MTR Gaming Group Announces First Quarter Results and Issues Guidance f

MTR Gaming Group Announces First Quarter Results and Issues Guidance for the Second Quarter of 2005

    Business Editors

    CHESTER, W.Va.--(BUSINESS WIRE)--May 9, 2005--MTR Gaming Group, Inc. (Nasdaq National Market:MNTG) today announced financial results for the first quarter ended March 31, 2005. See attached tables (including Reconciliation of Non-GAAP Measures to GAAP).
    Total revenues for the quarter increased 3% to $77.9 million compared to $75.7 million for the first quarter of 2004. EBITDA also grew by 3% to $13.5 million compared to $13.1 million in the same period last year. Net income was $2.9 million or $0.10 per diluted share compared to $3.0 million or $0.11 per diluted share in the first quarter of 2004. Net win from slot operations at Mountaineer was $62.1 million, producing net win-per-day-per-machine of $214 based on an average of 3,218 machines for the current quarter, which is slightly lower than the $220 on an average of 3,220 machines in the first quarter of 2004. EBITDA for the Nevada properties was $1.2 million.
    As previously discussed, the Company's performance continues to reflect the carrying costs of the numerous developments on which it is working. The Company also noted:

--	Mountaineer Race Track & Gaming Resort. Mountaineer achieved $69.2 million of total revenues despite a 25% increase in the number of Limited Video Lottery Terminals in bars and fraternal organizations in its target market. The Company will continue to pursue legislation for table games, which, together with the resort's amenities, would further differentiate Mountaineer's product from any current and proposed new competition.
--	Nevada Properties. Binion's Gambling Hall & Hotel generated $5.2 million in total revenues and $872,000 of EBITDA (approximately $400,000 of such revenue and EBITDA are attributable to payments received under a joint operating agreement with an affiliate of Harrah's that concluded on March 10, 2005). While management is pleased with the results, it cautions that three weeks of operating data are not necessarily indicative of future performance. The Speedway Casino in North Las Vegas generated $2.7 million in total revenues and $342,000 of EBITDA, both increases over the first quarter of 2004.
--	Pennsylvania. During the quarter, the Company closed on the acquisition of all of the real property required for Presque Isle Downs' racetrack and slot operation at its licensed site in Summit Township, Erie County, Pennsylvania. While the Company had contemplated breaking ground in May, MTR now plans to commence construction immediately after obtaining its gaming license from the Pennsylvania Gaming Control Board, but in any event, in time to satisfy the condition of its racing license that it commence live racing by December of 2007.

    Edson R. (Ted) Arneault, President and CEO of MTR Gaming Group, stated, "We remain focused on optimizing operating performance at our properties and successfully carrying out our external development plans. We look forward to updating you with our progress."

    Financial Guidance

    For the second quarter of 2005, the Company expects total revenues of approximately $98.0 - $102.0 million, EBITDA of approximately $14.0 - $14.8 million and net income of approximately $2.9 - $3.4 million. The Company's guidance assumes that (i) there will be no material new competition; and (ii) no material changes in economic conditions, West Virginia gaming or tax laws or world events; and is subject to recoverability of certain costs in the event the Company is unable to move forward with plans in Minnesota or Michigan.

    Reconciliation of Non-GAAP Measures to GAAP

    EBITDA or earnings before interest, taxes, depreciation and amortization is not a measure of performance or liquidity calculated in accordance with generally accepted accounting principles ("GAAP"), is unaudited and should not be considered an alternative to, or more meaningful than, net income or income from operations as an indicator of our operating performance, or cash flows from operating activities, as a measure of liquidity. We have presented EBITDA as a supplemental disclosure because it is a widely used measure of performance and basis for valuation of companies in our industry. Uses of our cash flows that are not reflected in EBITDA include capital expenditures (which are significant given our expansion), interest payments, income taxes, and debt principal repayments. Moreover, other companies that provide EBITDA information may calculate EBITDA differently than we do. A reconciliation of GAAP income from operations to EBITDA is included in the financial tables accompanying this release.

    Conference Call

    Management will conduct a conference call and webcast focusing on the financial results and recent corporate developments at 10:00 a.m. ET on Monday, May 9, 2005. Interested parties may participate in the call by dialing 706-679-0882 - please call in 10 minutes before the call is scheduled to begin, and ask for the MTR Gaming call. The conference call will be webcast live via the Investor Relations section of the Company's web site at www.mtrgaming.com. To listen to the live call please go to the website at least 15 minutes early to register, download and install any necessary audio software. If you are unable to listen live, the conference call will be archived on the Company's web site.

    About MTR Gaming Group

    MTR Gaming Group, Inc., through subsidiaries, owns and operates the Mountaineer Race Track & Gaming Resort in Chester, West Virginia; Scioto Downs in Columbus, Ohio; the Ramada Inn and Speedway Casino in North Las Vegas, Nevada; Binion's Gambling Hall & Hotel in Las Vegas, Nevada, and holds a license to build Presque Isle Downs, a thoroughbred racetrack with pari-mutuel wagering in Erie, Pennsylvania. The Company also owns a 50% interest in the North Metro Harness Initiative, LLC, which has a license to construct and operate a harness racetrack 30 miles north of downtown Minneapolis (judicial review pending). Additionally, the Company has entered into a definitive agreement to acquire a 90% interest in Jackson Trotting Association, LLC, which operates Jackson Harness Raceway in Jackson, Michigan. The Mountaineer facility, the Company's primary source of revenues, currently encompasses a thoroughbred racetrack with off-track betting and export simulcasting, 3,220 slot machines, 359 hotel rooms, golf course, spa & fitness center, theater and events center, convention center and fine dining and entertainment. MTR is included on the Russell 2000(R) and Russell(R) 3000 Indexes. For more information, please visit www.mtrgaming.com.

    Except for historical information, this press release contains forward-looking statements concerning, among other things, construction schedules for Presque Isle Downs, the construction of a racetrack and card room in Minnesota, and the prospects for our operation of Binion's. Such statements are subject to a number of risks and uncertainties that could cause the statements made to be incorrect and/or for actual results to differ materially. Those risks and uncertainties include but are not limited to favorable resolution of the pending legal challenge to North Metro Harness Initiative's Minnesota racing license, successful completion of a 50-day race meet and regulatory approval of a card room plan of operations for the planned Minnesota racetrack, disruption in developing our planned Pennsylvania and Minnesota operations and other facilities we may expand and/or acquire, our compliance with environmental laws and potential exposure to environmental liabilities, successful transition and operation of Binion's, and other factors described in the Company's periodic reports filed with the Securities and Exchange Commission. The Company does not intend to update publicly any forward-looking statements, except as may be required by law.

MTR GAMING GROUP, INC. CONDENSED AND CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

Three Months Ended March 31 ------------------------- 2005 2004 ------------ ------------ Revenues: Gaming $67,224,000 $66,460,000 Parimutuel commissions 2,156,000 2,208,000 Food, beverage and lodging 6,697,000 5,422,000 Other 1,865,000 1,605,000 ------------ ------------ Total revenues 77,942,000 75,695,000 Less promotional allowances (1,354,000) (1,271,000) ------------ ------------ Net revenues 76,588,000 74,424,000 ------------ ------------

Costs of revenues: Cost of gaming 39,875,000 40,167,000 Cost of parimutuel commissions 2,020,000 1,974,000 Cost of food, beverage and lodging 5,241,000 4,208,000 Cost of other revenues 1,622,000 2,045,000 ------------ ------------ Total cost of revenues 48,758,000 48,394,000 ------------ ------------

Gross profit 27,830,000 26,030,000 ------------ ------------

Selling, general and administrative expenses: Marketing and promotions 1,820,000 2,213,000 General and administrative 12,544,000 10,713,000 Depreciation and amortization 5,854,000 4,943,000 ------------ ------------

Total selling, general and administrative expenses 20,218,000 17,869,000 ------------ ------------

Operating income 7,612,000 8,161,000

Other (expense) income: Equity in loss of unconsolidated joint venture (46,000) - Gain on disposal of property 16,000 - Interest income 98,000 61,000 Interest expense (3,068,000) (3,429,000) ------------ ------------

Income before provision for income taxes 4,612,000 4,793,000 Provision for income taxes (1,729,000) (1,774,000) ------------ ------------

Net income $2,883,000 $3,019,000 ============ ============

Net income per share: Basic $0.10 $0.11 Diluted $0.10 $0.11

Weighted average number of shares outstanding: Basic 28,619,868 28,176,534 Diluted 28,990,665 28,691,097

MTR GAMING GROUP, INC. SELECTED FINANCIAL INFORMATION (unaudited)

Three Months Ended March 31 ------------------------- 2005 2004 ------------ ------------ Net revenues: Mountaineer Park $68,370,000 $70,855,000 Binion's Gambling Hall 4,906,000 213,000 Las Vegas Speedway 2,514,000 2,481,000 Scioto Downs 798,000 872,000 Corporate - 3,000 ------------ ------------ Consolidated $76,588,000 $74,424,000 ============ ============

EBITDA: Mountaineer Park $15,377,000 $14,843,000 Binion's Gambling Hall 872,000 212,000 Las Vegas Speedway 342,000 291,000 Scioto Downs (352,000) (493,000) Corporate (2,773,000) (1,749,000) ------------ ------------ Consolidated $13,466,000 $13,104,000 ============ ============

MTR GAMING GROUP, INC. SELECTED FINANCIAL INFORMATION RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA (unaudited)

The following tables set forth a reconciliation of operating income (loss), a GAAP financial measure, to EBITDA, a non-GAAP financial measure.

Three Months Ended Financial Guidance March 31 For the Three ------------------------- Months Ending 2005 2004 June 30, 2005 ------------ ------------ ------------------------ Mountaineer Park: Operating income $10,565,000 $10,837,000 Depreciation and amortization 4,812,000 4,006,000 ------------ ------------ EBITDA $15,377,000 $14,843,000 ============ ============

Binion's Gambling Hall: Operating income $614,000 $84,000 Depreciation and amortization 258,000 128,000 ------------ ------------ EBITDA $872,000 $212,000 ============ ============

Las Vegas Speedway: Operating income $86,000 $- Depreciation and amortization 256,000 291,000 ------------ ------------ EBITDA $342,000 $291,000 ============ ============

Scioto Downs: Operating loss $(583,000) $(712,000) Depreciation and amortization 231,000 219,000 ------------ ------------ EBITDA $(352,000) $(493,000) ============ ============

Corporate: Operating loss $(3,070,000) $(2,048,000) Depreciation and amortization 297,000 299,000 ------------ ------------ EBITDA $(2,773,000) $(1,749,000) ============ ============

Consolidated: Operating income $7,612,000 $8,161,000 $8,900,000 - $9,400,000 Depreciation and amortization 5,854,000 4,943,000 $6,000,000 ------------ ------------ ------------------------ EBITDA $13,466,000 $13,104,000 $2,900,000 - $3,400,000 ============ ============ ========================

MTR GAMING GROUP, INC. CONDENSED AND CONSOLIDATED BALANCE SHEETS

March 31 December 31 2005 2004 ------------- ------------- (unaudited) ASSETS

Current assets: Cash and cash equivalents $30,627,000 $22,443,000 Restricted cash 1,158,000 604,000 Accounts receivable, net of allowance for doubtful accounts of $109,000 in 2005 and $91,000 in 2004 7,396,000 4,417,000 Accounts receivable - West Virginia Lottery Commission 1,857,000 - Inventories 3,143,000 2,877,000 Deferred financing costs 1,472,000 1,469,000 Prepaid taxes 505,000 505,000 Deferred income taxes 962,000 962,000 Other current assets 3,961,000 2,262,000 ------------- ------------- Total current assets 51,081,000 35,539,000 ------------- -------------

Property and equipment: Land 34,731,000 34,731,000 Building 162,756,000 157,843,000 Equipment and automobiles 78,828,000 77,037,000 Furniture and fixtures 16,281,000 16,252,000 Construction in progress 18,745,000 10,082,000 ------------- ------------- 311,341,000 295,945,000 Less accumulated depreciation (78,702,000) (73,403,000) ------------- ------------- 232,639,000 222,542,000 ------------- -------------

Other assets: Goodwill 1,492,000 1,492,000 Other intangibles 14,285,000 14,285,000 Note receivable - 2,172,000 Deferred income taxes 3,851,000 3,851,000 Deferred financing costs, net of current portion 4,405,000 4,775,000 Deposits and other 17,672,000 15,371,000 ------------- ------------- 41,705,000 41,946,000 ------------- ------------- Total assets $325,425,000 $300,027,000 ============= =============

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities: Accounts payable $12,596,000 $2,966,000 Accounts payable - West Virginia Lottery Commission - 677,000 Accrued payroll and payroll taxes 4,478,000 2,308,000 Accrued tax liability 1,738,000 - Accrued interest 6,398,000 3,244,000 Accrued liabilities 12,599,000 6,258,000 Current portion of capital leases 1,035,000 1,792,000 Current portion of long-term and other debt 384,000 383,000 ------------- ------------- Total current liabilities 39,228,000 17,628,000

Capital lease obligations, net of current portion 3,000 4,000 Long-term and other debt, less current portion 133,091,000 133,133,000 Deferred leasehold obligation 5,155,000 5,177,000 Long-term deferred compensation 6,576,000 5,710,000 Deferred income taxes 15,121,000 15,121,000 ------------- ------------- Total liabilities 199,174,000 176,773,000 ------------- -------------

Shareholders' equity: Common stock - - Paid in capital 62,006,000 61,892,000 Retained earnings 64,245,000 61,362,000 ------------- ------------- Total shareholders' equity 126,251,000 123,254,000 ------------- ------------- Total liabilities and shareholders' equity $325,425,000 $300,027,000 ============= =============

--30--CD/ny*

CONTACT: MTR Gaming Group, Inc. Edson R. (Ted) Arneault, 304-387-8300 www.mtrgaming.com or Investor Relations Counsel: The Equity Group Inc. Lauren Barbera, 212-836-9610 lbarbera@equityny.com www.theequitygroup.com

KEYWORD: WEST VIRGINIA INDUSTRY KEYWORD: GAMING EARNINGS CONFERENCE CALLS SOURCE: MTR Gaming Group, Inc.

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