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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

For the fiscal year ended December 31, 2004

Commission file number 001-13641

PINNACLE ENTERTAINMENT, INC.

(Exact Name of Registrant as Specified in Its Charter)

3800 Howard Hughes Parkway

Las Vegas, Nevada 89109

(Address of Principal Executive Offices) (Zip Code)

(702) 784-7777

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

PINNACLE ENTERTAINMENT, INC.

Common Stock, $.10 par value

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether 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, 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.  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).  YES  x    NO  ¨

The aggregate market value of the common stock held by non-affiliates of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter, was $443,817,000 based on a closing price of $12.61 per share of common stock. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

The number of outstanding shares of the registrant’s common stock, as of the close of business on March 10, 2005: 40,501,605.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s definitive 2005 proxy statement, anticipated to be filed with the Securities and Exchange Commission within 120 days after the close of the Registrant’s fiscal year, are incorporated by reference into Part III of this Form 10-K.

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PINNACLE ENTERTAINMENT, INC.

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PART I

Item 1.    Description of Business

Pinnacle Entertainment, Inc. (the “Company” or “Pinnacle”) is a leading diversified, multi-jurisdictional owner and operator of gaming entertainment facilities that owns and operates five properties in the United States. Such properties are located in southeastern Indiana; Reno, Nevada; Bossier City, Louisiana; New Orleans, Louisiana; and Biloxi, Mississippi. The Company is also building L’Auberge du Lac, a major casino resort in Lake Charles, Louisiana. In addition, the Company is developing a major casino in downtown St. Louis, Missouri and a major casino in south St. Louis County, Missouri. Internationally, the Company is building a replacement casino for the larger of the three casinos it operates in Argentina and has signed a letter of intent to operate a casino adjoining the Four Seasons Resort Great Exuma at Emerald Bay in the Bahamas. The Company also receives lease income from two card clubs in Southern California. All of the Company’s current casinos cater primarily to customers who live within driving distance of the properties.

Pinnacle is the successor to the Hollywood Park Turf Club, organized in 1938. It was incorporated in 1981 under the name Hollywood Park Realty Enterprises, Inc. In 1992, as part of a restructuring, the Company changed its name to Hollywood Park, Inc. In February 2000, the Company changed its name to Pinnacle Entertainment, Inc.

The Company plans to grow profitability three ways: first, through the strategic development of new gaming properties in attractive gaming markets; second, through a disciplined capital expenditure program at its existing locations; and finally, through ongoing cost-reduction initiatives.

In May 2004, the Company opened its new 300-guestroom tower at Belterra Casino Resort, the centerpiece of a $37 million expansion project. In addition to increasing the guestroom base to a total of 608 guestrooms, the expansion project added approximately 33,000 square feet of meeting and conference space, a year-round swimming pool and other amenities.

Pinnacle is currently building L’Auberge du Lac Hotel & Casino, a $365 million casino resort in Lake Charles, Louisiana. The Company believes this resort will be the premier casino in the Lake Charles area upon its scheduled opening in May 2005. Lake Charles is the closest significant gaming jurisdiction to the Houston, Austin and San Antonio metropolitan areas. L’Auberge is located on 227 acres and will feature approximately 745 guestrooms, several restaurants, approximately 28,000 square feet of meeting space, a championship golf course designed by Tom Fazio, an expansive pool area, retail shops and a full-service spa. Unlike most other riverboat casinos, all of the public areas at L’Auberge (except the parking garage), and in particular the casino, will be situated entirely on one level. The casino will be surrounded on three sides by the hotel facility and other guest amenities, providing convenient access to approximately 1,600 slot machines and 60 table games. The Company believes L’Auberge will be larger, and offer more amenities, than any other resort in the southwest Louisiana/east Texas market.

The Company is also building a replacement casino in Neuqúen, Argentina, which facility will include a casino, a restaurant and an entertainment venue. The new and larger casino replaces a leased facility that is in an inferior location and is over 20 years old.

In January 2004, the City of St. Louis (through affiliated entities) selected the Company to develop a $258 million casino, luxury hotel and entertainment complex in downtown St. Louis near Laclede’s Landing north of the Gateway Arch. In February 2004, St. Louis County (through an affiliated entity) selected the Company to develop a $300 million casino and mixed-use complex in St. Louis County, approximately 10 miles south of downtown St. Louis. In September 2004, the Missouri Gaming Commission selected the Company for priority investigation, thereby enabling it to proceed with both St. Louis development projects.

In December 2004, the Company signed a letter of intent to sublease premises from Emerald Bay Resort Hotel Limited to operate a casino adjacent to the Four Seasons Resort Great Exuma at Emerald Bay in the Bahamas, which letter of intent was extended in March to May 1, 2005.

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Company Overview

The following is an overview of the Company’s gaming operations as of December 31, 2004:

Business Strategy and Competitive Strengths

Pinnacle’s strategy is to grow profitability in three ways: first, through the strategic development of new gaming properties in attractive gaming markets; second, through a disciplined capital expenditure program at its

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existing locations; and finally, through ongoing cost-reduction initiatives. Management believes that the following key competitive strengths will contribute to the successful implementation of its strategy:

In November 2004, the Company entered into an agreement to purchase the Embassy Suites Hotel—St. Louis-Downtown for approximately $38 million. This 297-suite hotel adjoins the site on which the Company intends to build the St. Louis City casino and luxury hotel. The transaction is expected to close in the first half of 2005. In addition, in February 2005, the Company entered into an agreement to purchase an additional 4.9 acres of vacant land immediately adjacent to the 7.3 acres owned by the Company and the Embassy Suites. Combined with an option the Company holds to lease an additional 4.3 acres adjacent to the other downtown parcels, the Company owns, has agreed to purchase, or has an option to lease approximately 18 contiguous acres of real estate in downtown St. Louis.

The Missouri Gaming Commission will determine in its discretion whether to issue gaming licenses to the Company for either or both projects, based on its ongoing licensing investigation of the Company and its key individuals and other factors. Among other factors, the Missouri Gaming Commission has indicated, as a condition of potential future licensing, that the Company should attain a fixed charge coverage ratio (as defined by the Missouri Gaming Commission) of 2.0x by September 30, 2005 and maintain such ratio. Management’s projections anticipate meeting such requirement.

Several of the Company’s properties occupy only a portion of their sites, allowing the Company ample opportunity to add casino capacity, guestrooms, and entertainment and other facilities, as its market

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opportunities grow and demand warrants. The Company has entered into agreements to sell approximately 39 acres of its excess Reno land to Cabela’s Retail, Inc. for construction of an outdoor sporting goods store adjacent to its Boomtown Reno hotel casino facility.

Since joining Pinnacle, the management team has focused on improving operations and reducing overhead, as evidenced by the recent improvements in operating margins. The Company also continues to improve its balance sheet through various capital financing transactions. In addition, the Company has been actively seeking growth opportunities, including L’Auberge, the St. Louis development projects and the Argentina casino developments. Its management team is continuously evaluating opportunities to increase efficiency and productivity, to improve its capitalization, and to seize upon growth opportunities.

Current Operations

Boomtown New Orleans is a locals-oriented dockside riverboat casino. The riverboat features a casino containing approximately 1,532 slot machines and 47 table games and an approximately 88,000-square-foot adjoining building with two restaurants, a delicatessen, a 350-seat nightclub, 21,000 square feet of meeting space, an amusement center and 1,729 parking spaces. The property opened in 1994 and is located on 54 acres in Harvey, Louisiana, approximately 10 miles from downtown New Orleans and across the Mississippi River in the “West Bank” suburban area.

Boomtown New Orleans competes with two other dockside riverboat casinos and a large land-based casino and entertainment facility in downtown New Orleans. During 2004, according to the Louisiana Gaming Control Board, gaming revenues grew 7.7% to $608 million in the New Orleans market, of which 52.6% was accounted for by the land-based casino and 19.2% by Boomtown New Orleans. Boomtown New Orleans is the only casino on the west bank of the Mississippi River and there are a limited number of bridges across the river, which the Company believes provides it with a competitive advantage amongst West Bank residents. Legislation passed in 2004 permits, subject to a local referendum, the introduction of 400 slot machines at a racetrack located on the east side of the river and approximately 20 miles from the Boomtown New Orleans property.

Belterra Casino Resort (“Belterra”) is a regional resort adjoining a dockside riverboat casino. It opened in October 2000 and is located on 315 acres of land along the Ohio River near Vevay, Indiana, approximately 50 miles southwest of downtown Cincinnati, Ohio, and 65 miles northeast of Louisville, Kentucky. The total population within 300 miles of Belterra is approximately 39 million people. By comparison, some 26 million people live within 300 miles of Las Vegas.

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In early May 2004, the Company completed and opened a $37 million hotel tower expansion. Today, the resort features a riverboat casino with 38,000 square feet of casino space, approximately 1,598 slot machines and 44 table games. It also features a 15-story, 608-guestroom hotel with 11 suites, six restaurants, 33,000 square feet of meeting and conference space, a retail shopping pavilion, a 1,750-seat entertainment showroom, a year-round swimming pool, a spa and an 18-hole championship golf course designed by Tom Fazio. The resort provides 2,000 parking spaces, most of which are in a multi-level parking structure. Indiana law was revised to permit dockside gaming operations as of August 1, 2002, with a new graduated tax structure. Customers strongly prefer dockside operations due to the convenience of being able to enter and leave the casino at any time, as well as the reduction of customer surges and the resultant lines at the facility’s restaurants, valet parking and other services that may occur with cruising riverboat casino operations.

Belterra competes with four other dockside riverboats. According to the Indiana Gaming Commission, 2004 gross gaming revenues from the five riverboats in this market grew 7.0% over the prior year, to approximately $1.2 billion. Belterra grew its gaming revenues by 12.9% during the same period. Current Indiana law does not permit any additional casinos to be built along the Ohio River, although there are no legal limitations as to the size of the riverboats operated by each licensee. A major competitor has indicated its intent to replace its current casino riverboat with a larger one. State law was also amended in 2004 to permit a casino operation in the town of French Lick, Indiana, which is between Louisville and Indianapolis, approximately 95 miles from Belterra.

Boomtown Bossier City is a regional hotel property built around a dockside riverboat casino. The property opened in October 1996 on a site directly adjacent to, and highly visible from, Interstate 20. The Bossier City/Shreveport region offers the closest casinos to the Dallas/Fort Worth metropolitan area, which is a three-hour drive to the west along Interstate 20. Boomtown Bossier City offers approximately 1,206 slot machines and 35 table games. The property also includes a 188-guestroom hotel, with four master suites and 88 junior suites, four restaurants and 1,867 parking spaces.

In November 2002, the Company completed a $24 million renovation of the Boomtown Bossier City property. This renovation included re-branding the facility to the Boomtown name, adding new restaurants and re-designing the hotel lobby and porte-cochere.

According to the Louisiana Gaming Control Board, gaming revenues in the Bossier City/Shreveport region were $835.5 million in 2004, up 2.3% compared to the prior year. Revenues at Boomtown Bossier City declined 4.1% for the same period. The market currently consists of five dockside riverboat casino hotels, including Boomtown, and a racetrack slot operation located approximately eight miles east of Boomtown Bossier City. The racetrack slot parlor opened with approximately 900 slot machines in mid-2003. The racetrack opened a larger, free-standing slot-only casino with approximately 1,400 slot machines in May 2004 and accounted for essentially all of the market growth in the period. Current state regulations do not permit table games at the racetrack. In mid-2003, a Native American casino opened in Oklahoma, approximately one hour north of Dallas, providing competition for the Bossier City/Shreveport casinos. Other Native American casinos have also opened in Oklahoma, and racetracks in that state have installed slot machines.

Casino Magic Biloxi is a regional property on the Mississippi Gulf Coast that features a dockside riverboat casino and hotel tower. The property, which began operations in 1993, is situated in the center of a cluster of three casinos known as “Casino Row.” In 1998, the Company opened a 378-guestroom hotel, including 86 suites, at the property. The property features a 48,920-square-foot dockside riverboat casino containing approximately 1,166 slot machines and 32 table games. The facility also features three restaurants, 6,600 square feet of convention space, a health club and 1,315 parking spaces.

The property is smaller than some of the other area casinos, but offers superior quality guestrooms and facilities. Since the end of 2001, the property has enjoyed a “Four-Diamond” rating from AAA, the first hotel/casino in Mississippi to receive such a designation. In late 2004, Casino Magic commenced an $11 million casino enhancement project, which includes substantially refurbishing the existing showroom and casino, and

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updating the existing slot product. The Company expects the project to be completed in Spring 2005. In June 2003, a renovation of the property’s high-roller area and casino entrance was completed at a cost of approximately $1.2 million.

The principal markets for the Mississippi Gulf Coast region are the nearby cities of Mobile, Alabama; Pensacola and Tallahassee, Florida; the interior areas of the South, whose residents visit the Mississippi Gulf Coast to escape the summer heat; and the numerous other cities of central and northern Florida, for whom the Mississippi Gulf Coast also often offers the closest casinos. According to the Mississippi Gaming Commission, the Gulf Coast market generated gaming revenues of $1.2 billion during 2004, a 4.8% increase over the prior year. Casino Magic’s gaming revenue fell by approximately 3.7% in the same period. A competing casino located near the Casino Magic Biloxi property has announced an expansion project, including guestrooms, a restaurant and other amenities, and the construction of a new casino barge. Completion of the hotel expansion is expected in Spring 2005, and the new casino barge is expected in late 2005. In addition, another competitor commenced construction of a new facility during 2004, with an opening date announced for Summer 2005.

The nearby city of New Orleans is also a significant market for the Mississippi Gulf Coast, even though New Orleans has its own casinos. The State of Mississippi opted to legalize casinos in a fashion similar to Nevada and New Jersey, where tax rates are lower, but there is no limit as to the number of casinos. Such states therefore have a greater number of casinos, with most of such casinos offering more extensive accommodations and food, beverage, entertainment and other amenities than many of the casinos in jurisdictions where tax rates are high and the number of casinos is limited. Many New Orleans residents prefer to drive the short distance to Mississippi to enjoy the greater amenities offered along the Mississippi Gulf Coast as an alternative to the casinos available in New Orleans proper.

Boomtown Reno is a land-based casino hotel that has been operating for more than 35 years and is located on a portion of the Company’s 569 acres approximately 11 miles west of downtown Reno, Nevada. This location is directly adjacent to Interstate 80, which is the primary east-west interstate highway into northern California from northern Nevada.

The property features 318 guestrooms and a 45,000-square-foot casino containing approximately 1,117 slot machines and 30 table games. The property features four restaurants, an 80-seat lounge, a 30,000-square-foot amusement center and an indoor pool. In addition to the main casino/hotel, the property also includes a full-service truck stop with a satellite casino containing approximately 112 slot machines, a gas station and mini-mart, a 203-space recreational vehicle park and 1,548 parking spaces.

On March 7, 2005, the Company entered into an agreement with Cabela’s Retail, Inc. to sell a total of 37.4 acres adjacent to its Boomtown Reno hotel and casino facility for an aggregate price of approximately $7.8 million. The Company has entered into a separate agreement with the purchaser to sell the approximately 1.1 acres of existing truck stop land for $10,000 following the receipt of certain environmental clearances. The purchaser intends to build a Cabela’s outdoor sporting goods store on the land. A portion of the cost needed to improve the road accessing the site and other related improvements would be financed through the issuance of sales tax bonds through local or state governmental authorities. The bonds will be serviced by a portion of the sales taxes generated by the new retail facilities. The Company has agreed to purchase, if necessary, half of the bonds that would be used to finance a new loop road and utility work, and half of the bonds used to finance certain interchange work supporting the developments if the interchange work is financed with sales tax bonds. The Company estimates that it would purchase approximately $4 million to $10 million of these bonds, and believes such bonds could be resold to other investors, particularly after the new facilities have opened. In connection with the sale, the Company intends to build a new truck stop (together with a satellite casino) at another location on the Boomtown Reno property it owns for approximately $12 million and will continue to operate the existing truck stop and satellite casino during the construction period. The agreements are subject to various conditions and are expected to close in the second half of 2005.

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Reno’s gaming market is primarily a drive-in market that attracts visitors from northern California. In March 2000, California voters passed Proposition 1A, a ballot initiative that allows Native American groups to conduct various gaming activities, including slot machines, card games and lotteries. Each Native American group in California may operate slot machines, and up to two gaming facilities may be operated on any one reservation. The number of machines each group is allowed to operate is subject to change pursuant to negotiations which have been initiated between the tribes and the State of California.

In mid-2003 and 2004, new Native American casino developments opened in California that compete with the Reno gaming properties. These casino developments are significantly closer to several primary feeder markets than is the Boomtown Reno property and had an adverse impact on Boomtown Reno’s performance when compared to pre-2003 levels. The Company believes the impact of the recent growth in Native American gaming has been substantially absorbed by the Reno gaming market, including its Boomtown Reno property, although the market will continue to be very competitive. Additionally, numerous Native American groups are at various stages of planning new or significantly expanded facilities in the northern California area. During 2004, revenues at Boomtown Reno increased approximately 1.0% versus the prior year, primarily due to an increase in fuel sales offset by a decline in gaming revenue.

Casino Magic Argentina:    The Company operates three casinos in the Patagonia region of Argentina. It is building a replacement casino for the largest of the three (see “New Developments and Expansion Plans—Casino Magic Argentina” below). The largest facility is located in the city of Neuqúen and contains approximately 500 slot machines, 31 table games and a 384-seat bingo facility. The second largest facility, located in San Martín de los Andes, has 107 slot machines and 13 table games. The Company began operating the smallest of the three facilities in November 2003, which is located in Junín de los Andes and has 46 slot machines. The Company does not own any real property at these sites, but does own approximately 20 acres of land in the city of Neuqúen, where the Company is building a replacement casino facility expected to open in Spring 2005.

The first two casinos opened in 1995 and the Company began operating the third casino in November 2003. All three casinos are operated under a 12-year concession agreement with the Province of Neuqúen that originally was scheduled to expire in December 2006. This agreement was modified in 2003 in connection with the expansion activities discussed below at “New Developments and Expansion Plans—Casino Magic Argentina” and is expected to be extended to 2016 upon the opening of the new facility.

The Company’s current concession agreement with the Province of Neuqúen provides for the Company’s exclusive operation of casinos within approximately 33 miles of its facilities. In the Province of Rio Negro, immediately adjacent to the Province of Neuqúen, there is a casino approximately 10 miles from the Company’s Neuqúen operations.

California Card Club Leases:    The Company receives lease income from two card clubs in Los Angeles County: the Hollywood Park-Casino and the Crystal Park Casino. The Company leases the Hollywood Park-Casino under a long-term lease agreement that, including a 10-year renewal option, expires in 2019. The Hollywood Park-Casino is then subleased to an unaffiliated third-party operator under a year-to-year lease. The Company owns the furniture, fixtures, equipment and leasehold improvements within the Hollywood Park-Casino. The Company owns the Crystal Park Casino and leases it to the same card club operator that leases and operates the Hollywood Park-Casino. The third-party operator is not believed to have substantial assets other than the two card clubs. The lease payments under the year-to-year leases are believed to constitute a substantial portion of the income at the card clubs.

The Hollywood Park-Casino opened in 1994. The facility contains approximately 30,000 square feet of card club gaming space with 102 gaming tables and 21,000 square feet of retail and restaurant space.

The Crystal Park Casino opened in October 1996. The Crystal Park Casino contains approximately 40,000 square feet of gaming and banquet space with 18 gaming tables. The adjoining hotel contains 238 rooms, including 36 suites.

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The Hollywood Park-Casino and the Crystal Park Casino face significant competition from other card club casinos in neighboring cities, as well as competition from other forms of gaming around southern California, including horse racing and Native American gaming. Although the Company does not operate these card club casinos, the operator, who is its lessee, is affected by local market conditions.

New Developments and Expansion Plans

L’Auberge du Lac:    In early September 2003, the Company commenced construction of L’Auberge du Lac, which management believes will be the premier casino in the Lake Charles, Louisiana area. L’Auberge is located on 227 acres of land, and is expected to offer approximately 745 guestrooms, several restaurants, approximately 28,000 square feet of meeting space, a championship golf course designed by Tom Fazio, an expansive outdoor pool area, retail shops and a full-service spa. Unlike most other riverboat casinos, all of the public areas at L’Auberge (except the parking garage), and in particular the casino, will be situated entirely on one level. The casino will be surrounded on three sides by the hotel facility and other guest amenities, providing convenient access to approximately 1,600 slot machines and 60 table games.

In July 2004, the Company announced an increase in the scope and budget of L’Auberge, including, among other items, increasing the number of guestrooms to approximately 745 from approximately 700. Overall, the budget was increased to $365 million from $325 million to reflect these and other changes. Through December 31, 2004, the Company has invested approximately $193 million in the form of construction and other costs.

L’Auberge remains on schedule for an opening in May 2005 and in accord with its agreement with the Louisiana Gaming Control Board that calls for construction of certain facilities to be completed by June 13, 2005, which date was extended on March 15 from the prior May 12, 2005 date. After completion and an employee training period, L’Auberge is expected to officially open to the public on May 26, 2005. Issuance of the gaming license from the Louisiana Gaming Control Board is subject to continued compliance with gaming regulations and other conditions.

St. Louis City Project:    In January 2004, the City of St. Louis (through affiliated entities) selected the Company to develop its St. Louis City project, a $258 million casino, luxury hotel and entertainment complex near Laclede’s Landing north of the Gateway Arch. A redevelopment agreement was executed in April. As proposed, the project includes a 75,000-square-foot casino, 200 luxury guestrooms, restaurants and retail space on approximately 7.3 acres of land currently owned by the Company.

In April 2004, the Company executed a letter of intent under which the luxury hotel and some of the food, beverage and spa facilities would be operated by Four Seasons Hotels Limited under the Four Seasons brand. Such letter of intent anticipates a binding management agreement, which the Company hopes to execute in the second quarter of 2005.

In May 2004, the Company executed an 18-month option to lease for 99 years 4.3 acres of additional land near Laclede’s Landing which is owned or subject to ongoing condemnation proceedings by a city agency. In November, the Company entered into an agreement to purchase the Embassy Suites Hotel—St. Louis-Downtown (“Embassy Suites”), a 297-suite hotel that adjoins the site on which the Company intends to build the St. Louis City facility. Anticipated to cost approximately $38 million, the Company expects to close the transaction in the first half of 2005 and intends to continue the hotel’s affiliation with the Embassy Suites brand. The Company also intends to refurbish the Embassy Suites and connect it to the planned casino complex. Finally, in February 2005, the Company entered into an agreement to acquire an additional 4.9 acre land parcel immediately adjacent to the proposed casino site and Embassy Suites hotel for approximately $7.5 million, which is expected to close in March 2005. Cumulatively, the Company owns, has agreed to purchase, or has under option to lease, approximately 18 acres of contiguous land for the development of its St. Louis City project.

In September, the Company was selected by the Missouri Gaming Commission (“MGC”) for priority investigation, and in January 2005 received several key approvals from the MGC for the St. Louis City project.

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The Company anticipates beginning construction shortly after receiving the necessary building and land-use permits, which it expects to receive in mid-2005. The St. Louis City project is expected to open 18 months thereafter, in early 2007.

St. Louis County Project:    In February 2004, St. Louis County (through an affiliated entity) selected the Company to develop its St. Louis County project, a $300 million casino complex in the community of Lemay. A lease and development agreement was executed in August 2004. Located approximately 10 miles south of downtown St. Louis, the south St. Louis County development will be situated on 80 acres of land and will include a 90,000-square-foot casino, 100-guestroom hotel, retail space, multiplex movie theater and bowling alley. According to the terms of the agreement, Pinnacle will lease approximately 80 acres of land from the Port Authority, 56 of such acres for its gaming and commercial facilities, and the remaining 24 acres will become a public park and include additional community and recreational facilities.

The MGC also selected the Company for priority investigation for the St. Louis County project in September 2004. The Company anticipates obtaining the required site approvals from the MGC in the first half of 2005. Development of the St. Louis County site requires extensive environmental remediation and construction of a new road to the site, which costs have been factored into the estimated project cost. Management estimates that full development of the St. Louis County project will take approximately one year longer than the St. Louis City project. Both of the projects are subject to MGC approval and licensing.

Casino Magic Argentina:    In May 2004, construction began for a replacement facility for the existing Neuqúen casino, the principal Casino Magic Argentina property. The new facility is expected to open in the Spring of 2005 and will include a casino, a restaurant and an entertainment venue on land owned by the Company approximately one mile from the existing facility at an estimated cost of approximately US$14 million. The Company is funding the expansion project utilizing Casino Magic Argentina’s existing cash resources and its retained earnings through 2006. Depending on the subsidiary’s profitability through 2006, the Company intends to develop additional phases of the planned expansion. Under the Company’s concession agreement with the Province of Neuqúen, either construction of certain minimum facilities or reinvestment of Casino Magic Argentina’s financial resources (existing cash and retained earnings through 2006) will extend the existing concession agreement from December 2006 to December 2016. An incremental investment of 5 million pesos (or approximately US$1.7 million based on exchange rates as of December 31, 2004) to build a hotel facility with a minimum of 10 guestrooms and three-star rating will further extend the agreement to December 2021.

Development of Casino in Great Exuma, Bahamas:    The Company has signed a letter of intent to sublease premises from Emerald Bay Resort Hotel Limited, a Bahamian corporation, to operate a casino adjoining the existing Four Seasons Resort Great Exuma in the Bahamas. The casino is expected to be approximately 5,000 square feet in size and require an investment of approximately US$5 million. The casino is expected to open in late 2005, contingent on receiving approvals from governmental authorities in the Bahamas and execution of a final lease agreement.

Competition

The Company faces significant competition in each of the jurisdictions in which it has established gaming operations. Such competition may intensify in some of these jurisdictions as new gaming operations enter these markets and existing competitors expand their operations. The Company’s properties compete directly with other gaming properties in Indiana, Louisiana, Mississippi, Nevada, and Argentina, as well as in states adjacent to the Company’s properties. The Company also competes for customers with other casino operators in other markets, including casinos located on Native American reservations, and other forms of gaming, such as lotteries and Internet gaming. Many of the Company’s competitors are larger and have substantially greater name recognition and marketing resources, as well as access to lower cost sources of financing, and sometimes, particularly for Native American casinos, lower or non-existent tax rates. The Company believes that increased legalized gaming in other states, particularly in areas close to its existing gaming properties, such as Alabama, Arkansas,

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California, Florida, Kentucky, Ohio, Oklahoma or Texas, or the expansion of Native American gaming in or near the states in which the Company operates, could create additional competition for the Company and could adversely affect its operations.

Government Regulation and Gaming Issues

The ownership and operation of gaming facilities are subject to extensive state and local regulation. The states and localities in which the Company and its subsidiaries conduct gaming operations require the Company to hold various licenses, findings of suitability, registrations, permits and approvals. The various regulatory authorities, including the Indiana Gaming Commission, the Louisiana Gaming Control Board, the Mississippi Gaming Commission, the Missouri Gaming Commission, the Nevada State Gaming Control Board and the Nevada Gaming Commission, may, among other things, limit, condition, suspend, revoke or fail to renew a license or approval to own any of the gaming subsidiaries for any cause deemed reasonable by such licensing authorities. Substantial fines or forfeitures of assets for violations of gaming laws or regulations may be levied against the Company, its subsidiaries and the persons involved. Holders of the Company’s securities are also subject to additional requirements regarding the ownership and disposition of their securities, including possibly being called forward by applicable gaming authorities to be licensed or found suitable to be the beneficial owner of the Company’s securities.

To date, the Company and its subsidiaries have obtained all governmental licenses, findings of suitability, registrations, permits and approvals necessary for the operation of its gaming facilities. However, there can be no assurance that the Company and its subsidiaries will be able to obtain any new licenses, findings of suitability, registrations, permits and approvals that may be required in the future or that existing ones will be renewed or will not be suspended or revoked. Any expansion of gaming operations in the existing jurisdictions or into new jurisdictions, including Missouri and the Bahamas, will require various additional licenses, findings of suitability, registrations, permits and approvals of the gaming authorities. The approval process can be time-consuming and costly and has no assurance of success.

For a more detailed description of gaming regulations to which the Company is subject, see Exhibit 99.1 to this Annual Report on Form 10-K, “Government Regulation and Gaming Issues”, which is incorporated herein by reference.

Employees

The following is a summary of the Company’s employees by property at December 31, 2004, some of which are part-time:

The Company does not employ the staff at the Hollywood Park-Casino or the Crystal Park Casino. Additionally, during busier months, each casino property supplements its permanent staff with seasonal employees.

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Other Information

Compliance with federal, state and local provisions which have been enacted or adopted regulating the discharge of materials into the environment or otherwise relating to the protection of the environment have not had a material effect upon capital expenditures, earnings or the competitive position of the Company.

Pinnacle pays significant taxes in the communities in which it operates. In 2004, Pinnacle paid or accrued $117.7 million in gaming taxes, $11.6 million in payroll taxes, $5.5 million in property taxes, and $3.0 million in sales taxes during the year. Setting aside income taxes, Pinnacle paid or accrued $137.8 million for taxes paid to state and local authorities in 2004.

Available Information

The Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports are available free of charge as soon as reasonably practicable after they are filed or furnished to the Securities and Exchange Commission (“SEC”), through its Internet website, www.pnkinc.com. The Company’s filings also are available through a database maintained by the SEC at www.sec.gov.

Item 2.    Properties

The following describes the Company’s principal real estate properties:

Pinnacle Entertainment, Inc.:    The Company leases approximately 19,000 square feet for its corporate offices in Las Vegas, Nevada under lease agreements that expire in October 2005, with renewal options through 2011.

Boomtown New Orleans:    The Company owns approximately 54 acres in Harvey, Louisiana that are utilized by Boomtown New Orleans. The Company owns the facilities and associated improvements at the property, including the riverboat casino.

Belterra Casino Resort:    The Company owns 167 acres and leases 148 acres that are utilized by Belterra Casino Resort. The Company owns the facilities and associated improvements at the property, including the dockside riverboat. In addition, the Company owns the Ogle Haus Inn, a 54-room hotel operation in Vevay, Indiana, approximately 10 miles from the Belterra Casino Resort. The Ogle Haus is used primarily for overflow capacity during peak visitation periods.

Boomtown Bossier City:    The Company owns 23 acres on the banks of the Red River in Bossier City, Louisiana. The property contains a dockside riverboat casino, hotel, parking structure and other land-based facilities, all of which are owned by the Company. The Company also leases approximately one acre of water bottoms from the State of Louisiana. The current lease term expires in September 2006. The Company has options to extend the lease for eight additional 5-year periods.

Casino Magic Biloxi:    Casino Magic Biloxi is located on approximately 10.6 acres, of which 5.5 acres are owned and approximately 5.1 acres are leased. The leases expire in June 2008. The Company has options to extend the terms of each lease for 15 additional five-year periods. The Company also leases approximately 6.4 acres of submerged tidelands from the State of Mississippi. The tidelands are under a lease that expires in May 2008. The Company has the right of first refusal to re-lease the tidelands at the expiration of the lease. The Company expects the rent for the new lease will be based on an appraisal methodology approved by the Mississippi Secretary of State. The Company owns the dockside casino and all of the land-based facilities, including the hotel.

Boomtown Reno:    The Company owns 569 acres in Reno, Nevada, approximately 11 miles west of downtown Reno, with current operations presently utilizing approximately 61 acres. The Company owns all of

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the improvements and facilities at the property, including the casino, hotel, truck stop, recreational vehicle park and service station, along with the related water rights and sewage treatment plant. As described above, the Company has entered into agreements to sell approximately 39 acres to Cabela’s Retail, Inc.

During 2002, the property was annexed into the City of Reno, Nevada, which will allow the facility to be connected to the City of Reno’s municipal sewer system. Currently, development of the additional acreage is restricted due to insufficient sewage treatment facilities. It is anticipated that the sewer line connection will be completed in 2005.

The Company also owns 290 acres in the mountains outside Reno, Nevada, which are surrounded by federal land.

Casino Magic Argentina:    The Company operates casinos in southern Argentina, in the cities of Neuqúen, San Martín de los Andes and Junín de los Andes. All three casinos are currently in leased facilities. In 2001, the Company acquired approximately 20 acres in the City of Neuqúen, which Pinnacle is using as the site for the new casino facility. At the San Martin de los Andes location, the lease is scheduled to expire in December 2006. The Company is currently evaluating whether to renew the lease, move to another leased facility, or build or acquire a replacement location.

Hollywood Park-Casino:    The Company leases the Hollywood Park-Casino under a long-term lease agreement that, including a 10-year renewal option, expires in 2019. The Hollywood Park-Casino is then subleased to an unaffiliated third-party operator under a year-to-year lease.

Crystal Park Casino:    The Company owns the approximately 20 acres on which the casino facility, adjoining hotel and parking is located, and leases the facility to an unaffiliated third-party operator under a year-to-year lease.

Lake Charles, Louisiana:    The Company leases 227 acres of unimproved land from the Lake Charles Harbor and Terminal District upon which the Lake Charles resort development is being constructed. The lease calls for annual payments of $835,600 commencing upon opening of the resort complex with increases for inflation thereafter, subject to a maximum annual increase of 5%. The lease has an initial term of 10 years, commencing on the opening of the resort casino, with six renewal options of 10 years each. In addition, the Company entered into a Cooperative Endeavor Agreement with the City of Lake Charles, Calcasieu Parish and the District requiring Pinnacle to make infrastructure improvements, including, among other things, a road extension and utility improvements, and pay non-specific impact fees, which, collectively, are expected to approximate $11.4 million. The Company has included such obligations in the $365 million project budget. The Company also has an option to lease an additional 75 acres of unimproved land adjacent to the 227 acres. The lease option currently expires on August 19, 2005, with one remaining one-year renewal option. The terms of the lease, if the option is exercised, would be substantially similar on a per acre basis to the terms of the lease for the 227 acres.

City of St. Louis, Missouri:    The Company owns approximately 7.3 acres of contiguous land in downtown St. Louis, Missouri near Laclede’s Landing. The Company has also executed an option to lease an additional 4.3 acres near Laclede’s Landing, has agreed to purchase the Embassy Suites hotel that adjoins the 7.3 acre site owned by the Company and has agreed to purchase another 4.9 acres adjacent to the 7.3 acre site and Embassy Suites hotel. Cumulatively, the Company owns, has agreed to purchase, or has under option to lease, approximately 18 acres of contiguous land for development of the City of St. Louis project.

St. Louis County, Missouri:    The Company entered into a lease and development agreement in August 2004 for an 80-acre site in south St. Louis County located approximately 10 miles south of downtown St. Louis. According to the terms of the agreement, Pinnacle will lease approximately 80 acres of land from the Port Authority, 56 of such acres for its gaming and commercial facilities, and the remaining 24 acres will become a public park and include additional community and recreational facilities.

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Warehouse Leases:    The Company leases warehouse space at various locations close to its operating properties for various operating purposes.

Item 3.    Legal Proceedings

Astoria Entertainment Litigation:    In November 1998, Astoria Entertainment, Inc. filed a complaint in the United States District Court for the Eastern District of Louisiana. Astoria, an unsuccessful applicant for a license to operate a riverboat casino in Louisiana, attempted to assert a claim under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), seeking damages allegedly resulting from its failure to obtain a license. Astoria named several companies and individuals as defendants, including Hollywood Park, Inc. (the predecessor to Pinnacle Entertainment), Louisiana Gaming Enterprises, Inc. (“LGE”), then a wholly-owned subsidiary of Pinnacle Entertainment, and an employee of Boomtown, Inc.

On March 1, 2001, Astoria amended its complaint, adding new claims and renaming Boomtown, Inc. and LGE as defendants. Pursuant to a settlement agreement executed on February 3, 2005, Astoria has dismissed its claims with prejudice and has released the Company and all of its subsidiaries, affiliates, and other released parties described in the agreement from any act or omission, including, but not limited to, those relating to or arising from the Louisiana riverboat gaming licensing process or the operation of the Company’s Louisiana casinos. The cost of such settlement was fully reserved for as of December 31, 2004.

Poulos Lawsuit:    A class-action lawsuit was filed on April 26, 1994, in the United States District Court, Middle District of Florida (the “Poulos Lawsuit”), naming as defendants 41 manufacturers, distributors and casino operators of video poker and electronic slot machines, including Casino Magic. The lawsuit alleges that the defendants have engaged in a course of fraudulent and misleading conduct intended to induce people to play such games based on false beliefs concerning the operation of the gaming machines and the extent to which there is an opportunity to win. The suit alleges violations of RICO, as well as claims of common law fraud, unjust enrichment and negligent misrepresentation, and seeks damages in excess of $6 billion. On May 10, 1994, a second class-action lawsuit was filed in the United States District Court, Middle District of Florida (the “Ahearn Lawsuit”), naming as defendants the same defendants who were named in the Poulos Lawsuit and adding as defendants the owners of certain casino operations in Puerto Rico and the Bahamas, who were not named as defendants in the Poulos Lawsuit. The claims in the Ahearn Lawsuit are identical to the claims in the Poulos Lawsuit. Because of the similarity of parties and claims, the Poulos Lawsuit and Ahearn Lawsuit were consolidated into one case file (the “Poulos/Ahearn Lawsuit”) in the United States District Court, Middle District of Florida. On December 9, 1994 a motion by the defendants for change of venue was granted, transferring the case to the United States District Court for the District of Nevada, in Las Vegas. In an order dated April 17, 1996, the court granted motions to dismiss filed by Casino Magic and other defendants and dismissed the complaint without prejudice. The plaintiffs then filed an amended complaint on May 31, 1996 seeking damages against Casino Magic and other defendants in excess of $1 billion and punitive damages for violations of RICO and for state common law claims for fraud, unjust enrichment and negligent misrepresentation.

At a December 13, 1996 status conference, the Poulos/Ahearn Lawsuit was consolidated with two other class-action lawsuits (one on behalf of a smaller, more defined class of plaintiffs and one against additional defendants) involving allegations substantially identical to those in the Poulos/Ahearn Lawsuit (collectively, the “Consolidated Lawsuits”) and all pending motions in the Consolidated Lawsuits were deemed withdrawn without prejudice. The plaintiffs in the Consolidated Lawsuits filed a consolidated amended complaint on February 14, 1997, which the defendants moved to dismiss. On December 19, 1997, the court granted the defendants’ motion to dismiss certain allegations in the RICO claim, but denied the motion as to the remainder of such claim; granted the defendants’ motion to strike certain parts of the consolidated amended complaint; denied the defendants’ remaining motions to dismiss and to stay or abstain; and permitted the plaintiffs to substitute one of the class representatives. On January 9, 1998, the plaintiffs filed a second consolidated amended complaint containing claims nearly identical to those in the previously dismissed complaints. The defendants answered, denying the substantive allegations of the second consolidated amended complaint. On June 21, 2002, the court denied plaintiffs’ motion for class certification. On July 11, 2002, the plaintiffs filed a petition for permission to appeal

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the court’s denial of the plaintiffs’ motion for class certification. On August 15, 2002, the United States Court of Appeals for the Ninth Circuit granted plaintiffs’ petition. On August 23, 2002, the plaintiffs filed their notice of appeal with the U.S. District Court for the District of Nevada. On or about April 30, 2003, the plaintiffs filed their opening brief on appeal. Defendants’ answering brief was filed on September 18, 2003. The plaintiffs’ reply brief was filed on October 20, 2003. Oral argument on the appeal of the order denying class certification was heard on January 15, 2004. On August 10, 2004, the Ninth Circuit affirmed the district court’s denial of plaintiffs’ class certification motion. This case is again before the district court.

On January 20, 2005, plaintiffs’ counsel advised the Court that the two (2) remaining plaintiffs, Poulos and McElmore, have agreed to dismiss Casino Magic and the other defendants in whose casino the plaintiffs did not play. The terms of a stipulation for dismissal of these claims have not yet been finalized. On March 4, 2005, the claims of Ahearn and Schreier against all defendants were dismissed with prejudice.

The claims may not be covered under the Company’s insurance policies. While the Company cannot predict the outcome of this action, management intends to defend it vigorously.

Casino Magic Biloxi Patron Incident:    In January 2001, three Casino Magic Biloxi patrons sustained injuries as a result of an assault by another Casino Magic Biloxi patron. In August 2001, two of the casino patrons injured during the January 2001 incident filed a complaint in the Circuit Court of Harrison County, Mississippi, Second Judicial District, which complaint was subsequently amended. In February 2004, Casino Magic Biloxi settled the complaint that was originally filed in August 2001 with respect to the two injured patrons. An Order of Dismissal with prejudice was entered on February 20, 2004. The settlement has been paid by the Company’s applicable insurance carriers.

On February 13, 2002, a third injured victim and her husband filed a subsequent complaint in the Circuit Court of Harrison County, Mississippi, Second Judicial District. The allegations in the complaint are substantially similar to those contained in the original August 2001 lawsuit. No trial date has been set for the subsequent suit.

While the Company cannot predict the outcome of this action, the Company, together with its applicable insurers, intends to defend it vigorously.

Indiana State Tax Dispute:    The State of Indiana conducted a sales and use tax audit at the Company’s Belterra entity in 2001. In October 2002, the Company received a proposed assessment in the amount of $3.1 million with respect to the Miss Belterra casino riverboat, including interest and a penalty. A protest was filed by the Company in December of 2002. On June 16, 2003, the Indiana Tax Court issued two favorable rulings for other taxpayers with claims similar to the Company’s. On September 21, 2004, the Indiana Supreme Court reversed the Tax Court’s ruling with respect to one of those taxpayers. The other taxpayer settled its assessment with the State. The Company believes that these recent cases may not apply to its case because of the different facts involved and intends to pursue this matter vigorously.

Hubbard Litigation:    In connection with the resignation of R.D. Hubbard as the Company’s Chairman in 2002 (“former Chairman”), the Company agreed to extend the exercise period for stock options (“subject options”) covering 322,000 shares held by the former Chairman with a weighted average exercise price of $10.60 per share provided that the Indiana Gaming Commission approved his exercise of these options as so extended. In December 2004, the former Chairman sought to exercise stock options (“specific options”) covering an aggregate of 185,000 of these shares (“requested option shares”). On January 21, 2005, the Indiana Gaming Commission advised the Company that it did not approve the former Chairman’s option exercise. In order to avoid exposure to either the Indiana Gaming Commission or to the former Chairman, on January 25, 2005, the Company filed an action seeking a declaratory judgment in the U.S. District Court for the Southern District of Indiana (“Indiana Action”), naming the former Chairman and the Indiana Gaming Commission as defendants, and requesting an order from the court determining whether the former Chairman is entitled to exercise the

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subject options and whether the Company is obligated to sell the former Chairman the requested option shares. On or about January 26, 2005, the Company’s former Chairman commenced litigation against the Company and its current Chairman and CEO by filing a Complaint in the Superior Court of the County of Riverside, California (“California Action”). The former Chairman, in that action, has asserted claims for breach of contract, breach of the implied covenant of good faith and fair dealing, fraud and equitable estoppel. The former Chairman seeks compensatory damages in an amount greater than $5 million and punitive damages based on the Company’s allegedly wrongful failure to sell to the former Chairman the requested option shares pursuant to the former Chairman’s attempted exercise of the specific options. In the California Action, the Company has removed the action from the state court in California to the United States District Court for the Central District of California. The Company has also, in the California Action, filed a motion to dismiss the former Chairman’s suit, or, in the alternative to (i) transfer the action to the Southern District of Indiana or (ii) stay the action until the resolution of the prior-filed action in the Southern District of Indiana. Due to the uncertainty surrounding the extension of the subject options, the Company continues to include the subject options in the balance of its outstanding options.

Columbia Sussex Litigation.    On January 26, 2005, Columbia Sussex Corporation and three other plaintiffs filed a petition against the Missouri Gaming Commission and Casino One Corporation, a wholly owned subsidiary of the Company, in the Circuit Court of Cole County, Missouri. In addition to Columbia Sussex, named plaintiffs are Wimar Tahoe Corporation, as an owner of property near the proposed Casino One site, President of Columbia Sussex, William J. Yung, as a Missouri taxpayer, and Fred Dehner, a resident of Osage Beach, Missouri, as a registered Missouri voter and taxpayer. The plaintiffs seek to undo the Missouri Gaming Commission’s approval of Casino One’s docking site on the St. Louis riverfront under a claim for judicial review by original writ, declaratory judgment, and writ of prohibition. The factual allegations for each claim are that the Commission could not grant approval to Casino One because the facility’s planned gaming floor is allegedly not within 1,000 feet of the main channel of the Mississippi River, as required under the Missouri constitution.

While the Company cannot predict the outcome of this litigation, management intends to defend it vigorously.

Other:    In September 2004, the Company learned that an attorney who had previously represented it in connection with regulatory matters in Louisiana may have billed the Company for services which had not been rendered and had misappropriated from his law firm fees that the Company had paid for those and other services. The Company understands that other gaming companies which utilized this attorney had similar experiences. The Company has conducted an internal investigation into this matter and intends to seek recoupment of those fees for which the law firm cannot provide adequate documentation that the services were performed and that the fees charged for such services were reasonable.

The Company is party to a number of other pending legal proceedings, though management does not expect that the outcome of such proceedings, either individually or in the aggregate, will have a material effect on the Company’s financial position, cash flows or results of operations.

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

None

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PART II

Item 5.    Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The Company’s common stock is listed on the New York Stock Exchange and is traded under the name Pinnacle Entertainment, Inc., identified by the symbol “PNK”. Prior to February 28, 2000, the Company’s common stock was traded on the New York Stock Exchange under the name Hollywood Park, Inc., identified by the symbol “HPK.”

The following table sets forth the high and low closing sales prices per common share of the Company’s common stock on the New York Stock Exchange:

As of March 10, 2005, there were 2,853 stockholders of record of the Company’s common stock.

Dividends:    The Company did not pay any dividends in 2004 or 2003. The Company’s 8.25% Notes and 8.75% Notes (each as defined below) and existing credit facility limit the amount of dividends that the Company is permitted to pay. The Board of Directors does not anticipate paying any cash dividends on the Company’s common stock in the foreseeable future, as its financial resources are being reinvested into its business, including L’Auberge du Lac Hotel & Casino and the St. Louis development proposals.

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Item 6.    Selected Financial Data

The following selected financial information for the years 2000 through 2004 was derived from the consolidated financial statements of the Company. The information set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, the consolidated financial statements and related notes thereto.

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

The following discussion and analysis of financial condition, results of operations, liquidity and capital resources should be read in conjunction with, and is qualified in its entirety by, the Company’s audited Consolidated Financial Statements and the notes thereto, and other filings with the Securities and Exchange Commission.

Overview and Summary

The Company is a leading diversified, multi-jurisdictional owner and operator of gaming entertainment facilities. The Company owns and operates casinos in Nevada, Mississippi, Louisiana, Indiana and Argentina. The Company is building a $365 million casino resort in Lake Charles, Louisiana and is developing major casinos in downtown St. Louis and St. Louis County, Missouri. Internationally, the Company is building a replacement casino for one of its Argentine facilities and has signed a letter of intent to operate a small casino in the Bahamas. The Company also receives lease income from two card clubs in southern California.

The Company has undertaken a number of initiatives designed to increase earnings from its existing operations. For example, in early May 2004, the Company opened its 300-guestroom tower at Belterra in Indiana. The Company also is gradually upgrading the slot product at most of its facilities and has corporate-wide efforts to centralize certain services and control staffing levels. Such improvements were partially offset by the competitive effect on the Company’s Reno property of large Native American casinos that opened or expanded in Northern California, as well as increased corporate costs associated with execution of its long-term growth objectives.

During 2004, the Company amended and increased its credit facility, refinanced a significant portion of its long-term debt, issued approximately $200 million of common stock (net of expenses) and sold its two parcels of surplus land in Inglewood, California. As a result, the Company believes it has the resources necessary to both complete the L’Auberge du Lac casino and the St. Louis City casino resort and, when combined with its expected ongoing earnings, to fund much of its St. Louis County project as well.

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RESULTS OF OPERATIONS

The following table highlights the Company’s results of operations for the three years ended December 31, 2004, 2003 and 2002.

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Comparisons of the Years Ended December 31, 2004, 2003 and 2002

The following commentary reflects the Company’s results in accordance with several GAAP measures. An additional, supplemental analysis of the Company’s results using EBITDA, including the Company’s definition of EBITDA and a reconciliation of such EBITDA to GAAP accounting measures is provided in the “Other Supplemental Data” section below.

Operating Results    Revenues increased to $553,311,000 in 2004 from $530,402,000 in 2003 and $514,001,000 in 2002. Operating income increased to $81,631,000 in 2004 from $38,042,000 in 2003 and $28,411,000 in 2002. Operating income for 2004 includes certain non-routine items that net to a benefit of $28,205,000. Operating income for 2003 and 2002 include certain non-routine items that net to costs of $6,838,000 and $12,911,000, respectively. See notes (f) and (g) to Item 6 above for additional detail of the non-routine items.

Each property’s contribution to these results is as follows:

The Company’s Boomtown New Orleans produced another strong year. Revenues grew to $111,129,000 for 2004 from $106,398,000, or 4.4%. A majority of the increase, approximately $3,557,000, came from increased slot revenue. Most of the increase came from higher slot volume. The property also improved its operating margin by 1.5 percentage points to 22.9% in 2004.

Revenues in 2003 grew to $106,398,000 from $100,403,000 in 2002, due to a small expansion of gaming capacity, improved slot product and a new player loyalty program. Operating income grew by 11.5% to $22,814,000 in 2003 from $20,470,000, with the operating margin improving to 21.4% from 20.4%.

As in 2003, Belterra Casino Resort produced the largest growth in both revenue and operating income for the Company in 2004. In early May 2004, the property opened its new 300-guestroom tower, the centerpiece of the $37 million expansion project. Benefiting from the additional guestrooms, meeting space and swimming pool, revenues in 2004 grew $21,830,000 to $155,534,000, with casino, hotel and food and beverage revenue accounting for $17,362,000, $1,678,000 and $1,337,000, respectively. Operating income also improved dramatically in 2004, increasing by $6,022,000, or 63.6%, to $15,496,000, despite incurring approximately $2 million of marketing costs associated with the opening of the new tower and $2,497,000 of additional depreciation costs from the increased asset base. The Company anticipates results for 2005 will be greater than 2004, as the property should benefit from the hotel tower expansion project for the full year.

For 2003, revenues at Belterra grew by $11,586,000 to $133,704,000 from $122,118,000 in 2002. A full year of dockside gaming (which commenced in August 2002) and enhanced marketing campaigns and player development events all contributed to the revenue growth. Operating income in 2003 also grew substantially, improving to $9,474,000 from $2,616,000, despite a $1,550,000 one-time retroactive gaming tax charge imposed by the State of Indiana in 2003 related to the effective date of 2002 tax changes. The Indiana State Department of Revenue, interpreting tax legislation passed by the Indiana General Assembly in the 2003 legislative session, assessed this retroactive tax on all riverboats, without providing an offset for taxes paid at a higher tax rate during the period of July 1, 2002 to August 1, 2002. Belterra and most other Indiana casinos have filed protests with the state, asserting the interpretation of the legislation is erroneous and should be set aside.

At Boomtown Bossier City, results for the year ended December 31, 2004 reflect gains from continued operating efficiency, despite the highly competitive gaming market. For the year, operating income improved to $13,920,000 from $8,366,000 in 2003, as cost-control measures associated with labor and marketing costs more than offset a decline in revenues. Expanded Native American gaming in Oklahoma and increased competition from a new race track casino approximately eight miles east of Bossier City/Shreveport affected the property, such that revenues were $99,821,000 in 2004 compared to $104,295,000 in 2003.

For 2003, revenues grew by $1,615,000 to $104,295,000 from $102,680,000 in 2002, as the property benefited from a full year of the renovation and expansion work that was completed in 2002, offset by the

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opening of slot operations at the nearby racetrack in May 2003. Boomtown Bossier City’s operating income for the year improved to $8,366,000 from $5,568,000, as the Company implemented more efficient marketing programs and staffing levels during 2003, resulting in the significant margin and operating income improvement.

In late 2004, the Company began an $11 million casino enhancement project at Casino Magic Biloxi, which includes substantially refurbishing the existing showroom and casino, and updating the existing slot product. The Company believes the construction has caused some disruption to operations since such time. The project is scheduled to be completed in the spring of 2005. In mid-September 2004, Hurricane Ivan struck the Gulf Coast region, causing Casino Magic Biloxi to close for approximately three days. Although the property did not incur any significant property damage, the closure negatively affected results during that period and early in the fourth quarter due to damage and disruption within the region. For the year ended December 31, 2004, revenues were $80,528,000, compared to $83,603,000 in 2003. Operating income improved to $8,345,000 in the year from $8,127,000 in 2003, as the property increased its focus on more profitable promotional offers.

In 2003, revenues were $83,603,000 compared to $86,500,000 in 2002, reflecting the competitive gaming market in the region and the elimination of marginally profitable marketing programs and promotions. Operating income was $8,127,000 for 2003 versus $10,570,000 in 2002, as the transition period between marketing strategies caused some customer disruption during the 2003 second and third quarters.

In mid-2003, new Native American casino operations that are closer to several of Boomtown Reno’s feeder markets opened in California. Results for 2004 reflect a full year of competition from such facilities. For the year ended December 31, 2004, revenues grew to $84,506,000 from $83,645,000, primarily from higher fuel prices at the property’s two service stations of $3,052,000, offset by a decline in gaming revenue of $1,673,000. Reflecting the shift in revenue from high-margin casino revenue to low-margin fuel sales, operating income for 2004 was $3,257,000 compared to $6,538,000. The Company believes the impact of the recent growth in Native American gaming has been substantially absorbed by the Reno gaming market, including its Boomtown Reno property, although the market will continue to be very competitive. In addition, the Company continues to evaluate its sizable excess acreage for future development or other uses—see “Factors Affecting Future Operating Results”.

Revenues for the year ended December 31, 2003 at Boomtown Reno were $83,645,000, compared to $89,021,000 for the year ended December 31, 2002, reflecting the mid-2003 expansion of Native American gaming in California. For the year, operating income was $6,538,000 versus $10,208,000 in 2002.

At Casino Magic Argentina, operating results over the past two years have improved significantly as the economic and political environment has stabilized since the devaluation of the currency at the end of 2001. Revenues in 2004 grew to $15,553,000 from $12,517,000 in 2003 and operating income improved to $5,963,000 in 2004 from $4,455,000 in 2003. Revenues and operating income in 2002 were $7,039,000 and $1,456,000, respectively.

Revenues and operating income from the Company’s Card Clubs in 2004, 2003 and 2002 are all consistent, as there was no change in the monthly lease income from either facility. In late 2004, the Company and the lessee of the Hollywood Park-Casino negotiated an increase in rent to $7 million per annum from $6 million, for the year 2005. The Company also agreed to make certain improvements to the leased assets.

Corporate Costs    Corporate costs in 2004 were $23,098,000 compared to $18,511,000 in 2003, including increased audit and related service costs of approximately $1,800,000 and additional corporate staffing and related costs of approximately $1,971,000, consistent with the Company’s long-term growth and centralization strategies.

Corporate costs were $13,188,000 in 2002. Corporate costs increased in 2003 compared to 2002 primarily due to increased corporate staffing and related benefit costs of approximately $1,976,000 and increased litigation defense costs of approximately $1,805,000.

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Pre-opening and development costs    In 2004, pre-opening and development costs were approximately $14,399,000, including $7,081,000 for L’Auberge du Lac, $4,258,000 for the St. Louis development projects and approximately $3,000,000 for an unsuccessful gaming initiative the Company helped sponsor in California. The Company expects to incur significant pre-opening and development costs in 2005 as it prepares to open L’Auberge and continues to pursue development of the St. Louis projects. In 2003 and 2002, pre-opening and development costs were $1,261,000 and $1,948,000, respectively, primarily related to Lake Charles.

Indiana Regulatory Matters    In 2002, the Company recorded estimated regulatory, legal, severance and other settlement costs of $6,609,000 in connection with an investigation by the Indiana Gaming Commission into events surrounding a golf tournament in 2001. In December 2002, the Company’s former CEO filed a lawsuit against, among others, the Company, claiming wrongful termination, among other things. In February 2003, the court granted the Company’s motion to send the wrongful termination matter to binding arbitration. In December 2003, the arbitrator granted summary judgment in favor of the Company. During 2003, the Company also received funds exceeding its legal expenses for settlement of other litigation resulting from the golf tournament. The effect of this litigation was to increase corporate expense during 2002 by $6,609,000, then to reduce corporate expenses during 2003 by $2,056,000. In 2004, a benefit of $194,000 was recorded in connection with the reversal of reserves no longer deemed necessary.

Gain on Sale of Assets, Net of Other Items    As discussed in Note 3 to the Consolidated Financial Statements, during the year ended December 31, 2004, the Company sold its 97 acres of surplus land for approximately $57 million in cash and recorded a gain, net of transactional and other costs, of $43,946,000. In addition, the Company recorded a charge of $1,566,000 for the expensing of an agreement for a consultant that assisted with the disposition of the surplus land.

Goodwill and Asset Impairment Charges    During 2003, the Company identified certain pre-acquisition deferred tax assets related to Casino Magic Corp. whose estimated future realization had changed based on facts identified in the year (see Notes 1 to the Consolidated Financial Statements). Pursuant to SFAS No. 109, “Accounting for Income Taxes,” pre-acquisition contingent tax matters, including changes in a deferred tax asset’s estimated future realization, that are resolved beyond the one-year post-acquisition period are required to be reclassified from the deferred tax accounts to goodwill. Pursuant to SFAS No. 142, “Goodwill and Other Intangible Assets,” (“SFAS No. 142”) the Company included such amounts in its annual goodwill assessment. Based on the evaluation completed, the Company recorded a goodwill impairment charge of $7,832,000 in 2003.

In 2002, the Company incurred asset impairment charges of $2,753,000 (see Note 1 to the Consolidated Financial Statements).

Corporate Relocation Expenses and Related Benefits    In December 2002, the Company relocated its corporate headquarters to Las Vegas, Nevada from Glendale, California and recorded relocation costs of $1,601,000, including costs attributed to the Glendale office space leased through May 2005. In November 2003, the Company executed a sub-lease agreement for the remainder of the Glendale lease term and as such recorded a benefit of $199,000.

Interest Income    Interest income in 2004 was $3,584,000 compared to $2,111,000 in 2003, and $2,206,000 in 2002, with the increase in 2004 primarily attributed to increased invested funds from the various financing activities in 2004.

Interest Expense    Interest expense in 2004 before capitalized interest was $57,640,000 compared to $56,394,000 in 2003, with the increase primarily due to a full year of funded term loan debt in 2004. Interest expense in 2002 (before capitalized interest) was $50,683,000. Capitalized interest was $5,102,000 (including $4,819,000 associated with L’Auberge), $1,513,000 and $995,000 in 2004, 2003 and 2002, respectively.

Loss on Early Extinguishment of Debt    During 2004, the Company refinanced $285 million of its 9.25% Notes (defined below) and amended its bank credit facility. During 2003, the Company retired its 9.50% Senior

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Subordinated Notes, entered into a new credit facility and amended a prior credit facility. In connection with these refinancing activities, the Company recorded losses on the early extinguishment of debt of $14,921,000 and $19,908,000 in 2004 and 2003, respectively.

Income Tax (Expense) Benefit    The effective tax rate in 2004 was 48.4%, or a tax provision of $8,595,000. This was higher than the statutory rate primarily due to the non-deductible California gaming initiative costs.

The effective tax rate in 2003 was 18.5%, or a tax benefit of $6,394,000. During 2003, the Company revised its estimate of tax reserves to cover certain tax exposures. The Company recorded a tax provision of $4,248,000 in 2003 in connection with such activity. Excluding the goodwill impairment charge from pre-tax losses and the non-routine tax charge noted above, the effective tax rate in 2003 was 39.7%.

The effective tax rate in 2002 was 32.2%, or a tax benefit of $6,146,000. A portion of the 2002 Indiana regulatory settlement costs was not tax deductible, resulting in the lower-than-statutory tax rate.

Change in Accounting Principle    The charge in the first quarter of 2002 for the cumulative change in accounting principle of $56,704,000 related to the write-down of goodwill and other intangible assets. This charge reflected the adoption of SFAS No. 142 in January 2002 (see Note 1 to the Consolidated Financial Statements).

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2004, the Company had $287,788,000 of cash, cash equivalents and restricted cash, and approximately $245 million of availability under its credit facility. As of that same date, the estimated required funds to complete and open the L’Auberge facility in 2005 were approximately $160 million. The Company also has agreements to purchase the Embassy Suites in downtown St. Louis for $38 million and adjoining land for $7.5 million. Such purchases are expected to be completed in the first half of 2005. The Company’s development agreements for development of the St. Louis City and St. Louis County facilities require investments of at least $200 million and $300 million, respectively. Such investments are expected to be made over the next three years. The Company also intends to renovate the Embassy Suites and to spend approximately $12 million for a replacement truck stop and satellite casino at Boomtown Reno in connection with the proposed Cabela’s transaction, and to continue to maintain its current properties in good condition and estimates that this will require maintenance and miscellaneous capital spending of approximately $25 million to $30 million per year.

Management estimates that approximately $45 million is currently used to fund the Company’s casino cages, slot machines, operating accounts and day-to-day working capital needs.

Included in cash, cash equivalents and restricted cash at December 31, 2004 and 2003 is restricted cash of $85,414,000 and $128,929,000, respectively. Restricted cash is primarily comprised of a completion reserve account established pursuant to the Company’s Credit Facility (defined below). The account is designated for, among other things, construction and pre-opening costs associated with “Current Projects” (as defined in the credit agreement), including the ongoing development of L’Auberge du Lac, and following the approval of the project budgets by the administrative agent under the Credit Facility, the St. Louis City and County projects. During 2004, the Company utilized approximately $119 million from the account for such activities. In addition, in August 2004, the Company applied approximately $26 million from the account to repay a portion of its funded term loan debt and related costs and expenses. Sources of funds in 2004 deposited into the completion reserve account included asset sale proceeds of approximately $57 million and a portion of the common stock offering proceeds aggregating approximately $50 million.

Working capital for the Company (current assets less current liabilities and excluding the restricted cash) was $106,471,000 at December 31, 2004, versus $43,434,000 at December 31, 2003. The increase is primarily due to proceeds from the common stock offerings and cash flow from operations, offset by capital spending.

Cash provided by operations was $30,374,000 in 2004, compared to $55,386,000 in 2003. The decrease is primarily attributed to increased pre-opening and development costs of $13,138,000, additional net cash interest

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paid of approximately $4,700,000 in 2004, and cash income tax refunds received in 2003 of approximately $10,479,000. The increased net cash interest paid in 2004 is due largely to a full year of funded term loan debt and commitment fees, compared to only a partial year in 2003. In addition, due to the timing of the refinancing of a portion of the 9.25% Senior Subordinated Notes in late 2004, interest was paid in 2004 on the refinanced bond, that would otherwise have been paid in 2005. The Company anticipates a lower average cost of funded debt in 2005 due to the reduced coupons on its senior subordinated notes.

Cash provided from operations was $55,386,000 in 2003, compared to $39,030,000 in 2002. The increase is primarily attributed to the improved operations in 2003 compared to 2002, as well as additional cash income tax receipts in 2003 versus 2002. For the year ended December 31, 2003, the Company invested $82,931,000 in property and equipment, approximately $53,643,000 of which was for the L’Auberge and Belterra projects. In addition, during 2003, the Company improved its overall capital structure by refinancing its credit facility in December and May (lowering interest rate levels and improving covenant requirements in both financings) and issuing new 8.75% Senior Subordinated Notes to refinance the 9.50% Senior Subordinated Notes. In connection with improving the capital structure, the Company expended approximately $21,698,000 to refinance its debt during 2003, including call and tender premiums to retire old debt and the financing fees on the new debt that are capitalized and will be amortized over the life of the new debt instruments. Finally, in December 2003, the Company repurchased approximately 2 million shares of its common stock for approximately $20,090,000 in cash.

Cash invested in property and equipment in 2004 was $209,597,000, approximately $170,000,000 of which was for construction at L’Auberge and completion of the Belterra hotel tower expansion. The Company anticipates significant capital spending in 2005 for completion of L’Auberge and the commencement of construction activity for the two St. Louis projects. See below for a discussion of capital resources for the next 12 months and beyond.

Cash generated from financing activities of $181,387,000 was primarily through the February and December common stock offerings (approximately $120 million and $80 million of net proceeds, respectively). As noted above, a portion of the proceeds were deposited into the completion reserve account, with the remainder deposited into the Company’s unrestricted cash accounts. The Company also continued to improve its debt capital structure, successfully refinancing $285 million of its 9.25% Senior Subordinated Notes with new 8.25% Senior Subordinated Notes, and executing a new Credit Facility (both discussed more fully below). In connection with these activities, the Company expended approximately $13,609,000 to fund such refinancing activity. In February 2005, the Company refinanced the remaining $65 million aggregate principal amount of 9.25% Senior Subordinated Notes with proceeds from the Credit Facility.

As of December 31, 2004, the Company’s debt consists primarily of the term loan portion of the Credit Facility (defined below) of $125 million and the three issues of senior subordinated indebtedness: $300 million aggregate principal amount of 8.25% Senior Subordinated Notes due March 2012 (the “8.25% Notes”), $135 million aggregate principal amount of 8.75% Senior Subordinated Notes due October 2013 (the “8.75% Notes”) and $65 million aggregate principal amount of 9.25% Senior Subordinated Notes due February 2007 (the “9.25% Notes”). The $65 million aggregate principal amount of 9.25% Notes were refinanced in February 2005. There are no sinking fund requirements or other principal repayment obligations on any of this debt prior to maturity.

The Company’s $380 million amended and restated bank credit facility (the “Credit Facility”), provides for a $255 million six-year term loan facility, of which $125 million was drawn immediately and $130 million is available on a delayed basis in minimum increments of $25 million through September 2005, and a $125 million revolving credit facility which matures in December 2008.

Upon closing the Credit Facility, the Company deposited the term loan borrowings of $125 million into a completion reserve account and repaid all outstanding obligations under the 2003 Credit Facility (defined below). Funds maintained in the completion reserve account, subject to satisfying conditions to withdrawal, are permitted to be used to pay for the costs and expenses of the construction of the Company’s Current Projects. Proceeds of

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the delayed-draw term loan facility are required to be funded into the completion reserve account and are also available subject to satisfying conditions to withdrawal from such account. The proceeds of the revolving credit facility may be used to pay for the construction costs of any Current Project or general corporate purposes.

The Company’s only debt repayment obligations prior to 2008 are nominal. The term loans are repayable in quarterly installments of 0.25% of the principal amount of the term loans outstanding on October 1, 2005, commencing in March 2006. The Company is obligated to make mandatory prepayments of indebtedness under the Credit Facility from the net proceeds of certain debt offerings, certain asset sales and dispositions and certain equity issuances. On the later of August 27, 2006 and the date when the Company completes all of its Current Projects, the Company will be required to prepay borrowings under the Credit Facility with a percentage of its “excess cash flow” as the Company meets certain “leverage ratios” (each as defined in the Credit Facility). The Company has the option to prepay all or any portion of the indebtedness under the Credit Facility at any time without premium or penalty.

Interest on the Credit Facility is subject to change based on the floating rate index selected. For the revolving loan facility, the interest rate margin is based on the Company’s “leverage ratio”. As of December 31, 2004, the term loan bore interest of 5.42% per annum (3.00% over LIBOR), and the delayed-draw term loan and revolver facility bore facility fees for unborrowed amounts of 1.00% and 1.25% per annum, respectively. The Company may also, at its option, borrow at a base rate, as defined in the agreement. Under the Credit Facility, at least 50% of the Company’s debt obligations must be subject to fixed interest rates or hedge agreements or other interest rate protection agreements.

The Credit Facility has, among other things, restrictive financial covenants and capital spending limits and other affirmative and negative covenants. The obligations under the Credit Facility are secured by substantially all of the assets of the Company and its domestic restricted subsidiaries, including a pledge of the equity interests in the Company’s domestic subsidiaries. The Company’s obligations under the Credit Facility are also guaranteed by the Company’s domestic restricted subsidiaries. The Company believes it is in compliance with its bank debt covenants as of December 31, 2004.

Borrowing under the Credit Facility and access to funds from the completion reserve account for the costs and expenses associated with the Company’s Current Projects are subject to conditions commonly associated with construction loans, including an “in balance requirement” (as defined in the Credit Facility), which looks to the sufficiency of the Company’s available resources to complete its Current Projects including the Company’s “projected free cash flow” (all as defined in the Credit Facility).

Under the Company’s most restrictive indenture, the Company is permitted to incur up to $350 million in senior indebtedness of which $135 million was outstanding at December 31, 2004. Additional borrowings under the Credit Facility may account for most or all of such permitted indebtedness. The Company’s indenture also permits the incurrence of additional indebtedness (senior or otherwise) in excess of $350 million for debt refinancing or under a provision that permits additional incurrence if at the time the indebtedness is proposed to be incurred, the Company’s consolidated coverage ratio on a pro forma basis (as defined in the indenture) would be at least 2.00 to 1.00. The Company’s consolidated coverage ratio is currently under 2.00 to 1.00.

In addition to permitted capital expenditures for maintaining existing facilities and amounts permitted to be applied to the costs and expenses of the Current Projects (inclusive of the St. Louis development opportunities), the Credit Facility permits the Company to expend funds, during the term of the Credit Facility, on various new capital projects (prior to designating such projects as a Current Project) in an amount up to $125 million.

In March 2004, the Company issued $200 million in aggregate principal amount of 8.25% Notes, which were issued at a price of 99.282% of par, thereby yielding 8.375% to maturity. Net proceeds of the offering plus cash on hand were used to repurchase $188 million in aggregate principal amount of the Company’s 9.25% Notes (see below). In February 2005, the Company refinanced the remaining portion of its 9.25% Notes (see below) with borrowings of $69 million under the Credit Facility.

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In December 2004, the Company issued $100 million in aggregate principal amount of additional 8.25% Notes, which were issued at a price of 105.00% of par, thereby yielding 7.10% to the first call date (7.35% to maturity). The Company issued the additional notes under the March 2004 8.25% Notes indenture. Net proceeds of the offering plus cash on hand were used to repurchase $97 million in aggregate principal amount of the Company’s 9.25% Notes (see below).

In September 2003, the Company issued $135 million in aggregate principal amount of 8.75% Notes, which notes were issued at 98.369% of par, thereby yielding 9.00% to maturity. The net proceeds of the offering were used to retire all of the Company’s 9.50% Senior Subordinated Notes (the “9.50% Notes”).

In 1999, the Company issued $350 million in aggregate principal amount of 9.25% Notes, of which $285 million in aggregate principal amount was refinanced in 2004 and the remaining $65 million in aggregate principal amount were repurchased in February 2005 using proceeds from the Credit Facility.

Both the 8.25% and the 8.75% Notes are unsecured obligations of the Company, guaranteed by all material restricted subsidiaries (excluding foreign subsidiaries) of the Company, as defined in the indentures. The indentures governing the 8.25% Notes and 8.75% Notes contain certain covenants limiting the ability of the Company and its restricted subsidiaries to incur additional indebtedness, issue preferred stock, pay dividends or make certain distributions, repurchase equity interests or subordinated indebtedness, create certain liens, enter into certain transactions with affiliates, sell assets, issue or sell equity interests in its subsidiaries, or enter into certain mergers and consolidations.

The 8.25% Notes and 8.75% Notes become callable at a premium over their face amount on March 15, 2008 and October 1, 2008, respectively. Such premiums decline periodically as the bonds near their respective maturities. Neither series of notes has any required sinking fund or other principal payments prior to their maturities.

In September 2004, the Company issued a $10 million irrevocable letter of credit for the benefit of an affiliate of the City of St. Louis, thereby reducing availability under the revolving credit facility to $115 million as of December 31, 2004. The letter of credit bears a facility fee of 3.25% per annum as of December 31, 2004. In addition, the Company maintained a cash collateralized letter of credit of approximately $3,300,000 as of December 31, 2004.

In October 2002, the Company’s shelf registration statement with the Securities and Exchange Commission became effective, permitting the issuance of up to $500 million of debt, equity or other securities. As of December 31, 2004 remaining, availability was approximately $53 million following the issuance of the $100 million of 8.25% Notes in December 2004, the two common stock equity offerings in February and December 2004, and the 8.75% Notes in September 2003. There can be no assurance, however, that the Company will be able to issue any additional securities on terms acceptable to the Company.

The Company currently believes that its existing cash resources and cash flows from operations and funds available under the Credit Facility will be sufficient to fund operations, maintain existing properties, make necessary debt service payments and fund remaining construction of the L’Auberge du Lac and the St. Louis City project. The Company anticipates it will require incremental funding in the next 18 to 24 months to complete its St. Louis County project. The amount of incremental funding is dependent on, among other things, future cash flows, debt service requirements and additional capital investment activity. Based on its successful access to the capital markets in 2003 and 2004, the Company believes it will be able to raise such incremental funding; however, there can be no assurances such funds will be available, and if so, on terms acceptable to the Company.

OTHER SUPPLEMENTAL DATA

EBITDA:    The Company defines EBITDA as earnings before interest expense and interest income, income taxes, depreciation, amortization, loss on early extinguishment of debt and cumulative effect of a change in accounting principles. Management uses EBITDA as a relevant and useful measure to compare operating results among its properties and between accounting periods. The presentation of EBITDA has economic substance because it is used by management as a performance measure to analyze the performance of the Company’s

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business segments. EBITDA is specifically relevant in evaluating large, long-lived hotel casino projects because it provides a perspective on the current effects of operating decisions separated from the substantial, non-operational depreciation charges and financing costs of such projects. Additionally, management believes some investors consider EBITDA to be a useful measure in determining a company’s ability to service or incur indebtedness and for estimating a company’s underlying cash flow from operations before capital costs, taxes and capital expenditures. EBITDA, subject to certain adjustments, is also a measure used in debt covenants in the Company’s debt agreements. Unlike net income, EBITDA does not include depreciation or interest expense and therefore does not reflect current or future capital expenditures or the cost of capital. Management compensates for these limitations by using EBITDA as only one of several comparative tools, together with the common GAAP measurements, to assist in the evaluation of operating performance and to measure cash flow generated by ongoing operations. Such GAAP measurements include operating income (loss), net income (loss), cash flows from operations and cash flow data. EBITDA is not calculated in the same manner by all companies and accordingly, may not be an appropriate measure of comparing performance amongst different companies. See Notes (f) and (g) to the “Selected Financial Data” for a reconciliation from net income (loss) to EBITDA and for details regarding certain costs that are included in this table. The table below is a reconciliation from operating income to EBITDA, in each case by year, for 2004, 2003 and 2002.