435 along the north bank of the Missouri River. The site, which is
approximately seven miles east of downtown Kansas City, Missouri, may be
accessed via the Missouri Highway 210 exit on Interstate 435.

Ameristar Council Bluffs.Ameristar Council Bluffs is located on an
approximately 50-acre site along the bank of the Missouri River and adjacent to
the Nebraska Avenue exit on Interstate 29 immediately north of the junction of
Interstates 29 and 80. We own approximately 27 acres of this site and have
rights to use the remaining portion of the site that is owned by the State of
Iowa for a 50-year term. We lease approximately one acre of the Ameristar
Council Bluffs site to affiliates of Kinseth Hospitality Corporation for the
operation of a 188-room limited service Holiday Inn Suites Hotel and a 96-room
Hampton Inn Hotel.

Ameristar Vicksburg.In connection with the development of Ameristar
Vicksburg, we acquired eight parcels in Vicksburg along Washington Street near
Interstate 20. These parcels comprise approximately 48 acres, approximately 34
of which can be developed. In addition, we have developed a 20-acre mobile
home park with 30 single- and 20 double-wide mobile homes. This mobile home
park is located seven miles from Ameristar Vicksburg and sites are available
for rent by employees and other persons. The mobile home park rental rates are
competitive with the local market rates.

The Jackpot Properties.Cactus Petes is located on a 35-acre site and The
Horseshu is located on a 30-acre site, both of which we own. The Cactus Petes
and Horseshu sites are across from each other on U.S. Highway 93. We also own
239 housing units in Jackpot, including 90 units in two apartment complexes
developed as United States Department of Agriculture Rural Economic and
Community Development Services Multi-Family Housing Program (USDA) projects.
These housing units support the primary operations of the

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Jackpot properties.
The USDA housing projects are subject to mortgage loans in favor of the USDA.

We own a gas station adjacent to Highway 93 in Jackpot, which we operate
under a franchise from Chevron. We believe that this facility is in material
compliance with applicable environmental and other regulatory requirements. We
have previously operated two other gas stations at the Jackpot properties, one
of which was abandoned prior to the adoption of modern environmental
abandonment standards. Although management believes that all tanks for this
gas station were removed in the mid-1970s, we have not conducted tests for the
presence of any environmental contamination from this gas station. We believe
that the likelihood of a material unfavorable outcome with respect to potential
environmental liabilities relating to this former gas station is remote.

Other.We lease approximately 45,000 square feet of office space in
various locations, including our executive offices in Las Vegas, Nevada.
Substantially all of our real property assets secure our obligations under our
senior credit facilities.




Item 3. Legal Proceedings

From time to time, we are a party to litigation which arises in the
ordinary course of business. We are not currently a party to any litigation
that management believes would be likely to have a material adverse effect on
us.




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

None.




PART II




Item 5. Market for Registrants Common Equity and Related Stockholder Matters

Ameristars Common Stock is traded on the Nasdaq National Market System
under the symbol ASCA. The following table sets forth, for the fiscal
quarters indicated, the high and low sale prices of the Common Stock, as
reported by Nasdaq:

|               |  |      |       |     |  |   |       | 
|-------------- |  | ---- | ----- | --- |  | - | ----- | 
|2001           |  | High |       | Low
|               |  |      |       |    
|First Quarter  |  | $    | 6.75  |     |  | $ | 4.50  | 
|Second Quarter |  |      | 18.75 |     |  |   | 6.53  | 
|Third Quarter  |  |      | 21.90 |     |  |   | 9.41  | 
|Fourth Quarter |  |      | 25.51 |     |  |   | 12.00 | 

|               |  |   |       |  |  |   |       | 
|-------------- |  | - | ----- |  |  | - | ----- | 
|2002           |  |   |       |  |  |   |       | 
|               |  |   |       |  |  |   |       | 
|First Quarter  |  | $ | 31.23 |  |  | $ | 23.28 | 
|Second Quarter |  |   | 33.94 |  |  |   | 22.51 | 
|Third Quarter  |  |   | 29.12 |  |  |   | 15.94 | 
|Fourth Quarter |  |   | 19.27 |  |  |   | 11.04 | 

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Ameristar, a Nevada corporation, was incorporated in 1993. As of March
12, 2003, there were 163 holders of record of Ameristars Common Stock.

No dividends on Ameristars Common Stock have been declared during the
last three fiscal years. We intend to retain all earnings for use in the
development of our business and do not anticipate paying any cash dividends in
the foreseeable future. In addition, our senior credit facilities and senior
subordinated notes obligate us to comply with certain financial covenants that
place limitations on the payment of dividends. See Item 7. Managements
Discussion and Analysis of Financial Condition and Results of Operations 
Liquidity and Capital Resources and Note 5  Notes payable and long-term
debt of Notes to Consolidated Financial Statements.




Item 6. Selected Financial Data

The following data
has been derived from our audited consolidated financial statements
and should be read in conjunction with those statements, certain of which are
included in this Report.

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AMERISTAR CASINOS, INC.
CONSOLIDATED SELECTED FINANCIAL DATA

|                                                                                                                                                            |  |                                         |         |                                               |         |      |         |      |         |      |         |   |         |   |         |   |         |   |         |   |         |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------- | ------- | --------------------------------------------- | ------- | ---- | ------- | ---- | ------- | ---- | ------- | - | ------- | - | ------- | - | ------- | - | ------- | - | ------- | -
|                                                                                                                                                            |  |                                         |         | For the years ended December 31,             
|                                                                                                                                                            |  |                                         |         |                                              
|STATEMENT OF OPERATIONS DATA (1):                                                                                                                           |  | 1998                                    |         | 1999                                          |         | 2000 |         | 2001 |         | 2002
|                                                                                                                                                            |  |                                         |         |                                               |         |      |         |      |         |     
|                                                                                                                                                            |  |                                         |         | (Amounts in Thousands, Except Per Share Data)
|REVENUES:                                                                                                                                                   |  |                                         |         |                                               |         |      |         |      |         |      |         |   |         |   |         |   |         |   |         |  
|                                                                                                                                                            |  | Casino (2)                              |         | $                                             | 216,319 |      |         | $    | 247,416 |      |         | $ | 286,438 |   |         | $ | 568,259 |   |         | $ | 678,642 |  
|                                                                                                                                                            |  | Food and beverage                       |         |                                               | 45,853  |      |         |      | 49,142  |      |         |   | 53,653  |   |         |   | 70,314  |   |         |   | 84,351  |  
|                                                                                                                                                            |  | Rooms                                   |         |                                               | 14,201  |      |         |      | 17,257  |      |         |   | 18,121  |   |         |   | 23,384  |   |         |   | 23,989  |  
|                                                                                                                                                            |  | Other                                   |         |                                               | 10,401  |      |         |      | 11,089  |      |         |   | 12,018  |   |         |   | 18,074  |   |         |   | 19,387  |  
|                                                                                                                                                            |  |                                         |         |                                               |         |      |         |      |         |      |         |   |         |   |         |   |         |   |         |  
|                                                                                                                                                            |  |                                         | 286,774 |                                               |         |      | 324,904 |      |         |      | 370,230 |   |         |   | 680,031 |   |         |   | 806,369 |  
|                                                                                                                                                            |  | Less: Promotional allowances (2)        |         |                                               | 34,990  |      |         |      | 39,599  |      |         |   | 47,308  |   |         |   | 77,206  |   |         |   | 108,406 |  
|                                                                                                                                                            |  |                                         |         |                                               |         |      |         |      |         |      |         |   |         |   |         |   |         |   |         |  
|                                                                                                                                                            |  | Net revenues                            |         |                                               | 251,784 |      |         |      | 285,305 |      |         |   | 322,922 |   |         |   | 602,825 |   |         |   | 697,963 |  
|                                                                                                                                                            |  |                                         |         |                                               |         |      |         |      |         |      |         |   |         |   |         |   |         |   |         |  
|OPERATING EXPENSES:                                                                                                                                         |  |                                         |         |                                               |         |      |         |      |         |      |         |   |         |   |         |   |         |   |         |  
|                                                                                                                                                            |  | Casino (2)                              |         |                                               | 90,489  |      |         |      | 99,376  |      |         |   | 115,864 |   |         |   | 252,906 |   |         |   | 297,476 |  
|                                                                                                                                                            |  | Food and beverage                       |         |                                               | 31,698  |      |         |      | 33,207  |      |         |   | 35,135  |   |         |   | 46,169  |   |         |   | 53,963  |  
|                                                                                                                                                            |  | Rooms                                   |         |                                               | 5,809   |      |         |      | 6,372   |      |         |   | 6,944   |   |         |   | 7,921   |   |         |   | 6,826   |  
|                                                                                                                                                            |  | Other                                   |         |                                               | 10,044  |      |         |      | 10,203  |      |         |   | 12,257  |   |         |   | 11,813  |   |         |   | 13,962  |  
|                                                                                                                                                            |  | Selling, general and administrative     |         |                                               | 75,604  |      |         |      | 86,142  |      |         |   | 90,416  |   |         |   | 129,060 |   |         |   | 150,228 |  
|                                                                                                                                                            |  | Depreciation and amortization           |         |                                               | 24,191  |      |         |      | 24,460  |      |         |   | 27,784  |   |         |   | 40,101  |   |         |   | 48,711  |  
|                                                                                                                                                            |  | Impairment loss on assets held for
sale |         |                                               |        |      |         |      |        |      |         |   | 57,153  |   |         |   |        |   |         |   | 5,213   |  
|                                                                                                                                                            |  | Preopening costs                        |         |                                               | 10,611  |      |         |      |        |      |         |   |        |   |         |   |        |   |         |   | 6,401   |  
|                                                                                                                                                            |  |                                         |         |                                               |         |      |         |      |         |      |         |   |         |   |         |   |         |   |         |  
|                                                                                                                                                            |  | Total operating expenses                |         |                                               | 248,446 |      |         |      | 259,760 |      |         |   | 345,553 |   |         |   | 487,970 |   |         |   | 582,780 |  
|                                                                                                                                                            |  |                                         |         |                                               |         |      |         |      |         |      |         |   |         |   |         |   |         |   |         |  
|INCOME (LOSS) FROM OPERATIONS                                                                                                                               |  |                                         | 3,338   |                                               |         |      | 25,545  |      |         |      | (22,631 | ) |         |   | 114,855 |   |         |   | 115,183 |  
|OTHER INCOME (EXPENSE):                                                                                                                                     |  |                                         |         |                                               |         |      |         |      |         |      |         |   |         |   |         |   |         |   |         |  
|                                                                                                                                                            |  | Interest income                         |         |                                               | 296     |      |         |      | 300     |      |         |   | 161     |   |         |   | 522     |   |         |   | 174     |  
|                                                                                                                                                            |  | Interest expense, net                   |         |                                               | (22,699 | )    |         |      | (24,449 | )    |         |   | (28,316 | ) |         |   | (64,931 | ) |         |   | (51,206 | )
|                                                                                                                                                            |  | Other                                   |         |                                               | (13     | )    |         |      | (851    | )    |         |   | (942    | ) |         |   | (776    | ) |         |   | (272    | )
|                                                                                                                                                            |  |                                         |         |                                               |         |      |         |      |         |      |         |   |         |   |         |   |         |   |         |  
|Income (loss) before income tax provision
(benefit), extraordinary loss on early
retirement of debt and cumulative effect of change in accounting principle |  |                                         | (19,078 | )                                             |         |      | 545     |      |         |      | (51,728 | ) |         |   | 49,670  |   |         |   | 63,879  |  
|Income tax provision (benefit)                                                                                                                              |  |                                         | (6,363  | )                                             |         |      | 340     |      |         |      | (17,981 | ) |         |   | 16,381  |   |         |   | 23,345  |  
|                                                                                                                                                            |  |                                         |         |                                               |         |      |         |      |         |      |         |   |         |   |         |   |         |   |         |  
|Income (loss) before extraordinary loss
on early retirement of debt and
cumulative
effect of change in accounting principle                                 |  |                                         | (12,715 | )                                             |         |      | 205     |      |         |      | (33,747 | ) |         |   | 33,289  |   |         |   | 40,534  |  
|Extraordinary loss on early retirement
of debt, net of income tax benefit
of $3,479                                                                         |  |                                         |        |                                               |         |      |        |      |         |      | (6,560  | ) |         |   |        |   |         |   |        |  
|                                                                                                                                                            |  |                                         |         |                                               |         |      |         |      |         |      |         |   |         |   |         |   |         |   |         |  
|Income (loss) before cumulative effect of
change in accounting principle                                                                                    |  |                                         | (12,715 | )                                             |         |      | 205     |      |         |      | (40,307 | ) |         |   | 33,289  |   |         |   | 40,534  |  
|Cumulative effect of change in
accounting principle  adoption of SFAS
No. 133, net of income tax benefit of
$73                                            |  |                                         |        |                                               |         |      |        |      |         |      |        |   |         |   | (135    | ) |         |   |        |  
|                                                                                                                                                            |  |                                         |         |                                               |         |      |         |      |         |      |         |   |         |   |         |   |         |   |         |  
|NET INCOME (LOSS)                                                                                                                                           |  | $                                       | (12,715 | )                                             |         | $    | 205     |      |         | $    | (40,307 | ) |         | $ | 33,154  |   |         | $ | 40,534  |  
|                                                                                                                                                            |  |                                         |         |                                               |         |      |         |      |         |      |         |   |         |   |         |   |         |   |         |  

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##### Table of Contents



AMERISTAR CASINOS, INC.
CONSOLIDATED SELECTED FINANCIAL DATA(continued)

|                                    |                   |                                                                                                                             |  |         |  |                                               |        |      |  |      |        |  |  |   |        |   |  |   |        |   |  |   |        | 
|----------------------------------- | ----------------- | --------------------------------------------------------------------------------------------------------------------------- |  | ------- |  | --------------------------------------------- | ------ | ---- |  | ---- | ------ |  |  | - | ------ | - |  | - | ------ | - |  | - | ------ | 
|                                    |                   |                                                                                                                             |  |         |  | For the years ended December 31,             
|STATEMENT OF OPERATIONS DATA        |                   |                                                                                                                            
|(CONTINUED):                        |                   | 1998                                                                                                                        |  | 1999    |  | 2000                                          |        | 2001 |  | 2002
|                                    |                   |                                                                                                                             |  |         |  |                                               |        |      |  |     
|                                    |                   |                                                                                                                             |  |         |  | (Amounts in Thousands, Except Per Share Data)
|EARNINGS PER SHARE (3):             |                   |                                                                                                                             |  |         |  |                                               |        |      |  |      |        |  |  |   |        |   |  |   |        |  
|                                    |                   | Income (loss) before
extraordinary loss
on early retirement of debt and
cumulative effect of change in
accounting principle |  |         |  |                                               |        |      |  |      |        |  |  |   |        |   |  |   |        |   |  |  
|                                    |                   |                                                                                                                             |  | Basic   |  | $                                             | (0.62  | )    |  | $    | 0.01   |  |  | $ | (1.65  | ) |  | $ | 1.59   |   |  | $ | 1.55   | 
|                                    |                   |                                                                                                                             |  |         |  |                                               |        |      |  |      |        |  |  |   |        |   |  |   |        |  
|                                    |                   |                                                                                                                             |  | Diluted |  | $                                             | (0.62  | )    |  | $    | 0.01   |  |  | $ | (1.65  | ) |  | $ | 1.52   |   |  | $ | 1.50   | 
|                                    |                   |                                                                                                                             |  |         |  |                                               |        |      |  |      |        |  |  |   |        |   |  |   |        |  
|                                    |                   | Extraordinary loss on early
retirement of
debt                                                                              |  |         |  |                                               |        |      |  |      |        |  |  |   |        |   |  |   |        |   |  |  
|                                    |                   |                                                                                                                             |  | Basic   |  | $                                             |       |      |  | $    |       |  |  | $ | (0.33  | ) |  | $ |       |   |  | $ |       | 
|                                    |                   |                                                                                                                             |  |         |  |                                               |        |      |  |      |        |  |  |   |        |   |  |   |        |  
|                                    |                   |                                                                                                                             |  | Diluted |  | $                                             |       |      |  | $    |       |  |  | $ | (0.33  | ) |  | $ |       |   |  | $ |       | 
|                                    |                   |                                                                                                                             |  |         |  |                                               |        |      |  |      |        |  |  |   |        |   |  |   |        |  
|                                    |                   | Cumulative effect of change in
accounting principle                                                                         |  |         |  |                                               |        |      |  |      |        |  |  |   |        |   |  |   |        |   |  |  
|                                    |                   |                                                                                                                             |  | Basic   |  | $                                             |       |      |  | $    |       |  |  | $ |       |   |  | $ |       |   |  | $ |       | 
|                                    |                   |                                                                                                                             |  |         |  |                                               |        |      |  |      |        |  |  |   |        |   |  |   |        |  
|                                    |                   |                                                                                                                             |  | Diluted |  | $                                             |       |      |  | $    |       |  |  | $ |       |   |  | $ | (0.01  | ) |  | $ |       | 
|                                    |                   |                                                                                                                             |  |         |  |                                               |        |      |  |      |        |  |  |   |        |   |  |   |        |  
|                                    | Net income (loss) |                                                                                                                             |  |         |  |                                               |        |      |  |      |        |  |  |   |        |   |  |   |        |   | 
|                                    |                   |                                                                                                                             |  | Basic   |  | $                                             | (0.62  | )    |  | $    | 0.01   |  |  | $ | (1.98  | ) |  | $ | 1.59   |   |  | $ | 1.55   | 
|                                    |                   |                                                                                                                             |  |         |  |                                               |        |      |  |      |        |  |  |   |        |   |  |   |        |  
|                                    |                   |                                                                                                                             |  | Diluted |  | $                                             | (0.62  | )    |  | $    | 0.01   |  |  | $ | (1.98  | ) |  | $ | 1.51   |   |  | $ | 1.50   | 
|                                    |                   |                                                                                                                             |  |         |  |                                               |        |      |  |      |        |  |  |   |        |   |  |   |        |  
|WEIGHTED AVERAGE SHARES OUTSTANDING |                   |                                                                                                                             |  |         |  |                                               |        |      |  |      |        |  |  |   |        |   |  |   |        |  
|                                    |                   |                                                                                                                             |  | Basic   |  |                                               | 20,360 |      |  |      | 20,362 |  |  |   | 20,401 |   |  |   | 20,906 |   |  |   | 26,107 | 
|                                    |                   |                                                                                                                             |  |         |  |                                               |        |      |  |      |        |  |  |   |        |   |  |   |        |  
|                                    |                   |                                                                                                                             |  | Diluted |  |                                               | 20,360 |      |  |      | 20,362 |  |  |   | 20,401 |   |  |   | 21,908 |   |  |   | 26,992 | 
|                                    |                   |                                                                                                                             |  |         |  |                                               |        |      |  |      |        |  |  |   |        |   |  |   |        |  

|                                                                                  |  |                        |         |      |  |      |         |      |  |      |         |  |  |   |         |  |  |   |           | 
|--------------------------------------------------------------------------------- |  | ---------------------- | ------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- |  |  | - | ------- |  |  | - | --------- | 
|                                                                                  |  | December 31,          
|                                                                                  |  |                       
|BALANCE SHEET AND OTHER DATA:                                                     |  | 1998                   |         | 1999 |  | 2000 |         | 2001 |  | 2002
|                                                                                  |  |                        |         |      |  |      |         |      |  |     
|                                                                                  |  | (Amounts in
Thousands)
|Cash and cash equivalents                                                         |  | $                      | 18,209  |      |  | $    | 15,531  |      |  | $    | 36,245  |  |  | $ | 41,098  |  |  | $ | 90,573    | 
|Total assets                                                                      |  |                        | 351,773 |      |  |      | 378,645 |      |  |      | 890,921 |  |  |   | 892,592 |  |  |   | 1,157,307 | 
|Total long-term debt and
capitalized lease obligations,
net of current maturities |  |                        | 230,399 |      |  |      | 242,890 |      |  |      | 780,475 |  |  |   | 624,255 |  |  |   | 760,665   | 
|Stockholders equity (4)                                                          |  |                        | 67,924  |      |  |      | 68,169  |      |  |      | 28,044  |  |  |   | 157,336 |  |  |   | 202,196   | 
|Capital expenditures                                                              |  |                        | 32,312  |      |  |      | 57,590  |      |  |      | 33,357  |  |  |   | 114,114 |  |  |   | 255,530   | 



---

|(1) |  | The expanded casino at Ameristar Council Bluffs opened in November 1999.
The Reserve Hotel Casino opened in February 1998 and was sold on January
29, 2001 pursuant to an agreement entered into in October 2000. The
Ameristar Vicksburg hotel opened in June 1998. The expanded casino at
Ameristar Vicksburg opened in December 1999. The Ameristar Kansas City
and Ameristar St. Charles properties were acquired on December 20, 2000.
The new Ameristar St. Charles facility opened on August 6, 2002.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Casino revenues for each of 1998, 1999, 2000 and 2001 were previously
adjusted to account for expenses associated with progress toward earning
points for cash-based loyalty programs; however, these expenses have
been reclassified and are now
reported as promotional                                                                                                                                                                                                                                   

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##### Table of Contents



|    |  | allowances. In addition,
expenses associated with
directed target mail coin coupon offerings have been reclassified and
are now reported as promotional allowances for
1998, 1999, 2000 and 2001, with a corresponding reduction in casino costs.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(3) |  | Weighted average basic and diluted shares outstanding are equal for 1998,
1999 and 2000 as stock options were anti-dilutive in 1998 and 2000 and the
dilution was not material in 1999.                                                          
|   
|   
|   
|   
|(4) |  | No dividends were paid in 1998 through 2002.                                                                                                                                                                                                     

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##### Table of Contents



AMERISTAR CASINOS, INC.
CONSOLIDATED SELECTED QUARTERLY FINANCIAL DATA

|                                       |  |                                               |         |          |  |               |         |              |  |       |         |     |  |   |         |  |  |   |         | 
|-------------------------------------- |  | --------------------------------------------- | ------- | -------- |  | ------------- | ------- | ------------ |  | ----- | ------- | --- |  | - | ------- |  |  | - | ------- | 
|                                       |  | For the fiscal quarters ended                 |         |          |  |              
|                                       |  |                                               |         |          |  |              
|                                       |  | March 31,                                     |         | June 30, |  | September 30, |         | December 31, |  |       |         |    
|                                       |  | 2002                                          |         | 2002     |  | 2002          |         | 2002         |  | Total
|                                       |  |                                               |         |          |  |               |         |              |  |      
|                                       |  | (Amounts in Thousands, Except Per Share Data)
|Net revenues                           |  | $                                             | 162,795 |          |  | $             | 166,291 |              |  | $     | 187,258 |     |  | $ | 181,619 |  |  | $ | 697,963 | 
|Income from operations                 |  |                                               | 35,416  | (1)      |  |               | 29,277  | (2)          |  |       | 25,369  | (3) |  |   | 25,121  |  |  |   | 115,183 | 
|Income before income tax provision (4) |  |                                               | 24,775  |          |  |               | 19,911  |              |  |       | 11,139  |     |  |   | 8,055   |  |  |   | 63,879  | 
|Net income (4)                         |  |                                               | 15,449  |          |  |               | 12,631  |              |  |       | 7,408   |     |  |   | 5,047   |  |  |   | 40,534  | 
|Basic earnings per share (5)           |  | $                                             | 0.60    |          |  | $             | 0.48    |              |  | $     | 0.28    |     |  | $ | 0.19    |  |  | $ | 1.55    | 
|Diluted earnings per share (5)         |  |                                               | 0.57    |          |  |               | 0.47    |              |  |       | 0.28    |     |  |   | 0.19    |  |  |   | 1.50    | 

|                                                                                           |  |                                               |         |          |  |               |         |              |  |       |         |  |  |   |         |  |  |   |         | 
|------------------------------------------------------------------------------------------ |  | --------------------------------------------- | ------- | -------- |  | ------------- | ------- | ------------ |  | ----- | ------- |  |  | - | ------- |  |  | - | ------- | 
|                                                                                           |  | For the fiscal quarters ended                 |         |          |  |              
|                                                                                           |  |                                               |         |          |  |              
|                                                                                           |  | March 31,                                     |         | June 30, |  | September 30, |         | December 31, |  |       |         | 
|                                                                                           |  | 2001                                          |         | 2001     |  | 2001          |         | 2001         |  | Total
|                                                                                           |  |                                               |         |          |  |               |         |              |  |      
|                                                                                           |  | (Amounts in Thousands, Except Per Share Data)
|Net revenues                                                                               |  | $                                             | 147,767 |          |  | $             | 147,226 |              |  | $     | 155,806 |  |  | $ | 152,026 |  |  | $ | 602,825 | 
|Income from operations                                                                     |  |                                               | 26,766  |          |  |               | 29,450  |              |  |       | 31,972  |  |  |   | 26,667  |  |  |   | 114,855 | 
|Income before income tax provision
and cumulative effect of change in
accounting principle |  |                                               | 6,392   |          |  |               | 13,799  |              |  |       | 17,490  |  |  |   | 11,989  |  |  |   | 49,670  | 
|Income before cumulative effect of
change in accounting principle                          |  |                                               | 3,996   |          |  |               | 8,875   |              |  |       | 11,265  |  |  |   | 9,153   |  |  |   | 33,289  | 
|Net income                                                                                 |  |                                               | 3,861   |          |  |               | 8,875   |              |  |       | 11,265  |  |  |   | 9,153   |  |  |   | 33,154  | 
|Basic earnings per share (5)                                                               |  | $                                             | 0.19    |          |  | $             | 0.43    |              |  | $     | 0.54    |  |  | $ | 0.42    |  |  | $ | 1.59    | 
|Diluted earnings per share (5)                                                             |  |                                               | 0.18    |          |  |               | 0.40    |              |  |       | 0.49    |  |  |   | 0.40    |  |  |   | 1.51    | 



---

|(1) |  | Net of preopening expense of $150.                                                                                                                                                                                                                                                          
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Net of impairment loss on assets held for sale of $4,136 and preopening expense of $1,326.                                                                                                                                                                                                  
|   
|   
|   
|   
|(3) |  | Net of impairment loss on assets held for sale of $1,077 and preopening expense of $4,925.                                                                                                                                                                                                  
|   
|   
|   
|   
|(4) |  | The sum of the amounts for the four quarters does not equal the total for the year due to rounding.                                                                                                                                                                                         
|   
|   
|   
|   
|(5) |  | Because earnings per share amounts are calculated using the weighted average number of common and dilutive common equivalent shares outstanding during each quarter, the sum
of the per-share amounts for the four quarters may not equal the total earnings per share amounts for the year.

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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with our
Consolidated Financial Statements and the Notes thereto included in this
Report. The information in this section and in this Report generally includes
forward-looking statements. See Item 1. Business  Risk Factors.

Overview

We develop, own and operate casinos and related hotel, food and beverage,
entertainment and other facilities, with six properties in operation in
Missouri, Iowa, Mississippi and Nevada. Our properties consist of Ameristar
Casino St. Charles, located in St. Charles, Missouri serving the St. Louis
metropolitan area; Ameristar Casino Hotel Kansas City, located in Kansas City,
Missouri; Ameristar Casino Hotel Council Bluffs, located in Council Bluffs,
Iowa serving the Omaha, Nebraska/Council Bluffs metropolitan area; Ameristar
Casino Hotel Vicksburg, located in Vicksburg, Mississippi; and Cactus Petes
Resort Casino and The Horseshu Hotel & Casino, located in Jackpot, Nevada at
the Idaho border. We acquired the Missouri properties in late December 2000. We
sold The Reserve Hotel Casino in Henderson, Nevada in late January 2001.

We recently completed, or are in the process of completing, several major
enhancement projects at our properties. These projects include the following:



| |  |  | New Casino and Entertainment Facility at Ameristar St. Charles.We
opened the new casino and entertainment facility at Ameristar St.
Charles on August 6, 2002. The new facility features 130,000 square
feet of casino and entertainment space consisting of approximately 3,330
slot machines, 95 table games (including a 12-table poker room) and a
wide variety of dining and entertainment amenities.                                                                                                                                                                                                                                                                  
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | New Parking Garage at Ameristar Kansas City.In July 2002,
construction of the new 2,650-space parking garage Ameristar Kansas City
was completed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  |  | Renovation and Enhancement Project at Ameristar Kansas City.In July
2002, we began a substantial renovation and enhancement project at
Ameristar Kansas City. As part of Phase I of this project, we opened
three new dining and entertainment venues in early January 2003: the
Great Plains Cattle Co. steakhouse; the Falcon Diner; and the Depot No.
9 entertainment venue. We have also constructed an open-seating food
court, where we have leased space to three nationally known brands:
Burger King, which opened in December 2002; Sbarro Pizza, which opened
in February 2003; and Cold Stone Creamery, which is expected to open in
the second quarter of 2003.
|
| |   |  | Phase I of the project also
includes a major renovation of the Kansas City casino.
We have opened up large sections of a wall
dividing the casino floor, added escalators in the central portions of the
casino floor to improve access to the second level, removed a large
portion of the wall that separated the casino from the streetscape to
improve visibility into the casino and replaced the carpet and
other finishes                                                                                                                                                                                                                                            

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| |   |  | throughout the casino. As part of
Phase I of the project, we plan to relocate and renovate the poker
room and high-limit area. In addition, we will add slot machines to the
half of the mezzanine level that was previously not being used, which
will bring the total slot count up to approximately 3,150 machines. We
believe these changes will substantially improve the layout and flow of
the casino area, enhance the overall excitement of the casino and improve
customer satisfaction.                                                                                                                                                                                                                                    
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |   |  | Phase I of the renovation and enhancement project has been
substantially completed and the total construction costs are expected to be
approximately $29 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |   |  | We expect to begin construction on Phase II of the renovation
and enhancement project in the second quarter of 2003. We plan to convert
the Hofbrauhaus Brewery into a 330-seat Amerisports Brew Pub featuring
state-of-the-art video and audio technology, remodel Pearls
Oyster Bar, construct a cabaret in the casino area and
upgrade certain common areas throughout the Ameristar Kansas City property.
We will take the necessary steps to isolate the construction areas in
order to minimize disruption associated with Phase II of the
project. We expect to spend approximately $10 million in construction costs
on Phase II of the renovation
and enhancement project, which is expected to be completed in August 2003.
|
| |  |  | Renovations and enhancements at
Ameristar Vicksburg.We
plan to remodel a large portion of the third level of the casino boat,
including constructing a meeting room, remodeling the Veranda Buffet and
enhancing certain common areas. We expect
to begin construction during the second quarter of 2003 and complete the
project by the end of the first quarter of 2004. The project construction costs are
expected to be approximately $7 million.                                                                                                                                                                                                                                                                                

Our quarterly and annual operating results may be affected by, among other
things, competitive pressures, gaming tax increases, the commencement of new
gaming operations, the amount of preopening costs, charges associated with debt
refinancing or property acquisition and disposition transactions, construction
at existing facilities and weather conditions affecting our properties.
Consequently, our operating results for any quarter or year are not necessarily
comparable and may not be indicative of future periods results.

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Results of Operations

Selected Financial Measures By Property

The following table sets forth certain information concerning our
consolidated cash flows and the results of operations of our operating
properties:

|                                    |                                             |  |                          |          |      |  |      |         |   |  |   |          |  
|----------------------------------- | ------------------------------------------- |  | ------------------------ | -------- | ---- |  | ---- | ------- | - |  | - | -------- | -
|                                    |                                             |  | Years ended December 31,
|                                    |                                             |  |                         
|                                    |                                             |  | 2000                     |          | 2001 |  | 2002
|                                    |                                             |  |                          |          |      |  |     
|                                    |                                             |  | (Dollars in thousands)  
|Consolidated cash flow information: |                                             |  |                          |          |      |  |      |         |   |  |   |         
|                                    | Cash flows provided by operations           |  | $                        | 38,836   |      |  | $    | 111,342 |   |  | $ | 126,618  |  
|                                    | Cash flows used in investing                |  |                          | (521,206 | )    |  |      | (31,970 | ) |  |   | (241,454 | )
|                                    | Cash flows provided by (used in) financing  |  |                          | 503,084  |      |  |      | (74,519 | ) |  |   | 164,311  |  
|                                   
|Net revenues (1):                   |                                             |  |                          |          |      |  |      |         |   |  |   |         
|                                    | Ameristar St. Charles (2)                   |  | $                        | 4,245    |      |  | $    | 139,318 |   |  | $ | 190,526  |  
|                                    | Ameristar Kansas City (2)                   |  |                          | 7,744    |      |  |      | 202,528 |   |  |   | 211,728  |  
|                                    | Ameristar Council Bluffs                    |  |                          | 115,333  |      |  |      | 124,256 |   |  |   | 145,357  |  
|                                    | Ameristar Vicksburg                         |  |                          | 76,969   |      |  |      | 75,068  |   |  |   | 90,960   |  
|                                    | Jackpot Properties                          |  |                          | 59,160   |      |  |      | 56,944  |   |  |   | 59,217   |  
|                                    | The Reserve (3)                             |  |                          | 59,359   |      |  |      | 4,710   |   |  |   |         |  
|                                    | Corporate and other                         |  |                          | 112      |      |  |      | 1       |   |  |   | 175      |  
|                                    |                                             |  |                          |          |      |  |      |         |   |  |   |         
|                                    | Consolidated net revenues                   |  | $                        | 322,922  |      |  | $    | 602,825 |   |  | $ | 697,963  |  
|                                    |                                             |  |                          |          |      |  |      |         |   |  |   |         
|Operating income (loss):            |                                             |  |                          |          |      |  |      |         |   |  |   |         
|                                    | Ameristar St. Charles (2) (4)               |  | $                        | 597      |      |  | $    | 40,986  |   |  | $ | 30,386   |  
|                                    | Ameristar Kansas City (2)                   |  |                          | 1,168    |      |  |      | 43,447  |   |  |   | 41,451   |  
|                                    | Ameristar Council Bluffs                    |  |                          | 22,060   |      |  |      | 28,029  |   |  |   | 38,560   |  
|                                    | Ameristar Vicksburg                         |  |                          | 16,041   |      |  |      | 14,376  |   |  |   | 23,261   |  
|                                    | Jackpot Properties                          |  |                          | 10,595   |      |  |      | 9,344   |   |  |   | 9,834    |  
|                                    | The Reserve (3)                             |  |                          | (57,321  | )    |  |      | 67      |   |  |   | (280     | )
|                                    | Corporate
and other (4)                     |  |                          | (15,771  | )    |  |      | (21,394 | ) |  |   | (28,029  | )
|                                    |                                             |  |                          |          |      |  |      |         |   |  |   |         
|                                    | Consolidated operating income (loss)        |  | $                        | (22,631  | )    |  | $    | 114,855 |   |  | $ | 115,183  |  
|                                    |                                             |  |                          |          |      |  |      |         |   |  |   |         
|Operating income (loss) margins:    |                                             |  |                          |          |      |  |      |         |   |  |   |         
|                                    | Ameristar St. Charles (2) (4)               |  |                          | 14.1     | %    |  |      | 29.4    | % |  |   | 15.9     | %
|                                    | Ameristar Kansas City (2)                   |  |                          | 15.1     | %    |  |      | 21.5    | % |  |   | 19.6     | %
|                                    | Ameristar Council Bluffs                    |  |                          | 19.1     | %    |  |      | 22.6    | % |  |   | 26.5     | %
|                                    | Ameristar Vicksburg                         |  |                          | 20.8     | %    |  |      | 19.2    | % |  |   | 25.6     | %
|                                    | Jackpot Properties                          |  |                          | 17.9     | %    |  |      | 16.4    | % |  |   | 16.6     | %
|                                    | The Reserve (3)                             |  |                          | (96.6    | %)   |  |      | 1.4     | % |  |   |         |  
|                                    | Consolidated operating income (loss) margin |  |                          | (7.0     | %)   |  |      | 19.1    | % |  |   | 16.5     | %

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---

|(1) |  | We previously recorded expenses associated with our targeted direct
mail coin coupon offerings as a casino department expense. These
charges totaling $11.2 million and $24.0 million for the years ended
December 31, 2000 and 2001, respectively, have been reclassified
and are now reported as promotional allowances.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | The Missouri properties were acquired on December 20, 2000.
According to information published by the prior owner of the Missouri
properties, as adjusted to exclude gain from the sale of the Missouri
properties and to account for progress towards the point-based
complimentary goods and services/cash rebates and expenses associated
with the properties targeted direct mail coin coupon offerings, the
combined operating results of the Missouri properties (including
operating results reported by the prior owner and Ameristar) for the
twelve-month period ended December 31, 2000 are as set forth below.
The combined operating results of the Missouri properties for the
twelve-month periods ended December 31, 2001 and 2002 are shown below
for comparative purposes. All amounts, except margins, are in
thousands.

|                        |  |                                      |         |      |  |      |         |   |  |   |         |  
|----------------------- |  | ------------------------------------ | ------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|                        |  | Twelve Months                       
|                        |  | Ended December 31,                  
|                        |  |                                     
|                        |  | 2000                                 |         | 2001 |  | 2002
|                        |  |                                      |         |      |  |     
|                        |  | Amounts in thousands, except margins
|Net revenues            |  | $                                    | 315,032 |      |  | $    | 341,846 |   |  | $ | 402,254 |  
|Operating income        |  |                                      | 62,916  |      |  |      | 84,433  |   |  |   | 71,837  |  
|Operating income margin |  |                                      | 20.0    | %    |  |      | 24.7    | % |  |   | 17.9    | %



|(3) |  | Operating results for The Reserve are through January 29, 2001,
when we sold the property. Operating loss for The Reserve in 2000
includes a $57.2 million impairment loss from the sale of the property.                                                                                                                                                                                                                 
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(4) |  | Operating income for Ameristar St. Charles in 2002 includes
preopening expense of $5.8 million related to the new facility that
opened in August 2002 and impairment loss of $4.4 million on assets
held for sale, including the former casino barge and certain gaming
equipment. Corporate and other operating expense in 2002 includes $0.6 million of
preopening expense associated with the new St. Charles facility.

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| |  | Year Ended December 31, 2002 Versus Year Ended December 31, 2001
| |  | ----------------------------------------------------------------

Net Revenues

Consolidated net revenues for the year ended December 31, 2002 were $698.0
million compared to $602.8 million for 2001, an increase of $95.2 million or
15.8%. The improvement in revenues is primarily attributable to increased
revenues at the new St. Charles facility, which opened on August 6, 2002, as
well as continued revenue growth at all other properties.

Net revenues at Ameristar St. Charles for 2002 were $190.5 million, up
$51.2 million or 36.8%. The growth in net revenues is due mainly to the
opening of the new facility in August 2002. Ameristar St. Charles market
share grew from 19.9% in the first quarter of 2002 to 29.4% in the fourth
quarter of 2002.

Ameristar Kansas Citys net revenues for 2002 were $211.7 million, up $9.2
million or 4.5%. The increase is mainly the result of effective targeted
marketing programs and was achieved despite increased competition
following the June 2001 opening of a competitors newly renovated facility.
Ameristar Kansas City had a 34.2% market share in 2002, up from 32.8% in 2001.

Net revenues at Ameristar Council Bluffs for 2002 were $145.4 million,
representing an increase of $21.1 million, or 17.0%, over 2001. The property
continued to benefit from the ongoing refinement of targeted marketing
programs, the installation of new gaming equipment and the renovation project
that was completed in the first quarter of 2001. The propertys market share
also improved significantly, from 33.7% in 2001 to 37.9% in 2002.

Ameristar Vicksburgs net revenues for 2002 increased to $91.0 million
from $75.1 million in 2001, up 21.2%, due to the continuing refinement of
targeted marketing programs, the installation of new gaming product and the
renovation project that was completed in the second quarter of 2001. Ameristar
Vicksburg, the long-time market share leader in Vicksburg, improved its market
share to 39.2% in 2002, up from 32.7% in 2001.

The Jackpot properties generated $59.2 million of net revenues in 2002, an
increase of 4.0% compared to the same period in 2001. This improvement is
attributable primarily to more effective marketing programs in 2002.

Income from Operations

Income from operations for the year ended December 31, 2002 improved
slightly to $115.2 million, up $0.3 million, or 0.3%, over income from
operations of $114.9 million in 2001. Strong results at Ameristar Council
Bluffs and Ameristar Vicksburg contributed to this improvement while operating
income at Ameristar St. Charles and Ameristar Kansas City decreased and
corporate expense increased in 2002 compared to 2001. Income from operations
in 2002 includes preopening expense of $6.4 million related to the opening of
the new St. Charles facility and impairment loss of $5.2 million on assets held
for sale, including

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the former casino barge at Ameristar St. Charles and
certain gaming equipment at various properties. Our operating income margin
decreased from 19.1% in 2001 to 16.5% in 2002. We expect to achieve improved operating margins in future periods through
increased labor and marketing efficiencies and other operational initiatives.

Ameristar St. Charles generated $30.4 million of income from operations
during 2002, representing a decrease of $10.6 million, or 25.9%, from the prior
year. In 2002, we incurred $5.8 million of preopening expenses related to the
new St. Charles facility that opened in August 2002 and $4.4 million of
impairment loss associated with certain assets held for sale, including the
casino barge and gaming equipment, that were not utilized after the new
facility opened. In addition, labor and marketing expenses increased by $15.8
million in the third and fourth quarter of 2002 compared to the same period in
2001, due to the increased size and the scope of amenities offered at the new
facility and initial operating inefficiencies associated with the opening of
the new facility. Furthermore, depreciation expense increased by $7.0 million
in the same period as the result of the substantial increase in the base of
depreciable assets after the new facility opened. The operating income margin at Ameristar St. Charles has been steadily
improving since the new facility opened in August 2002. In February 2003,
operating income margin at the property was 21.9%, compared to 15.1% for the
period from August through December 2002. This improvement is largely
attributable to improved operating efficiencies through cost-control measures
implemented to date, especially in the areas of labor and marketing, as well as
the heightened customer awareness of the scope and quality of the new facility.

Income from operations at Ameristar Kansas City declined from $43.4
million in 2001 to 41.5 million in 2002, representing a decrease of $1.9
million, or 4.4%. The propertys results were adversely impacted by business disruption
associated with the ongoing construction of enhancements to the casino and
entertainment facilities that began in July 2002. In addition, higher labor
and related costs primarily as a result of increased health insurance costs as well as additional expenses directly related to
increased revenues, including gaming taxes and other expenses attributable to
player development strategies, were principally responsible for the increase in
operating expenses. These increases were partially offset by a decrease in
depreciation and amortization expense as a result of the absence of goodwill
amortization expense in 2002 compared to $3.0 million recorded in the prior
year. In accordance with Statement of Financial Accounting Standards (SFAS)
No. 142, which we adopted on January 1, 2002, we no longer amortize goodwill.

The renovation and enhancement project at Ameristar Kansas City includes
significant improvements to the casino and land-based amenities. Phase I of
the renovation and enhancement project at Ameristar Kansas City has been
substantially completed and Phase II is expected to be completed in August
2003. Similar projects at Ameristar Council Bluffs, Ameristar Vicksburg and
Ameristar St. Charles have produced significantly improved operating results
since the completion of the projects. We believe that we will achieve
improved results at Ameristar Kansas City through these enhancements once
construction is completed.

Ameristar Council Bluffs reported income from operations of $38.6 million
for 2002 compared to $28.0 million in 2001, a $10.6 million, or 37.9%,
improvement. This significant growth is primarily due to increased revenues as
discussed above and improved operating efficiencies as the result of a
continued emphasis on controlling costs.

Ameristar Vicksburgs income from operations of $23.3 million in 2002
represents an increase of $8.9 million, or 61.8%, as compared to 2001. Similar
to Ameristar Council Bluffs, higher revenues due to the factors discussed above
and greater operating efficiencies contributed to the improvement in operating
results at Ameristar Vicksburg. The increase was partially offset by $0.5
million of impairment loss on gaming equipment held for sale.

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The Jackpot properties reported income from operations of $9.8 million in
2002, a $0.5 million, or 5.4%, increase as compared to 2001. This increase was
due to increased revenues as discussed above.

Corporate operating expenses increased by $6.8 million, or 31.8%, in 2002
compared to 2001. This increase was mainly attributable to the increase in
corporate payroll as a result of our growth since the acquisition of the
Missouri properties in December 2000 as well as the consolidation of certain
management functions at the corporate level in order to achieve operating
efficiencies and consistency.

Interest Expense

Consolidated interest expense, net of capitalized interest of $17.9
million in 2002 and $17.8 million in 2001, was $51.2 million in 2002 compared
to $64.9 million in 2001. This reduction reflects: (1) a lower average
interest rate on our outstanding debt due to a decline in the LIBOR rate, the
amendment of our senior credit facilities in May 2002 to reduce our borrowing
cost and an increase by Standard & Poors Ratings Services in September 2002 of
the rating on our senior secured debt to BB-, which further reduced the
interest rate on a portion of our senior credit facilities; (2) a $3.5 million
write-off in the first quarter of 2001 of unamortized interim credit facility
loan fees and prepayment premiums on retired senior debt; and (3) a $2.8
million decrease in recorded interest expense from 2001 to 2002 associated with
the fair value of the interest rate collar agreement covering $50 million
principal amount of indebtedness under our senior credit facilities. These
factors were partially offset by a higher weighted-average outstanding debt
level in 2002, as we borrowed $157 million under the senior credit facilities
to fund construction projects and $14 million from a commercial bank to finance
equipment purchases for the new St. Charles facility during 2002.

After the opening of the new casino and entertainment facility at
Ameristar St. Charles in August 2002, we no longer capitalized the interest
payments associated with borrowings made to fund construction. As a result,
interest expense has increased and is expected to increase
substantially on a comparative basis through
the third quarter of 2003. We recorded $16.4 million, $15.2 million and $0.5 million in
capitalized interest associated with this project during 2002, 2001 and 2000,
respectively.

Income Tax Expense

Our effective federal income tax rate was 35.2% in 2002 and 31.5% in 2001.
The federal income tax statutory rate was 35% in both years. The differences
from the statutory rate are due to the effects of certain expenses incurred by
us which are not deductible for federal income tax purposes and other tax credits. In 2001, we recorded $1.7 million of previously unrecognized tax credits based on
continued improvement in operating performance and our expectation of
generating significant taxable income in future years. These tax credits
directly reduced income tax expense. Income tax expense for the years ended
December 31, 2002 and 2001 include $0.9 million and $0.7 million of state
income taxes. See Liquidity and Capital Resources below for additional
discussions regarding our tax credits and carryforwards.

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Net Income

Net income of $40.5 million for the year ended December 31, 2002 included
$4.2 million (net of tax) of preopening expenses relating to the new St.
Charles facility ($0.15 per share on a diluted basis) and $3.4 million (net of
tax) of impairment loss on assets held for sale ($0.13 per share on a diluted
basis). Our diluted earnings per share for the year ended December 31, 2002
were $1.50.

Net income of $33.2 million for the year ended December 31, 2001 included
charges of $2.3 million (net of tax) relating to the amortization of interim
credit facility fees, prepayment premiums on retired senior debt and change in
accounting principles, which collectively reduced diluted earnings per share by
$0.11. Net income in 2001 was benefited by $1.7 million (net of tax), or
approximately $0.08 per share, from our recording of previously unrecognized
tax credits. Our diluted earnings per share for the year ended December 31,
2001 were $1.51.



| |  | Year Ended December 31, 2001 Versus Year Ended December 31, 2000
| |  | ----------------------------------------------------------------

Net Revenues

Consolidated net revenues for the year ended December 31, 2001 were $602.8
million compared to $322.9 million for 2000, an increase of $279.9 million, or
86.7%. The growth in revenues is primarily attributable to contributions from
the Kansas City and St. Charles properties, which were acquired on December 20,
2000 and contributed $341.8 million in combined net revenues during the twelve
months ended December 31, 2001, as well as significant revenue growth at
Ameristar Council Bluffs. The Missouri properties contributions were partially
offset by the absence of revenues from The Reserve, which was sold on
January 29, 2001.

Net revenues at Ameristar St. Charles of $139.3 million for 2001 were
positively impacted by strong overall market growth and market share increases
driven by aggressive marketing and promotional programs and the introduction of
new slot product. Ameristar St. Charles market share grew from 17.6% in the
first quarter of 2001 to 19.9% in the fourth quarter of 2001.

Ameristar Kansas Citys net revenues of $202.5 million for 2001 were
adversely impacted by a market-wide decline in table games revenues and
construction disruption associated with the one-boat consolidation, casino
floor reconfiguration and the new parking garage. Net revenues in the latter
portion of the period were also adversely impacted by enhanced competition from
another property following the June 2001 opening of that propertys newly
renovated facility. Ameristar Kansas City had a 32.8% market share in 2001,
down slightly from 33.6% in 2000.

Net revenues at Ameristar Council Bluffs for 2001 were $124.3 million, an
increase of $9.0 million, or 7.8%, over 2000. Net revenues during the
beginning of the year were adversely affected by construction disruption
associated with the propertys renovation and enhancement

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project as well as
adverse winter weather conditions. However, Ameristar Council Bluffs saw
improved results from the renovation project beginning in the third quarter of
2001, with net revenues in the second half of 2001 of $66.8 million, an
increase of 19.4% over the corresponding period in 2000. The propertys market
share also improved significantly after completion of the renovation project,
resulting in a 33.7% market share for 2001, up from 32.1% for 2000.

Ameristar Vicksburgs net revenues for 2001 declined 2.5% to $75.1 million
compared to 2000, primarily due to construction disruption associated with the
renovation and enhancement project completed in the second quarter of 2001 and
the relatively flat Vicksburg market generally in 2001. Like Ameristar Council
Bluffs, net revenues at Ameristar Vicksburg began to improve once construction
was completed, leading to a 2.7% increase in net revenues in the second half of
2001 compared to the same period in 2000. Ameristar Vicksburg continued to
lead the market in 2001 with a market share of 32.7%, down slightly from 32.9%
in 2000.

The Jackpot properties generated $56.9 million of net revenues in 2001, a
decline of 3.9% compared to the same period in 2000, primarily as the result of
slow economic conditions in the southern Idaho market.

The Reserve produced net revenues of $4.7 million for the year ended
December 31, 2001, which consisted of less than one month of operations prior
to its being sold on January 29, 2001.

Income from Operations

Income from operations for the twelve months ended December 31, 2001
improved to $114.9 million, up $137.5 million over loss from operations of
$22.6 million in 2000. This improvement is primarily due to (1) contributions
made by the Missouri properties, which contributed $84.4 million to income from
operations during 2001; and (2) a $57.2 million impairment loss associated with
the sale of The Reserve recorded in 2000. The improvement in 2001 was
partially offset by an increase in corporate and other expenses of $5.6 million
primarily resulting from our increased size and scope following the acquisition
of the Missouri properties. Our operating income (loss) margin improved from
(7.0)% in 2000 to 19.1% in 2001.

Ameristar St. Charles generated $41.0 million of income from operations during
2001, with the propertys strong revenues during the period leading to a 29.4%
operating income margin for 2001. Income from operations at Ameristar Kansas City of $43.4 million for 2001
was adversely impacted by the factors that affected revenues described above.

Ameristar Council Bluffs reported income from operations of $28.0 million
for 2001 compared to $22.1 million in 2000, a $5.9 million, or 26.7%,
improvement compared to 2000. This improvement is primarily due to increased
revenues and improved operating efficiencies, particularly in the latter
portion of the year after the completion of the propertys renovation and
enhancement project, as well as a continued emphasis on controlling costs.

Ameristar Vicksburgs income from operations of $14.4 million in 2001
represents a decrease of $1.6 million, or 10.0%, as compared to 2000. This
decline is primarily

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attributable to decreased revenues resulting from
construction disruption in the first half of the year and additional expenses
(including depreciation) associated with the newly renovated
facilities. During the second half of 2001, once construction was completed at
Ameristar Vicksburg and revenues began to improve, income from operations
improved $0.3 million, or 4.2%, compared to the corresponding period in 2000.

The Jackpot properties reported income from operations of $9.3 million in
2001, a $1.3 million, or 12.3%, decline as compared to 2000. This decline was
due to reduced revenues primarily during the first half of the year.

Interest Expense

Consolidated interest expense, net of capitalized interest of $17.8
million in 2001 and $1.4 million in 2000, was $64.9 million in 2001 compared to
$28.3 million in 2000. The increased interest expense reflects our additional
debt incurred in connection with the acquisition of the Missouri properties,
and the increase in capitalized interest is primarily attributable to our
acquisition of construction in progress in connection with our acquisition of
the St. Charles property.

We recorded a $3.5 million charge to interest expense for the amortization
of interim credit facility costs in the first quarter of 2001. A charge to
interest expense of $1.9 million was also incurred during 2001 due to changes
in the fair value of our interest rate collar agreement.

Income Tax Expense

Our effective federal income tax rate on income was 31.5% in 2001 and the
effective tax benefit on losses was 34.7% in 2000. The federal statutory rate
was 35% in both years. The differences from the statutory rate are due to the
effects of certain expenses incurred by us which are not deductible for federal
income tax purposes and other tax credits. In 2001, we recorded $1.7 million of previously
unrecognized tax credits based on continued improvement in operating
performance and our expectation of generating significant taxable income in
future years. This directly reduced income tax expense. Income tax expense
for the year ended December 31, 2001 also includes $0.7 million of state income
taxes. See Liquidity and Capital Resources below for additional discussion
regarding our tax credits and carryforwards.

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Net Income

Our diluted earnings per share for the year ended December 31, 2001 were
$1.51, compared to a loss per share of $1.98 for the year ended December 31,
2000. Net income of $33.2 million for the year ended December 31, 2001
included charges of $2.3 million (net of tax) relating to the amortization of
interim credit facility fees, prepayment premiums on retired senior debt and
change in accounting principles, which collectively reduced diluted earnings
per share by $0.11. Net income in 2001 was benefited by $1.7 million (net of
tax), or approximately $0.08 per share, from our recording of previously
unrecognized tax credits.

Net loss for the year ended December 31, 2000 included impairment loss of
$37.1 million (net of tax) relating to the sale of The Reserve, which increased
the loss per share by $1.82 and resulted in a loss per share of $1.98 for 2000.

Liquidity and Capital Resources

Cash flows from operating activities

Cash flows provided by operating activities were $126.6 million, $111.3
million and $38.8 million for the years ended December 31, 2002, 2001 and 2000,
respectively. The increase from 2001 to 2002 was due primarily to the
improved operations at Ameristar Council Bluffs and Ameristar Vicksburg. The
increase from 2000 to 2001 was mainly the result of the contribution of
operating income by the Missouri properties as well as improvements in
operating income at Ameristar Council Bluffs, as discussed under Results of
Operations.

Cash flows from investing activities

Cash flows used in investing activities were $241.5 million, $32.0 million
and $521.2 million for the years ended December 31, 2002, 2001 and 2000,
respectively. We incurred $255.5 million, $114.1 million and $33.4 million in
capital expenditures (including capitalized interest) in 2002, 2001 and 2000,
respectively. See Liquidity below for further discussion on capital
expenditures.

The sale of The Reserve in January 2001 generated $71.6 million in cash
flows from investing activities. In addition, the acquisition of Ameristar
Kansas City and Ameristar St. Charles in December 2000 utilized approximately
$486.8 million in cash.

Cash flows from financing activities

Cash flows provided by financing activities were $164.3 million and $503.1
million for the years ended December 31, 2002 and 2000, respectively. Cash
flows used in financing activities in 2001 were $74.5 million. Cash flows used
in or provided by financing activities were significantly impacted by the
following transactions in 2000, 2001 and 2002:



| |  |  | In December 2000, we refinanced substantially all of our long-term
debt in connection with our acquisition of the Missouri properties.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------

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| |  |  | In January 2001, we sold The Reserve for approximately $71.6
million and used the proceeds to, among other things: (1) prepay and
permanently reduce term loans B and C outstanding under our senior
credit facilities, and (2) repay amounts outstanding under the
revolving loan portion of our senior credit facilities.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | In February 2001, we issued $380 million of senior subordinated
notes and used the proceeds to, among other things: (1) retire the $300
million senior subordinated credit facility, and (2) prepay and
permanently reduce term loans outstanding under our senior credit
facilities.                                      
|
| |  |  | In December 2001, we sold 4.9 million shares of our Common Stock in
an underwritten public offering and used the $94.2 million of proceeds,
net of underwriting discounts and related expenses, to repay term loans
under our senior credit facilities.                                                                    
|
| |  |  | Between January and September 2002, we borrowed $124.7 million
under our senior credit facilities to fund various construction
projects.                                                                                                                                                                                   
|
| |  |  | In October 2002, we borrowed $14 million from a commercial bank to
finance equipment purchases for the new St. Charles facility.                                                                                                                                                                                           
|
| |  |  | In December 2002, we borrowed an additional $100 million under the
incremental term loan commitment provisions of our senior credit
facilities and repaid all $67.7 million of the outstanding debt under
the $75 million revolving credit facility.                                                                       

As a result of the 2002 transactions described above, our total long-term
debt outstanding (including current maturities) increased from $630.5 million
at December 31, 2001 to $796.3 million at December 31, 2002.

Capital expenditures

We incurred $255.5 million in capital expenditures in 2002, which
consisted of the following: (1) $158.9 million on the new casino and
entertainment facility at Ameristar St. Charles completed in August 2002; (2)
$15.3 million on the new 2,650-space parking garage at Ameristar Kansas City
placed in service in July 2002; (3) approximately $14.8 million on the ongoing
renovation and enhancement project at Ameristar Kansas City; (4) capitalized
interest of $17.9 million primarily related to the above projects; and (5)
$48.6 million on maintenance capital expenditures at all of our properties.

Capital expenditures made during 2001 totaled $114.1 million and included:
(1) approximately $51.1 million on the new casino and entertainment facility at
Ameristar St. Charles; (2) approximately $8.6 million on the new parking garage
at Ameristar Kansas City; (3) $8.0 million on the renovation and enhancement
project at Ameristar Council Bluffs; (4) $9.5 million on the renovation and
enhancement project at Ameristar Vicksburg; (5) capitalized interest of $17.8
million primarily associated with the above projects; and (6) $19.1 million on
maintenance capital expenditures at all of our properties.

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Capital expenditures in 2000 of $33.4 million included $13.1 million
related to expansion and remodeling projects at Ameristar Council Bluffs
(including the completion of the 1,000 space parking garage) and $11.7 million
in remodeling projects and equipment at Ameristar Vicksburg.

The senior credit facilities limit our aggregate capital expenditures in
each year. For the year ended December 31, 2002, our maximum permitted
consolidated capital expenditures were 7.0% of our consolidated gross revenues,
or $56.4 million. In addition, the senior credit facilities permit us to incur
up to certain amounts of capital expenditures on specified projects. As of
December 31, 2002, we were in compliance with all capital expenditure covenant
requirements.

We do not expect to make capital expenditures in 2003 in excess of the
amount currently permitted under our senior credit facilities, which is
approximately $73 million. Our capital expenditure requirements for 2003
include the costs associated with the following projects: (1) the completion of
Phase I and Phase II of the Kansas City renovation and enhancement project; (2)
the Vicksburg renovations and enhancements; (3) investment in
new slot product and related systems;
(4) certain upgrades and improvements to our information technology
infrastructure; and (5) general maintenance capital expenditures at all of our
properties.

Liquidity

Our principal long-term debt is comprised of $395.2 million of secured
senior credit facilities and $380 million in aggregate principal amount of
10.75% senior subordinated notes due 2009. At December 31, 2002, the senior
credit facilities consisted of a $75 million revolving term loan
facility, term loan A and term loan B (which had $75.0 million, $30.0 million and $290.2 million
outstanding, respectively, for a total of $395.2 million), and a $75 million
revolving credit facility, $67.7 million of which was available for borrowing.

The revolving term
loan facility converted to a term loan on December 31, 2002. The
revolving term loan facility, the revolving credit facility and the
term loan A mature on December 20, 2005. The term loan B matures on December
20, 2006. Significant principal repayments are required on the above
facilities in 2003 through 2006. The revolving term loan facility is subject
to mandatory quarterly principal repayments of $4.7 million in 2003, $6.6
million in 2004 and $7.5 million in 2005. Term loan A is subject to mandatory
quarterly principal repayments of $1.8 million in 2003, $2.6 million in 2004
and $3.1 million in 2005. Term loan B is subject to mandatory quarterly
principal repayments of $0.7 million in 2003, 2004 and 2005 and from $69.6
million to $70.5 million in 2006. All mandatory principal repayments have been
made through December 31, 2002. We expect to fund principal repayments from
cash flows from operating activities in 2003.

We are required to comply with various affirmative and negative financial
and other covenants under the senior credit facilities and the indenture
governing our senior subordinated notes. These covenants include, among other
things, restrictions on the incurrence of additional indebtedness, restrictions
on dividend payments and other restrictions, as well as promises to maintain
certain financial ratios and tests within defined parameters. As of December
31, 2002, we were in compliance with all required covenants.

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We historically have funded our daily operations through net cash provided
by operating activities and our significant capital expenditures primarily
through operating cash flows, bank debt and other debt financing. We believe
that our cash flows from operations, cash and cash equivalents and availability
under our senior credit facilities will support our operations and liquidity
requirements, including current capital expenditure plans, for the foreseeable
future. Our ability to borrow funds under our senior credit facilities at any
time is primarily dependent upon the amount of our EBITDA, as defined for
purposes of our senior credit facilities, for the preceding four fiscal
quarters. As of December 31, 2002, in addition to the $67.7 million available
for borrowing under the senior credit facilities, we had $90.6 million of cash
and cash equivalents, approximately $45 million of which were required for
daily operations.

We did not make any federal income tax payments in 2001. In 2002, we paid
$10.7 million in estimated federal income tax payments through quarterly
installments. In January 2003, we received a $10.7 million refund related to
the 2002 tax year as the actual taxable income for the year was significantly
lower than the estimates used to calculate quarterly installments. At December
31, 2002, we had approximately $80 million in net operating loss carryforwards
and $1 million in alternative minimum tax credits, which will reduce the amount
of federal income tax cash payments that we are required to make in 2003.

We have not declared any dividends on our Common Stock in the past, and we
intend for the foreseeable future to retain all earnings for use in the
development of our business. In addition, as described above, the terms of our
senior credit facilities and senior subordinated notes obligate us to comply
with certain financial covenants that may restrict or prohibit the payment of
dividends.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements as defined in SEC
Release No. 33-8182.

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Contractual and Other Commitments

The following table summarizes our material obligations and commitments to
make future payments under certain contracts, including long-term debt
obligations, capitalized leases, operating leases and certain construction
contracts.

|                                |       |      |                                       |           |  |           |        |            |  |       |         |         |  |   |         |         |  |   |         |         | 
|------------------------------- | ----- | ---- | ------------------------------------- | --------- |  | --------- | ------ | ---------- |  | ----- | ------- | ------- |  | - | ------- | ------- |  | - | ------- | ------- | 
|                                |       |      | Payments Due by Period (In Thousands)
|                                |       |      |                                      
|Contractual Obligations         |       | 2003 |                                       | 2004-2005 |  | 2006-2007 |        | After 2007 |  | Total
|                                |       |      |                                       |           |  |           |        |            |  |      
|Long-Term Debt
Instruments      |       | $    | 36,628                                |           |  | $         | 93,965 |            |  | $     | 284,519 |         |  | $ | 381,228 |         |  | $ | 796,340 |        
|Capital Leases                  |       |      | 1,396                                 |           |  |           | 811    |            |  |       | 50      |         |  |   | 404     |         |  |   | 2,661   |        
|Operating Leases                |       |      | 1,993                                 |           |  |           | 3,695  |            |  |       | 3,551   |         |  |   | 3,296   |         |  |   | 12,535  |        
|Material Construction
Contracts |       |      | 32,985                                |           |  |           |       |            |  |       |        |         |  |   |        |         |  |   | 32,985  |        
|                                |       |      |                                       |           |  |           |        |            |  |       |         |         |  |   |         |         |  |   |         |        
|                                | Total |      | $                                     | 73,002    |  |           | $      | 98,471     |  |       | $       | 288,120 |  |   | $       | 384,928 |  |   | $       | 844,521 | 
|                                |       |      |                                       |           |  |           |        |            |  |       |         |         |  |   |         |         |  |   |         |        

|                  |  |      |                                       |           |  |           |       |            |  |       |   |  |  |   |   |  |  |   |       |  | 
|----------------- |  | ---- | ------------------------------------- | --------- |  | --------- | ----- | ---------- |  | ----- | - |  |  | - | - |  |  | - | ----- |  | 
|                  |  |      | Payments Due by Period (In Thousands)
|                  |  |      |                                      
|Other Commitments |  | 2003 |                                       | 2004-2005 |  | 2006-2007 |       | After 2007 |  | Total
|                  |  |      |                                       |           |  |           |       |            |  |      
|Letters of credit |  | $    | 5,864                                 |           |  | $         | 1,400 |            |  | $     |  |  |  | $ |  |  |  | $ | 7,264 | 
|                  |  |      |                                       |           |  |           |       |            |  |       |   |  |  |   |   |  |  |   |       | 

We routinely enter into operational contracts in the ordinary course of
our business, including construction contracts for minor projects that are not
material to our business or financial condition as a whole. Our commitments
relating to these contracts are recognized as liabilities in our consolidated
balance sheets when services are provided with respect to such contracts.

At December 31, 2002, we had outstanding letters of credit in the amount
of $7.3 million, which reduced the amount available to borrow under our senior
credit facilities. We do not have any other guarantees, contingent commitments
or other material liabilities that are not reflected on our consolidated
balance sheets.

Critical Accounting Policies and Estimates

We prepare our
Consolidated Financial Statements in conformity with generally
accepted accounting principles.
Certain of our accounting policies require that we apply significant judgment
in defining the appropriate assumptions for calculating financial estimates.
By their nature, these judgments are subject to an inherent degree of
uncertainty. Our judgments are based on our historical experience, terms of
existing contracts, our observance of trends in the industry, information
provided by our customers and information available from other outside sources,
as appropriate. There can be no assurance that actual results will conform to
our estimates. We believe the policies and estimates discussed below have a
significant impact on issues that are inherently uncertain.

Property and Equipment

We have significant capital invested in our property and equipment, which
represents approximately 79% of our total assets. Judgments are made in
determining the estimated useful lives of assets, salvage values to be assigned
to assets and if or when an asset has been impaired. The accuracy of these
estimates affects the amount of depreciation expense recognized in our
financial results and whether we have a gain or loss on the disposal of the
asset. We assign lives to our assets based on our standard policy, which we
believe is representative of the useful life of each category of assets. We
review the carrying value of our property and equipment whenever events and
circumstances indicate that the carrying value of an asset may not be
recoverable from the estimated future cash flows expected to result from its
use and eventual disposition. The factors we consider in performing this
assessment include

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current operating results, trends and prospects, as well as
the effect of obsolescence, demand, competition and other economic factors.

Goodwill and Other Intangible Assets

We have approximately $82 million in goodwill and other intangible assets
on our consolidated balance sheet resulting from our acquisition of the
Missouri properties. According to the requirements of SFAS No. 142 , which we
adopted on January 1, 2002, we completed our initial assessment and our annual
assessment for impairment and determined that no goodwill impairment existed.
The assessment in both cases requires the use of estimates about future
operating results of each reporting unit to determine its estimated fair value.
Changes in forecasted operations can materially affect these estimates.

Star Awards Program

Our customer reward program, Star Awards, allows customers to earn certain
point-based cash rewards or complimentary goods and services based on the
volume of the customers gaming activity. Customers can accumulate or bank
reward points over time that they may redeem at their discretion under the
terms of the program. The reward credit balance will be forfeited if a
customer does not earn any reward credits over any subsequent twelve-month period.
As a result of the ability of the customer to bank the reward points, we accrue
the expense of reward points, after giving effect to estimated
forfeitures, as
they are earned. At December 31, 2002 and 2001, $5.1 million and $3.1 million,
respectively, was accrued. The value of these point-based cash rewards or
complimentary goods and services are netted against revenue as a promotional
allowance.

Our players are also awarded cash coupons based on their play volume. The
coupons are redeemable within a short time period, generally seven days, and
are redeemable only on a return visit. There is no ability to renew or extend
the offer. We recognize a reduction in revenue as a promotional allowance for
these coupons when the coupons are redeemed and, as a result, no liability
associated with this item was recorded on our balance sheets as of December 31,
2002 and 2001.

Self-Funded Employee Health Care Insurance Program

Our employee health care benefits program is self-funded up to a maximum
amount per claim. Accruals are based on claims filed and estimates of claims
incurred but not reported. At December 31, 2002, our estimated liabilities for
unpaid and incurred but not reported claims totaled $3.6 million. We consider
historical loss experience and certain unusual claims in estimating these
liabilities. We believe the use of this method to account for these
liabilities provides a consistent and effective way to measure these highly
judgmental accruals; however, changes in health care costs, accident
or illness frequency
and severity and other factors can materially affect the estimate for these
liabilities. We continually monitor the potential for changes in estimates,
evaluate our insurance accruals and adjust our recorded provisions.

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Recently Issued Accounting Standards

In April 2002, the Financial Accounting Standards Board (FASB) issued
SFAS No. 145, Rescission of FASB Statement No. 4, 44 and 64, Amendment of FASB
Statement No. 13, and Technical Corrections. The key provision of SFAS No. 145
affecting us requires that gains or losses from the extinguishment of debt be
reclassified from extraordinary gains or losses to other income (expense). In
June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities, which requires that a liability for costs
associated with an exit or disposal activity be recognized when the liability
is incurred. We adopted SFAS Nos. 145 and 146 effective January 1, 2003. We do
not believe the adoption of these accounting standards will have a material impact on
our financial position or results of operations.

In November 2002, the FASB issued FASB Interpretation (FIN) No. 45,
Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN No. 45 outlines additional
disclosure requirements for a guarantor and requires the guarantor to recognize
a liability for the fair value of the obligation undertaken. We adopted FIN No.
45 as of December 31, 2002.

In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation-Transition and Disclosure-an Amendment of FASB
Statement No. 123. SFAS No. 148 amends SFAS No. 123, Accounting for
Stock-Based Compensation, to provide alternative methods of transition for a
voluntary change to the fair value-based method of accounting for stock-based
employee compensation. In addition, SFAS No. 148 amends the disclosure
requirements of SFAS No. 123 to require prominent disclosures in both annual
and interim financial statements about the method of accounting for stock-based
employee compensation and the effect of the method used on reported results and
specifies the form, content and location of those disclosures. We adopted the
disclosure requirements of SFAS No. 148 as of December 31, 2002. We do not
currently plan to transition to the fair value-based method and will continue
to account for stock options in accordance with Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees (APB No. 25), as
permitted under SFAS No. 123. See Note 7  Benefit plans of Notes to
Consolidated Financial Statements for more information on our stock incentive
plans.

In January 2003, the FASB issued FIN No. 46, Consolidation of Variable
Interest Entities. FIN No. 46 addresses how an enterprise identifies and
consolidates variable interest entities in which it has a controlling financial
interest. We adopted FIN No. 46 as of January 1, 2003. We do not believe the
adoption of this accounting standard will have a material impact on our financial
position or results of operations.




Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk of loss arising from adverse changes in market
rates and prices, such as interest rates, foreign currency exchange rates and
commodity prices. Our primary exposure to market risk is interest rate risk
associated with our senior credit facilities, and we utilize interest rate swap
and collar agreements to manage this risk. As of December 31, 2002, we had
$395.2 million outstanding under our senior credit facilities bearing interest
at variable rates. Of this amount, $100 million is covered by an interest rate
swap agreement that

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fixes the interest rate thereon and $50 million is covered
by an interest rate collar agreement that sets a floor and ceiling for the
interest rate thereon (See Note 5  Notes payable and long-term debt of Notes
to Consolidated Financial Statements for more discussion on the derivative
instruments.) Other than the borrowings under the senior credit facilities
that are not covered by the interest rate swap agreement and $1.1 million in
other long-term debt outstanding at December 31, 2002 (collectively, the
Variable Rate Debt), all of our long-term debt bears interest at fixed rates.
The Variable Rate Debt bears interest equal to LIBOR (in the case of
Eurodollar loans) or the prime interest rate (in the case of base rate loans),
plus an applicable margin. At December 31, 2002, the average interest rate
applicable to the Variable Rate Debt was 4.2%. An increase of one percentage
point in the average interest rate applicable to the Variable Rate Debt
outstanding at December 31, 2002 would increase our annual interest cost by
approximately $2.5 million. We continue to monitor interest rate markets and
may enter into interest rate collar or swap agreements for additional amounts
of principal under the senior credit facilities as market conditions warrant.




PART III




Item 8. Financial Statements and Supplementary Data

The Report of Independent Public Accountants appears at page F-1 hereof,
and our Consolidated Financial Statements and Notes to Consolidated Financial
Statements appear at pages F-2 through F-31 hereof.




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

None.




Item 10. Directors and Executive Officers of the Registrant

The information required by this Item will be set forth under the captions
Proposal No. 1. Election of Directors  Information Concerning the Nominees
and  Directors and Executive Officers in the definitive Proxy Statement for
our 2003 Annual Meeting of Stockholders (our Proxy Statement) to be filed
with the Securities and Exchange Commission and is incorporated herein by this
reference.




Item 11. Executive Compensation

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




Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this Item will be set forth under the captions
Proposal No. 1. Election of Directors  Security Ownership of Certain
Beneficial Owners and Management, Executive Compensation and Equity
Compensation Plan Information in our Proxy Statement and is incorporated
herein by this reference.

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Item 13. Certain Relationships and Related Transactions

The information required by this Item is set forth under the caption
Certain Transactions in our Proxy Statement and is incorporated herein by
this reference.




PART IV




Item 14. Controls and Procedures

Within the 90 days prior to the filing of this Report, we carried out an
evaluation, under the supervision and with the participation of management,
including our President and Chief Executive Officer and our Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures pursuant to Rule 13a-14 of the Securities Exchange Act
of 1934. Based upon that evaluation, our President and Chief Executive Officer
and our Chief Financial Officer and other members of management concluded that
our disclosure controls and procedures are effective in timely alerting them to
material information relating to us (including our consolidated subsidiaries)
required to be included in our periodic filings with the Securities and
Exchange Commission. There have been no significant changes in our internal
controls or in other factors which could significantly affect internal controls
subsequent to the date we carried out our evaluation.




Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K

The following are filed as part of this Report:

(a)  1. Financial Statements

|                                                                                                     |  | 
|---------------------------------------------------------------------------------------------------- |  | 
|Report of Independent Public Accountants                                                             |  | 
|Consolidated Balance Sheets as of December 31, 2001 and 2002                                         |  | 
|Consolidated Statements of Operations for the years ended
December 31, 2000, 2001 and 2002           |  | 
|Consolidated Statements of Stockholders Equity for the
years ended December 31, 2000, 2001 and 2002 |  | 
|Consolidated Statements of Cash Flows for the years ended
December 31, 2000, 2001 and 2002           |  | 
|Notes to Consolidated Financial Statements                                                           |  | 

(a)  2. Financial Statement Schedules

All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
related instructions or are inapplicable and therefore have been omitted.

(a)  3. Exhibits

The following exhibits are filed or incorporated by reference as part of
this Report. Certain of the listed exhibits are incorporated by reference to
previously filed reports of ACI under the

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Securities Exchange Act of 1934, as
amended, including Forms 10-K, 10-Q and 8-K. These reports have been filed
with the Securities and Exchange Commission under File Number 0-22494.

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                                                                                                                                                                               
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                                                                                                                                                                               
|Number  |  | Description of Exhibit                                                                                                                                                                                                                                                                                                                                                                                                   |  | Method of Filing                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                                                                                                                                                                               
|3(i).1  |  | Articles of Incorporation of ACI                                                                                                                                                                                                                                                                                                                                                                                         |  | Incorporated by reference to
Exhibit 3.1 to Registration
Statement on Form S-1 filed by
ACI under the Securities Act
of 1933, as amended (File No.
33-68936) (the Form S-1).
|       
|3(i).2  |  | Certificate of Amendment to
Articles of Incorporation of ACI                                                                                                                                                                                                                                                                                                                                                             |  | Incorporated by reference to
Exhibit 3.1 to ACIs Quarterly
Report on Form 10-Q for the
quarter ended June 30, 2002.                                                          
|       
|3(ii).1 |  | Bylaws of ACI                                                                                                                                                                                                                                                                                                                                                                                                            |  | Incorporated by reference to
Exhibit 3.2 to ACIs Annual
Report on Form 10-K for the
year ended December 31, 1995
(the 1995 10-K).                                          
|       
|4.1     |  | Specimen Common Stock Certificate                                                                                                                                                                                                                                                                                                                                                                                        |  | Incorporated by reference to
Exhibit 4 to Amendment No. 2
to the Form S-1.                                                                                                    
|       
|4.2(a)  |  | Credit Agreement (the Credit
Agreement) dated as of December
20, 2000 among ACI, the Lenders
party thereto from time to time,
Wells Fargo Bank, N.A., as
Co-Arranger and Syndication Agent
(WFB), Bear Stearns Corporate
Lending Inc., as Documentation
Agent (BSCLI), Deutsche Bank
Securities Inc., as Lead Arranger
and Sole Book Manager (DBSI),
and Bankers Trust Company, as
Administrative Agent (BTCo) |  | Incorporated by reference to
Exhibit 4.2(a) to ACIs Annual
Report on Form 10-K for the
year ended December 31, 2000
(the 2000 10-K).                                       
|       
|4.2(b)  |  | First Amendment to Credit
Agreement dated as of January 30,
2001 among ACI, the Lenders party
to the Credit Agreement, WFB,
BSCLI, DBSI and BTCo                                                                                                                                                                                                                                                                         |  | Incorporated by reference to
Exhibit 4.2(b) to the 2000
10-K.                                                                                                                 

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|         |  |                                                                                                                                                                                                                                      |  |                                                                                                                                                       
|-------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit  |  |                                                                                                                                                                                                                                      |  |                                                                                                                                                       
|Number   |  | Description of Exhibit                                                                                                                                                                                                               |  | Method of Filing                                                                                                                                      
|         |  |                                                                                                                                                                                                                                      |  |                                                                                                                                                       
|4.2(c)   |  | Second Amendment to Credit
Agreement dated as of May 31,
2002 among ACI, the various
Lenders party to the Credit
Agreement and Deutsche Bank Trust
Company Americas (f/k/a Bankers
Trust Company), as Administrative
Agent (DBTCA) |  | Incorporated by reference to
Exhibit 4.1 to ACIs Current
Report on Form 8-K filed on
June 19, 2002.                                                  
|        
|4.2(d)   |  | Third Amendment to Credit
Agreement dated as of November
22, 2002 among ACI, the various
Lenders party to the Credit
Agreement and DBTCA                                                                                             |  | Incorporated by reference to
Exhibit 4.2 to ACIs Current
Report on Form 8-K filed on
December 4, 2002 (the
December 2002 8-K).                     
|        
|4.2(e)   |  | First Incremental Commitment
Agreement dated as of December 2,
2002 among ACI, the Incremental
Lenders party thereto, the
Guarantors party thereto and
DBTCA                                                                         |  | Incorporated by reference to
Exhibit 4.1 to the December
2002 8-K.                                                                                    
|        
|4.2(f)   |  | Guaranty made by each of ACIs
subsidiaries guaranteeing ACIs
obligations under the Credit
Agreement                                                                                                                                |  | Incorporated by reference to
Exhibit 4.2(c) to the 2000
10-K.                                                                                         
|        
|4.2(g)   |  | Interest Rate Collar Agreement
dated August 10, 1998 between ACI
and Wells Fargo Bank, N.A                                                                                                                                           |  | Incorporated by reference to
Exhibit 4.2(b) to ACIs Annual
Report on Form 10-K for the
year ended December 31, 1998.                                 
|        
|4.3      |  | Indenture dated as of February 2,
2001 among ACI, the Guarantors
(as defined therein) and U.S.
Bank Trust National Association,
as trustee                                                                                           |  | Incorporated by reference to
Exhibit 4.4 to the 2000 10-K.                                                                                            
|        
|*10.1(a) |  | Employment Agreement dated
November 15, 1993 between ACI and
Thomas M. Steinbauer                                                                                                                                                    |  | Incorporated by reference to
Exhibit 10.1(a) to ACIs
Annual Report on Form 10-K for
the year ended December 31,
1994 (the 1994 10-K).              
|        
|*10.1(b) |  | Amendment No. 1 to Employment
Agreement dated as of October 5,
2001 between ACI and Thomas M.
Steinbauer                                                                                                                             |  | Incorporated by reference to
Exhibit 10.2 to ACIs
Quarterly Report on Form 10-Q
for the quarter ended
September 30, 2001 (the
September 2001 10-Q).

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|         |  |                                                                                                                                 |  |                                                                                                                                                       
|-------- |  | ------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit  |  |                                                                                                                                 |  |                                                                                                                                                       
|Number   |  | Description of Exhibit                                                                                                          |  | Method of Filing                                                                                                                                      
|         |  |                                                                                                                                 |  |                                                                                                                                                       
|*10.1(c) |  | Amendment No. 2 to Employment
Agreement dated as of August 15,
2002 between ACI and Thomas M.
Steinbauer                        |  | Incorporated by reference to
Exhibit 10.2 to ACIs
Quarterly Report on Form 10-Q
for the quarter ended
September 30, 2002 (the
September 2002 10-Q).
|        
|*10.1(d) |  | Amended and Restated Executive
Employment Agreement dated as of
March 11, 2002 between ACI and
Gordon R. Kanofsky               |  | Incorporated by reference to
Exhibit 10.1(c) to ACIs
Annual Report on Form 10-K for
the year ended December 31,
2001 (the 2001 10-K).              
|        
|*10.1(e) |  | Amendment to Amended and Restated
Executive Employment Agreement
dated as of August 16, 2002
between ACI and Gordon R.
Kanofsky |  | Incorporated by reference to
Exhibit 10.3 to the September
2002 10-Q.                                                                                 
|        
|*10.1(f) |  | Executive Employment Agreement
dated as of March 13, 2002
between ACI and Peter C. Walsh                                        |  | Incorporated by reference to
Exhibit 10.1(d) to the 2001
10-K.                                                                                        
|        
|*10.1(g) |  | Executive Employment Agreement
dated as of June 5, 2002 between
ACI and Angela R. Baker                                         |  | Filed electronically herewith.                                                                                                                        
|        
|*10.1(h) |  | Amendment to Executive Employment
Agreement dated as of August 16,
2002 between ACI and Peter C.
Walsh                          |  | Incorporated by reference to
Exhibit 10.4 to the September
2002 10-Q.                                                                                 
|        
|*10.2    |  | Ameristar Casinos, Inc. 1993
Non-Employee Director Stock
Option Plan, as amended and
restated                                   |  | Incorporated by reference to
Exhibit 10.2 to ACIs
Quarterly Report on Form 10-Q
for the quarter ended June 30,
1994.                                 
|        
|*10.3(a) |  | Ameristar Casinos, Inc.
Management Stock Option Incentive
Plan, as amended and restated                                         |  | Incorporated by reference to
Exhibit 10.3 to ACIs
Quarterly Report on Form 10-Q
for the quarter ended
September 30, 1996.                            
|        
|*10.3(b) |  | Amendment to Ameristar Casinos,
Inc. Amended and Restated
Management Stock Option Incentive
Plan                                |  | Incorporated by reference to
Exhibit 10.3 to the September
2001 10-Q.                                                                                 

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|         |  |                                                                                                                                                                                                                                      |  |                                                                                                                                       
|-------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------
|Exhibit  |  |                                                                                                                                                                                                                                      |  |                                                                                                                                       
|Number   |  | Description of Exhibit                                                                                                                                                                                                               |  | Method of Filing                                                                                                                      
|         |  |                                                                                                                                                                                                                                      |  |                                                                                                                                       
|*10.3(c) |  | Second Amendment to Ameristar
Casinos, Inc. Amended and
Restated Management Stock Option
Incentive Plan                                                                                                                              |  | Filed electronically herewith.                                                                                                        
|        
|*10.4(a) |  | 1999 Stock Incentive Plan of
Ameristar Casinos, Inc.                                                                                                                                                                                 |  | Incorporated by reference to
Exhibit 10.6 to ACIs
Quarterly Report on Form 10-Q
for the quarter ended June 30,
1999.                 
|        
|*10.4(b) |  | First Amendment to 1999 Stock
Incentive Plan of Ameristar
Casinos, Inc.                                                                                                                                                              |  | Incorporated by reference to
Exhibit 10.4(b) to the 2000
10-K.                                                                        
|        
|*10.4(c) |  | Second Amendment to 1999 Stock
Incentive Plan of Ameristar
Casinos, Inc.                                                                                                                                                             |  | Filed electronically herewith.                                                                                                        
|        
|*10.5    |  | ACI 2002 Non-Employee Directors
Stock Election Plan                                                                                                                                                                                 |  | Incorporated by reference to
Appendix A to the definitive
Proxy Statement filed by ACI
on April 30, 2002 (the 2002
Proxy Statement).
|        
|*10.6    |  | ACI Performance-Based Bonus Plan
for Craig H. Neilsen                                                                                                                                                                                |  | Incorporated by reference to
Appendix B to the 2002 Proxy
Statement.                                                                  
|        
|*10.7    |  | Form of Indemnification Agreement
between ACI and each of its
directors and executive officers                                                                                                                                       |  | Incorporated by reference to
Exhibit 10.33 to Amendment No.
2 to the Form S-1.                                                        
|        
|10.8     |  | Plan of Reorganization, dated
November 15, 1993, between ACI
and Craig H. Neilsen in his
individual capacity and as
trustee of the testamentary trust
created under the last will and
testament of Ray Neilsen dated
October 9, 1963 |  | Incorporated by reference to
Exhibit 2.1 to the 1994 10-K.                                                                            
|        
|10.9     |  | Amended and Restated Excursion
Boat Sponsorship and Operations
Agreement dated October 7, 2002
between Iowa West Racing
Association and Ameristar Casino
Council Bluffs, Inc.                                                        |  | Incorporated by reference to
Exhibit 10.1 to the September
2002 10-Q.                                                                 

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|        |  |                                                                                                                                                                                                              |  |                                                                                                                                                       
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                              |  |                                                                                                                                                       
|Number  |  | Description of Exhibit                                                                                                                                                                                       |  | Method of Filing                                                                                                                                      
|        |  |                                                                                                                                                                                                              |  |                                                                                                                                                       
|10.10   |  | Settlement, Use and Management
Agreement and DNR Permit, dated
May 15, 1995, between the State
of Iowa acting through the Iowa
Department of Natural Resources
and ACCBI as the assignee of Koch
Fuels, Inc. |  | Incorporated by reference to
Exhibits 10.12 and 99.1 to
ACIs Annual Report on Form
10-K for the year ended
December 31, 1996.                        
|       
|10.11   |  | Asset Purchase Agreement dated as
of October 17, 2000 by and among
Ameristar Casino Kansas City,
Inc., ACI, Kansas City Station
Corporation and Station Casinos,
Inc. (SCI)                                |  | Incorporated by reference to
Exhibit 10.3 to ACIs
Quarterly Report on Form 10-Q
for the quarter ended
September 30, 2000 (the
September 2000 10-Q).
|       
|10.12   |  | Asset Purchase Agreement dated as
of October 17, 2000 by and among
Ameristar Casino St. Charles,
Inc., ACI, St. Charles Riverfront
Station, Inc. and SCI                                                     |  | Incorporated by reference to
Exhibit 10.1 to the September
2000 10-Q.                                                                                 
|       
|10.13   |  | Asset Purchase Agreement dated as
of October 17, 2000 by and among
Lake Mead Station, Inc., SCI,
Ameristar Casino Las Vegas, Inc.
and ACI                                                                    |  | Incorporated by reference to
Exhibit 10.4 to the September
2000 10-Q.                                                                                 
|       
|*10.14  |  | Ameristar Casinos, Inc. Deferred
Compensation Plan                                                                                                                                                           |  | Incorporated by reference to
Exhibit 10.14 to the 2000
10-K.                                                                                          
|       
|*10.15  |  | Master Trust Agreement for
Ameristar Casinos, Inc. Deferred
Compensation Plan, dated as of
April 1, 2001, between ACI and
Wilmington Trust Company                                                           |  | Filed electronically herewith.                                                                                                                        
|       
|21.1    |  | Subsidiaries of ACI                                                                                                                                                                                          |  | Incorporated by reference to
Exhibit 21.1 to the 2000 10-K.                                                                                           
|       
|23.1    |  | Consent of Deloitte & Touche LLP                                                                                                                                                                             |  | Filed electronically herewith.                                                                                                                        
|       
|99.1    |  | Agreement to furnish the
Securities and Exchange
Commission certain instruments
defining the rights of holders of
certain long-term debt                                                                     |  | Incorporated by reference to
Exhibit 99.1 to the 2000 10-K.                                                                                           

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|        |  |                                                                                                                                                                                                                           |  |                               
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------
|Exhibit |  |                                                                                                                                                                                                                           |  |                               
|Number  |  | Description of Exhibit                                                                                                                                                                                                    |  | Method of Filing              
|        |  |                                                                                                                                                                                                                           |  |                               
|99.2    |  | Certification of Craig H.
Neilsen, Chairman, President and
Chief Executive Officer, pursuant
to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002                              |  | Filed electronically herewith.
|       
|99.3    |  | Certification of Thomas M.
Steinbauer, Senior Vice President
of Finance, Chief Financial
Officer and Treasurer, pursuant
to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906
of the Sarbanes-Oxley Act of
2002. |  | Filed electronically herewith.



---

|*   |  | Denotes a management contract or compensatory plan or arrangement.
|--- |  | ------------------------------------------------------------------
|   
|   
|   
|   
|(b) |  | Reports on Form 8-K                                               

On December 4, 2002, we filed a Current Report on Form 8-K in which we
reported, under Item 5, (1) the execution of the Third Amendment to our Credit
Agreement and (2) the incremental commitment and borrowing of $100 million
under the term loan B tranche of our Credit Agreement.

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SIGNATURES

Pursuant to the requirements of 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.

|               |  |     |  |                                                                              
|-------------- |  | --- |  | -----------------------------------------------------------------------------
|               |  |     |  | AMERISTAR CASINOS, INC.
(Registrant)                                         
|              
|              
|March 31, 2003 |  | By: |  | /s/ Craig H. Neilsen                                                         
|               |  |     |  |                                                                              
|               |  |     |  | Craig H. Neilsen
Chairman of the Board, President and
Chief Executive Officer

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

|                         |  |                                                                                                                             |  |               
|------------------------ |  | --------------------------------------------------------------------------------------------------------------------------- |  | --------------
|Signature                |  | Name and Title                                                                                                              |  | Date          
|                         |  |                                                                                                                             |  |               
|/s/ Craig H. Neilsen     |  | Craig H. Neilsen, Chairman of the
Board, Chief Executive Officer and
President (principal executive
officer)                |  | March 31, 2003
|                        
|/s/ Thomas M. Steinbauer |  | Thomas M. Steinbauer, Senior Vice
President of Finance, Chief
Financial Officer and Treasurer
(principal financial officer) |  | March 31, 2003
|                        
|/s/ Thomas L. Malone     |  | Thomas L. Malone, Vice President
of Finance and Controller
(principal accounting officer)                                   |  | March 31, 2003
|                        
|/s/ Larry A. Hodges      |  | Larry A. Hodges, Director                                                                                                   |  | March 31, 2003
|                        
|/s/ Joseph E. Monaly     |  | Joseph E. Monaly, Director                                                                                                  |  | March 31, 2003
|                        
|/s/ W. Bruce Turner      |  | W. Bruce Turner, Director                                                                                                   |  | March 31, 2003

S-1



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##### Table of Contents



On this 31st of March, 2003, Craig H. Neilsen directed Connie Wilson in
his presence as well as our own, to sign the foregoing document as Craig H.
Neilsen. Upon viewing the signatures as signed by Connie Wilson and in our
presence, Craig H. Neilsen declared to us that he adopted them as his own
signatures.



| | /s/ Josie RubioWitness
 
 
/s/ Margene OttenWitness
| | ---------------------------------------------------

|                |  |      | 
|--------------- |  | ---- | 
|STATE OF NEVADA |  | )    | 
|                |  | ):ss | 
|COUNTY OF CLARK |  | )    | 

I, Janet Catron, Notary Public in and for said county and state, do hereby
certify that Craig H. Neilsen personally appeared before me and is known or
identified to me to be the President and Chief Executive Officer of Ameristar
Casinos, Inc., the corporation that executed the within instrument or the
person who executed the instrument on behalf of said corporation. Craig H.
Neilsen, who being unable due to physical incapacity to sign his name or offer
his mark, did direct Connie Wilson in his presence, as well as my own, to sign
his name to the foregoing document. Craig H. Neilsen, after viewing his name
as signed by Connie Wilson, thereupon adopted the signatures as his own by
acknowledging to me his intention to so adopt them as if he had personally
executed the same both in his individual capacity and on behalf of said
corporation, and further acknowledged to me that such corporation executed the
same.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
31st day of March, 2003.



| | /s/   Janet CatronNotary Public
| | -------------------------------

My Commission Expires: 5/9/2005

Residing at: Las Vegas, NV

S-2



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##### Table of Contents



CERTIFICATION PURSUANT TO RULE 13A-14
OF THE SECURITIES EXCHANGE ACT,
AS ADOPTED PURSUANT TO SECTION
302 OF THE SARBANES-OXLEY ACT

I, Craig H. Neilsen, certify that:

1. I have reviewed this Annual Report on Form 10-K of Ameristar Casinos, Inc.;

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

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

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

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

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

(c)  presented in this Annual Report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

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

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

S-3



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##### Table of Contents



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

6. The registrants other certifying officers and I have indicated in this
Annual Report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

March 31, 2003

By:
    
    /s/ Craig H. NeilsenCraig H. Neilsen
President and Chief Executive Officer


S-4



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##### Table of Contents



On this 31st of March, 2003, Craig H. Neilsen directed Connie Wilson in
his presence as well as our own, to sign the foregoing document as Craig H.
Neilsen. Upon viewing the signatures as signed by Connie Wilson and in our
presence, Craig H. Neilsen declared to us that he adopted them as his own
signatures.

| |  |                          
| |  | -------------------------
| |  | /s/ Josie Rubio
Witness  
|
| |  | /s/ Margene Otten
Witness

STATE OF NEVADA)
                                       ):ss.
COUNTY OF CLARK)

I, Janet Catron, Notary Public in and for said county and state, do hereby
certify that Craig H. Neilsen personally appeared before me and is known or
identified to me to be the President and Chief Executive Officer of Ameristar
Casinos, Inc., the corporation that executed the within instrument or the
person who executed the instrument on behalf of said corporation. Craig H.
Neilsen, who being unable due to physical incapacity to sign his name or offer
his mark, did direct Connie Wilson in his presence, as well as my own, to sign
his name to the foregoing document. Craig H. Neilsen, after viewing his name
as signed by Connie Wilson, thereupon adopted the signatures as his own by
acknowledging to me his intention to so adopt them as if he had personally
executed the same both in his individual capacity and on behalf of said
corporation, and further acknowledged to me that such corporation executed the
same.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
31st day of March, 2003.

| |  |                 
| |  | ----------------
| |  | /s/ Janet Catron
| |  |                 
| |  | Notary Public   

My Commission Expires:  5/9/2005
Residing at:  Las Vegas, NV

S-5



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CERTIFICATION PURSUANT TO RULE 13A-14
OF THE SECURITIES EXCHANGE ACT,
AS ADOPTED PURSUANT TO SECTION
302 OF THE SARBANES-OXLEY ACT

I, Thomas M. Steinbauer, certify that:

1. I have reviewed this Annual Report on Form 10-K of Ameristar Casinos, Inc.;

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

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

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

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

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

(c)  presented in this Annual Report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

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

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

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

S-6



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##### Table of Contents



6. The registrants other certifying officers and I have indicated in this
Annual Report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

March 31, 2003

By:
    
    /s/ Thomas M. SteinbauerThomas M. Steinbauer
Senior Vice President of Finance,
Chief Financial Officer and Treasurer


S-7



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##### Table of Contents



REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders
         of Ameristar Casinos, Inc.:

We have audited the accompanying consolidated balance sheets of Ameristar
Casinos, Inc. (a Nevada corporation) and subsidiaries (the Company) as of
December 31, 2001 and 2002, and the related consolidated statements of
operations, stockholders equity and cash flows for each of the three years in
the period ended December 31, 2002. These financial statements are the
responsibility of the Companys management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Ameristar Casinos, Inc. and subsidiaries as of December 31,
2001 and 2002, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 2002 in conformity
with accounting principles generally accepted in the United States of America.

As described in Note 2 to the consolidated financial statements, the Company
adopted Statements of Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities, and No. 138, Accounting for
Certain Derivative Instruments and Certain Hedging Activities  an Amendment of
FASB Statement No. 133, as of January 1, 2001, and adopted Statement of
Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets,
as of January 1, 2002.

DELOITTE & TOUCHE LLP

Las Vegas, Nevada
February 6, 2003

F-1



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##### Table of Contents



AMERISTAR CASINOS, INC.
CONSOLIDATED BALANCE SHEETS

ASSETS
(Amounts in Thousands)

|                                                                       |                                                            |                                                 |         |              |         |      |           |         |         | 
|---------------------------------------------------------------------- | ---------------------------------------------------------- | ----------------------------------------------- | ------- | ------------ | ------- | ---- | --------- | ------- | ------- | 
|                                                                       |                                                            |                                                 |         | December 31,
|                                                                       |                                                            |                                                 |         |             
|                                                                       |                                                            |                                                 |         | 2001         |         | 2002
|                                                                       |                                                            |                                                 |         |              |         |     
|CURRENT ASSETS:                                                        |                                                            |                                                 |         |              |         |      |           |        
|                                                                       | Cash and cash equivalents                                  |                                                 | $       | 41,098       |         |      | $         | 90,573  |        
|                                                                       | Accounts receivable, net                                   |                                                 |         | 3,653        |         |      |           | 4,952   |        
|                                                                       | Income tax refund receivable                               |                                                 |         |             |         |      |           | 11,614  |        
|                                                                       | Inventories                                                |                                                 |         | 5,206        |         |      |           | 6,585   |        
|                                                                       | Prepaid expenses                                           |                                                 |         | 7,421        |         |      |           | 9,413   |        
|                                                                       | Deferred income taxes                                      |                                                 |         | 3,452        |         |      |           | 8,545   |        
|                                                                       | Assets held for sale                                       |                                                 |         |             |         |      |           | 335     |        
|                                                                       |                                                            |                                                 |         |              |         |      |           |        
|                                                                       |                                                            | Total current assets                            |         |              | 60,830  |      |           |         | 132,017 | 
|                                                                       |                                                            |                                                 |         |              |         |      |           |        
|PROPERTY AND EQUIPMENT, at cost:                                       |                                                            |                                                 |         |              |         |      |           |        
|                                                                       | Buildings and improvements                                 |                                                 |         | 461,869      |         |      |           | 820,057 |        
|                                                                       | Furniture, fixtures and equipment                          |                                                 |         | 135,949      |         |      |           | 203,762 |        
|                                                                       | Furniture, fixtures and equipment under capitalized leases |                                                 |         | 8,317        |         |      |           | 5,652   |        
|                                                                       |                                                            |                                                 |         |              |         |      |           |        
|                                                                       |                                                            |                                                 | 606,135 |              |         |      | 1,029,471 |        
|                                                                       |                                                            | Less: Accumulated depreciation and amortization |         |              | 149,945 |      |           |         | 186,986 | 
|                                                                       |                                                            |                                                 |         |              |         |      |           |        
|                                                                       |                                                            |                                                 | 456,190 |              |         |      | 842,485   |        
|                                                                       | Land                                                       |                                                 |         | 43,173       |         |      |           | 43,173  |        
|                                                                       | Construction in progress                                   |                                                 |         | 221,152      |         |      |           | 30,719  |        
|                                                                       |                                                            |                                                 |         |              |         |      |           |        
|                                                                       |                                                            | Total property and equipment, net               |         |              | 720,515 |      |           |         | 916,377 | 
|                                                                       |                                                            |                                                 |         |              |         |      |           |        
|EXCESS OF PURCHASE PRICE OVER FAIR
MARKET VALUE OF NET ASSETS ACQUIRED |                                                            |                                                 | 83,224  |              |         |      | 82,020    |        
|                                                                       |                                                            |                                                 |         |              |         |      |           |        
|DEPOSITS AND OTHER ASSETS                                              |                                                            |                                                 | 28,023  |              |         |      | 26,893    |        
|                                                                       |                                                            |                                                 |         |              |         |      |           |        
|TOTAL ASSETS                                                           |                                                            | $                                               | 892,592 |              |         | $    | 1,157,307 |        
|                                                                       |                                                            |                                                 |         |              |         |      |           |        

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

F-2



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AMERISTAR CASINOS, INC.
CONSOLIDATED BALANCE SHEETS-CONTINUED

LIABILITIES AND STOCKHOLDERS EQUITY
(Amounts in Thousands, Except Share Data)

|                                                                |                                                                                                                                                                          |                           |                                      |                            |        |              |           |        |         |         |         | 
|--------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------- | ------------------------------------ | -------------------------- | ------ | ------------ | --------- | ------ | ------- | ------- | ------- | 
|                                                                |                                                                                                                                                                          |                           |                                      |                            |        | December 31,
|                                                                |                                                                                                                                                                          |                           |                                      |                            |        |             
|                                                                |                                                                                                                                                                          |                           |                                      |                            |        | 2001         |           | 2002  
|                                                                |                                                                                                                                                                          |                           |                                      |                            |        |              |           |       
|CURRENT LIABILITIES:                                            |                                                                                                                                                                          |                           |                                      |                            |        |              |           |       
|                                                                | Accounts payable                                                                                                                                                         |                           | $                                    | 10,331                     |        |              | $         | 17,044 |        
|                                                                | Construction contracts payable                                                                                                                                           |                           |                                      | 16,455                     |        |              |           | 26,510 |        
|                                                                | Accrued liabilities                                                                                                                                                      |                           |                                      | 51,648                     |        |              |           | 63,343 |        
|                                                                | Current obligations under capitalized leases                                                                                                                             |                           |                                      | 1,170                      |        |              |           | 1,231  |        
|                                                                | Current maturities of notes payable and long-term debt                                                                                                                   |                           |                                      | 8,433                      |        |              |           | 36,628 |        
|                                                                |                                                                                                                                                                          |                           |                                      |                            |        |              |           |       
|                                                                |                                                                                                                                                                          | Total current liabilities |                                      |                            | 88,037 |              |           |        | 144,756 |        
|                                                                |                                                                                                                                                                          |                           |                                      |                            |        |              |           |       
|OBLIGATIONS UNDER CAPITALIZED LEASES, net of current maturities |                                                                                                                                                                          |                           | 2,184                                |                            |        |              | 953       |       
|                                                                |                                                                                                                                                                          |                           |                                      |                            |        |              |           |       
|LONG-TERM DEBT, net of current maturities                       |                                                                                                                                                                          |                           | 622,071                              |                            |        |              | 759,712   |       
|                                                                |                                                                                                                                                                          |                           |                                      |                            |        |              |           |       
|DEFERRED INCOME TAXES AND OTHER LONG-TERM LIABILITIES           |                                                                                                                                                                          |                           | 22,964                               |                            |        |              | 49,690    |       
|                                                                |                                                                                                                                                                          |                           |                                      |                            |        |              |           |       
|COMMITMENTS AND CONTINGENCIES                                   |                                                                                                                                                                          |                           |                                      |                            |        |              |           |       
|STOCKHOLDERS EQUITY:                                           |                                                                                                                                                                          |                           |                                      |                            |        |              |           |       
|                                                                | Preferred stock, $.01 par value: Authorized - 30,000,000 shares; Issued  None                                                                                           |                           |                                      |                           |        |              |           |       |        
|                                                                | Common stock, $.01 par value: Authorized -
60,000,000 shares; Issued and outstanding -
25,858,771 shares at December 31, 2001 and
26,244,985 shares at December 31, 2002 |                           |                                      | 258                        |        |              |           | 262    |        
|                                                                |                                                                                                                                                                          |                           | Additional paid-in capital           |                            |        | 141,302      |           |        |         | 146,631 |        
|                                                                |                                                                                                                                                                          |                           | Accumulated other comprehensive loss |                            |        | (1,953       | )         |        |         | (2,960  | )      
|                                                                |                                                                                                                                                                          |                           | Retained earnings                    |                            |        | 17,729       |           |        |         | 58,263  |        
|                                                                |                                                                                                                                                                          |                           |                                      |                            |        |              |           |       
|                                                                |                                                                                                                                                                          |                           |                                      | Total stockholders equity |        |              | 157,336   |        |         |         | 202,196 | 
|                                                                |                                                                                                                                                                          |                           |                                      |                            |        |              |           |       
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                      |                                                                                                                                                                          | $                         | 892,592                              |                            |        | $            | 1,157,307 |       
|                                                                |                                                                                                                                                                          |                           |                                      |                            |        |              |           |       

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

F-3



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##### Table of Contents



AMERISTAR CASINOS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Share Data)

|                                                                                                                 |                                |                                         |                               |         |                          |         |         |        |         |         |         |        |         |         | 
|---------------------------------------------------------------------------------------------------------------- | ------------------------------ | --------------------------------------- | ----------------------------- | ------- | ------------------------ | ------- | ------- | ------ | ------- | ------- | ------- | ------ | ------- | ------- | 
|                                                                                                                 |                                |                                         |                               |         | Years ended December 31,
|                                                                                                                 |                                |                                         |                               |         |                         
|                                                                                                                 |                                |                                         |                               |         | 2000                     |         | 2001    |        | 2002   
|                                                                                                                 |                                |                                         |                               |         |                          |         |         |        |        
|REVENUES:                                                                                                        |                                |                                         |                               |         |                          |         |         |        |         |         |         |       
|                                                                                                                 |                                | Casino                                  |                               | $       | 286,438                  |         |         | $      | 568,259 |         |         | $      | 678,642 |        
|                                                                                                                 |                                | Food and beverage                       |                               |         | 53,653                   |         |         |        | 70,314  |         |         |        | 84,351  |        
|                                                                                                                 |                                | Rooms                                   |                               |         | 18,121                   |         |         |        | 23,384  |         |         |        | 23,989  |        
|                                                                                                                 |                                | Other                                   |                               |         | 12,018                   |         |         |        | 18,074  |         |         |        | 19,387  |        
|                                                                                                                 |                                |                                         |                               |         |                          |         |         |        |         |         |         |       
|                                                                                                                 |                                |                                         | 370,230                       |         |                          |         | 680,031 |        |         |         | 806,369 |       
|                                                                                                                 |                                | Less: Promotional allowances            |                               |         | 47,308                   |         |         |        | 77,206  |         |         |        | 108,406 |        
|                                                                                                                 |                                |                                         |                               |         |                          |         |         |        |         |         |         |       
|                                                                                                                 |                                |                                         | Net revenues                  |         |                          | 322,922 |         |        |         | 602,825 |         |        |         | 697,963 | 
|                                                                                                                 |                                |                                         |                               |         |                          |         |         |        |         |         |         |       
|OPERATING EXPENSES:                                                                                              |                                |                                         |                               |         |                          |         |         |        |         |         |         |       
|                                                                                                                 |                                | Casino                                  |                               |         | 115,864                  |         |         |        | 252,906 |         |         |        | 297,476 |        
|                                                                                                                 |                                | Food and beverage                       |                               |         | 35,135                   |         |         |        | 46,169  |         |         |        | 53,963  |        
|                                                                                                                 |                                | Rooms                                   |                               |         | 6,944                    |         |         |        | 7,921   |         |         |        | 6,826   |        
|                                                                                                                 |                                | Other                                   |                               |         | 12,257                   |         |         |        | 11,813  |         |         |        | 13,962  |        
|                                                                                                                 |                                | Selling, general and administrative     |                               |         | 90,416                   |         |         |        | 129,060 |         |         |        | 150,228 |        
|                                                                                                                 |                                | Depreciation and amortization           |                               |         | 27,784                   |         |         |        | 40,101  |         |         |        | 48,711  |        
|                                                                                                                 |                                | Impairment loss on assets held for sale |                               |         | 57,153                   |         |         |        |        |         |         |        | 5,213   |        
|                                                                                                                 |                                | Preopening expense                      |                               |         |                         |         |         |        |        |         |         |        | 6,401   |        
|                                                                                                                 |                                |                                         |                               |         |                          |         |         |        |         |         |         |       
|                                                                                                                 |                                | Total operating expenses                |                               |         | 345,553                  |         |         |        | 487,970 |         |         |        | 582,780 |        
|                                                                                                                 |                                |                                         |                               |         |                          |         |         |        |         |         |         |       
|                                                                                                                 |                                |                                         | Income (loss) from operations |         |                          | (22,631 | )       |        |         | 114,855 |         |        |         | 115,183 | 
|OTHER INCOME (EXPENSE):                                                                                          |                                |                                         |                               |         |                          |         |         |        |         |         |         |       
|                                                                                                                 |                                | Interest income                         |                               |         | 161                      |         |         |        | 522     |         |         |        | 174     |        
|                                                                                                                 |                                | Interest expense, net                   |                               |         | (28,316                  | )       |         |        | (64,931 | )       |         |        | (51,206 | )      
|                                                                                                                 |                                | Other                                   |                               |         | (942                     | )       |         |        | (776    | )       |         |        | (272    | )      
|                                                                                                                 |                                |                                         |                               |         |                          |         |         |        |         |         |         |       
|INCOME (LOSS) BEFORE INCOME TAX PROVISION
(BENEFIT), EXTRAORDINARY LOSS AND                                      |                                |                                         |                               |         |                          |         |         |        |         |         |         |       
|CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE                                                              |                                |                                         | (51,728                       | )       |                          |         | 49,670  |        |         |         | 63,879  |       
|                                                                                                                 | Income tax provision (benefit) |                                         |                               | (17,981 | )                        |         |         | 16,381 |         |         |         | 23,345 |        
|INCOME (LOSS) BEFORE EXTRAORDINARY LOSS
AND CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE                  |                                |                                         | (33,747                       | )       |                          |         | 33,289  |        |         |         | 40,534  |       
|Extraordinary loss on early retirement
of debt, net of income tax
benefit of $3,479                              |                                |                                         | (6,560                        | )       |                          |         |        |        |         |         |        |       
|                                                                                                                 |                                |                                         |                               |         |                          |         |         |        |         |         |         |       
|INCOME (LOSS) BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING PRINCIPLE                                         |                                |                                         | (40,307                       | )       |                          |         | 33,289  |        |         |         | 40,534  |       
|Cumulative effect of change in accounting
principle  adoption of SFAS No. 133,
net of income tax benefit of $73 |                                |                                         |                              |         |                          |         | (135    | )      |         |         |        |       
|                                                                                                                 |                                |                                         |                               |         |                          |         |         |        |         |         |         |       
|NET INCOME (LOSS)                                                                                                |                                | $                                       | (40,307                       | )       |                          | $       | 33,154  |        |         | $       | 40,534  |       
|                                                                                                                 |                                |                                         |                               |         |                          |         |         |        |         |         |         |       

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

F-4



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##### Table of Contents



AMERISTAR CASINOS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS-CONTINUED
(Amounts in Thousands, Except Share Data)

|                           |                                                                                                                              |         |  |                          |       |      |  |      |       |   |  |   |      | 
|-------------------------- | ---------------------------------------------------------------------------------------------------------------------------- | ------- |  | ------------------------ | ----- | ---- |  | ---- | ----- | - |  | - | ---- | 
|                           |                                                                                                                              |         |  | Years ended December 31,
|                           |                                                                                                                              |         |  |                         
|                           |                                                                                                                              |         |  | 2000                     |       | 2001 |  | 2002
|                           |                                                                                                                              |         |  |                          |       |      |  |     
|EARNINGS (LOSS) PER SHARE: |                                                                                                                              |         |  |                          |       |      |  |      |       |   |  |  
|                           | Income (loss) before
extraordinary loss on early
retirement of debt and
cumulative effect of change
in accounting principle: |         |  |                          |       |      |  |      |       |   |  |   |     
|                           |                                                                                                                              | Basic   |  | $                        | (1.65 | )    |  | $    | 1.59  |   |  | $ | 1.55 | 
|                           |                                                                                                                              |         |  |                          |       |      |  |      |       |   |  |  
|                           |                                                                                                                              | Diluted |  | $                        | (1.65 | )    |  | $    | 1.52  |   |  | $ | 1.50 | 
|                           |                                                                                                                              |         |  |                          |       |      |  |      |       |   |  |  
|                           | Extraordinary loss on early retirement of debt                                                                               |         |  |                          |       |      |  |      |       |   |  |   |     
|                           |                                                                                                                              | Basic   |  | $                        | (0.33 | )    |  | $    |      |   |  | $ |     | 
|                           |                                                                                                                              |         |  |                          |       |      |  |      |       |   |  |  
|                           |                                                                                                                              | Diluted |  | $                        | (0.33 | )    |  | $    |      |   |  | $ |     | 
|                           |                                                                                                                              |         |  |                          |       |      |  |      |       |   |  |  
|                           | Cumulative effect of change in
accounting principle:                                                                         |         |  |                          |       |      |  |      |       |   |  |   |     
|                           |                                                                                                                              | Basic   |  | $                        |      |      |  | $    |      |   |  | $ |     | 
|                           |                                                                                                                              |         |  |                          |       |      |  |      |       |   |  |  
|                           |                                                                                                                              | Diluted |  | $                        |      |      |  | $    | (0.01 | ) |  | $ |     | 
|                           |                                                                                                                              |         |  |                          |       |      |  |      |       |   |  |  
|                           | Net income (loss):                                                                                                           |         |  |                          |       |      |  |      |       |   |  |   |     
|                           |                                                                                                                              | Basic   |  | $                        | (1.98 | )    |  | $    | 1.59  |   |  | $ | 1.55 | 
|                           |                                                                                                                              |         |  |                          |       |      |  |      |       |   |  |  
|                           |                                                                                                                              | Diluted |  | $                        | (1.98 | )    |  | $    | 1.51  |   |  | $ | 1.50 | 
|                           |                                                                                                                              |         |  |                          |       |      |  |      |       |   |  |  

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

F-5



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##### Table of Contents



AMERISTAR CASINOS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(Amounts and Shares in Thousands)

|                                                                                    |  |               |        |            |  |         |     |             |  |               |         |              |  |   |        |   |  |   |         |   |  |   |         |  
|----------------------------------------------------------------------------------- |  | ------------- | ------ | ---------- |  | ------- | --- | ----------- |  | ------------- | ------- | ------------ |  | - | ------ | - |  | - | ------- | - |  | - | ------- | -
|                                                                                    |  | Capital Stock |        |            |  |         |     | Accumulated |  | Retained      |         |              |  |  
|                                                                                    |  |               |        | Additional |  | Other   |     | Earnings    |  |               |         |             
|                                                                                    |  | Number        |        |            |  |         |     | Paid-In     |  | Comprehensive |         | (Accumulated |  |   |        |  
|                                                                                    |  | of Shares     |        | Amount     |  | Capital |     | Loss        |  | Deficit)      |         | Total       
|                                                                                    |  |               |        |            |  |         |     |             |  |               |         |             
|Balance, December 31, 1999                                                          |  |               | 20,375 |            |  | $       | 204 |             |  | $             | 43,083  |              |  | $ |       |   |  | $ | 24,882  |   |  | $ | 68,169  |  
|Net loss                                                                            |  |               |       |            |  |         |    |             |  |               |        |              |  |   |       |   |  |   | (40,307 | ) |  |   | (40,307 | )
|Exercise of stock options                                                           |  |               | 68     |            |  |         |    |             |  |               | 182     |              |  |   |       |   |  |   |        |   |  |   | 182     |  
|                                                                                    |  |               |        |            |  |         |     |             |  |               |         |              |  |   |        |   |  |   |         |   |  |   |         |  
|Balance, December 31, 2000                                                          |  |               | 20,443 |            |  |         | 204 |             |  |               | 43,265  |              |  |   |       |   |  |   | (15,425 | ) |  |   | 28,044  |  
|Net income                                                                          |  |               |       |            |  |         |    |             |  |               |        |              |  |   |       |   |  |   | 33,154  |   |  |   | 33,154  |  
|Change in fair value of interest rate
swap agreement, net of
deferred tax of $1,052 |  |               |       |            |  |         |    |             |  |               |        |              |  |   | (1,953 | ) |  |   |        |   |  |   | (1,953  | )
|Total comprehensive income                                                          |  |               |        |            |  |         |     |             |  |               |         |              |  |   |        |   |  |   |         |   |  |   | 31,201  |  
|Issuance of common stock, net of offering costs                                     |  |               | 4,900  |            |  |         | 49  |             |  |               | 94,179  |              |  |   |       |   |  |   |        |   |  |   | 94,228  |  
|Exercise of stock options                                                           |  |               | 516    |            |  |         | 5   |             |  |               | 1,994   |              |  |   |       |   |  |   |        |   |  |   | 1,999   |  
|Tax benefits of stock option exercises                                              |  |               |       |            |  |         |    |             |  |               | 1,864   |              |  |   |       |   |  |   |        |   |  |   | 1,864   |  
|                                                                                    |  |               |        |            |  |         |     |             |  |               |         |              |  |   |        |   |  |   |         |   |  |   |         |  
|Balance, December 31, 2001                                                          |  |               | 25,859 |            |  |         | 258 |             |  |               | 141,302 |              |  |   | (1,953 | ) |  |   | 17,729  |   |  |   | 157,336 |  
|Net income                                                                          |  |               |       |            |  |         |    |             |  |               |        |              |  |   |       |   |  |   | 40,534  |   |  |   | 40,534  |  
|Change in fair value of interest rate swap
agreement, net of deferred tax of $470   |  |               |       |            |  |         |    |             |  |               |        |              |  |   | (1,007 | ) |  |   |        |   |  |   | (1,007  | )
|Total comprehensive income                                                          |  |               |        |            |  |         |     |             |  |               |         |              |  |   |        |   |  |   |         |   |  |   | 39,527  |  
|Exercise of stock options                                                           |  |               | 386    |            |  |         | 4   |             |  |               | 1,819   |              |  |   |       |   |  |   |        |   |  |   | 1,823   |  
|Tax benefits of stock option exercises                                              |  |               |       |            |  |         |    |             |  |               | 3,510   |              |  |   |       |   |  |   |        |   |  |   | 3,510   |  
|                                                                                    |  |               |        |            |  |         |     |             |  |               |         |              |  |   |        |   |  |   |         |   |  |   |         |  
|Balance, December 31, 2002                                                          |  |               | 26,245 |            |  | $       | 262 |             |  | $             | 146,631 |              |  | $ | (2,960 | ) |  | $ | 58,263  |   |  | $ | 202,196 |  
|                                                                                    |  |               |        |            |  |         |     |             |  |               |         |              |  |   |        |   |  |   |         |   |  |   |         |  

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

F-6



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##### Table of Contents



AMERISTAR CASINOS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)

|                                          |                                                                                          |                                                        |          |                          |         |      |         |          |        |   |          |          |         |  
|----------------------------------------- | ---------------------------------------------------------------------------------------- | ------------------------------------------------------ | -------- | ------------------------ | ------- | ---- | ------- | -------- | ------ | - | -------- | -------- | ------- | -
|                                          |                                                                                          |                                                        |          | Years ended December 31,
|                                          |                                                                                          |                                                        |          |                         
|                                          |                                                                                          |                                                        |          | 2000                     |         | 2001 |         | 2002    
|                                          |                                                                                          |                                                        |          |                          |         |      |         |         
|CASH FLOWS FROM OPERATING ACTIVITIES:     |                                                                                          |                                                        |          |                          |         |      |         |          |        |   |          |         
|                                          | Net income (loss)                                                                        |                                                        | $        | (40,307                  | )       |      | $       | 33,154   |        |   | $        | 40,534   |        
|                                          |                                                                                          |                                                        |          |                          |         |      |         |          |        |   |          |         
|                                          | Adjustments to reconcile net income (loss) to net cash
provided by operating activities: |                                                        |          |                          |         |      |         |          |        |   |          |          |        
|                                          |                                                                                          | Depreciation and amortization                          |          |                          | 27,784  |      |         |          | 40,101 |   |          |          | 48,711  |  
|                                          |                                                                                          | Amortization of debt issuance costs and debt discounts |          |                          | 734     |      |         |          | 7,365  |   |          |          | 4,688   |  
|                                          |                                                                                          | Extraordinary loss on early retirement of debt         |          |                          | 10,039  |      |         |          |       |   |          |          |        |  
|                                          |                                                                                          | Change in value of interest rate collar agreement      |          |                          |        |      |         |          | 1,900  |   |          |          | 886     |  
|                                          |                                                                                          | Impairment loss on assets held for sale                |          |                          | 57,153  |      |         |          |       |   |          |          | 5,213   |  
|                                          |                                                                                          | Net loss on disposition of assets                      |          |                          | 942     |      |         |          | 777    |   |          |          | 341     |  
|                                          |                                                                                          | Change in deferred income taxes                        |          |                          | (20,682 | )    |         |          | 14,560 |   |          |          | 23,074  |  
|                                          |                                                                                          | Decrease (increase) in accounts receivable, net        |          |                          | (1,794  | )    |         |          | 7,668  |   |          |          | (1,299  | )
|                                          |                                                                                          | Decrease (increase) in income tax refund receivable    |          |                          | 1,325   |      |         |          | 125    |   |          |          | (11,614 | )
|                                          |                                                                                          | Increase in inventories                                |          |                          | (1,124  | )    |         |          | (771   | ) |          |          | (1,379  | )
|                                          |                                                                                          | Increase in prepaid expenses                           |          |                          | (451    | )    |         |          | (2,071 | ) |          |          | (1,992  | )
|                                          |                                                                                          | Increase in assets held for sale                       |          |                          |        |      |         |          |       |   |          |          | (335    | )
|                                          |                                                                                          | Increase (decrease) in accounts payable                |          |                          | 3,920   |      |         |          | (2,793 | ) |          |          | 6,713   |  
|                                          |                                                                                          | Increase in accrued liabilities                        |          |                          | 1,297   |      |         |          | 10,274 |   |          |          | 11,695  |  
|                                          |                                                                                          | Increase in other long-term liabilities                |          |                          |        |      |         |          | 1,053  |   |          |          | 1,382   |  
|                                          |                                                                                          |                                                        |          |                          |         |      |         |          |        |   |          |         
|                                          | Total adjustments                                                                        |                                                        |          | 79,143                   |         |      |         | 78,188   |        |   |          | 86,084   |        
|                                          |                                                                                          |                                                        |          |                          |         |      |         |          |        |   |          |         
|Net cash provided by operating activities |                                                                                          |                                                        | 38,836   |                          |         |      | 111,342 |          |        |   | 126,618  |         
|                                          |                                                                                          |                                                        |          |                          |         |      |         |          |        |   |          |         
|CASH FLOWS FROM INVESTING ACTIVITIES:     |                                                                                          |                                                        |          |                          |         |      |         |          |        |   |          |         
|                                          | Capital expenditures                                                                     |                                                        |          | (33,357                  | )       |      |         | (114,114 | )      |   |          | (255,530 | )      
|                                          | Increase (decrease) in construction contracts payable                                    |                                                        |          | (1,848                   | )       |      |         | 11,962   |        |   |          | 10,055   |        
|                                          | Acquisition of Missouri properties, net of cash acquired                                 |                                                        |          | (486,800                 | )       |      |         |         |        |   |          |         |        
|                                          | Proceeds from sale of The Reserve                                                        |                                                        |          |                         |         |      |         | 71,559   |        |   |          |         |        
|                                          | Proceeds from sale of assets (other than The Reserve)                                    |                                                        |          | 1,838                    |         |      |         | 28       |        |   |          | 8,370    |        
|                                          | Increase in deposits and other non-current assets                                        |                                                        |          | (1,039                   | )       |      |         | (1,405   | )      |   |          | (4,349   | )      
|                                          |                                                                                          |                                                        |          |                          |         |      |         |          |        |   |          |         
|Net cash used in investing activities     |                                                                                          |                                                        | (521,206 | )                        |         |      | (31,970 | )        |        |   | (241,454 | )       
|                                          |                                                                                          |                                                        |          |                          |         |      |         |          |        |   |          |         

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

F-7



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##### Table of Contents



AMERISTAR CASINOS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS-CONTINUED
(Amounts in Thousands)

|                                                    |                                                                            |                                |         |                          |         |      |         |          |   |   |         |         |   | 
|--------------------------------------------------- | -------------------------------------------------------------------------- | ------------------------------ | ------- | ------------------------ | ------- | ---- | ------- | -------- | - | - | ------- | ------- | - | 
|                                                    |                                                                            |                                |         | Years ended December 31,
|                                                    |                                                                            |                                |         | 2000                     |         | 2001 |         | 2002    
|                                                    |                                                                            |                                |         |                          |         |      |         |         
|CASH FLOWS FROM FINANCING ACTIVITIES:               |                                                                            |                                |         |                          |         |      |         |          |   |   |         |        
|                                                    | Proceeds from issuance of notes payable and long-term debt                 |                                |         | 788,227                  |         |      |         | 395,269  |   |   |         | 246,038 |  
|                                                    | Principal payments of notes payable, long-term debt and capitalized leases |                                |         | (264,487                 | )       |      |         | (558,548 | ) |   |         | (81,996 | )
|                                                    | Debt issuance costs and amendment fees                                     |                                |         | (20,838                  | )       |      |         | (7,467   | ) |   |         | (1,553  | )
|                                                    | Proceeds from stock offering                                               |                                |         |                         |         |      |         | 94,228   |   |   |         |        |  
|                                                    | Proceeds from stock option exercises                                       |                                |         | 182                      |         |      |         | 1,999    |   |   |         | 1,822   |  
|                                                    |                                                                            |                                |         |                          |         |      |         |          |   |   |         |        
|Net cash provided by (used in) financing activities |                                                                            |                                | 503,084 |                          |         |      | (74,519 | )        |   |   | 164,311 |        
|                                                    |                                                                            |                                |         |                          |         |      |         |          |   |   |         |        
|NET INCREASE IN CASH AND CASH EQUIVALENTS           |                                                                            |                                | 20,714  |                          |         |      | 4,853   |          |   |   | 49,475  |        
|CASH AND CASH EQUIVALENTS  BEGINNING OF YEAR       |                                                                            |                                | 15,531  |                          |         |      | 36,245  |          |   |   | 41,098  |        
|                                                    |                                                                            |                                |         |                          |         |      |         |          |   |   |         |        
|CASH AND CASH EQUIVALENTS  END OF YEAR             |                                                                            | $                              | 36,245  |                          |         | $    | 41,098  |          |   | $ | 90,573  |        
|                                                    |                                                                            |                                |         |                          |         |      |         |          |   |   |         |        
|SUPPLEMENTAL CASH FLOW DISCLOSURES:                 |                                                                            |                                |         |                          |         |      |         |          |   |   |         |        
|                                                    | Cash paid for interest, net of amounts capitalized                         |                                | $       | 30,916                   |         |      | $       | 44,612   |   |   | $       | 45,407  |  
|                                                    | Cash paid for federal and state income taxes (refunds received)            |                                | $       | (2,162                   | )       |      | $       | 1,065    |   |   | $       | 1,391   |  
|                                                    | Acquisition of the Missouri properties:                                    |                                |         |                          |         |      |         |          |   |   |         |         |  
|                                                    |                                                                            | Fair value of assets purchased |         | $                        | 498,885 |      |         | $        |  |   |         | $       |  | 
|                                                    |                                                                            | Less: liabilities assumed      |         |                          | (12,085 | )    |         |          |  |   |         |         |  | 
|                                                    |                                                                            |                                |         |                          |         |      |         |          |   |   |         |        
|                                                    | Net cash paid for the acquisition                                          |                                | $       | 486,800                  |         |      | $       |         |   |   | $       |        |  
|                                                    |                                                                            |                                |         |                          |         |      |         |          |   |   |         |        
|NONCASH INVESTING AND FINANCING ACTIVITIES:         |                                                                            |                                |         |                          |         |      |         |          |   |   |         |        
|                                                    | Acquisition of assets with capital leases                                  |                                | $       | 4,531                    |         |      | $       |         |   |   | $       |        |  
|                                                    | Acquisition of assets with notes payable                                   |                                | $       | 3,603                    |         |      | $       | 264      |   |   | $       |        |  

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

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AMERISTAR CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1  Basis of presentation

The accompanying condensed consolidated financial statements include the
accounts of Ameristar Casinos, Inc. (ACI) and its wholly owned subsidiaries
(collectively, the Company). Through its subsidiaries, the Company owns and
operates six casino properties in five markets. The Companys properties
consist of Ameristar Casino St. Charles, located in St. Charles, Missouri
serving the St. Louis metropolitan area; Ameristar Casino Hotel Kansas City,
located in Kansas City, Missouri; Ameristar Casino Hotel Council Bluffs,
located in Council Bluffs, Iowa serving the Omaha, Nebraska/Council Bluffs,
Iowa metropolitan area; Ameristar Casino Hotel Vicksburg, located in Vicksburg,
Mississippi; and Cactus Petes Resort Casino and The Horseshu Hotel & Casino,
located in Jackpot, Nevada at the Idaho border. The Company views each
property as an operating segment and all such operating segments have been
aggregated into one reporting segment. All significant intercompany
transactions have been eliminated.

Note 2  Summary of significant accounting policies

Use of estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to apply significant judgment in defining the appropriate estimates
and assumptions for calculating financial estimates. By their nature, these
judgments are subject to an inherent degree of uncertainty. The Companys
judgments are based in part on its historical experience, terms of existing
contracts, observance of trends in the gaming industry and information
available from other outside sources. Actual results could differ from those
estimates.

Cash and cash equivalents

The Company considers all highly liquid investments with maturities of
three months or less when purchased to be cash equivalents. Cash equivalents
are carried at cost, which approximates market, due to the short-term
maturities of these instruments.

Accounts receivable

Gaming receivables are included as part of the Companys accounts
receivable balance. At December 31, 2001 and 2002, an allowance of $0.2 and
$0.3 million, respectively, have been applied to reduce total accounts
receivable to amounts anticipated to be collected.

Inventories

Inventories primarily consist of food and beverage items, gift shop and
general store retail merchandise, engineering and slot supplies, uniforms,
linens, china and other general

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supplies. Inventories are stated at the lower
of cost or market. Cost is determined principally on the weighted average
basis.

Depreciation and capitalization

Property and equipment are recorded at cost, including interest charged on
funds borrowed to finance construction. Interest of $1.4 million, $17.8
million and $17.9 million was capitalized for the years ended December 31,
2000, 2001 and 2002, respectively. Betterments, renewals and repairs that
extend the life of an asset are capitalized. Ordinary maintenance and repairs
are charged to expense as incurred. Costs of major renovation projects are
capitalized in accordance with existing policies.

Depreciation is provided on the straight-line method. Amortization of
building and furniture, fixtures and equipment under capitalized leases is
provided over the shorter of the estimated useful life of the asset or the term
of the associated lease (including lease renewal or purchase options the
Company expects to exercise). Depreciation and amortization is provided over
the following estimated useful lives:

|                                                           |  |               |  | 
|---------------------------------------------------------- |  | ------------- |  | 
|Buildings and improvements                                 |  | 5 to 40 years
|Furniture, fixtures and equipment                          |  | 3 to 15 years
|Furniture, fixtures and equipment
under capitalized leases |  | 3 to 5 years 

Impairment of long-lived assets

The Company reviews long-lived assets for impairment in accordance with
Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets, which the Company adopted on
January 1, 2002.

SFAS No. 144 requires that long-lived assets be reviewed for impairment
whenever events or changes in circumstances indicate that the book value of the
asset may not be recoverable. The Company reviews long-lived assets for such
events or changes in circumstances and at each balance sheet date. If a
long-lived asset is to be held and used, the Company assesses recoverability
based on the future undiscounted cash flows of the related asset over the
remaining life compared to the assets book value. If an impairment exists,
the asset is written down to fair value, based on quoted market prices or
another valuation technique, such as discounted cash flow analysis. If a
long-lived asset is to be sold, the asset is reported at the lower of carrying
amount or fair value less cost to sell, with fair value measured as discussed
above. See also Note 11  Impairment loss on assets held for sale.

Debt issuance costs

Debt issuance costs are capitalized and amortized to interest expense
using the effective interest method or a method that approximates the effective
interest method over the term of the related debt instrument.

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Excess of purchase price over fair market value of net assets acquired

In connection with the December 2000 acquisition of the Missouri
properties, the Company recorded an excess of purchase price over fair market
value of net assets acquired (goodwill). See also  Note 10  Pro forma
data.

The Company accounts for goodwill in accordance with SFAS No. 142,
Goodwill and Other Intangible Assets, which the Company adopted on January 1,
2002. Under SFAS No. 142, goodwill is no longer being amortized beginning
January 1, 2002. Instead, goodwill must be reviewed for impairment using a
fair value assessment approach upon adoption and then at least annually and
more frequently if events or circumstances indicate a possible impairment. The
Company completed a review of goodwill as of January 1, 2002 and October 1,
2002 and determined that no impairment existed as of those dates. The Company
will review goodwill annually as of October 1 of each year. See also  Note 13
- Excess of purchase price over fair market value of net assets acquired.

Derivative instruments and hedging activities

The Company seeks to manage interest rate risk associated with variable
rate borrowings through the use of derivative instruments designated as cash
flow hedges. The Company accounts for these derivative instruments in
accordance with SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities, and SFAS No. 138, Accounting for Certain Derivative
Instruments and Hedging Activities  an Amendment of FASB Statement No. 133,
which the Company adopted on January 1, 2001. SFAS No. 133 requires that
derivative financial instruments be recognized as assets or liabilities, with
changes in fair value affecting net income or comprehensive income. See also
Note 5  Notes payable and long-term debt.

Revenue recognition

In accordance with industry practice, casino revenues consist of the net
win from gaming activities. Food and beverage and rooms revenues include the
retail value of complimentary goods and services furnished to customers.

Promotional allowances consist of the retail value of complimentary food
and beverage, rooms, progress towards earning points for cash-based loyalty
programs and targeted direct mail coin coupons.

According to the requirements of Emerging Issues Task Force (EITF) Issue
00-22, Accounting for Points and Certain Other Time-Based or Volume-Based
Sales Incentive Offers, and Offers for Free Products or Services to be
Delivered in the Future (EITF 00-22), which became effective in the first
quarter of 2000, progress towards earning points for cash-based loyalty
programs and coin coupons be recorded as a reduction of revenue, including
reclassifying prior period amounts.

In its consolidated financial statements for the year ended December 31,
2001, the Company reclassified progress towards the point-based complimentary
goods and services/cash

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rebates totaling $7.9 million and $16.6 million for the
years ended December 31, 2000 and 2001, respectively, as a reduction of casino
revenue. These charges have now been reclassified as an increase to
promotional allowances to be consistent with industry practice.

The Company previously recorded expenses associated with its targeted
direct mail coin coupon offerings as a casino department expense. These charges
totaling $11.2 million and $24.0 million for the years ended December 31, 2000
and 2001, respectively, have been reclassified as an increase to promotional
allowances.

The estimated departmental costs of providing complimentary food and
beverage, rooms and other are included in casino operating expenses and consist
of the following:

|                  |  |                          |        |      |  |      |        |  |  |   |        | 
|----------------- |  | ------------------------ | ------ | ---- |  | ---- | ------ |  |  | - | ------ | 
|                  |  | Years ended December 31,
|                  |  | 2000                     |        | 2001 |  | 2002
|                  |  |                          |        |      |  |     
|                  |  | (Amounts in Thousands)  
|Food and beverage |  | $                        | 20,552 |      |  | $    | 22,632 |  |  | $ | 30,266 | 
|Rooms             |  |                          | 1,089  |      |  |      | 1,550  |  |  |   | 3,416  | 
|Other             |  |                          | 1,303  |      |  |      | 3,638  |  |  |   | 2,972  | 
|                  |  |                          |        |      |  |      |        |  |  |   |        | 
|                  |  | $                        | 22,944 |      |  | $    | 27,820 |  |  | $ | 36,654 | 
|                  |  |                          |        |      |  |      |        |  |  |   |        | 

Advertising

The Company expenses advertising costs the first time the advertising
takes place. Advertising expense included in selling, general and
administrative expenses was approximately $11.6 million, $17.6 million and
$19.0 million for the years ended December 31, 2000, 2001 and 2002,
respectively.

Preopening expenses and business development expenses

Preopening expenses primarily represent direct personnel and other
operating costs incurred prior to the opening of new facilities and are
expensed as incurred in accordance with American Institute of Certified Public
Accountants Statement of Position No. 98-5, Reporting on the Costs of
Start-up Activities, which became effective January 1, 1999 (SOP 98-5). In
August 2002, the Company opened its new casino and entertainment facility at
Ameristar St. Charles and incurred $6.4 million of related preopening expenses
in 2002. These expenses included, without limitation, payroll and related
benefits, contract labor, employee recruiting expense and general supplies.

Business development expenses are general costs incurred in connection
with identifying, evaluating and pursuing opportunities to expand into existing
or new gaming jurisdictions. Such costs include, among others, legal fees,
land option payments and fees for applications filed with regulatory agencies,
and are expensed as incurred. During the year ended December 31, 2000, the
Company incurred $2.0 million of business development expenses, classified as
selling, general and administrative expenses, for its efforts to obtain a
gaming license in South St. Louis County, Missouri. The Company recorded $0.1
million and $0.4 million in business development expenses in 2001 and 2002,
respectively.

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Federal income taxes

Income taxes are recorded in accordance with SFAS No. 109, Accounting for
Income Taxes. SFAS No. 109 requires recognition of deferred income tax assets
and liabilities for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective income tax bases. Deferred income tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected
to be recovered or settled.

Recently issued accounting standards

In April 2002, the Financial Accounting Standards Board (FASB) issued
SFAS No. 145, Rescission of FASB Statement No. 4, 44 and 64, Amendment of FASB
Statement No. 13, and Technical Corrections. The key provision of SFAS No. 145
affecting the Company requires that gains or losses from the extinguishment of
debt be reclassified from extraordinary gains or losses to other income
(expense). In June 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities, which requires that a liability
for a cost associated with an exit or disposal activity be recognized when the
liability is incurred. The Company adopted SFAS Nos. 145 and 146 effective
January 1, 2003. Management does not believe the adoption of these accounting
standards will have a material impact on the Companys financial position or results
of operations.

In November 2002, the FASB issued FASB Interpretation (FIN) No. 45,
Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN No. 45 outlines additional
disclosure requirements for a guarantor and requires the guarantor to recognize
a liability for the fair value of the obligation undertaken. The Company
adopted FIN No. 45 as of December 31, 2002.

In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation-Transition and Disclosure-an Amendment of FASB
Statement No. 123. SFAS No. 148 amends SFAS No. 123, Accounting for
Stock-Based Compensation, to provide alternative methods of transition for a
voluntary change to the fair value-based method of accounting for stock-based
employee compensation. In addition, SFAS No. 148 amends the disclosure
requirements of SFAS No. 123 to require prominent disclosures in both annual
and interim financial statements about the method of accounting for stock-based
employee compensation and the effect of the method used on reported results and
specifies the form, content and location of those disclosures. The Company
adopted the disclosure requirements of SFAS No. 148 as of December 31, 2002.

The Company does not currently plan to transition to the fair value-based
method and will continue to account for stock incentive plans in accordance
with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued
to Employees (APB No. 25). Under SFAS No. 123, all employee stock option
grants are considered compensatory. SFAS No. 123 provides, among other things,
that companies may elect to account for employee stock options using APB No.
25. Had compensation cost for these plans been determined consistent

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with
SFAS No. 123, the Companys net income (loss) and earnings (loss) per share
would have been adjusted to the pro forma amounts in the following table. The
table also discloses the weighted average assumptions used in estimating the
fair value of each option grant on the date of grant using the Black-Scholes
option pricing model and the estimated weighted average fair value of the
options granted. The model assumes no expected future dividend payments on the
Companys common stock for the options granted in 2000, 2001 and 2002.

|                                   |                                                                         |  |                                               |         |      |  |      |        |   |  |   |        |  
|---------------------------------- | ----------------------------------------------------------------------- |  | --------------------------------------------- | ------- | ---- |  | ---- | ------ | - |  | - | ------ | -
|                                   |                                                                         |  | Years ended December 31,                     
|                                   |                                                                         |  |                                              
|                                   |                                                                         |  | 2000                                          |         | 2001 |  | 2002
|                                   |                                                                         |  |                                               |         |      |  |     
|                                   |                                                                         |  | (Dollars in Thousands, Except Per Share Data)
|Net income (loss):                 |                                                                         |  |                                               |         |      |  |      |        |   |  |   |       
|                                   | As reported                                                             |  | $                                             | (40,307 | )    |  | $    | 33,154 |   |  | $ | 40,534 |  
|                                   | Deduct: compensation expense under fair value-based
method (net of tax) |  |                                               | (444    | )    |  |      | (978   | ) |  |   | (2,084 | )
|                                   |                                                                         |  |                                               |         |      |  |      |        |   |  |   |       
|                                   | Pro forma                                                               |  | $                                             | (40,751 | )    |  | $    | 32,176 |   |  | $ | 38,450 |  
|                                   |                                                                         |  |                                               |         |      |  |      |        |   |  |   |       
|Basic earnings (loss) per share:   |                                                                         |  |                                               |         |      |  |      |        |   |  |   |       
|                                   | As reported                                                             |  | $                                             | (1.98   | )    |  | $    | 1.59   |   |  | $ | 1.55   |  
|                                   | Pro forma (net of tax)                                                  |  |                                               | (2.00   | )    |  |      | 1.54   |   |  |   | 1.47   |  
|Diluted earnings (loss) per share: |                                                                         |  |                                               |         |      |  |      |        |   |  |   |       
|                                   | As reported                                                             |  | $                                             | (1.98   | )    |  | $    | 1.51   |   |  | $ | 1.50   |  
|                                   | Pro forma (net of tax)                                                  |  |                                               | (2.00   | )    |  |      | 1.47   |   |  |   | 1.42   |  
|Weighted average assumptions:      |                                                                         |  |                                               |         |      |  |      |        |   |  |   |       
|                                   | Expected stock price volatility                                         |  |                                               | 54      | %    |  |      | 54     | % |  |   | 52     | %
|                                   | Risk-free interest rate                                                 |  |                                               | 5.6     | %    |  |      | 4.6    | % |  |   | 3.4    | %
|                                   | Expected option life (years)                                            |  |                                               | 5       |      |  |      | 5      |   |  |   | 7      |  
|                                   | Estimated fair value per share of options granted                       |  | $                                             | 2.73    |      |  | $    | 5.83   |   |  | $ | 4.76   |  

In January 2003, the FASB issued FASB Interpretation (FIN) No. 46,
Consolidation of Variable Interest Entities. FIN No. 46 addresses how an
enterprise identifies and consolidates variable interest entities in which it
has a controlling financial interest. The Company has adopted FIN No. 46 as of
January 1, 2003. Management does not believe the adoption of this accounting
standard will have a material impact on the Companys financial position or
results of operations.

Reclassifications

Certain reclassifications, having no effect on net income, have been made
to the prior periods consolidated financial statements to conform to the
current periods presentation.

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Note 3  Accrued liabilities

Accrued liabilities consist of the following:

|                                              |  |                        |        |      |  |   |        | 
|--------------------------------------------- |  | ---------------------- | ------ | ---- |  | - | ------ | 
|                                              |  | December 31,          
|                                              |  | 2001                   |        | 2002
|                                              |  |                        |        |     
|                                              |  | (Amounts in Thousands)
|Compensation and related benefits             |  | $                      | 11,480 |      |  | $ | 16,918 | 
|Interest                                      |  |                        | 15,939 |      |  |   | 16,899 | 
|Taxes other than income taxes                 |  |                        | 10,427 |      |  |   | 13,460 | 
|Players club rewards                         |  |                        | 3,125  |      |  |   | 5,112  | 
|Progressive slot machine and related accruals |  |                        | 4,141  |      |  |   | 4,740  | 
|Deposits and other accruals                   |  |                        | 6,536  |      |  |   | 6,214  | 
|                                              |  |                        |        |      |  |   |        | 
|                                              |  | $                      | 51,648 |      |  | $ | 63,343 | 
|                                              |  |                        |        |      |  |   |        | 

Note 4  Federal and state income taxes

The provision (benefit) for income taxes consists of the following:

|                                                                     |                      |   |                          |         |      |   |        |        |  |   |        |        | 
|-------------------------------------------------------------------- | -------------------- | - | ------------------------ | ------- | ---- | - | ------ | ------ |  | - | ------ | ------ | 
|                                                                     |                      |   | Years ended December 31,
|                                                                     |                      |   | 2000                     |         | 2001 |   | 2002  
|                                                                     |                      |   |                          |         |      |   |       
|                                                                     |                      |   | (Amounts in Thousands)  
|Taxes on income from continuing operations:                          |                      |   |                          |         |      |   |        |        |  |   |        |       
|                                                                     | Federal income taxes |   | $                        | (17,981 | )    |   | $      | 15,648 |  |   | $      | 22,467 | 
|                                                                     | State income taxes   |   |                          |        |      |   |        | 733    |  |   |        | 878    | 
|Tax benefit from extraordinary item                                  |                      |   | (3,479                   | )       |      |   |       |        |  |   |       |       
|Tax benefit from cumulative effect of change
in accounting principle |                      |   |                         |         |      |   | (73    | )      |  |   |       |       
|                                                                     |                      |   |                          |         |      |   |        |        |  |   |        |       
|                                                                     |                      | $ | (21,460                  | )       |      | $ | 16,308 |        |  | $ | 23,345 |       
|                                                                     |                      |   |                          |         |      |   |        |        |  |   |        |       

The components of the income tax provision (benefit) are as follows:

|         |  |                          |         |      |  |      |        |  |  |   |        |  
|-------- |  | ------------------------ | ------- | ---- |  | ---- | ------ |  |  | - | ------ | -
|         |  | Years ended December 31,
|         |  | 2000                     |         | 2001 |  | 2002
|         |  |                          |         |      |  |     
|         |  | (Amounts in Thousands)  
|Current  |  | $                        |        |      |  | $    | 733    |  |  | $ | (177   | )
|Deferred |  |                          | (17,981 | )    |  |      | 15,648 |  |  |   | 23,522 |  
|         |  |                          |         |      |  |      |        |  |  |   |        |  
|         |  | $                        | (17,981 | )    |  | $    | 16,381 |  |  | $ | 23,345 |  
|         |  |                          |         |      |  |      |        |  |  |   |        |  

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The reconciliation of income tax at the federal statutory rate to income
tax expense is as follows:

|                                               |  |                          |       |      |  |      |      |   |  |  |      |  
|---------------------------------------------- |  | ------------------------ | ----- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                                               |  | Years ended December 31,
|                                               |  | 2000                     |       | 2001 |  | 2002
|                                               |  |                          |       |      |  |     
|Federal statutory rate                         |  |                          | (35.0 | )%   |  |      | 35.0 | % |  |  | 35.0 | %
|State income tax expense                       |  |                          |      |      |  |      | 1.0  |   |  |  | 0.9  |  
|Nondeductible political and lobbying costs     |  |                          |      |      |  |      | 0.3  |   |  |  | 0.4  |  
|Nondeductible meals and entertainment expenses |  |                          | 0.1   |      |  |      | 0.1  |   |  |  | 0.0  |  
|Other nondeductible expenses                   |  |                          | 0.2   |      |  |      | 0.1  |   |  |  | 0.2  |  
|Previously unrecognized credit carryforwards   |  |                          |      |      |  |      | (3.5 | ) |  |  |     |  
|                                               |  |                          |       |      |  |      |      |   |  |  |      |  
|                                               |  |                          | (34.7 | )%   |  |      | 33.0 | % |  |  | 36.5 | %
|                                               |  |                          |       |      |  |      |      |   |  |  |      |  

Under SFAS No. 109, deferred income taxes reflect the net tax effects of
temporary differences between the carrying amount of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Companys net deferred income tax liability
consist of the following:

|                                  |                                         |                                       |         |                        |         |      |         |         |         |  
|--------------------------------- | --------------------------------------- | ------------------------------------- | ------- | ---------------------- | ------- | ---- | ------- | ------- | ------- | -
|                                  |                                         |                                       |         | December 31,          
|                                  |                                         |                                       |         | 2001                   |         | 2002
|                                  |                                         |                                       |         |                        |         |     
|                                  |                                         |                                       |         | (Amounts in Thousands)
|Deferred income tax assets:       |                                         |                                       |         |                        |         |      |         |        
|                                  | Accrued expenses                        |                                       | $       | 2,195                  |         |      | $       | 4,329   |        
|                                  | Alternative minimum tax credit          |                                       |         | 2,126                  |         |      |         | 1,004   |        
|                                  | Net operating loss carryforwards        |                                       |         | 21,427                 |         |      |         | 27,997  |        
|                                  | Impairment loss on assets held for sale |                                       |         |                       |         |      |         | 2,677   |        
|                                  | Other                                   |                                       |         | 5,684                  |         |      |         | 9,836   |        
|                                  |                                         |                                       |         |                        |         |      |         |        
|                                  |                                         | Total deferred income tax assets      |         |                        | 31,432  |      |         |         | 45,843  |  
|                                  |                                         |                                       |         |                        |         |      |         |        
|Deferred income tax liabilities:  |                                         |                                       |         |                        |         |      |         |        
|                                  | Property and equipment                  |                                       |         | (40,758                | )       |      |         | (69,259 | )      
|                                  | Other                                   |                                       |         | (5,380                 | )       |      |         | (9,548  | )      
|                                  |                                         |                                       |         |                        |         |      |         |        
|                                  |                                         | Total deferred income tax liabilities |         |                        | (46,138 | )    |         |         | (78,807 | )
|                                  |                                         |                                       |         |                        |         |      |         |        
|Net deferred income tax liability |                                         | $                                     | (14,706 | )                      |         | $    | (32,964 | )      
|                                  |                                         |                                       |         |                        |         |      |         |        

The excess of the alternative minimum tax over regular federal income tax
is a tax credit which can be carried forward indefinitely to reduce future
federal income tax liabilities. At December 31, 2002, the Company has available
$80.0 million of unused operating loss carryforwards that may be applied
against future taxable income. The unused operating loss carryforwards will
expire in 2018 through 2021. No valuation allowance has been provided against
deferred income tax assets as the Company believes it is more likely than not
that deferred income tax assets are realizable based on expected future taxable
income.

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Note 5  Notes payable and long-term debt

Notes payable and long-term debt consist of the following:

|                                                                                                                                                                                                  |                                                                                                                                                                             |  |                        |         |      |  |   |         | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ------- | ---- |  | - | ------- | 
|                                                                                                                                                                                                  |                                                                                                                                                                             |  | December 31,          
|                                                                                                                                                                                                  |                                                                                                                                                                             |  | 2001                   |         | 2002
|                                                                                                                                                                                                  |                                                                                                                                                                             |  |                        |         |     
|                                                                                                                                                                                                  |                                                                                                                                                                             |  | (Amounts in Thousands)
|Senior credit facilities, secured by first
priority security interest in
substantially all real and personal
property assets of ACI and its
subsidiaries, consisting of the
following facilities: |                                                                                                                                                                             |  |                        |         |      |  |   |        
|                                                                                                                                                                                                  | Revolving credit facility, at variable
interest (5.2% at December 31, 2001)                                                                                                 |  | $                      | 6,000   |      |  | $ |        | 
|                                                                                                                                                                                                  | Revolving term loan facility, at
variable interest (5.2% at December 31,
2001 and 4.4% at December 31, 2002),
through December 20, 2005                                     |  |                        | 12,000  |      |  |   | 75,000  | 
|                                                                                                                                                                                                  | Term loan A, at variable interest (5.2% at
December 31, 2001 and 4.4% at December 31,
2002), principal due quarterly, through December 31, 2005                             |  |                        | 33,376  |      |  |   | 30,027  | 
|                                                                                                                                                                                                  | Term loan B, at variable interest (5.7%
at December 31, 2001 and 4.1% at
December 31, 2002), principal due
quarterly, through December 20, 2006                             |  |                        | 103,464 |      |  |   | 290,147 | 
|                                                                                                                                                                                                  | Term loan C, at variable interest (5.9%
at December 31, 2001), principal due
quarterly, through December 20, 2007
The balance was consolidated into term
loan B in May 2002 |  |                        | 88,683  |      |  |   |        | 

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|                                                                                                                                                                                                   |  |                        |         |      |  |   |         | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ------- | ---- |  | - | ------- | 
|                                                                                                                                                                                                   |  | 2001                   |         | 2002
|                                                                                                                                                                                                   |  |                        |         |     
|                                                                                                                                                                                                   |  | (Amounts in Thousands)
|Senior subordinated notes, unsecured,
10.75% fixed interest, payable
semi-annually, principal due
February 2, 2009 (net of $4,455 and
$3,831 discount at December 31, 2001
and 2002, respectively) |  |                        | 375,545 |      |  |   | 376,169 | 
|Equipment financing, secured, variable
interest (4.13% at December 31,
2002), payable monthly, principal
due October 18, 2006                                                                      |  |                        |        |      |  |   | 13,180  | 
|Other                                                                                                                                                                                              |  |                        | 11,436  |      |  |   | 11,817  | 
|                                                                                                                                                                                                   |  |                        |         |      |  |   |         | 
|                                                                                                                                                                                                   |  |                        | 630,504 |      |  |   | 796,340 | 
|Less: Current maturities                                                                                                                                                                           |  |                        | 8,433   |      |  |   | 36,628  | 
|                                                                                                                                                                                                   |  |                        |         |      |  |   |         | 
|                                                                                                                                                                                                   |  | $                      | 622,071 |      |  | $ | 759,712 | 
|                                                                                                                                                                                                   |  |                        |         |      |  |   |         | 

Maturities of the Companys borrowings for the next five years as of
December 31, 2002 are as follows (amounts in thousands):

|           |  |   |         | 
|---------- |  | - | ------- | 
|2003       |  | $ | 36,628  | 
|2004       |  |   | 44,644  | 
|2005       |  |   | 49,321  | 
|2006       |  |   | 284,244 | 
|2007       |  |   | 275     | 
|Thereafter |  |   | 381,228 | 
|           |  |   |         | 
|           |  | $ | 796,340 | 
|           |  |   |         | 

Senior credit facilities

In December 2000, the Company refinanced substantially all of its
long-term debt with $575 million of senior credit facilities provided by a
group of lenders led by affiliates of Deutsche Bank AG and a $300 million
senior subordinated credit facility provided by a group of lenders also led by
affiliates of Deutsche Bank AG. In connection with the refinancing, the
Company repurchased through a tender offer $100 million in aggregate principal
amount of its 10.5% senior subordinated notes due 2004 and repaid and
terminated its previous $115 million revolving credit facility and
approximately $30.2 million of other indebtedness. As a result of the early
repurchase of the 10.5% senior subordinated notes issued in 1997 and the early
termination of the previous credit facility, during 2000, the Company incurred
an extraordinary charge of $6.6 million (net of associated tax benefit of $3.5
million). This extraordinary charge was comprised of the premium paid to the
noteholders, unamortized discount on the notes and the write-off of related
loan costs and fees.

In May 2002, the Company amended the senior credit facilities. The
primary elements of the amendment include: (1) a reduction in the applicable
interest rate margin on all

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loans; (2) the consolidation of the term loan C
into the term loan B; (3) a further reduction in the applicable interest rate
margin for the term loan B upon an improvement in the Companys credit rating
or if the Companys leverage ratio falls below 3.50:1; (4) increased
flexibility for capital expenditures generally, including an increase in the
basket applicable to the Companys new St. Charles facility to accommodate the
expanded scope of that project; (5) significant increases in various covenant
allowances; and (6) the extension of the approval to add up to $200 million of
debt capacity if the Company obtains additional financing commitments. The
Company paid a fee to its lenders of approximately $0.9 million in connection
with the amendment, which is being amortized over the remaining lives of the
senior credit facilities.

In November 2002, the Company further amended the senior credit facilities
to increase the capital expenditure basket applicable to the new facility at
Ameristar St. Charles from $180 million to $210 million and paid a $0.2 million
amendment fee to the lenders.

On December 2, 2002, the Company borrowed an additional $100 million under
term loan B of the incremental term loan commitment provisions of the senior
credit facilities. The Company used the loan proceeds to repay all $67.7
million of the outstanding balance under the revolving credit facility and to
finance various capital improvements at its properties. The Company incurred
$0.3 million in loan fees associated with the borrowing.

At December 31, 2002, the senior credit facilities consisted of a $75
million revolving credit facility, $75 million revolving term
loan facility,
term loan A and term loan B (which had $0, $75.0 million, $30.0 million and $290.2
million outstanding, respectively, for a total of $395.2 million). At December
31, 2002, the amount of the revolving credit facility available for borrowing
is $67.7 million, after giving effect to $7.3 million of outstanding letters of
credit. Each of the facilities bears interest at a variable rate based, at the
Companys option, on LIBOR (Eurodollar loans) or the prime rate (base rate
loans) plus an applicable margin. For the revolving credit facility, the
revolving term loan facility and the term loan A, the interest rate margin
fluctuates based on the Companys leverage ratio, which is the ratio of
consolidated debt to EBITDA (as defined) for the most recent four full fiscal
quarters, and ranges from 1.25% to 3.00% in the case of Eurodollar loans and
from 0.25% to 2.00% in the case of base rate loans. For term loan B, the
interest rate margin fluctuates based on the Companys leverage ratio and
ranges from 2.50% to 3.00% in the case of Eurodollar loans and 1.50% to 2.00%
in the case of base rate loans. In the case of Eurodollar loans, the Company
has the option of selecting a one, two, three or six-month interest period,
with interest payable at the earlier of three months from the borrowing date or
upon expiration of the interest period selected.

The revolving term loan facility converted to a term loan on December 31,
2002. The revolving term loan facility, the revolving credit facility and the
term loan A mature on December 20, 2005. The term loan B matures on December
20, 2006. The revolving term loan facility is subject to mandatory quarterly
principal repayments of $4.7 million in 2003, $6.6 million in 2004 and $7.5
million in 2005. Term loan A is subject to mandatory quarterly principal
repayments of $1.8 million in 2003, $2.6 million in 2004 and $3.1 million in
2005. Term loan B is subject to mandatory quarterly principal repayments of
$0.7 million in 2003,

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2004 and 2005 and from $69.6 million to $70.5 million in
2006. All mandatory principal repayments have been made through December 31,
2002.

In addition to making all required quarterly principal repayments under
the senior credit facilities, in 2001 and 2002 the Company prepaid and reduced
the senior credit facilities as follows:



| |  |  | In January 2001, upon the closing of the sale of The
Reserve, the Company partially repaid the revolving credit
facility and permanently reduced the term loan A by a total of
$50 million;                                    
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | In February 2001, upon the issuance of the Companys
10.75% senior subordinated notes (described below), the Company
prepaid and permanently reduced the term loan B and term loan C
by a total of $50 million;                
|
| |  |  | In December 2001, upon the Companys sale of 4.9
million shares of common stock in a secondary public offering,
the Company prepaid and permanently reduced the term loans on a
pro rata basis by a total of $94.2 million; and
|
| |  |  | In December 2002, the Company repaid the outstanding
balance of the revolving credit facility of $67.7 million,
utilizing proceeds from the additional $100 million borrowing
under the term loan B.                           

The senior credit facilities and the indenture governing the senior
subordinated notes require the Company to comply with various affirmative and
negative financial and other covenants, including restrictions on the
incurrence of additional indebtedness, restrictions on dividend payments and
other restrictions and promises to maintain certain financial ratios and tests
within defined parameters. As of December 31, 2002, the Company was required
to maintain a maximum senior debt ratio, defined as senior debt divided by
EBITDA, of 3:1, and a maximum total debt ratio, defined as consolidated debt
divided by EBITDA, of 5:1. As of December 31, 2002, the Companys senior debt
and total debt ratios were 2.25:1 and 4.55:1, respectively.

As of December 31, 2002, the Company was required to maintain a minimum
fixed charge coverage ratio (EBITDA divided by fixed charges, as defined) of
1.50:1. As of December 31, 2002, the Companys fixed charge coverage ratio was
2.26:1. In addition, the senior credit facilities require the Company to
maintain a minimum of 1.5:1 adjusted fixed charge coverage ratio (EBITDA
divided by adjusted fixed charges, as defined). As of December 31, 2002, the
Companys adjusted fixed charge coverage ratio was 2.11:1.

The senior credit facilities also limit the Companys aggregate capital
expenditures in each year. For the year ended December 31, 2002, the Companys
maximum permitted capital expenditures were 7.0% of its consolidated gross
revenues, or $56.4 million. In addition, the senior credit facilities permit
the Company to incur up to certain amounts of capital expenditures on specified
projects. As of December 31, 2002, the Company was in compliance with the
capital expenditure covenant requirements.

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Senior subordinated credit facility

On December 20, 2000, the Company obtained a $300 million senior
subordinated credit facility provided by a group of lenders led by affiliates
of Deutsche Bank AG. This credit facility served as the interim financing for
the Companys acquisition of the Missouri properties until it was retired using
proceeds from the 10.75% senior subordinated notes in February 2001. During
the first quarter of 2001, the Company amortized $3.5 million ($2.3 million net
of tax) of debt issuance costs to interest expense related to the senior
subordinated credit facility.

Senior subordinated notes

On February 2, 2001, the Company issued $380 million in aggregate
principal amount of 10.75% senior subordinated notes due 2009. The notes were
issued at a discount, resulting in an effective yield of 11.0%. The proceeds
of the offering were used (1) to repay the $300 million in principal amount
outstanding under the senior subordinated credit facility and accrued interest
thereon; (2) to partially repay and permanently reduce term loan B and term
loan C under the senior credit facilities by a total of $50 million; (3) to
partially repay the revolving credit facility under the senior credit
facilities by $13.7 million and (4) for working capital purposes. The notes are
unsecured and rank junior to all of the Companys existing and future senior
debt, including borrowings under the senior credit facilities.

All of ACIs current subsidiaries (the Guarantors) have jointly and
severally, and fully and unconditionally, guaranteed the senior subordinated
notes. Each of the Guarantors is a wholly owned subsidiary of ACI and the
Guarantors constitute all of ACIs direct and indirect subsidiaries. ACI is a
holding company with no operations or material assets independent of those of
the Guarantors, other than its investment in the Guarantors, and the aggregate
assets, liabilities, earnings and equity of the Guarantors are substantially
equivalent to the assets, liabilities, earnings and equity on a consolidated
basis of the Company. Separate financial statements and certain other
disclosures concerning the Guarantors are not presented because, in the opinion
of management, such information is not material to investors. Other than
customary restrictions imposed by applicable corporate statutes, there are no
restrictions on the ability of the Guarantors to transfer funds to ACI in the
form of cash dividends, loans or advances.

Other debt

In October 2002, the Company borrowed $14 million on a secured basis from
a commercial bank to finance equipment purchases for the new St. Charles
facility.

Interest rate collar and swap agreements

The Company seeks to manage interest rate risk associated with variable
rate borrowings through balancing fixed-rate and variable-rate borrowings and
the use of derivative instruments designated as cash flow hedges. Derivative
financial instruments are recognized as assets or liabilities, with changes in
fair value affecting net income or comprehensive income.

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In 1998, the Company entered into an interest rate collar agreement with
Wells Fargo Bank to manage interest expense. The agreement, which covered
$50.0 million of LIBOR-based borrowings under the Companys previous revolving
credit/term loan facility and covers $50.0 million of LIBOR-based borrowings
under the revolving term loan facility and term loan A, terminates on June 30,
2003. The Company has a LIBOR floor rate of 5.39% and a LIBOR ceiling rate of
6.75%, plus the applicable margin. In 2001 and 2002, the Company paid
approximately $0.6 million and $1.8 million, respectively, in interest as a
result of this agreement. In addition, the Company recorded the value of the
collar agreement ($1.9 million and $1.0 million at December 31, 2001 and 2002,
respectively) in other long-term liabilities in the accompanying consolidated
balance sheets. Because the collar agreement is not a highly effective hedge,
any change in fair value is recorded as interest expense. As a result, the
Company recorded additional interest expense of $1.9 million during the year
ended December 31, 2001 and reduced interest expense by $0.9 million during
2002. In 2001, the Company recognized $0.1 million, net of tax, as a
cumulative effect of change in accounting principle upon adoption of SFAS No.
133.

In April 2001, the Company entered into an interest rate swap agreement
with Deutsche Bank to fix the interest rate on $100 million of LIBOR-based
borrowings under the senior credit facilities at 5.07% plus the applicable
margin. The interest rate swap agreement has been highly effective as a cash
flow hedging instrument and, therefore, the value of the swap agreement (net of
tax) has been recorded as accumulated other comprehensive loss as part of
stockholders equity. At December 31, 2002, the value of the swap agreement
was $4.5 million, which was recorded as other long-term liabilities. The
Company believes the interest rate swap agreement will continue to be an
effective cash flow hedge as it will have sufficient LIBOR-based borrowings
outstanding under the senior credit facilities. As a result, the Company does
not expect any reclassification from accumulated other comprehensive loss to
interest expense through March 2004, when the agreement expires. The Company
paid $1.0 million and $3.2 million of additional interest expense in 2001 and
2002, respectively, as a result of the interest rate swap agreement.

Fair value of long-term debt

The estimated fair value of the Companys long-term debt at December 31,
2002 was approximately $832.4 million, compared to its book value of $796.3
million, based on the quoted market price of the senior subordinated notes.
Primarily all other long-term debt carries variable interest rates. At
December 31, 2001, the estimated fair value of the Companys long-term debt was
approximately $664.7 million, compared to its book value of $630.5 million.

Note 6  Leases

Capital leases

The Company has various capital leases for slot machines, restaurant
equipment and computer and other equipment. These leases have interest rates
ranging from 9.2% to 10.6% and require aggregate monthly payments of $116,000
as of December 31, 2002.

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Future minimum lease payments required under capitalized leases for the
five years subsequent to December 31, 2002 are as follows (amounts in
thousands):

|                                        |  |   |       | 
|--------------------------------------- |  | - | ----- | 
|2003                                    |  | $ | 1,396 | 
|2004                                    |  |   | 786   | 
|2005                                    |  |   | 25    | 
|2006                                    |  |   | 25    | 
|2007                                    |  |   | 25    | 
|Thereafter                              |  |   | 404   | 
|                                        |  |   |       | 
|                                        |  |   | 2,661 | 
|Less: Amount representing interest      |  |   | 477   | 
|                                        |  |   |       | 
|Present value of minimum lease payments |  | $ | 2,184 | 
|                                        |  |   |       | 

Operating leases

ACI leases office space in Las Vegas, Nevada to serve as its corporate
offices. Monthly payments are approximately $118,000 plus the Companys share
of certain common area maintenance expenses. Payments under the leases are
subject to annual escalation clauses corresponding to increases in the cost of
living. The Company recorded rental expense of approximately $0.6 million,
$0.8 million and $1.3 million under these leases in the years ended December
31, 2000, 2001 and 2002, respectively.

In November 1999, the Company entered into a three-year lease (with
renewal options for an additional 18 years) for a portion of the land on which
Ameristar Vicksburg is situated. Effective January 2003, the lease was renewed
for two years and the quarterly lease payment during this two-year period is
approximately $21,000. The lease contains a purchase option exercisable at
various times during the term of the lease.

Future minimum lease payments required under operating leases for the five
years subsequent to December 31, 2002 are as follows (amounts in thousands):

|           |  |   |        | 
|---------- |  | - | ------ | 
|2003       |  | $ | 1,993  | 
|2004       |  |   | 1,842  | 
|2005       |  |   | 1,853  | 
|2006       |  |   | 1,810  | 
|2007       |  |   | 1,741  | 
|Thereafter |  |   | 3,296  | 
|           |  |   |        | 
|           |  | $ | 12,535 | 
|           |  |   |        | 

Note 7  Benefit plans

401(k) plan

The Company maintains a defined contribution 401(k) plan which covers all
employees who meet certain age and length of service requirements. Plan
participants can elect to defer before-tax compensation through payroll
deductions. These deferrals are regulated under Section 401(k) of the Internal
Revenue Code. The Company matches 50% of eligible

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##### Table of Contents



participants deferrals
which do not exceed 4% of their salaries (subject to limitations imposed by the
Internal Revenue Code). The Companys matching contributions were $0.6
million, $1.1 million and $1.4 million for the years ended December 31, 2000,
2001 and 2002, respectively. Neither the Companys 401(k) plan nor any other
Company benefit plan holds or invests in shares of the Companys common stock
or derivative securities based on the Companys common stock.

Health insurance plan

The Company maintains a qualified employee health insurance plan covering
all employees who work an average of 32 hours or more per week on a regular
basis. The plan, which is self-funded by the Company with respect to claims
below a certain maximum amount, requires contributions from eligible employees
and their dependents. The Companys contribution expense for the plan was
approximately $10.0 million, $15.1 million and $18.8 million for the years ended
December 31, 2000, 2001 and 2002, respectively.

Deferred compensation plan

On April 1, 2001, the Company adopted a deferred compensation plan for
certain highly-compensated employees. The Company matches up to 5% of
participants annual salary and bonus in each participants account. The
Companys obligation under the plan represents an unsecured promise to pay
benefits in the future and in the event of bankruptcy of the Company, assets of
the plan would be available to satisfy the claims of general creditors. To
increase the security of the participants deferred compensation plan benefits,
the Company has established and funded a grantor trust (known as a rabbi
trust). The rabbi trust is specifically designed so that assets are available
to pay plan benefits to participants in the event that the Company is unwilling
or unable to pay the plan benefits for any reason other than insolvency. As a
result, the Company is prevented from withdrawing or accessing assets for
corporate needs. Plan participants can choose to receive a return on their
account balances equal to the return on various investment fund options. The
Company currently invests plan assets in an equity-based life insurance product
of which the rabbi trust is the owner and beneficiary.

Stock incentive plans

The Company has various stock incentive plans for directors, officers,
employees, consultants and advisers of the Company. The plans permit the grant
of options to purchase common stock intended to qualify as incentive stock
options or non-qualified stock options and also provide for the award of
restricted stock. The maximum number of shares available for issuance under
the plans is approximately 4.6 million, subject to certain limitations. To
date, the Company has not granted any awards of restricted stock. The
Compensation Committee of the Board of Directors administers the plans and has
broad discretion to establish the terms of stock option awards, including
without limitation the power to set the term (up to 10 years), vesting schedule
and exercise price of stock option awards.

In December 2000, in connection with the Companys acquisition of two
properties in Missouri (see Note 10  Pro forma data), the Company granted
675,000 options to four

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members of the Missouri properties senior management
team. These options have an exercise price of $4.64 per share and the market
price on the date of grant was $5.56 per share, resulting in compensation
expense to be recognized over the vesting period of the options. Options to
purchase 270,000 shares vest equally over a four-year period from January 1,
2002 through December 31, 2005. The remaining options were to vest on December
31, 2007, with a portion of the options subject to accelerated vesting each
year from December 2001 through December 2005 based on the Missouri properties
meeting certain annual performance targets. The performance targets were to be
established annually by the Board of Directors or a committee thereof,
resulting in a new measurement date for the options subject to acceleration.
On July 23, 2002, the
Company amended and restated the terms of the stock options held by the
management team. If the members of the management team were to leave the
employment of the Company prior to December 31, 2007, the Company would
recognize compensation expense of $1.6 million based on the spread between the
market price and exercise price of the stock options on the July 23, 2002
modification date. Compensation expense related to the options issued to the
management team totaled $0.3 million and $0.1 million in 2002 and
2001, respectively.

Summary information for stock option grants under the Companys plans is
as follows:

|                                           |  |                          |           |       |  |          |      |       |  |         |           |          |  |   |       |  |  |          |           |   |  |   |       | 
|------------------------------------------ |  | ------------------------ | --------- | ----- |  | -------- | ---- | ----- |  | ------- | --------- | -------- |  | - | ----- |  |  | -------- | --------- | - |  | - | ----- | 
|                                           |  | Years ended December 31,
|                                           |  |                         
|                                           |  | 2000                     |           | 2001  |  | 2002    
|                                           |  |                          |           |       |  |         
|                                           |  |                          |           |       |  | Weighted |      |       |  |         |           | Weighted |  |   |       |  |  | Weighted
|                                           |  |                          |           |       |  | Average  |      |       |  |         |           | Average  |  |   |       |  |  | Average 
|                                           |  |                          |           |       |  | Exercise |      |       |  |         |           | Exercise |  |   |       |  |  | Exercise
|                                           |  | Options                  |           | Price |  | Options  |      | Price |  | Options |           | Price   
|                                           |  |                          |           |       |  |          |      |       |  |         |           |         
|Outstanding at beginning of year           |  |                          | 1,441,510 |       |  | $        | 2.99 |       |  |         | 3,223,979 |          |  | $ | 4.05  |  |  |          | 2,615,597 |   |  | $ | 5.36  | 
|Granted                                    |  |                          | 1,969,542 |       |  |          | 4.67 |       |  |         | 448,450   |          |  |   | 11.13 |  |  |          | 1,264,220 |   |  |   | 19.38 | 
|Exercised                                  |  |                          | (67,699   | )     |  |          | 2.69 |       |  |         | (515,908  | )        |  |   | 3.26  |  |  |          | (385,389  | ) |  |   | 3.80  | 
|Canceled                                   |  |                          | (119,374  | )     |  |          | 2.25 |       |  |         | (540,924  | )        |  |   | 4.11  |  |  |          | (686,548  | ) |  |   | 6.02  | 
|                                           |  |                          |           |       |  |          |      |       |  |         |           |          |  |   |       |  |  |          |           |   |  |   |       | 
|Outstanding at end of year                 |  |                          | 3,223,979 |       |  | $        | 4.05 |       |  |         | 2,615,597 |          |  | $ | 5.36  |  |  |          | 2,807,880 |   |  | $ | 11.72 | 
|                                           |  |                          |           |       |  |          |      |       |  |         |           |          |  |   |       |  |  |          |           |   |  |   |       | 
|Options exercisable at end of year         |  |                          | 608,632   |       |  | $        | 3.06 |       |  |         | 502,001   |          |  | $ | 3.54  |  |  |          | 540,721   |   |  | $ | 5.12  | 
|Options available for grant at end of year |  |                          | 1,293,058 |       |  |          |      |       |  |         | 1,393,532 |          |  |   |       |  |  |          | 815,860   |   |  |   |       | 

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##### Table of Contents



Following is a summary of the status of stock options outstanding at
December 31, 2002:

|                |        |        |           |                |                     |                  |                     |                  |  |                |       |       |  |                  |         |         |  |   |       |      |  |  | 
|--------------- | ------ | ------ | --------- | -------------- | ------------------- | ---------------- | ------------------- | ---------------- |  | -------------- | ----- | ----- |  | ---------------- | ------- | ------- |  | - | ----- | ---- |  |  | 
|                |        |        |           |                | Outstanding Options |                  | Exercisable Options
|                |        |        |           |                |                     |                  |                    
|Exercise        |        |        |           |                |                     | Weighted Average |                     | Weighted Average |  |                |       |       |  | Weighted Average
|Price Range     |        | Number |           | Remaining Life |                     | Exercise Price   |                     | Number           |  | Exercise Price
|                |        |        |           |                |                     |                  |                     |                  |  |               
|                | $2.64  |        |           | 220,707        |                     |                  |                     | 5.5              |  |                | $     | 2.64  |  |                  |         | 158,088 |  |   | $     | 2.64 | 
|$2.75 - $4.59   |        |        | 332,618   |                |                     |                  | 6.9                 |                  |  |                | 3.74  |       |  |                  | 104,625 |         |  |   | 3.63  |     
|                | $4.64  |        |           | 187,047        |                     |                  |                     | 8.0              |  |                |       | 4.64  |  |                  |         | 41,654  |  |   |       | 4.64 | 
|$4.72 - $6.75   |        |        | 540,738   |                |                     |                  | 7.8                 |                  |  |                | 5.09  |       |  |                  | 157,064 |         |  |   | 4.93  |     
|$7.54 - $10.55  |        |        | 108,650   |                |                     |                  | 8.3                 |                  |  |                | 8.19  |       |  |                  | 34,850  |         |  |   | 8.85  |     
|$12.12 - $13.84 |        |        | 194,700   |                |                     |                  | 9.4                 |                  |  |                | 13.08 |       |  |                  | 20,300  |         |  |   | 12.83 |     
|                | $13.94 |        |           | 459,035        |                     |                  |                     | 10.0             |  |                |       | 13.94 |  |                  |         |        |  |   |       |     | 
|$14.10 - $18.56 |        |        | 222,435   |                |                     |                  | 9.4                 |                  |  |                | 16.53 |       |  |                  | 15,920  |         |  |   | 16.24 |     
|$19.00 - $23.61 |        |        | 97,450    |                |                     |                  | 9.3                 |                  |  |                | 21.28 |       |  |                  | 8,220   |         |  |   | 21.76 |     
|$24.23 - $29.80 |        |        | 444,500   |                |                     |                  | 9.3                 |                  |  |                | 26.77 |       |  |                  |        |         |  |   |      |     
|                |        |        |           |                |                     |                  |                     |                  |  |                |       |       |  |                  |         |         |  |   |       |     
|                |        |        | 2,807,880 |                |                     |                  | 8.3                 |                  |  | $              | 11.72 |       |  |                  | 540,721 |         |  | $ | 5.13  |     
|                |        |        |           |                |                     |                  |                     |                  |  |                |       |       |  |                  |         |         |  |   |       |     

Note 8  Earnings per share

The Company calculates earnings per share in accordance with SFAS No. 128,
Earnings Per Share. Basic earnings per share are computed by dividing
reported earnings by the weighted average number of common shares outstanding
during the period. Diluted earnings per share reflects the additional dilution
from all potentially dilutive securities such as stock options. All
outstanding stock options were excluded from the calculation of diluted
earnings per share for the year ended December 31, 2000 as the effect would
have been anti-dilutive. For 2001 and 2002, all outstanding options with an
exercise price lower than the market price have been included in the
calculation of earnings per share.

The weighted average number of shares of common stock and common stock
equivalents used in the computation of basic and diluted earnings per share
consists of the following:

|                                                                           |  |                          |        |      |  |      |        |  |  |  |        | 
|-------------------------------------------------------------------------- |  | ------------------------ | ------ | ---- |  | ---- | ------ |  |  |  | ------ | 
|                                                                           |  | Years ended December 31,
|                                                                           |  | 2000                     |        | 2001 |  | 2002
|                                                                           |  |                          |        |      |  |     
|                                                                           |  | (Amounts in Thousands)  
|Weighted average number of shares
outstanding  basic earnings per share   |  |                          | 20,401 |      |  |      | 20,906 |  |  |  | 26,107 | 
|Dilutive effect of stock options                                           |  |                          |       |      |  |      | 1,002  |  |  |  | 885    | 
|                                                                           |  |                          |        |      |  |      |        |  |  |  |        | 
|Weighted average number of shares
outstanding  diluted earnings per share |  |                          | 20,401 |      |  |      | 21,908 |  |  |  | 26,992 | 
|                                                                           |  |                          |        |      |  |      |        |  |  |  |        | 

Note 9  Sale of The Reserve

On October 17, 2000, the Company, through its wholly owned subsidiary,
agreed to sell substantially all of the assets of The Reserve to a third party.
On January 29, 2001, the Company completed the sale of The Reserve for a total
consideration of approximately $71.6 million. The proceeds from the sale of
The Reserve were used (1) to partially repay the revolving loan commitment
(which remains available for future borrowing) and permanently reduce term loan
A under the Companys senior credit facilities by a total of $50 million and
(2) to repay certain indebtedness associated with the assets sold in the
transaction.

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##### Table of Contents



The Company recorded a $57.2 million impairment loss in 2000 from the sale
of The Reserve. The following table shows certain financial information of The
Reserve for the periods indicated:

|                                  |  |                          |         |      |  |   |       | 
|--------------------------------- |  | ------------------------ | ------- | ---- |  | - | ----- | 
|                                  |  | Years ended December 31,
|                                  |  | 2000                     |         | 2001
|                                  |  |                          |         |     
|                                  |  | (Amounts in Thousands)  
|Net revenues (1)                  |  | $                        | 59,359  |      |  | $ | 4,710 | 
|Income (loss) from operations (2) |  |                          | (57,321 | )    |  |   | 67    | 



---

|(1) |  | Net revenues for 2000 and 2001 have been adjusted to account for
progress toward earning points for cash-based loyalty programs and
direct mail coin coupon reclassifications in compliance with EITF
00-22.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Includes an impairment loss of $57.2 million for the
year ended December 31, 2000.                                                                                                                          

Note 10  Pro forma data

On December 20, 2000, the Company, through two newly-formed wholly owned
subsidiaries, completed its acquisitions of substantially all of the assets of
two gaming properties in St. Charles and Kansas City, Missouri from a third
party (the Acquisitions). The total purchase price for the Acquisitions, net
of cash acquired, was $486.8 million. As a result of the Acquisitions, the
Company recorded $86.4 million of goodwill on its balance sheets, which was
assigned a useful life of 40 years. See also Note 2  Summary of significant
accounting policies. The Acquisitions were financed with a portion of the
proceeds from the senior credit facilities and the Companys senior
subordinated credit facility (which was subsequently refinanced with a portion
of the proceeds of the senior subordinated notes).

In January 2001, the Company sold The Reserve for approximately $71.6
million in a separate transaction. See also Note 9  Sale of The Reserve.

The following unaudited pro forma data summarizes the Companys results of
operations for 2000 and 2001 as if the Acquisitions and the sale of The Reserve
had occurred as of January 1, 2000. This unaudited pro forma consolidated
financial information is not necessarily indicative of what the Companys
actual results would have been had the Acquisitions and the sale of The Reserve
been completed on January 1, 2000, or of future financial results.

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##### Table of Contents



|                                                                                         |  |                          |         |      |  |   |         | 
|---------------------------------------------------------------------------------------- |  | ------------------------ | ------- | ---- |  | - | ------- | 
|                                                                                         |  | Years ended December 31,
|                                                                                         |  | 2000                     |         | 2001
|                                                                                         |  |                          |         |     
|                                                                                         |  | (Amounts in Thousands)  
|Net revenues (1)                                                                         |  | $                        | 566,606 |      |  | $ | 598,115 | 
|Income before extraordinary loss and
cumulative effect of change in
accounting principle |  |                          | 16,725  |      |  |   | 33,703  | 
|Basic earnings per share                                                                 |  |                          | 0.82    |      |  |   | 1.61    | 
|Diluted earnings per share                                                               |  |                          | 0.82    |      |  |   | 1.54    | 



---

|(1) |  | Net revenues for 2000 and 2001 have been adjusted to account for
progress toward earning points for cash-based loyalty programs and
direct mail coin coupon reclassifications in compliance with EITF
00-22.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Note 11  Impairment loss on assets held for sale

In 2000, the Company recognized a $57.2 million impairment loss related to
the sale of The Reserve in 2001, as discussed more fully in Note 9  Sale of
The Reserve.

In August 2002, the Company entered into an agreement to sell various
assets that were not utilized after the new Ameristar St. Charles facility
opened, including the existing casino barge, for $6.6 million (net of
expenses), in a transaction that closed in September 2002. The Company also
decided to sell 3,207 slot machines that were not being used at its various
properties as part of the Companys ongoing strategy to provide patrons with
the latest-technology gaming equipment. In accordance with SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived
Assets, in 2002, the Company
recorded a $5.2 million impairment loss on the former casino barge
at Ameristar St. Charles and various slot machines based on their estimated realizable values, third-party offer prices or actual
sales proceeds. At December 31, 2002, 2,269 out of 3,207 slot machines had
been disposed of and the estimated realized value of the remaining machines in
the amount of $0.3 million was recorded as assets available for sale on the
Companys consolidated balance sheets.

Note 12  Opening of the new St. Charles facility and associated preopening
expenses

The Company opened its new casino and entertainment facility at Ameristar
St. Charles on August 6, 2002. The Company acquired $140 million of
construction-in-progress in December 2000 and invested approximately $210
million in connection with the development of the new facility. In addition,
the Company capitalized $32.1 million in interest associated with this project
during the same period, which reduced interest expense accordingly.

In accordance with SOP No. 98-5, Reporting on the Costs of Start-up
Activities, preopening expenses incurred prior to the opening of a new
facility must be expensed as incurred. During the year ended December 31,
2002, the Company incurred $6.4 million of preopening expenses associated with
the opening of the new facility. These expenses included, without limitation,
payroll and related benefits, contract labor, employee recruiting expense and
general supplies.

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##### Table of Contents



Note 13  Excess of purchase price over fair market value of net assets acquired

In June 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets. The primary impact on the Company is that the excess of purchase
price over fair market value of the net assets acquired in connection with the
acquisition of the Missouri properties in December 2000 is no longer being
amortized as of January 1, 2002. Instead, goodwill must be reviewed for
impairment at least annually and more frequently if events or circumstances
indicate a possible impairment. The Company completed a review of goodwill as
of January 1, 2002 and October 1, 2002 and determined that no impairment
existed as of those dates. The Company will perform an annual review of
goodwill impairment as of October 1 of each year and will review goodwill
sooner if events or circumstances indicate a possible impairment.

Goodwill amortization expense was $0.3 million, $2.2 million and $0 for
the years ended December 31, 2000, 2001 and 2002, respectively. As of December
31, 2002, the balance of goodwill was $82.0 million, which will continue to be
reduced through 2016 by annual tax benefits of $1.2 million resulting from
differences in the values assigned to certain purchased assets for financial
reporting and tax purposes.

The unaudited pro forma data set forth below summarizes the Companys net
income (loss) and earnings (loss) per share as if SFAS No. 142 had been
effective on January 1, 2000. Actual results for the year ended December 31,
2002 are shown for comparative purposes:

|                                                                                               |  |                          |         |      |  |      |        |  |  |   |        | 
|---------------------------------------------------------------------------------------------- |  | ------------------------ | ------- | ---- |  | ---- | ------ |  |  | - | ------ | 
|                                                                                               |  | Years ended December 31,
|                                                                                               |  | 2000                     |         | 2001 |  | 2002
|                                                                                               |  |                          |         |      |  |     
|                                                                                               |  | (Amounts in Thousands)  
|Income (loss) before extraordinary loss and
cumulative change in accounting principle:         |  |                          |         |      |  |      |        |  |  |   |        | 
|Reported income (loss) before
extraordinary loss and cumulative change
in accounting principle |  | $                        | (33,747 | )    |  | $    | 33,289 |  |  | $ | 40,534 | 
|Add back: goodwill amortization expense
(net of tax)                                           |  |                          | 226     |      |  |      | 1,435  |  |  |   |       | 
|                                                                                               |  |                          |         |      |  |      |        |  |  |   |        | 
|Income (loss) before extraordinary loss and
cumulative change in accounting principle          |  | $                        | (33,521 | )    |  | $    | 34,724 |  |  | $ | 40,534 | 
|                                                                                               |  |                          |         |      |  |      |        |  |  |   |        | 
|Net income (loss):                                                                             |  |                          |         |      |  |      |        |  |  |   |        | 
|Reported net income (loss)                                                                     |  | $                        | (40,307 | )    |  | $    | 33,154 |  |  | $ | 40,534 | 
|Add back: goodwill amortization expense
(net of tax)                                           |  |                          | 226     |      |  |      | 1,435  |  |  |   |       | 
|                                                                                               |  |                          |         |      |  |      |        |  |  |   |        | 
|Net income (loss)                                                                              |  | $                        | (40,081 | )    |  | $    | 34,589 |  |  | $ | 40,534 | 
|                                                                                               |  |                          |         |      |  |      |        |  |  |   |        | 
|Basic earnings (loss) per share:                                                               |  |                          |         |      |  |      |        |  |  |   |        | 
|Reported basic earnings (loss) per share                                                       |  | $                        | (1.98   | )    |  | $    | 1.59   |  |  | $ | 1.55   | 
|Add back: goodwill amortization expense                                                        |  |                          | 0.01    |      |  |      | 0.07   |  |  |   |       | 
|                                                                                               |  |                          |         |      |  |      |        |  |  |   |        | 
|Basic earnings (loss) per share                                                                |  | $                        | (1.97   | )    |  | $    | 1.66   |  |  | $ | 1.55   | 
|                                                                                               |  |                          |         |      |  |      |        |  |  |   |        | 
|Diluted earnings (loss) per share:                                                             |  |                          |         |      |  |      |        |  |  |   |        | 
|Reported diluted earnings (loss) per share                                                     |  | $                        | (1.98   | )    |  | $    | 1.51   |  |  | $ | 1.50   | 
|Add back: goodwill amortization expense                                                        |  |                          | 0.01    |      |  |      | 0.07   |  |  |   |       | 
|                                                                                               |  |                          |         |      |  |      |        |  |  |   |        | 
|Diluted earnings (loss) per share                                                              |  | $                        | (1.97   | )    |  | $    | 1.58   |  |  | $ | 1.50   | 
|                                                                                               |  |                          |         |      |  |      |        |  |  |   |        | 

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In December 2000, the Company acquired proprietary marketing information
valued at $6.0 million as part of the purchase of the Missouri properties. This
asset was amortized over two years between December 2000 and December 2002.
During 2000, 2001 and 2002, the Company recognized $0.1 million, $2.9 million
and $3.0 million, respectively, in amortization expense relating to this asset.

Note 14  Commitments and contingencies

Litigation. From time to time, the Company is a party to litigation which
arises in the ordinary course of business. The Company is not currently a
party to any litigation that management believes would be likely to have a
material adverse effect on the Company.

Self-Funded Employee Health Care Insurance Program.The Companys
employee health care benefits program is self-funded up to a maximum amount per
claim. Claims in excess of this maximum amount are fully insured through a
stop-loss insurance policy. Accruals are based on claims filed and estimates
of claims incurred but not reported. At December 31, 2001 and 2002, the
Companys liabilities for unpaid and incurred but not reported claims totaled
$2.3 million and $3.6 million, respectively, and are included in accrued
liabilities in the accompanying consolidated balance sheets. While the total
cost of claims incurred depends on future developments, in managements
opinion, recorded reserves are adequate to cover the payments of future claims.

Note 15  Related party transactions

The Company engages Neilsen & Company, L.L.C., a company owned and
controlled by Craig H. Neilsen, the Companys Chairman of the Board, President
and Chief Executive Officer, to provide certain professional services, office
space and other equipment and facilities. The Company also leases from Neilsen
& Company two condominium units in Sun Valley, Idaho, which it makes available
for use by management personnel and certain business associates with the
objective of strengthening management morale and maintaining goodwill with
important business contacts. In addition, Intermountain Express, Inc.
(Intermountain), a transportation concern owned and controlled by Mr.
Neilsen, provided CPI with package delivery services between Jackpot, Nevada
and Twin Falls, Idaho until July 2000. CPI provided contracted driver services
and miscellaneous other supplies to Intermountain until 2000. In 2002, the
Company reimbursed Neilsen & Company for administrative and clerical support
expenses reasonably incurred by Mr. Neilsen on Company business matters during
2001 and 2002, including nursing care expense and additional costs incurred as
a result of the use of his home for business purposes.

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##### Table of Contents



Total payments to these related parties were $100,000, $69,000 and
$562,000 for the years ended December 31, 2000, 2001 and 2002, respectively.
CPI was paid $23,000, $0 and $0 during 2000, 2001 and 2002, respectively, by
Intermountain for services and supplies.

In December 2001, the Company completed a public offering of 6.9 million
shares of its common stock at $20.50 per share. Of the shares sold, 4.9
million were sold by the Company and 2 million were sold by Mr. Neilsen. The
Company incurred approximately $950,000 of expenses related to the stock
offering, including expenses (other than underwriting discounts and
commissions) paid on behalf of Mr. Neilsen as required pursuant to registration
rights held by Mr. Neilsen.

F-31