Riviera Holdings Corp, et al. – ‘424B3’ on 12/11/97

As of:  Thursday, 12/11/97   ·   Accession #:  892569-97-3431   ·   File #s:  333-35291, -01, -02, -03, -04

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Prospectus   —   Rule 424(b)(3)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B3       Offer to Exchange                                    123    691K 

Document Table of Contents

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                                              This filing is made pursuant
                                         to Rule 424(b)(3) under
                                       the Securities Act of
                                         1933 in connection with
                                                 Registration Numbers 333-35291,
                                             333-35291-01, 333-35291-02,
                                               333-35291-03 and 333-35291-04

PROSPECTUS                                                                      

OFFER TO EXCHANGE 
10% FIRST MORTGAGE NOTES DUE 2004 
FOR ALL OUTSTANDING 
10% FIRST MORTGAGE NOTES DUE 2004 
OF

RIVIERA HOLDINGS CORPORATION

THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,

NEW YORK CITY TIME, ON THURSDAY, JANUARY 8, 1998, UNLESS EXTENDED 

------------------------

  Riviera Holdings Corporation, a Nevada corporation (the "Company"), hereby
offers to exchange an aggregate principal amount of up to $175,000,000 of its   
10% First Mortgage Notes due 2004 (the "New Notes") for a like principal amount 
of its 10% First Mortgage Notes due 2004 (the "Existing Notes") outstanding on  
the date hereof upon the terms and subject to the conditions set forth in this  
Prospectus and in the accompanying letter of transmittal (the "Letter of        
Transmittal" and, together with this Prospectus, the "Exchange Offer"). The New 
Notes and the Existing Notes are hereinafter collectively referred to as the    
"Notes." The terms of the New Notes are identical in all material respects to   
those of the Existing Notes, except that (i) the exchange will have been        
registered under the Securities Act of 1933, as amended (the "Securities Act"), 
and hence the New Notes will not bear legends restricting the transfer thereof, 
and (ii) holders of the New Notes will not be entitled to certain rights of     
holders of the Existing Notes under the Registration Rights Agreement (as       
defined), which rights will terminate upon the consummation of the Exchange     
Offer. The New Notes will be issued pursuant to, and will be entitled to the    
benefits of, the Indenture (as defined) governing the Existing Notes.           

    The New Notes will bear interest from and including the date of consummation
of the Exchange Offer. Interest on the New Notes will be payable semi-annually  
on February 15 and August 15 of each year, commencing February 15, 1998.        
Additionally, interest on the New Notes will accrue from the last interest      
payment date on which interest was paid on the Existing Notes surrendered in    
exchange therefor or, if no interest has been paid on the Existing Notes, from  
the date of original issue of the Existing Notes. Holders whose Existing Notes  
are accepted for exchange will be deemed to have waived the right to receive any
interest accrued on the Existing Notes.                                         

The New Notes will mature on August 15, 2004. The New Notes will be     
redeemable at the option of the Company, in whole or in part, on or after August
15, 2001, at the redemption prices set forth herein, plus accrued and unpaid    
interest, if any, to the date of redemption. Upon a Change of Control (as       
defined), subject to certain exceptions relating to the Merger (as defined), the
Company will be required to offer to repurchase all of the outstanding New Notes
at 101% of the principal amount thereof, plus accrued and unpaid interest, if   
any, to the date of repurchase.                                                 

The New Notes will be senior secured obligations of the Company and will
rank pari passu in right of payment with all senior indebtedness of the Company 
and senior in right of payment to all subordinated indebtedness of the Company. 
The New Notes will be unconditionally guaranteed by existing and future         
Restricted Subsidiaries (as defined) of the Company (the "Subsidiary            
Guarantees"). The Subsidiary Guarantees will be senior secured obligations of   
each Restricted Subsidiary and will rank pari passu in right of payment with all
senior indebtedness of such Restricted Subsidiary. The obligations under the New
Notes and the Subsidiary Guarantees will be secured by a first priority security
interest, subject to Permitted Liens (as defined) and certain exclusions, in the
land and improvements comprising the Riviera Hotel & Casino, furniture, fixtures
and equipment (excluding Gaming Equipment (as defined)), contract rights,       
trademarks and certain other personal property (excluding inventory and accounts
receivable) and a pledge of all of the capital stock of the Restricted          
Subsidiaries. See "Capitalization."                                             

The New Notes are being offered hereunder in order to satisfy certain   
obligations of the Company and the Guarantors (as defined) contained in the     
Registration Rights Agreement, dated as of August 13, 1997 (the "Registration   
Rights Agreement") by and between the Company, the Guarantors, and Jefferies &  
Company, Inc. and Ladenberg Thalmann & Co. Inc. (the "Initial Purchasers") with 
respect to the initial sale of the Existing Notes.                              

The Company will not receive any proceeds from the Exchange Offer. The  
Company will pay all the expenses incident to the Exchange Offer. Tenders of    
Existing Notes pursuant to the Exchange Offer may be withdrawn at any time prior
to the Expiration Date (as defined) for the Exchange Offer. In the event the    
Company terminates the Exchange Offer and does not accept for exchange any      
Existing Notes with respect to the Exchange Offer, the Company will promptly    
return such Existing Notes to the holders thereof. See "The Exchange Offer."    

                                                   (Continued on following page)
------------------------

SEE "RISK FACTORS" COMMENCING ON PAGE 9 FOR A DISCUSSION OF CERTAIN MATTERS THAT
SHOULD BE CONSIDERED BY HOLDERS OF EXISTING NOTES IN CONNECTION WITH THE
EXCHANGE OFFER. 

------------------------

NONE OF THE NEVADA GAMING COMMISSION, THE NEVADA STATE GAMING CONTROL BOARD OR
ANY OTHER GAMING AUTHORITY HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS 
OFFERING CIRCULAR OR THE INVESTMENT MERITS OF THE NOTES OFFERED HEREBY. ANY 
REPRESENTATION TO THE CONTRARY IS UNLAWFUL. 

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY 
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. 
------------------------

THE DATE OF THIS PROSPECTUS IS DECEMBER 10, 1997

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 The Company is offering the New Notes in reliance on certain interpretive
letters issued by the staff of the Securities and Exchange Commission (the      
"Commission") to third parties in unrelated transactions. Based on such         
interpretive letters, the Company is of the view that the New Notes issued      
pursuant to this Exchange Offer in exchange for Existing Notes may be offered   
for resale, resold and otherwise transferred by a holder thereof (other than (i)
a broker-dealer who purchases such New Notes directly from the Company to resell
pursuant to Rule 144A or any other available exemption under the Securities Act 
or (ii) a person that is an affiliate of the Company within the meaning of Rule 
405 under the Securities Act), without compliance with the registration and     
prospectus delivery provisions of the Securities Act, provided that the holder  
is acquiring the New Notes in the ordinary course of its business and is not    
participating, and had no arrangement or understanding with any person to       
participate, in the distribution of the New Notes. Holders of Existing Notes    
wishing to accept the Exchange Offer must represent to the Company, as required 
by the Registration Rights Agreement, that such conditions have been met. Each  
broker-dealer that receives the New Notes for its own account in exchange for   
the Existing Notes, where such Existing Notes were acquired by such             
broker-dealer as a result of market-making activities or other trading          
activities, must acknowledge that it will deliver a prospectus in connection    
with any resale of such New Notes. The Company believes that none of the        
registered holders of the Existing Notes is an affiliate (as such term is       
defined in Rule 405 under the Securities Act) of the Company.                   

Prior to the Exchange Offer, there has been no public market for the    
Existing Notes. If a market for the New Notes should develop, such New Notes    
could trade at a discount from their principal amount. The Company currently    
does not intend to list the New Notes on any securities exchange or to seek     
approval for quotation through any automated quotation system, and no active    
public market for the New Notes is currently anticipated. There can be no       
assurance that an active public market for the New Notes will develop. See "Risk
Factors -- Absence of Public Market for the Notes."                             

  Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in        
connection with any resale of such New Notes. The Letter of Transmittal states  
that by so acknowledging and by delivering a prospectus, a broker-dealer will   
not be deemed to admit that it is an "underwriter" within the meaning of the    
Securities Act. This Prospectus, as it may be amended or supplemented from time 
to time, may be used by a broker-dealer in connection with resales of New Notes 
received in exchange for Existing Notes where such Existing Notes were acquired 
by such broker-dealer as a result of market-making activities or other trading  
activities. The Company has indicated its intention to make this Prospectus (as 
it may be amended or supplemented) available to any broker-dealer for use in    
connection with any such resale for a period of one year following the Effective
Date (as defined). See "Plan of Distribution."                                  

  The Exchange Offer is not conditioned upon any minimum principal amount of
Existing Notes being tendered for exchange pursuant to the Exchange Offer.      

THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT  
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF EXISTING NOTES IN ANY JURISDICTION IN  
WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE   
WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.                      

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AVAILABLE INFORMATION 

    The Company has filed with the Commission a Registration Statement on Form
S-4 under the Securities Act with respect to the New Notes offered hereby (the  
"Registration Statement"). As permitted by the rules and regulations of the     
Commission, this Prospectus omits certain information, exhibits and undertakings
contained in the Registration Statement. For further information with respect to
the Company and the New Notes offered hereby, reference is made to the          
Registration Statement, including the exhibits thereto and the financial        
statements, notes and schedules filed as a part thereof. The Company is subject 
to the information requirements of the Securities Exchange Act of 1934, as      
amended (the "Exchange Act"), and in accordance therewith files periodic        
reports, proxy statements and other information with the Commission. Such       
reports, proxy statements and other information filed by the Company with the   
Commission can be inspected and copied at the public reference facilities       
maintained by the Commission at 450 Fifth Street, NW, Washington, D.C. 20549,   
and at the Commission's Regional Offices at 7 World Trade Center, New York, New 
York 10048 and Citicorp Center, 500 Madison Street, Suite 1400, Chicago,        
Illinois 60661. Copies of such material can be obtained upon written request    
addressed to the Commission, Public Reference Section, 450 Fifth Street, NW,    
Washington, D.C. 20549, at prescribed rates. The Commission also maintains a Web
site at http://www.sec.gov that contains reports and other information regarding
registrants that file electronically with the Commission. In addition, material 
filed by the Company may be inspected at the offices of the American Stock      
Exchange at 86 Trinity Place, New York, New York 10006. Statements contained in 
this Prospectus as to the contents of any contract or other document are not    
necessarily complete, and in each instance reference is made to the copy of such
contract or document filed as an exhibit to the Registration Statement, each    
such statement being qualified in all respects by such reference.               

 In the event that the Company ceases to be subject to the informational
requirements of the Exchange Act, the Company has agreed that, so long as any   
Notes remain outstanding, it will file with the Commission (but only if the     
Commission at such time is accepting such voluntary filings) and distribute to  
holders of the Notes, copies of the financial information that would have been  
contained in such annual reports and quarterly reports, including management's  
discussion and analysis of financial condition and results of operations, that  
would have been required to be filed with the Commission pursuant to the        
Exchange Act. The Company will also furnish such other reports as it may        
determine or as may be required by law.                                         
------------------------

     This Prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. All      
statements other than statements of historical facts included in this           
Prospectus, including, without limitation, the statements under "Summary,"      
"Management's Discussion and Analysis of Financial Condition and Results of     
Operations" and "Business" and located elsewhere herein regarding industry      
prospects and the Company's financial position are forward-looking statements.  
Although the Company believes that the expectations reflected in such           
forward-looking statements are reasonable, it can give no assurance that such   
expectations will prove to have been correct. Important factors that could cause
actual results to differ materially from the Company's expectations ("Cautionary
Statements") are disclosed in the Prospectus, including, without limitation, in 
conjunction with the forward-looking statements in this Prospectus under "Risk  
Factors."                                                                       

    All subsequent written and oral forward-looking statements attributable to
the Company or persons acting on its behalf are expressly qualified in their    
entirety by the Cautionary Statements.                                          

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SUMMARY 

   The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements     
(including notes thereto) included elsewhere in this Prospectus. Unless         
otherwise indicated or the context otherwise requires, references to the        
"Company" are to Riviera Holdings Corporation and its subsidiaries including    
Riviera Operating Corporation, a Nevada corporation ("ROC"). This Prospectus    
contains forward-looking information that involves risks and uncertainties, and 
such information is subject to the assumptions set forth in connection therewith
and the information contained or incorporated by reference herein. Holders of   
Existing Notes should carefully consider the information set forth under the    
heading "Risk Factors."                                                         

THE COMPANY 

  The Company owns and operates the Riviera Hotel & Casino (the "Riviera")
located on Las Vegas Boulevard (the "Strip") in Las Vegas, Nevada. Opened in    
1955, the Riviera has developed a long-standing reputation for delivering high  
quality, traditional Las Vegas-style gaming and entertainment. The Riviera is   
situated on a 26-acre site located across the Strip from Circus Circus and      
across Paradise Road from the Las Vegas Hilton and the Las Vegas Convention     
Center. The property features approximately 2,100 hotel rooms, including 169    
suites, 105,000 square feet of casino space, one of the largest convention,     
meeting and banquet facilities in Las Vegas, four full-service restaurants, a   
large buffet, four showrooms, an entertainment lounge, 43 food and retail       
concessions and approximately 2,900 parking spaces. The casino contains         
approximately 1,300 slot machines, 50 gaming tables, a keno lounge and a        
200-seat race and sports book. The Riviera offers one of the most extensive     
entertainment programs in Las Vegas, including the award winning show,          
Splash(R). The Company, through its gaming management subsidiary, also manages  
the Four Queens Hotel and Casino ("Four Queens") on Fremont Street in downtown  
Las Vegas.                                                                      

From 1992 to the end of 1996, the Riviera's management team achieved  
consistent growth in EBITDA (as defined) and profit margins. EBITDA has         
increased over 44% from $21.8 million in 1992 to $31.5 million in 1996 and      
EBITDA margins have improved from 15.1% to 19.2% over the same period. The      
Company achieved this growth through the implementation of a number of strategic
initiatives that included (i) refocusing its marketing strategy from            
"high-rollers" to adult midlevel gaming customers, a niche that management      
believes has been underserved, (ii) focusing on conventioneers who pay higher   
room rates, causing Riviera's average daily room rate ("ADR") to increase from  
$47 in 1992 to $57 in 1996, (iii) aggressively marketing its hotel facilities   
resulting in occupancy rates growing from 90.6% in 1992 to 98.2% in 1996, (iv)  
emphasizing higher margin slot play which increased slot revenue by 33.0% from  
1992 to 1996 and (v) investing approximately $47 million in capital improvements
since 1992. Management believes that it has also improved the stability of      
EBITDA by providing a broad entertainment experience (1996 non-gaming revenues: 
55% vs. 47% for other casinos on the Strip), focusing on conventioneers         
(approximately 30% of mid-week room nights pre-sold through June 1999) and      
developing a repeat and loyal customer base through proprietary database        
marketing.                                                                      

GROWTH OPPORTUNITIES

The Company seeks to continue its growth in EBITDA and profits by     
maximizing the potential of the Riviera's prime Strip frontage and capitalizing 
on the proven strength of its management team by leveraging its talents across  
multiple properties. To achieve this goal, the Company is pursuing the following
opportunities:                                                                  

     Riviera Expansion. By the end of 1997, management expects to have completed
the upgrade of the slot machines and refurbished substantially all of the hotel 
rooms at the Riviera. To continue capitalizing on the Riviera's prime Strip     
frontage, the Company is developing the Nickel Plaza, a new 10,000 square-foot  
gaming area fronting the Strip complete with 350 slot machines, a bar, snack bar
and souvenir shop, which is expected to be completed by December 1997. Nickel   
Plaza will be ideally positioned to attract the additional walk-in traffic from 
the 1,000 newly built rooms directly across the Strip at Circus Circus and the  
expansions of the Las Vegas Hilton and the Las Vegas Convention Center.         
Management expects Nickel Plaza will be developed for an estimated cost of $5   
million. To maintain and enhance its core conventioneer customer base, the      
Company also plans to expand its convention center from 100,000 square feet to  
158,000 square feet by                                                          

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constructing new state-of-the-art, multi-level, convention, meeting and banquet 
facilities. Construction commenced in November 1997 and is expected to be       
completed by the end of the third quarter of 1998. Management believes this     
expansion, which is estimated to cost approximately $15 million, will further   
solidify the Riviera as one of the premier convention sites in Las Vegas. In    
addition, the Company owns approximately six acres of contiguous property which 
is available for future expansion.                                              

    The Black Hawk Project. As part of the Company's strategy to diversify its
revenue base and leverage both the Riviera name and its management team, the    
Company pursues development opportunities in both established and emerging      
gaming markets. The Company has acquired a certain parcel of real property in   
Black Hawk, Colorado (the "Black Hawk Land"), which management believes to be   
the premier gaming site in Colorado. The Company intends to use this site to    
construct one of the largest gaming facilities in the adjacent gaming cities of 
Black Hawk and Central City, Colorado (the "Black Hawk Project"). The Black Hawk
Project is expected to feature approximately 1,000 slot machines, 14 table      
games, an approximately 520 space covered parking garage and entertainment and  
food service amenities. Management believes this market has attractive          
fundamentals, including (i) gaming currently limited to Black Hawk/Central City 
and Cripple Creek in Colorado, (ii) consistent gaming revenue growth since 1992 
to over $300 million in 1996, (iii) slot machine dominated market due to        
statutory limited stakes, (iv) one hour drive from central Denver and (v)       
approximately 2.3 million adults residing within 100 miles of Black Hawk.       
Management believes that the proposed Riviera facility will be highly successful
due to the following attributes: (i) premier location: it will be the first     
gaming site encountered when arriving from Denver, (ii) size and quality: it    
will be one of the largest casinos in the market complete with restaurant and   
entertainment options and (iii) superior parking: it will have onsite, covered  
self-parking, which is critical in this market where parking is currently       
extremely limited. The Black Hawk Project is an attractive investment           
opportunity that allows the Company to create a multi-jurisdictional gaming     
company. The Company currently estimates that total costs for completion of the 
Black Hawk Project will be approximately $60 million, a $5 million increase over
previous estimates resulting from the announcement of additional projects by    
competitors. The Company purchased the Black Hawk Land in August 1997 for $15   
million, which was financed by the net proceeds from the sale of the Existing   
Notes, and expects to finance the remainder of the Black Hawk Project from a    
combination of third party financing and additional investment by the Company,  
including up to an additional $15 million of the net proceeds from the sale of  
the Existing Notes. The Company expects to receive the necessary excavation and 
other permits in the near future, with construction of the casino commencing    
shortly thereafter. The casino is scheduled to open during mid-1999.            

Casino/Hotel Management Contracts. The Company believes that there is 
increasing demand for the services of skilled gaming and hospitality            
professionals. In order to capitalize on management's reputation and experience 
as successful casino operators, the Company formed Riviera Gaming Management,   
Inc. ("RGM") for the primary purpose of obtaining casino management contracts   
with casinos/hotels in Nevada and other jurisdictions. Since August 1996, RGM's 
subsidiary, Riviera Gaming Management -- Elsinore ("RGME"), has managed the Four
Queens located adjacent to the Golden Nugget on Fremont Street in downtown Las  
Vegas. Under the Four Queens management contract, RGME receives a guaranteed    
minimum management fee plus additional compensation based on EBITDA improvement 
of the Four Queens, and warrants to purchase 18.4% (on a fully diluted basis) of
the common stock of the Four Queens' parent, Elsinore Corporation ("Elsinore"). 
Such management contract provides significant revenues and upside equity        
potential with minimal additional overhead and capital expenditure. Under RGME, 
Four Queens' EBITDA improved by approximately 12% in the twelve months ended    
September 30, 1997, compared to the same period in 1996 and generated           
approximately $1.0 million in management fees for the Company. Management is    
continually evaluating opportunities to manage other casinos/hotels.            

 The Company's principal executive offices are located at 2901 Las Vegas
Boulevard South, Las Vegas, Nevada 89109, and its telephone number is (702)     
734-5110.                                                                       

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THE PROPOSED MERGER 

   The Company has entered into an Agreement and Plan of Merger (the "Merger
Agreement") among the Company and certain entities controlled by Allen E.       
Paulson, a California businessman, pursuant to which one of such entities would 
be merged with and into the Company (the "Merger"). The closing of the Merger is
subject to a number of conditions, including (i) approval by the affirmative    
vote of the holders of at least 60% of all issued and outstanding shares of     
Common Stock, par value $.001 per share (the "Common Stock"), of the Company    
(excluding the shares of Common Stock owned by Mr. Paulson or his affiliates) at
a meeting scheduled to be held this winter, (ii) Mr. Paulson's licensure by the 
Nevada Gaming Authorities (as defined), (iii) the absence of any regulation,    
judgment or other law that prohibits the consummation of the Merger or would    
prohibit or limit the Company's ownership or control of a material portion of   
the Company's business or assets following the Merger, and (iv) the absence of  
any material adverse change in the Company's cumulative EBITDA for the period   
commencing on April 1, 1997 through and including the most recent month prior to
such closing for which the Company's financial statements are available. The    
holders of approximately 59% of the Company's Common Stock have entered into an 
option and voting agreement in which they have agreed to vote for the Merger.   
However, there can be no assurance that the conditions to the Merger will be    
satisfied or waived or that the Merger will be consummated.                     

THE TRANSACTIONS

  The Existing Notes were issued on August 13, 1997. The net proceeds from
the sale of the Existing Notes were approximately $165.8 million, a portion of  
which were used as follows: (i) $109.8 million was used to defease the Company's
11% First Mortgage Notes due 2002 (the "11% First Mortgage Notes"), (ii) $4.5   
million was used to retire the Company's Class 13/14 Unsecured Promissory Note  
(the "Unsecured Note") and (iii) $7.0 million was used to pay fees and expenses 
relating to the foregoing as well as the sale of the Existing Notes. In         
addition, the Company has used $15 million of the net proceeds to acquire the   
Black Hawk Land. The Company also intends to use the remaining net proceeds from
the sale of the Existing Notes to fund the development of Nickel Plaza and the  
expansion of the convention center, and, if necessary, to provide additional    
financing for the Black Hawk Project. To the extent that the additional proceeds
are not used for the development of the Black Hawk Project, the unused proceeds 
will be used for the Company's general business purposes. The issuance and sale 
of the Existing Notes and the application of the net proceeds therefrom,        
including the payment of related transaction fees and expenses and the          
defeasance of the 11% First Mortgage Notes are collectively referred to herein  
as the "Transactions."                                                          

THE EXCHANGE OFFER

Securities Offered.........  Up to $175.0 million aggregate principal amount of 
                             10% First Mortgage Notes due 2004. The terms of the
                           New Notes and Existing Notes are identical in all
                        material respects, except for certain transfer
                          restrictions and registration rights relating to
the Existing Notes.   

The Exchange Offer.........  The New Notes are being offered in exchange for a  
                           like principal amount of Existing Notes. Existing
                           Notes may be exchanged only in integral multiples
                     of $1,000. The issuance of the New Notes is
                        intended to satisfy obligations of the Company
                         contained in the Registration Rights Agreement.

Expiration Date; Withdrawal                                                     
Tender.....................  The Exchange Offer will expire at 5:00 p.m., New   
                          York City time, on Thursday, January 8, 1998, or
                     such later date and time to which it may be
                         extended by the Company. The tender of Existing
                     Notes pursuant to the Exchange Offer may be
                             withdrawn at any time prior to the Expiration Date.
                          Any Existing Notes not accepted for exchange for
                            any reason will be returned without expense to the
     tendering holder thereof as

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                         promptly as practicable after the expiration or
            termination of the Exchange Offer.

Accrued Interest on the New                                                     
Notes and the Existing                                                          
Notes......................  The New Notes will bear interest from and including
                         the date of consummation of the Exchange Offer.
                             Additionally, interest on the New Notes will accrue
                      from the last interest payment date on which
                             interest was paid on the Existing Notes surrendered
                          in exchange therefor or, if no interest has been
                      paid on the Existing Notes, from the date of
                             original issue of the Existing Notes. Holders whose
                          Existing Notes are accepted for exchange will be
                        deemed to have waived the right to receive any
                 interest accrued on the Existing Notes.

Certain Conditions to the                                                       
Exchange Offer.............  The Company's obligation to accept for exchange, or
                          to issue New Notes in exchange for, any Existing
                          Notes is subject to certain customary conditions
                           relating to compliance with any applicable law or
                           any applicable interpretation by the staff of the
                   Commission, the receipt of any applicable
                       governmental approvals and the absence of any
                           actions or proceedings of any governmental agency
                    or court which could materially impair the
                             Company's ability to consummate the Exchange Offer.
                        The Company currently expects that each of the
                          conditions will be satisfied and that no waivers
                       will be necessary. See "The Exchange Offer --
                    Certain Conditions to the Exchange Offer."

Procedures for Tendering                                                        
Existing Notes.............  Each holder of Existing Notes wishing to accept the
                         Exchange Offer must complete, sign and date the
                           Letter of Transmittal, or a facsimile thereof, in
                           accordance with the instructions contained herein
                         and therein, and mail or otherwise deliver such
                            Letter of Transmittal, or such facsimile, together
                         with such Existing Notes and any other required
                           documentation, to the Exchange Agent (as defined)
                         at the address set forth herein. Subject to the
                         satisfaction or waiver of the conditions to the
                     Exchange Offer, the Company will accept for
                       exchange any and all Existing Notes which are
                          properly tendered in the Exchange Offer prior to
                the Expiration Date. See "The Exchange
                            Offer -- Procedures for Tendering Existing Notes."

Special Procedures for                                                          
Beneficial Owners..........  Any beneficial owner whose Existing Notes are      
                     registered in the name of a broker, dealer,
                             commercial bank, trust company or other nominee and
                         who wishes to tender such Existing Notes in the
                       Exchange Offer should contact such registered
                             holder promptly and instruct such registered holder
                          to tender on such beneficial owner's behalf. See
                         "The Exchange Offer -- Procedures for Tendering
                             Existing Notes." If such beneficial owner wishes to
                             tender on such owner's own behalf, such owner must,
                         prior to completing and executing the Letter of
                          Transmittal and delivering such owner's Existing
                        Notes, either make appropriate arrangements to
                          register ownership of the Existing Notes in such
                          owner's name or obtain a properly completed bond
                           power from the registered holder. The transfer of
                             registered ownership may take considerable time and
                      may not be able to be completed prior to the
Expiration Date.      

Guaranteed Delivery                                                             
Procedures.................  Holders of Existing Notes who wish to tender their 
                         Existing Notes and whose Existing Notes are not
             immediately available or who cannot

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                     deliver their Existing Notes, the Letter of
                           Transmittal or any other document required by the
                           Letter of Transmittal to the Exchange Agent prior
                            to the Expiration Date, must tender their Existing
                    Notes according to the guaranteed delivery
               procedures set forth in "The Exchange
                   Offer -- Guaranteed Delivery Procedures."

Withdrawal Rights..........  Tenders of Existing Notes may be withdrawn at any  
                     time prior to the Expiration Date. See "The
                   Exchange Offer -- Withdrawal of Tenders."

Certain Federal Income Tax                                                      
Considerations.............  For a discussion of certain federal income tax     
                        considerations relating to the exchange of the
                Notes, see "Certain Federal Income Tax
Considerations."      

Use of Proceeds............  The Company will not receive any proceeds from the 
Exchange Offer.       

Exchange Agent.............  Norwest Bank Minnesota, N.A. (the "Exchange Agent")
                             is serving as the Exchange Agent in connection with
Exchange Offer.       

CONSEQUENCES OF EXCHANGING EXISTING NOTES PURSUANT TO THE EXCHANGE OFFER

     Based on certain interpretive letters issued by the staff of the Commission
to third parties in unrelated transactions, the Company is of the view that the 
New Notes issued pursuant to this Exchange Offer in exchange for Existing Notes 
may be offered for resale, resold and otherwise transferred by a holder thereof 
(other than (i) a brokerdealer who purchases such New Notes directly from the   
Company to resell pursuant to Rule 144A or any other available exemption under  
the Securities Act or (ii) a person that is an affiliate of the Company within  
the meaning of Rule 405 under the Securities Act), without compliance with the  
registration and prospectus delivery provisions of the Securities Act, provided 
that the holder is acquiring the New Notes in the ordinary course of its        
business and is not participating, and had no arrangement or understanding with 
any person to participate, in the distribution of the New Notes. Holders of     
Existing Notes wishing to accept the Exchange Offer must represent to the       
Company, as required by the Registration Rights Agreement, that such conditions 
have been met. Each broker-dealer that receives the New Notes for its own       
account in exchange for the Existing Notes, where such Existing Notes were      
acquired by such broker-dealer as a result of marketmaking activities or other  
trading activities, must acknowledge that it will deliver a prospectus in       
connection with any resale of such New Notes. The Letter of Transmittal states  
that by so acknowledging and by delivering a prospectus, a broker-dealer will   
not be deemed to admit that it is an "underwriter" within the meaning of the    
Securities Act. This Prospectus, as it may be amended or supplemented from time 
to time, may be used by a broker-dealer in connection with resales of New Notes 
received in exchange for Existing Notes where such Existing Notes were acquired 
by such broker-dealer as a result of market-making activities or other trading  
activities. The Company has indicated its intention to make this Prospectus (as 
it may be amended or supplemented) available to any broker-dealer for use in    
connection with any such resale for a period of one year following the date the 
Registration Statement is declared effective by the Commission (the "Effective  
Date"). See "Plan of Distribution."                                             

   In addition, to comply with the securities laws of certain jurisdictions,
if applicable, the New Notes may not be offered or sold unless they have been   
registered or qualified for sale in such jurisdictions or in compliance with an 
available exemption from registration or qualification. The Company has agreed, 
pursuant to the Registration Rights Agreement and subject to certain specified  
limitations therein, to register or qualify the New Notes for offer or sale     
under the securities or blue sky laws of such jurisdictions as are necessary to 
permit consummation of the Exchange Offer. If a holder of Existing Notes does   
not exchange such Existing Notes for New Notes pursuant to the Exchange Offer,  
such Existing Notes will continue to be subject to the restrictions on transfer 
contained in the legend thereon. In general, the Existing Notes may not be      
offered or sold, unless registered under the Securities Act, except pursuant to 
an exemption from, or in a transaction not subject to, the Securities Act and   
applicable state securities laws. Holders of Existing Notes do not have any     

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appraisal or dissenters' rights under Nevada Corporation Law in connection with 
the Exchange Offer. See "The Exchange Offer -- Consequences of Failure to       
Exchange; Resales of New Notes."                                                

The Existing Notes are currently eligible for trading in the Private  
Offerings, Resales and Trading through Automated Linkages ("PORTAL") market.    
Following commencement of the Exchange Offer but prior to its consummation, the 
Existing Notes may continue to be traded in the PORTAL market. Following        
consummation of the Exchange Offer, the New Notes will not be eligible for      
PORTAL trading.                                                                 

THE NEW NOTES 

  The terms of the New Notes are identical in all material respects to the
Existing Notes, except for certain transfer restrictions and registration rights
relating to the Existing Notes.                                                 

Securities Offered.........  Up to $175.0 million in aggregate principal amount 
               of 10% First Mortgage Notes due 2004.

Maturity Date..............  August 15, 2004.                                   

Interest...................  The New Notes will bear interest at a rate of 10%  
                             per annum, payable semi-annually on February 15 and
                         August 15 of each year, commencing February 15,
1998.                 

Ranking....................  The New Notes will be senior secured obligations of
                          the Company and will rank pari passu in right of
                     payment with any existing and future senior
                            indebtedness of the Company and senior in right of
                         payment to any existing and future subordinated
                             indebtedness of the Company. At September 30, 1997,
                          after giving effect to the redemption of the 11%
                   First Mortgage Notes, the Company and its
                        subsidiaries would have had outstanding senior
                             indebtedness (including the Notes) of approximately
$173.8 million.       

Guarantees.................  The New Notes will be unconditionally guaranteed by
                             all existing and future Restricted Subsidiaries (as
                           defined) of the Company, which will not initially
                      include Riviera Black Hawk, Inc., a Colorado
                          corporation that owns the Black Hawk Land and is
                       expected to hold any required Colorado gaming
                        licenses ("Black Hawk Operating Company"). See
                            "Description of Notes -- Security." The Subsidiary
                          Guarantees will be senior secured obligations of
                         the respective Restricted Subsidiaries and will
                           rank pari passu in right of payment to all senior
                         indebtedness of the Restricted Subsidiaries. At
                          September 30, 1997, Black Hawk Operating Company
                          had assets of approximately $15.5 million, which
                        represents the cost of the Black Hawk Land (as
                     defined), and no liabilities or operations.
                         Therefore, separate financial statements of the
                             Guarantors have therefore not been included in this
Prospectus.           

Security...................  The New Notes and the Subsidiary Guarantees will be
                        secured by a first priority security interest,
                     subject to Permitted Liens, in the land and
                            improvements comprising the Riviera (provided that
                        up to six undeveloped acres of the land may be
                          released from the mortgage for purpose of future
                           developments), furnitures, fixtures and equipment
                        (excluding Gaming Equipment), contract rights,
                         trademarks, and certain other personal property
                            (excluding inventory and accounts receivable) and,
                           subject to required approvals, a pledge of all of
                           the capital stock of the Restricted Subsidiaries.
                 See "Description of Notes -- Security."

Optional Redemption........  The New Notes will be redeemable at the option of  
                       the Company, in whole or in part, on or after
                             August 15, 2001, at the redemption prices set forth
                           herein, plus accrued and unpaid interest, if any,
to the date of        

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                         redemption. The Company will have the option to
                         redeem the New Notes at any time to maintain or
                          obtain any Gaming License (as defined) under any
                             applicable Gaming Law (as defined). Notwithstanding
                         the foregoing, at any time or from time to time
                             prior to August 15, 2000, the Company may redeem up
                           to one-third of the aggregate principal amount of
                         the New Notes originally issued at a redemption
                             price equal to 110% of the principal amount thereof
                          plus accrued and unpaid interest, if any, to the
                        date of redemption with the net proceeds of an
                           offering of common stock of the Company, provided
                       that at least $116.7 million of the aggregate
                  principal amount of the New Notes remain
                 outstanding immediately thereafter. See
                        "Description of Notes -- Optional Redemption."

Mandatory Redemption.......  None.                                              

Change of Control..........  Upon the occurrence of a Change of Control (except 
                         as a result of the Merger), the Company will be
                    required to offer to repurchase all of the
                        outstanding New Notes at 101% of the principal
                          amount thereof, together with accrued and unpaid
                          interest, if any, to the date of repurchase. See
                           "Description of Notes -- Repurchase at the Option
of Holders."          

Certain Covenants..........  The Indenture relating to the New Notes contains   
                            certain covenants, including covenants which limit
                       the ability of the Company and its Restricted
                          Subsidiaries, subject to certain exceptions, to:
                     (i) incur additional indebtedness and issue
                      preferred stock; (ii) pay dividends or other
                          distributions, repurchase capital stock or other
                        equity interests or subordinated indebtedness;
                    (iii) enter into certain transactions with
                         affiliates; (iv) create certain liens; (v) sell
                             certain assets; and (vi) enter into certain mergers
                          and consolidations. See "Description of Notes --
Certain Covenants."   

For a more detailed discussion of the terms of the New Notes, see     
"Description of Notes."                                                         

RISK FACTORS

    Holders of Existing Notes should carefully consider all of the information
set forth in this Prospectus and, in particular, should evaluate the specific   
factors under "Risk Factors" beginning on page 9 in connection with the Exchange
Offer.                                                                          

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SUMMARY FINANCIAL AND OPERATING DATA

 The summary historical financial data set forth below have been derived
from the audited financial statements of the Company and, prior to the Company's
emergence from bankruptcy in June 1993, the Hotel and Casino Division of        
Riviera, Inc., the Company's predecessor, for the fiscal year ended December 31,
1992, each of the three fiscal years in the period ended December 31, 1996 and  
the fiscal years ended June 30, 1993 and December 31, 1993. The results for the 
three months and nine months ended September 30, 1996 and 1997 and as of        
September 30, 1997 are derived from the unaudited financial statements and notes
thereto of the Company and, in the opinion of management, reflect all           
adjustments, consisting of only normal recurring adjustments, necessary to      
present fairly information set forth therein. The results for the three months  
and nine months ended September 30, 1996 and 1997 are not necessarily indicative
of the results expected for any other interim period or for the full year. The  
following information should be read in conjunction with "Management's          
Discussion and Analysis of Financial Condition and Results of Operations" and   
the financial statements and notes thereto included elsewhere in this           
Prospectus.                                                                     

                                                        [Enlarge/Download Table]

                                                      SIX MONTHS ENDED       YEAR ENDED                                    
                                   YEAR ENDED    --------------------------   DEC. 31,        YEARS ENDED DECEMBER 31,     
                                    DEC. 31,       JUNE 30,      DEC. 31,       1993      -------------------------------- 
                                      1992           1993          1993       COMBINED      1994        1995        1996   
                                  -------------  -------------  -----------  ----------   --------    --------    -------- 
                                  (PREDECESSOR)  (PREDECESSOR)  (SUCCESSOR)                                                
                                                       (DOLLARS IN THOUSANDS, EXCEPT OPERATING DATA)                       
                                                                                                                           
INCOME STATEMENT DATA:                                                                                                     

 Net revenues....................   $ 144,502       $72,702       $76,221     $148,923    $153,921    $151,145    $164,409 

 Income(loss) from operations....     (76,608)(1)      8,260        8,767       17,027      19,919      20,980      23,281 

 Net income (loss)...............     (80,905)(1)      5,628        2,607        8,235       4,790       6,344       8,440 

OTHER DATA:                                                                                                                

 EBITDA(2).......................   $  21,843       $10,882       $11,166     $ 22,048    $ 25,593    $ 27,791    $ 31,493 

 EBITDA margin...................        15.1%         15.0%         14.6%        14.8%       16.6%       18.4%       19.2%

 Cash flows from operating                                                                                                 
   activities....................   $  13,130       $ 8,517       $   766     $  9,283    $ 16,372    $ 16,740    $ 18,290 

 Cash flows used in investing                                                                                              
   activities....................      (2,073)       (1,478)       (4,307)      (5,785)    (10,439)     (8,218)    (13,017)

 Cash flows provided by (used in)                                                                                          
   financing activities..........        (729)       (2,311)       (4,658)      (6,969)     (2,696)     (2,983)     (1,488)

 Depreciation & amortization.....      13,230         2,622         2,399        5,021       5,674       6,811       8,212 

 Ratio of earnings to fixed                                                                                                
   charges.......................        --(3)         2.99x(3)      1.41x        1.89x       1.60x       1.78x       2.06x

 Capital expenditures............   $   2,477       $ 1,478       $ 4,307     $  5,785    $  8,933    $  7,836    $ 14,923 

OPERATING DATA:                                                                                                            

 Average occupancy rate(4).......        90.6%         92.4%         95.0%        93.7%       97.5%       97.0%       98.2%

 Average daily room rate(ADR)....   $   47.00       $ 51.63       $ 49.33     $  50.42    $  47.51    $  54.69    $  57.09 

 Number of slot machines(5)......       1,218         1,218         1,207        1,207       1,203       1,226       1,312 

 Number of gaming tables(5)......          74            70            70           70          56          56          55 



                                                           THREE MONTHS ENDED                                              
                                    NINE MONTHS ENDED                                                                      
                                      SEPTEMBER 30,          SEPTEMBER 30,                                                 
                                   --------------------    ------------------                                              
                                     1996        1997       1996       1997                                                
                                   --------    --------    -------    -------                                              

                                  <C                                                                                       
INCOME STATEMENT DATA:                                                                                                     
 Net revenues....................  $124,205    $116,485    $40,931    $36,383                                              
 Income(loss) from operations....    17,364      13,515      4,838      2,660                                              
 Net income (loss)...............     6,034       2,016      1,417       (988)                                             
OTHER DATA:                                                                                                                
 EBITDA(2).......................  $ 23,323    $ 21,215    $ 6,935    $ 5,349                                              
 EBITDA margin...................      18.8%       18.2%      16.9%      14.7%                                             
 Cash flows from operating                                                                                                 
   activities....................  $ 15,453    $ 14,224    $ 7,419    $ 5,789                                              
 Cash flows used in investing                                                                                              
   activities....................    (6,811)    (34,752)    (4,250)   (26,767)                                             
 Cash flows provided by (used in)                                                                                          
   financing activities..........    (1,618)     57,188       (267)   (57,670)                                             
 Depreciation & amortization.....     5,959       7,700      2,097      2,690                                              
 Ratio of earnings to fixed                                                                                                
   charges.......................      1.99x       1.27x      1.69x      0.71x                                             
 Capital expenditures............  $  9,502    $ 11,379    $ 4,242    $ 4,494                                              
OPERATING DATA:                                                                                                            
 Average occupancy rate(4).......      99.0%       98.3%      99.0%      98.4%                                             
 Average daily room rate(ADR)....  $  55.73    $  56.19    $ 49.14    $ 49.95                                              
 Number of slot machines(5)......     1,312       1,308      1,312      1,308                                              
 Number of gaming tables(5)......        55          52         55         52                                              

                                                        [Enlarge/Download Table]

                                                                      AS OF DECEMBER 31,                            AS OF     
                                                 -------------------------------------------------------------  SEPTEMBER 30, 
                                                     1992           1993         1994       1995        1996         1997     
                                                 -------------   -----------   --------   --------    --------  --------------
                                                 (PREDECESSOR)   (SUCCESSOR)                                                  
                                                                                                                              
BALANCE SHEET DATA:                                                                                                           
Cash and cash equivalents.......................   $  16,659      $  13,188    $ 16,423   $ 21,962    $ 25,747     $ 62,407(6)
Total assets....................................     145,631        143,704     151,925    157,931     167,665      341,895   
Long term debt, including current portion.......     133,255        112,677     110,489    107,822     105,878      273,809(7)
Stockholders' equity............................    (114,358)        15,148      19,938     26,282      35,251       37,599   

---------------                                                                 

(1) Includes a recognized loss on the permanent impairment of assets during the 
  bankruptcy in the amount of $85,200 to record the fair market value of the
property and equipment.                                                 

(2) EBITDA consists of earnings before interest, income taxes, depreciation and 
amortization. While EBITDA should not be construed as a substitute for  
operating income or a better indicator of liquidity than cash flow from 
operating activities, which are determined in accordance with generally 
accepted accounting principles("GAAP"), it is included herein to provide
 additional information with respect to the ability of the Company to meet
its future debt service, capital expenditure and working capital        
   requirements. Although EBITDA is not necessarily a measure of the Company's
  ability to fund its cash needs, management believes that certain investors
   find EBITDA to be a useful tool for measuring the ability of the Company to
service its debt.                                                       

(3) The ratio for fiscal 1992 has been omitted because earnings were not        
sufficient to cover fixed charges. The coverage deficiency was $80,905  
  ($101,882 if interest was not stayed). If interest would have been accrued
   on the pre-bankruptcy or other unsecured debt for the six months ended June
30, 1993 earnings would have been inadequate to cover fixed charges by  
    $1,937. For the purpose of computing the ratio of earnings to fixed charges,
    "earnings" consist of income before fixed charges and income taxes, adjusted
to exclude interest capitalized, and "fixed charges" consist of interest
cost, amortizations of debt expense, amortization of bond discount and  
capitalized interest.                                                   

(4) Based on available rooms.                                                   

(5) Number of licensed slot machines and gaming tables at period end.           

(6) Includes $20,000 designated for the development of Nickel Plaza and the     
expansion of the convention center. See "Use of Proceeds."              

(7) Includes the 11% First Mortgage Notes to be retired by U.S. treasury bills  
as of September 30, 1997.                                               

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RISK FACTORS

     Holders of Existing Notes should give careful consideration to the specific
factors set forth below and the other information set forth herein in connection
with the Exchange Offer. The Risk Factors set forth below are generally         
applicable to the New Notes as well as the Existing Notes.                      

SIGNIFICANT LEVERAGE; ABILITY TO SERVICE DEBT                                   

     The Company is highly leveraged. At September 30, 1997, after giving effect
to the redemption of the 11% First Mortgage Notes, the Company's debt would have
been $173.8 million. See "Description of Certain Indebtedness."                 

    The Company's high degree of leverage could have important consequences to
the Holders, including, without limitation: (i) a substantial portion of the    
Company's cash flow from operations will be dedicated to servicing its debt;    
(ii) the covenants contained in the Company's debt documents impose certain     
restrictions on the Company which, among other things, will limit its ability to
borrow additional funds; (iii) the Company's ability to obtain additional       
financing in the future for working capital, capital expenditures, acquisitions,
general corporate purposes or other purposes may be impaired; and (iv) the      
Company's level of debt may limit the Company's flexibility in reacting to      
changes in its business environment.                                            

The Company is a holding company and its ability to make interest and 
principal payments on its obligations, including the Notes, will depend on the  
future operating performance of its subsidiaries, which will be affected by     
general economic conditions and financial, business and other factors, many of  
which are beyond their control. The ability of the Company's subsidiaries to    
make distributions to the Company is also subject to the gaming laws of Nevada  
(which place limits on the amount of funds that may be transferred to the       
Company and may require prior or subsequent approval for any such payments) and 
other restrictions that may be imposed by gaming authorities on licensed        
enterprises. Furthermore, it is expected that third party financing for the     
Black Hawk Project will restrict the ability of such project to make            
distributions to the Company. See "-- The Black Hawk Project." There can be no  
assurance that the subsidiaries will be able to, or will be permitted to, pay to
the Company amounts necessary to enable the Company to make required principal  
and interest payments on the Notes. If the Company cannot generate sufficient   
cash flow from operations in the future to service its debt, it may be required 
to refinance all or a portion of such debt (including the Notes), sell assets or
obtain additional financing. There can be no assurance that any of these        
financing strategies could be effected on terms satisfactory to the Company.    

FAILURE TO EXCHANGE EXISTING NOTES                                              

The New Notes will be issued in exchange for Existing Notes only after
timely receipt by the Exchange Agent of such Existing Notes, a properly         
completed and duly executed Letter of Transmittal and all other required        
documents. Therefore, holders of Existing Notes desiring to tender such Existing
Notes in exchange for New Notes should allow sufficient time to ensure timely   
delivery. Neither the Exchange Agent nor the Company is under any duty to give  
notification of defects or irregularities with respect to tenders of Existing   
Notes for exchange. Existing Notes that are not tendered or are tendered but not
accepted will, following consummation of the Exchange Offer, continue to be     
subject to the existing restrictions upon transfer thereof. In addition, any    
holder of Existing Notes who tenders in the Exchange Offer for the purpose of   
participating in a distribution of the New Notes will be required to comply with
the registration and prospectus delivery requirements of the Securities Act in  
connection with any resale transaction. Each broker-dealer that receives New    
Notes for its own account in exchange for Existing Notes, where such Existing   
Notes were acquired by such broker-dealer as a result of market-making          
activities or any other trading activities, must acknowledge that it will       
deliver a prospectus in connection with any resale of such New Notes. See "Plan 
of Distribution." To the extent that Existing Notes are tendered and accepted in
the Exchange Offer, the trading market for untendered and tendered but          
unaccepted Existing Notes could be adversely affected. See "The Exchange Offer."

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COMPETITION                                                                     

    Intense competition exists among companies in the gaming industry, many of
which have significantly greater resources than the Company. The Riviera faces  
competition from all other casinos and hotels in the Las Vegas area. Management 
believes that the Riviera's most direct competition comes from certain large    
casino/hotels located on or near the Strip which offer amenities and marketing  
programs similar to those offered by the Riviera.                               

  Las Vegas gaming square footage and room capacity are continuing to grow
and are expected to continue to increase significantly during the next several  
years. Since January 1, 1996 approximately 4,700 new hotel rooms opened. As of  
December 31, 1996 there were over 9,200 hotel rooms under construction (which   
combined constitutes a 14.7% increase in the number of hotel and motel rooms in 
Las Vegas) and the Las Vegas Convention and Visitors Authority estimates that   
approximately 60,000 additional hotel rooms are proposed for construction.      
Existing and future expansions, additions and enhancements to existing          
properties and construction of new properties by the Company's competitors could
divert additional business from the Company's facilities. There can be no       
assurance that the Company will compete successfully in the Las Vegas market in 
the future.                                                                     

    Compared to the first eight months ended August 31, 1996, during the first
eight months of 1997, available rooms in the Las Vegas market increased by      
11.2%, while total room nights occupied increased by only 6.8%. This has had the
effect of intensifying competition, resulting in declining occupancy and average
room rates throughout the Las Vegas market. Although the Company was able to    
increase its room rates nominally which offset a less than 1% decline in        
occupancy, there is no certainty that the Company can continue to maintain its  
present level of room revenue considering the competitive situation.            

Intense competition also characterizes the Black Hawk/Central City,   
Colorado market. There are approximately 31 casinos currently operating in this 
market in addition to casinos located in Cripple Creek. Several new development 
projects and expansion plans have been announced, including construction of a   
casino by a joint venture between Jacobs Entertainment, Ltd. and the            
owner/operator of Gilpin Hotel Casino and a casino on property adjacent to the  
Black Hawk Land (as defined) by a joint venture between Casino America and      
Nevada Gold. Colorado does not limit the total number of gaming licenses        
available for issuance in Colorado and there are no minimum facility size       
requirements. The Company believes that many Colorado casinos may not be        
operating profitably. A number of Colorado casinos have ceased operations, and  
others have either filed for bankruptcy protection, closed temporarily or       
reduced the number of their employees.                                          

In May 1997, the Colorado Legislature passed a bill mandating the     
installation of a minimum of 500 video lottery terminals at each licensed horse 
and greyhound racetrack then located in Colorado Springs, Pueblo, Byers,        
Loveland, Commerce City and Arapahoe County. The Governor of Colorado vetoed the
bill on June 4, 1997 labeling it as a "back-door expansion of gambling." There  
is no reason, however, to believe that there will not be renewed efforts to pass
similar legislation during the 1998 or subsequent legislative sessions.         

  The Company also competes, to some extent, with casinos in other states,
riverboat and Native American gaming ventures, state-sponsored lotteries, on-   
and off-track wagering, card parlors and other forms of legalized gaming in the 
United States, as well as with gaming on cruise ships and international gaming  
operations. In addition, certain states have recently legalized or are          
considering legalizing casino gaming in specific geographical areas within those
states. Any future development of casinos, lotteries or other forms of gaming in
other states, particularly areas close to Nevada, such as California, could have
a material adverse effect on the Company's results of operations. For a         
discussion of competitive factors affecting the Company's operations, see       
"Business -- Competition."                                                      

    The current business of the Company is entirely dependent on gaming in Las
Vegas. The Riviera derives a substantial percentage of its business from        
tourists, principally from Southern California and the southwestern United      
States. Weakness in the economy of Southern California has in the past and could
in the future adversely affect the financial results of the Company. Until the  
Black Hawk Casino opens, the Company's operations will be primarily dependent   
upon the results of operations achieved by the Riviera on the Las Vegas         

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Strip. Any significant disruption in operations at the Riviera would have a     
material adverse effect on the Company.                                         

UNCERTAINTIES OF FUTURE DEVELOPMENTS                                            

 While the Company intends to expand its business by managing additional
gaming properties and acquiring and developing new gaming properties, there is  
no assurance that it will be able to do so or that such projects will become    
operational within the time frames and budgets contemplated by management.      
Construction projects, such as the proposed Nickel Plaza project and convention 
center expansion at the Riviera and the Black Hawk Project, entail significant  
development and construction risks, including, but not limited to, cost         
overruns, delay in receipt of governmental approvals, shortages of materials or 
skilled labor, unforeseen engineering or environmental problems, work stoppages,
weather interference, unanticipated cost increases and regulatory problems, any 
of which, if they occurred, could delay construction or result in substantial   
cost increases to the Company. Budget overruns and delays with respect to       
expansion and development projects could have a material adverse impact on the  
Company's results of operations. In addition, with respect to the convention    
center project, the Company does not have final construction contracts. Further,
to the extent that the Company is successful in its expansion strategy, it will 
face the inherent risks associated with managing an increased number of         
properties. The necessity of key employees to focus their attention on various  
planned expansion projects may reduce the amount of time they can devote to core
operations of the Company.                                                      

THE BLACK HAWK PROJECT                                                          

Limitation on Distribution. The Company currently estimates that total
costs for completion of the Black Hawk Project will be approximately $60        
million, a $5 million increase over previous estimates resulting from the       
announcement of additional projects by competitors. The Company purchased the   
Black Hawk Land in August 1997 for $15 million, which was financed by the net   
proceeds from the sale of the Existing Notes, and expects to finance the        
remainder of the Black Hawk Project from a combination of third party financing 
and additional investment by the Company, including up to an additional $15     
million of the net proceeds from the sale of the Existing Notes. There is no    
assurance that such third party financing will be obtained on terms satisfactory
to the Company. In addition, such financing, if and when obtained, will likely  
be subject to various conditions, including restrictions on Black Hawk Operating
Company's ability to make distributions to the Company out of cash flow from the
operations at Black Hawk (which are expected to commence in mid-1999), other    
covenant restrictions, and approval by relevant gaming authorities. The Company 
expects that the amount of cash flow available for distributions to it from its 
operations in Black Hawk, which are expected to commence in mid-1999, will be   
limited until any project financing is repaid in its entirety.                  

    Completion of the Black Hawk Project. Completion of the Black Hawk Project
is subject to obtaining bonded fixed price construction and completion          
contracts, obtaining regulatory approvals for the Black Hawk Project and        
obtaining adequate third party financing for the Black Hawk Project. The Company
expects to receive the necessary excavation and other permits in the near       
future, with construction of the casino commencing shortly thereafter. However, 
There can be no assurance that these conditions to the Black Hawk Project can be
met or satisfied on terms satisfactory to the Company.                          

 Licensing Requirements. The Black Hawk Project will be contingent upon,
among other things, the Company's Colorado subsidiary's receipt of all required 
licenses, permits and authorizations under Colorado law. The scope of the       
approvals required for a project of this nature is extensive, including, without
limitation, state and local land-use permits, building and zoning permits,      
health and safety permits and gaming and liquor licenses. There can be no       
assurance that the Company's Colorado subsidiary will receive the necessary     
permits, licenses and approvals for the Black Hawk Project, or that such        
permits, licenses and approvals will be obtained within the anticipated time    
frame. Unexpected changes or concessions required by local, state or federal    
regulatory authorities could involve significant additional costs and delay or  
prevent the scheduled openings of the facilities.                               

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 Access to Black Hawk/Central City. The cities of Black Hawk and Central
City (adjacent to each other) are located in the Colorado Rocky Mountains and   
are serviced by winding mountain roads that require extremely cautious driving, 
particularly in bad weather. These roads have tunnels that are subject to       
closure. Congestion on the roads leading to Black Hawk and Central City is not  
uncommon during the peak summer season, holidays and other times of year and may
discourage potential customers from traveling to the casinos. In addition,      
concerns about the overall availability of convenient parking in Black Hawk and 
Central City may discourage some potential customers. Further, Black Hawk and   
Central City have experienced unanticipated demands for their municipal systems,
including water and sewage treatment facilities. Increased levels of activity in
the area may exacerbate old or pose new municipal and environmental problems,   
the costs of which could be borne by the gaming industry generally and in part  
by the Company specifically.                                                    

   Environmental Considerations. The Black Hawk Project site is located in a
400-square mile area that was designated in 1983 by the United States           
Environmental Protection Agency (the "EPA") as a National Priorities List area  
under the Comprehensive Environmental Response, Compensation and Liability Act, 
as a result of hazardous substance contamination in the soil, groundwater and   
surface water caused by historical mining activity in the area. Within this     
broad area, EPA has identified several areas of contamination from historical   
mining activity, including draining mines and mine dumps, as the Clear          
Creek/Central City Superfund Site. The EPA can require owners or operators of   
property to remediate hazardous substance contamination or to reimburse costs   
incurred by the government in connection with such remediation. Although several
remedial actions have occurred on property in the vicinity of the parcels on    
which the Black Hawk Project will be built, EPA has not identified contamination
on or from the Black Hawk Project site which requires remediation, and does not 
consider the Black Hawk Project to be part of the Clear Creek/Central City      
Superfund Site. Nevertheless, there can be no assurance that EPA or the State of
Colorado might not require remediation for contaminated soil uncovered during   
excavation or construction, or for contaminated groundwater on the property or  
elsewhere in the area, which sampling has disclosed. In addition, the handling  
of contaminated soil and groundwater can increase construction costs            
significantly.                                                                  

DEPENDENCE ON KEY PERSONNEL                                                     

   The ability of the Company to operate successfully is dependent, in part,
upon the continued services of certain of its executive personnel. The loss of  
one or more of such executive officers, the inability to attract or retain key  
employees in the future could have a material adverse effect on the Company. In 
addition, the necessity of key employees to focus their attention on various    
planned expansion projects may reduce the amount of time they can devote to core
operations of the Company. The Company has an employment agreement only with Mr.
William L. Westerman, the Chairman of the Board, President, and Chief Executive 
Officer of the Company. The term of Mr. Westerman's employment agreement with   
the Company is scheduled to expire on December 31, 1998. However, it will       
automatically be extended unless the Company gives three months notice or Mr.   
Westerman gives six months notice to terminate. Mr. Westerman's contract is also
subject to earlier termination upon occurrence of certain events. See           
"Management -- Employment Agreements." There can be no assurance that a suitable
replacement for Mr. Westerman could be found in the event of a termination of   
his employment. A shortage of skilled management-level employees currently      
exists in the gaming industry which may make it difficult and expensive to      
attract and retain qualified employees.                                         

REGULATION                                                                      

     The Company's business is subject to comprehensive and stringent government
regulation. In addition, there have been in the past and are currently a number 
of regulatory and tax proposals which could adversely affect the gaming industry
and the Company. See "Business -- Regulation and Licensing."                    

 The Company's gaming operations, and the ownership of securities in the
Company, are subject to extensive regulation by the Nevada Gaming Authorities   
(as defined). The Nevada Gaming Authorities have broad authority with respect to
licensing and registration of entities and individuals involved in gaming       
operations, including certain holders of the Company's outstanding voting       
securities. The Nevada Gaming Authorities may, among other things, revoke the   
license of any entity licensed as a gaming corporation or the                   

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registration of any entity registered as a holding company of a gaming          
corporation, and they may also revoke the license of any individual licensed as 
an officer, director, control person or stockholder of a licensed or registered 
entity. If the gaming licenses of the Company were revoked for any reason, the  
Nevada Gaming Authorities could require the closing of the Riviera which would  
result in a material adverse effect on the business of the Company.             

     In addition, any future public offering of debt or equity securities by the
Company, including the Exchange Offer and any offering the securities or        
proceeds of which are intended to be used to pay for construction of, or to     
acquire an interest in, any gaming facilities in Nevada, to finance the gaming  
operations of an affiliated company or to retire or extend obligations incurred 
for any such purposes, requires the prior approval of the Nevada Gaming         
Commission (the "Nevada Commission") upon the recommendation of the Nevada State
Gaming Control Board (the "Nevada Board"). The Nevada Commission approved the   
Exchange Offer on November 20, 1997.                                            

Each holder of the Notes shall be deemed to have agreed (to the extent
permitted by law) that if a relevant gaming authority determines that a holder  
or beneficial owner of Notes must be found suitable under applicable law        
(whether as a result of a foreclosure of the Company's casino or for any other  
reason), and if such holder or beneficial owner is not found suitable, such     
holder shall, upon the request of the Company, dispose of such holder's Notes   
within 30 days after receipt of such request or such earlier date as may be     
ordered by the relevant gaming authority. The Company also will have the right  
to call for the redemption of Notes held by any holder who is not found suitable
at a price equal to 100% of the principal amount thereof, plus accrued and      
unpaid interest and liquidated damages, if any, thereon to the date of          
redemption or such earlier date as may be required by the relevant gaming       
authority or applicable law. Although the Existing Notes are currently listed   
for trading on the PORTAL markets, the New Notes will be new securities for     
which there will be no established market and the price at which a holder of New
Notes may be required to dispose of such holder's New Notes cannot be predicted.
See " -- Absence of Public Trading Market," "Business -- Regulation and         
Licensing" and "Description of Notes -- Optional Redemption."                   

   On August 3, 1996, President Clinton signed a bill creating a nine-member
National Gambling Impact Study Commission to study the economic and social      
impact of gaming and report its findings to Congress and the President within   
two years after the first meeting of the commission. The commission could       
recommend changes in state or federal gaming policies. The President, House     
Speaker and Senate Majority Leader have each selected three of the commission's 
members and the commission held its first meeting in June 1997. Additional      
federal regulation of the gaming industry could occur as a result of            
investigations or hearings by the committee, which could have a material adverse
effect on the Company.                                                          

  The Company's plan to manage additional gaming properties and to acquire
and develop new gaming properties, including the Black Hawk Project, will       
require many permits, licenses and approvals. These could include, without      
limitation, gaming approvals, liquor licenses, state and local land-use permits,
governmental easement and flood plain requirements, building and zoning permits,
set back, access and building height waivers or approvals, and architectural    
(historic district) restrictions. Unexpected changes or concessions required by 
local, state or federal regulatory authorities could involve significant        
additional costs and delay or prevent the scheduled openings of the facilities. 

ABILITY TO REALIZE ON COLLATERAL                                                

     The New Notes are secured by a first priority security interest, subject to
Permitted Liens and certain exclusions, in the land and improvements comprising 
the Riviera, furniture, fixtures and equipment (excluding Gaming Equipment),    
contract rights, trademarks and certain other personal property (excluding      
inventory and accounts receivable) and a pledge of all of the capital stock of  
the Restricted Subsidiaries. There can be no assurance that, if an Event of     
Default (as defined) occurs with respect to the Notes and the indebtedness      
evidenced by the Notes is accelerated and the Company fails to make the required
payments, the liquidation of the collateral will produce proceeds in an amount  
sufficient to pay the principal of or accrued and unpaid interest, if any, or   
any other sums due and payable, on the New Notes.                               

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The pledge of the stock of a corporation which holds a gaming license 
issued by the Nevada Commission (a "Corporate Licensee"), such as ROC or RGME,  
or of a corporation which is registered as an intermediary company (an          
"Intermediary Company"), such as ROC or RGM, is void without the prior approval 
of the Nevada Commission. The Nevada Commission approved the pledge of stock of 
ROC, RGM and RGME on November 20, 1997. An approval to pledge the stock of a    
Corporate Licensee or Intermediary Company does not constitute approval to      
foreclose on such pledge. Separate approval is required to foreclose on a pledge
of stock of a Corporate Licensee or Intermediary Company and such approval      
requires the licensing of the indenture trustee unless such requirement is      
waived upon the application of the indenture trustee. In addition, restrictions 
on the transfer of equity securities issued by a Corporate Licensee or          
Intermediary Company, and agreements not to encumber such securities, are       
ineffective unless approved in advance by the Nevada Commission upon the        
recommendation of the Nevada Board. Such restrictions and agreements in respect 
of the Notes were approved by the Nevada Commission on November 20, 1997.       

  In the event of a foreclosure of the mortgage on the land located at the
Riviera, the purchaser or operator of the facility would be required to be      
licensed to operate the facility under Nevada gaming laws and regulations       
promulgated thereunder, and if the Trustee purchases the Riviera at a           
foreclosure sale and thereafter is unable or chooses not to sell that part of   
Riviera constituting the casino, the Trustee would be required to retain an     
entity licensed under the Nevada gaming laws in order to conduct gaming         
operations in the facility and the holders of the Notes may be required to be   
investigated and licensed or found suitable. Because potential bidders who wish 
to operate the facility as a casino must satisfy such requirements, the number  
of potential bidders in a foreclosure sale could be less than in foreclosure of 
other types of facilities, and such requirements may delay the sale of, and may 
adversely affect the sales price obtained for, the casinos. The ability to take 
possession and dispose of the collateral securing the Notes upon acceleration is
likely to be significantly impaired or delayed by applicable bankruptcy law if a
bankruptcy were to be commenced by or against the entity which owns such        
collateral prior to the Trustee's taking of possession or disposition of the    
collateral securing the Notes. See "Regulation."                                

SUBSIDIARY GUARANTEES                                                           

  The New Notes are guaranteed on a senior secured basis by the Guarantors
(as defined). Enforcement of the Subsidiary Guarantees against any existing or  
future Guarantors would be subject to certain defenses available to guarantors  
generally, and would also be subject to certain defenses available to the       
Company regarding enforcement of the Notes, including, without limitation, the  
right to force the Trustee to exercise its remedies under the Collateral        
Documents prior to commencement of any action on the Subsidiary Guarantees. The 
Guarantors have waived all such defenses to the extent they may legally do so.  
Black Hawk Operating Company will not initially be a Guarantor of the Notes. See
"Description of Notes -- Security." At September 30, 1997 Black Hawk Operating  
Company had assets of approximately $15.5 million, which represents the cost of 
the Black Hawk Land, and no liabilities or operations. Therefore, separate      
financial statements of the Guarantors have not been included in this           
Prospectus.                                                                     

FRAUDULENT TRANSFER CONSIDERATIONS                                              

   The ability of the holders of the New Notes or the Trustee to enforce the
Subsidiary Guarantees or realize on the collateral may be limited by certain    
fraudulent conveyance laws. Various fraudulent conveyance and avoidance laws    
have been enacted for the protection of creditors and may be utilized by a court
of competent jurisdiction to avoid the security interest in the collateral      
granted to the Trustee by the Company or any Guarantor (as defined herein), or  
to subordinate the obligations of the Company under the Notes or the Subsidiary 
Guarantees of any Guarantor. The requirements for establishing a fraudulent     
conveyance or avoidance transfer vary depending on the law of the jurisdiction  
which is being applied. Generally, if under federal and certain state statutes  
in a bankruptcy, reorganization, rehabilitation or similar proceeding in respect
of the Company or a Guarantor, or in a lawsuit by or on behalf of creditors     
against the Company or a Guarantor, a court were to find that (i) the Company or
a Guarantor, as the case may be, incurred indebtedness in connection with the   
Notes (including the Subsidiary Guarantees) or granted security interests in the
collateral with the intent of hindering, delaying or defrauding current or      
future creditors of the Company or the Guarantor, as the case may be, or (ii)   
the Company or a Guarantor, as the case may be, received less than reasonably   
equivalent value or fair consideration for incurring the indebtedness in        
connection with the                                                             

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Notes (including the Subsidiary Guarantees) or for granting security interests  
in the collateral and the Company or such Guarantor, as the case may be, (a) was
insolvent at the time of the incurrence of the indebtedness in connection with  
the Notes (including the Subsidiary Guarantees) or the granting of security     
interests in the collateral, (b) was rendered insolvent by reason of incurring  
the indebtedness in connection with the Notes (including the Subsidiary         
Guarantees) or the granting of security interests in the collateral, (c) was    
engaged or about to engage in a business or transaction for which its assets    
constituted unreasonably small capital or (d) intended to incur, or believed    
that it would incur, debts beyond its ability to pay such debts as they matured 
(as all of the foregoing terms are defined in or interpreted under the          
applicable fraudulent conveyance or revocatory statutes), such court could,     
subject to applicable statutes of limitation, with respect to the Company, or   
the Guarantor, as the case may be, avoid in whole or in part the obligations of 
the Company or such Guarantor in connection with the Notes (including the       
Subsidiary Guarantees) or the security interests granted in the collateral      
and/or subordinate claims with respect to the Notes (including Subsidiary       
Guarantees) to some or all other debts of the Company or the Guarantors, as     
applicable. There can be no assurance that there would be sufficient amounts to 
pay the New Notes and the Subsidiary Guarantees together with all other debts of
the Company or such Guarantors, as applicable, if such security interests in the
collateral were avoided. Similarly, if the obligations of the Company or the    
Guarantors or the security interests securing them were subordinated, there can 
be no assurance that after payment of the other debts of the Company or the     
Guarantors, there would be sufficient assets to pay such subordinated claims    
with respect to the Notes and the Subsidiary Guarantees.                        

The measures of insolvency for purposes of the foregoing will vary    
depending upon the law of the jurisdiction which is being applied in any such   
proceeding. Generally, however, an entity will be considered insolvent if the   
sum of its respective debts was greater than the fair saleable value of all of  
its property at a fair valuation or if the present fair saleable value of its   
assets is less than the amount that will be required to pay its probable        
liability on its existing debts, as they become absolute and matured.           

If certain bankruptcy or insolvency proceedings were initiated by or  
against the Company or any Guarantor within 90 days (or, possibly, one year)    
after any payment by the Company or such Guarantor with respect to the Notes or 
a Subsidiary Guarantee, respectively, or if the Company or such Guarantor       
anticipated becoming insolvent, all or a portion of such payment could be       
avoided as a preferential transfer under federal bankruptcy or applicable state 
insolvency law, and the recipient of such payment could be required to return   
such payment. In addition, the timing of any pledges of the capital stock of    
certain of the Company's future subsidiaries may result in treatment of such    
pledges as preferential transfers under applicable bankruptcy or state          
insolvency law and, if so treated, could be set aside by a court.               

ABSENCE OF PUBLIC TRADING MARKET                                                

     The Existing Notes are currently eligible for trading in the PORTAL market.
The New Notes are a new issue of securities for which there is currently no     
established trading market. The Company does not intend to list the New Notes on
any national securities exchange or to seek the admission thereof to trading in 
the National Association of Securities Dealer Automated Quotation System. The   
Initial Purchasers have advised the Company that they currently intend to make a
market in the New Notes. However, the Initial Purchasers are not obligated to do
so and any market making may be discontinued at any time without notice. There  
can be no assurance as to the development of any market or the liquidity of any 
market that may develop for the New Notes.                                      

CONTROL BY A SINGLE STOCKHOLDER                                                 

   If the Merger occurs, Mr. Allen E. Paulson will indirectly own all of the
outstanding capital stock of the Company. As the beneficial owner of 100% of the
outstanding shares of Common Stock, Mr. Paulson would control all of the voting 
power of the Company and would be able to exercise significant influence over   
the affairs of the Company. There can be no assurance that the Merger will be   
consummated. See "The Proposed Merger."                                         

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USE OF PROCEEDS 

The Company will not receive any proceeds from the Exchange Offer. The
proceeds to the Company from the sale of the Existing Notes, after deducting    
selling commissions and net related fees and expenses, were approximately $172.8
million, of which the Company has used approximately $109.8 million to defease  
the 11% First Mortgage Notes, approximately $4.5 million to repay the Unsecured 
Note and approximately $7.0 million to pay fees and expenses relating to the    
foregoing and the sale of the Existing Notes. In addition, the Company has used 
$15 million of the net proceeds to acquire the Black Hawk Land. The Company     
intends to use the remaining net proceeds to fund the development of the Nickel 
Plaza and the expansion of the convention center, and, if necessary, to provide 
additional financing for the Black Hawk Project. To the extent that the         
additional proceeds are not used for the development of the Black Hawk Project, 
the unused proceeds will be used for the Company's general business purposes.   
Pending use in the Company's business, the net proceeds from the sale of the    
Existing Notes have been invested in investment grade, short-term interest      
bearing securities or money market funds, and the New Notes will have a security
interest in such proceeds. See "Business -- Growth Opportunities -- The Black   
Hawk Project."                                                                  

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CAPITALIZATION

     The following table sets forth at September 30, 1997 (i) the capitalization
of the Company and (ii) the capitalization of the Company as adjusted to give   
effect to the redemption of the 11% First Mortgage Notes. This table should be  
read in conjunction with the consolidated financial statements of the Company   
and the related notes thereto, which are included elsewhere in this Prospectus. 

                                                        [Enlarge/Download Table]

                                                               SEPTEMBER 30, 1997     
                                                            ------------------------  
                                                            HISTORICAL   AS ADJUSTED  
                                                            --------     -----------  
                                                             (DOLLARS IN THOUSANDS)   
                                                                                      
Cash and cash equivalents.................................. $ 62,407      $  62,407(1)
                                                            ========      =========   
Short term debt, including current portion of long term                               
  debt(4).................................................. $    356      $     356   
                                                            ========      =========   
Long term debt, less current portion:                                                 
  Revolving Credit Facility(2)............................. $     --      $      --   
  11% First Mortgage Notes(3)..............................  100,000             --   
  10% First Mortgage Notes due 2004........................  172,848        172,848   
  Capitalized lease obligations and other indebtedness.....      605            605   
                                                            --------      ---------   
          Total long term debt, less current portion.......  273,453        173,453   
Stockholders' equity(4)....................................   37,599         34,796   
                                                            --------      ---------   
          Total capitalization............................. $311,052      $ 208,249   
                                                            ========      =========   

---------------                                                                 

(1) Includes $20.0 million designated for the development of Nickel Plaza and   
   expansion of the convention center. See "Business -- Growth Opportunities."

(2) The Company maintains a $15.0 million unsecured Revolving Credit Facility.  
See "Description of Certain Indebtedness." The Revolving Credit Facility
bears interest at prime plus 0.5% or LIBOR plus 2.9%. No amounts were   
   outstanding under the Revolving Credit Facility at September 30, 1997. As a
result of the sale of the Existing Notes, the Company does not meet the 
  conditions for borrowing availability and will not be able to borrow under
the facility unless its terms are renegotiated.                         

(3) On August 13, 1997, the Company defeased the 11% First Mortgage Notes. The  
  funds required to defease the 11% First Mortgage Notes were deposited into
an account with the trustee for the 11% First Mortgage Notes and will be
    held until June 1, 1998 upon which date the 11% First Mortgage Notes will be
 redeemed by the trustee at 104.3125% of the outstanding principal amount.

(4) Stockholders' equity is adjusted to reflect the extraordinary charges that  
will be recorded by the Company upon the redemption of the 11% First    
Mortgage Notes.                                                         

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SELECTED HISTORICAL FINANCIAL AND OPERATING DATA

  The selected income statement data and balance sheet data as of December
31, 1992, 1993, 1994, 1995 and 1996 and for the year ended December 31, 1992,   
the nine months ended September 30, 1993 and December 31, 1993 and the years    
ended December 31, 1994, 1995 and 1996 have been derived from the audited       
financial statements of the Company and, prior to the Company's emergence from  
bankruptcy in June 1993, the Hotel and Casino Division of Riviera, Inc., the    
Company's predecessor. The results for and as of the three months and nine      
months ended September 30, 1996 and 1997 are derived from the unaudited         
financial statements and notes thereto of the Company and, in the opinion of    
management, reflect all adjustments, consisting only of normal recurring        
adjustments, necessary to present fairly information set forth therein. The     
results for the three months and nine months ended September 30, 1996 and 1997  
are not necessarily indicative of the results expected for any other interim    
period or for the full year. The following information should be read in        
conjunction with "Management's Discussion and Analysis of Financial Condition   
and Results of Operations" and the financial statements and notes thereto       
included elsewhere in this Prospectus.                                          

                                                        [Enlarge/Download Table]

                                                           SIX MONTHS ENDED                                                       
                                      YEAR ENDED     -----------------------------                   YEARS ENDED DECEMBER 31,     
                                       DEC. 31,        JUNE 30,        DEC. 31,      COMBINED    -------------------------------- 
                                         1992            1993            1993        1993(1)       1994        1995        1996   
                                     -------------   -------------   -------------   --------    --------    --------    -------- 
                                     (PREDECESSOR)   (PREDECESSOR)    (SUCCESSOR)                                                 
                                                            (DOLLARS IN THOUSANDS, EXCEPT OPERATING DATA)                         
                                                                                                                                  
INCOME STATEMENT DATA:                                                                                                            
  Revenues:                                                                                                                       
    Casino.........................    $  75,975       $  38,073       $  41,158     $79,231     $ 82,060    $ 77,337    $ 80,384 
    Rooms..........................       33,474          17,614          17,808      35,422       35,422      39,848      41,835 
    Food and beverage..............       22,557          11,656          11,760      23,416       22,961      21,895      22,641 
    Entertainment..................       19,046           8,059           8,422      16,481       16,945      14,423      20,883 
    Other..........................        8,369           4,116           4,230       8,346        9,390       9,515      11,293 
                                       ---------       ---------       ---------     --------    --------    --------    -------- 
                                         159,421          79,518          83,378     162,896      166,778     163,018     177,036 
    Less promotional allowances....       14,919           6,816           7,157      13,973       12,857      11,873      12,627 
                                       ---------       ---------       ---------     --------    --------    --------    -------- 
    Net revenues...................      144,502          72,702          76,221     148,923      153,921     151,145     164,409 
                                       ---------       ---------       ---------     --------    --------    --------    -------- 
  COSTS AND EXPENSES:                                                                                                             
    Casino.........................       46,892          24,559          25,533      50,092       48,826      45,325      47,509 
    Rooms..........................       16,233           8,339           8,456      16,795       17,594      18,787      18,834 
    Food and beverage..............       15,592           7,427           7,796      15,223       15,588      15,768      15,916 
    Entertainment..................       15,152           7,051           7,897      14,948       13,982      10,329      15,290 
    Other..........................        3,256           1,737           1,839       3,576        3,516       3,527       3,913 
    Selling, general and                                                                                                          
      administrative...............       25,534          12,707          13,534      26,241       28,822      29,618      31,454 
    Depreciation and                                                                                                              
      amortization.................       13,230           2,622           2,399       5,021        5,674       6,811       8,212 
    Loss on permanent impairment of                                                                                               
      assets(2)....................       85,221              --              --          --           --          --          -- 
                                       ---------       ---------       ---------     --------    --------    --------    -------- 
    Total costs and expenses.......      221,110          64,442          67,454     131,896      134,002     130,165     141,128 
                                       ---------       ---------       ---------     --------    --------    --------    -------- 
  Income (loss) from operations....      (76,608)          8,260           8,767      17,027       19,919      20,980      23,281 
  Interest expense, net(3).........          434           2,632           6,160       8,792       12,254      11,304      10,918 
  Other (income) expense, net......           --              --              --          --           --          --        (505)
  Reorganization items(4)..........       (3,863)             --              --          --           --          --          -- 
  Provision for income taxes.......           --              --              --          --        2,875       3,332       4,428 
                                       ---------       ---------       ---------     --------    --------    --------    -------- 
  Net income (loss)................    $ (80,905)      $   5,628       $   2,607     $ 8,235     $  4,790    $  6,344    $  8,440 
                                       =========       =========       =========     ========    ========    ========    ======== 
OTHER DATA:                                                                                                                       
  EBITDA(5)........................    $  21,843       $  10,882       $  11,166     $22,048     $ 25,593    $ 27,791    $ 31,493 
  EBITDA margin....................         15.1%           15.0%           14.6%       14.8 %       16.6%       18.4%       19.2%
    Cash flows from operating                                                                                                     
      activities...................       13,130           8,517             766       9,283       16,372      16,740      18,290 
  Cash flows used in investing                                                                                                    
    activities.....................       (2,073)         (1,478)         (4,307)     (5,785)     (10,439)     (8,218)    (13,017)
  Cash flows used in financing                                                                                                    
    activities.....................         (729)         (2,311)         (4,658)     (6,969)      (2,696)     (2,983)     (1,488)
  Ratio of earnings to fixed                                                                                                      
    charges(6).....................           --(6)         2.99x(6)        1.41x       1.89 x       1.60x       1.78x       2.06x
  Capital expenditures.............    $   2,477       $   1,478       $   4,307     $ 5,785     $  8,933    $  7,836    $ 14,923 
OPERATING DATA:                                                                                                                   
  Average occupancy rate(7)........         90.6%           92.4%           95.0%       93.7 %       97.5%       97.0%       98.2%
  Average daily room rate (ADR)....    $   47.00       $   51.63       $   49.33     $ 50.42     $  47.51    $  54.69    $  57.09 
  Number of slot machines(8).......        1,218           1,218           1,207       1,207        1,203       1,226       1,312 
  Number of gaming tables(8).......           74              70              70          70           56          56          55 

                                                        [Enlarge/Download Table]

                                                                                     AS OF DECEMBER 31,                         
                                                            --------------------------------------------------------------------
                                                                1992             1993           1994         1995         1996  
                                                            -------------     -----------     --------     --------     --------
                                                            (PREDECESSOR)     (SUCCESSOR)                                       
                                                                                                                                
BALANCE SHEET DATA:                                                                                                             
  Cash and cash equivalents................................   $  16,659        $  13,188      $ 16,423     $ 21,962     $ 25,747
  Total assets.............................................     145,631          143,704       151,925      157,931      167,665
  Long term debt, including current portion................     133,255          112,677       110,489      107,822      105,878
  Stockholders' equity.....................................    (114,358)          15,148        19,938       26,282       35,251

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                                                        [Enlarge/Download Table]

                                                                                  NINE MONTHS                  THREE MONTHS      
                                                                              ENDED SEPTEMBER 30,           ENDED SEPTEMBER 30,  
                                                                             ---------------------         --------------------- 
                                                                               1996         1997             1996         1997   
                                                                             --------     --------         --------     -------- 
                                                                                (DOLLARS IN THOUSANDS, EXCEPT OPERATING DATA)    
                                                                                                                                 
INCOME STATEMENT DATA:                                                                                                           
  Revenues:                                                                                                                      
    Casino.................................................................. $ 61,378     $ 55,123         $ 20,996     $ 16,989 
    Rooms...................................................................   30,869       30,635            9,098        9,211 
    Food and beverage.......................................................   17,228       16,260            5,185        5,012 
    Entertainment...........................................................   16,961       16,233            5,714        5,475 
    Other...................................................................    7,636        7,904            2,884        2,663 
                                                                             --------     --------         --------      ------- 
                                                                              134,072      126,155           43,877       39,350 
    Less promotional allowances.............................................    9,867        9,670            2,946        2,967 
                                                                             --------     --------         --------      ------- 
    Net revenues............................................................  124,205      116,485           40,931       36,383 
                                                                             --------     --------         --------      ------- 
  COSTS AND EXPENSES:                                                                                                            
    Casino..................................................................   36,592       32,809           12,116       10,604 
    Rooms...................................................................   14,155       13,685            4,787        4,516 
    Food and beverage.......................................................   11,924       11,801            3,837        3,798 
    Entertainment...........................................................   12,262       11,752            4,361        4,203 
    Other...................................................................    2,194        2,300              742          827 
    Selling, general and administrative.....................................   23,755       22,923            8,153        7,085 
    Depreciation and amortization...........................................    5,959        7,700            2,097        2,690 
                                                                             --------     --------         --------      ------- 
    Total costs and expenses................................................  106,841      102,970           36,093       33,723 
                                                                             --------     --------         --------      ------- 
  Income from operations....................................................   17,364       13,515            4,838        2,660 
  Interest expense, net(3)..................................................    8,258        9,367               --        3,948 
  Other (income) expense, net...............................................       --        1,070            2,751         (220)
  Provision (benefit) for income taxes......................................    3,072        1,062              670         (520)
                                                                             --------     --------         --------      ------- 
  Net income (loss)......................................................... $  6,034     $  2,016         $  1,417     $   (988)
                                                                             ========     ========         ========      ======= 
OTHER DATA:                                                                                                                      
  EBITDA(5)................................................................. $ 23,323     $ 21,215         $  6,935     $  5,349 
  EBITDA margin.............................................................     18.8%        18.2%            16.9%        14.7%
  Cash flow from operating activities....................................... $ 15,453     $ 14,224         $  7,419     $  5,789 
  Cash flows used in investing activities...................................   (6,811)     (34,752)          (4,250)     (26,767)
  Cash flows provided by (used in) financing activities.....................   (1,618)      57,188             (267)     (57,760)
  Ratio of earnings to fixed charges(6).....................................     1.99x        1.27x            1.69x        0.71x
  Capital expenditures...................................................... $  9,502     $ 11,379         $  4,242     $  4,494 
OPERATING DATA:                                                                                                                  
  Average occupancy rate(7).................................................     99.0%        98.3%            99.0%        98.4%
  Average daily room rate (ADR) ............................................ $  55.73     $  56.19         $  49.14     $  49.95 
  Number of slot machines(8)................................................    1,312        1,308            1,312        1,308 
  Number of gaming tables(8)................................................       55           52               55           52 

                                                        [Enlarge/Download Table]

                                                                                                          AS OF SEPTEMBER 30, 
                                                                                                         ---------------------
                                                                                                           1996         1997  
                                                                                                         --------     --------
                                                                                                                              
BALANCE SHEET DATA:                                                                                                           
  Cash and cash equivalents............................................................................. $ 28,986     $ 62,407
  Total assets..........................................................................................  166,374      341,895
  Long term debt, including current portion(9)..........................................................  108,912      273,809
  Stockholders' equity..................................................................................   32,676       37,599

---------------                                                                 

(1) As the Company emerged from bankruptcy in June 1993, operating results      
    presented for 1993 reflect the combined operating results of the Company and
its predecessor.                                                        

(2) Includes a recognized loss on the permanent impairment of assets during the 
  bankruptcy of the Company's predecessor to record the fair market value of
the property and equipment.                                             

(3) Interest expense is presented net of interest income. 1993 results reflect  
no accrual of interest on debt through June 1993. If accrued, interest  
   expense on these obligations would have totaled $21,400 and $10,400 for the
year ended December 31, 1992 and the six months ended June 30, 1993,    
respectively.                                                           

(4) Represents costs incurred in connection with the bankruptcy of the Company's
predecessor.                                                            

(5) EBITDA consists of earnings before interest, income taxes, depreciation and 
amortization. While EBITDA should not be construed as a substitute for  
operating income or a better indicator of liquidity than cash flow from 
 operating activities, which are determined in accordance with GAAP, it is
included herein to provide additional information with respect to the   
   ability of the Company to meet its future debt service, capital expenditure
and working capital requirements. Although EBITDA is not necessarily a  
    measure of the Company's ability to fund its cash needs, management believes
that certain investors find EBITDA to be a useful tool for measuring the
ability of the Company to service its debt.                             

(6) The ratio for fiscal 1992 has been omitted because earnings were not        
sufficient to cover fixed charges. The coverage deficiency was $80,905  
  ($101,882 if interest was not stayed). If interest would have been accrued
   on the pre-bankruptcy or other unsecured debt for the six months ended June
30, 1993 earnings would have been inadequate to cover fixed charges by  
    $1,937. For the purpose of computing the ratio of earnings to fixed charges,
    "earnings" consist of income before fixed charges and income taxes, adjusted
to exclude interest capitalized, and "fixed charges" consist of interest
cost, amortizations of debt expense, amortization of bond discount and  
capitalized interest.                                                   

(7) Based on available rooms.                                                   

(8) Number of licensed slot machines and gaming tables at period end.           

(9) Includes the 11% First Mortgage Notes to be retired by U.S. treasury bills  
as of September 30, 1997.                                               

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RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                                                   NINE MONTHS        THREE MONTHS      
                                                                                      ENDED               ENDED         
                                              YEARS ENDED DECEMBER 31,            SEPTEMBER 30,       SEPTEMBER 30,     
                                        -------------------------------------   -----------------   -----------------   
                                        1993(1)    1994      1995      1996      1996      1997      1996      1997     
                                        -------   -------   -------   -------   -------   -------   -------   -------   
                                                                                                                        
Earnings:                                                                                                               
Pre-tax income (loss).................. $ 8,235   $ 7,665   $ 9,676   $12,868   $ 9,016   $ 3,078   $ 2,087   $(1,508)  
Fixed charges(2).......................   9,214    12,764    12,453    12,085     9,115    11,315     3,015     5,272(3)
Less capitalized interest..............       0         0         0         0         0         0         0         0   
                                        -------   -------   -------   -------   -------   -------   -------   -------   
Earnings available for fixed charges...  17,449    20,429    22,129    24,953    18,131    14,393     5,012     3,764   
                                        -------   -------   -------   -------   -------   -------   -------   -------   
Ratio of earnings to fixed charges.....    1.89x     1.60x     1.78x     2.06x     1.99x     1.27x     1.69x     0.71x  

---------------                                                                 

(1) As the Company emerged from bankruptcy in June 1993, operating results      
    presented for 1993 reflect the combined operating results of the Company and
its predecessor.                                                        

(2) Includes interest expense, amortization of debt expense, amortization of    
bond discount and capitalized interest.                                 

(3) Includes interest expense on the 11% First Mortgage Notes to be retired June
1, 1998 by U.S. treasury bills included in assets.                      

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
CONDITION AND RESULTS OF OPERATIONS 

GENERAL                                                                         

 The current management team successfully guided the Company through its
emergence from bankruptcy in June 1993. Since 1992, the Riviera's management    
team has achieved consistent growth in EBITDA and profit margins. EBITDA        
increased over 44% from $21.8 million in 1992 to $31.5 million in 1996 and      
EBITDA margins improved from 15.1% to 19.2% over the same period. The Company   
achieved this growth through the implementation of a number of strategic        
initiatives that included (i) refocusing its marketing strategy from            
"high-rollers" to adult mid-level gaming customers, a niche that management     
believes has been underserved, (ii) focusing on conventioneers who pay higher   
room rates, causing Riviera's ADR to increase from $47 in 1992 to $57 in 1996,  
(iii) aggressively marketing its hotel facilities resulting in occupancy rates  
growing from 90.6% in 1992 to 98.2% in 1996, (iv) emphasizing higher margin slot
play which increased slot revenue by 33.0% from 1992 to 1996 and (v) investing  
approximately $47 million in capital improvements since 1992. Management        
believes that it has also improved the stability of EBITDA by providing a broad 
entertainment experience (1996 non-gaming revenues: 55% vs. 47% for other       
casinos on the Strip), focusing on conventioneers (approximately 30% of mid-week
room nights pre-sold through June 1999) and developing a repeat and loyal       
customer base through proprietary database marketing.                           

RESULTS OF OPERATIONS                                                           

The following table sets forth certain of the Company's operating     
information for the years ended December 31, 1994, 1995, and 1996 and for the   
three months and nine months ended September 30, 1996 and 1997. Revenues and    
promotional allowances are shown as a percentage of net revenues. Departmental  
costs are shown as a percentage of departmental revenues. All other percentages 
are based on net revenues.                                                      

                                                        [Enlarge/Download Table]

                                                                                        NINE MONTHS      THREE MONTHS   
                                                                 YEARS ENDED               ENDED             ENDED      
                                                                DECEMBER 31,           SEPTEMBER 30,     SEPTEMBER 30,  
                                                          -------------------------   ---------------   --------------- 
                                                          1994      1995      1996    1996      1997    1996      1997  
                                                          -----     -----     -----   -----     -----   -----     ----- 
                                                                                                                        
REVENUES:                                                                                                               
  Casino.................................................  53.3%     51.2%     48.9%   49.4%     47.3%   51.3%     46.7%
  Rooms..................................................  23.0      26.4      25.4    24.9      26.3    22.2      25.3 
  Food and beverage......................................  14.9      14.5      13.8    13.9      14.0    12.7      13.8 
  Entertainment..........................................  11.0       9.5      12.7    13.7      13.9    14.0      15.0 
  Other..................................................   6.1       6.3       6.9     6.1       6.8     7.0       7.3 
  Less promotional allowances............................  (8.3)     (7.9)     (7.7)   (8.0)     (8.4)   (7.2)     (8.1)
                                                          -----     -----     -----   -----     -----   -----     ----- 
        Net revenues..................................... 100.0     100.0     100.0   100.0     100.0   100.0     100.0 
COSTS AND EXPENSES:                                                                                                     
  Casino(1)..............................................  59.5      58.6      59.1    59.6      59.5    57.7      62.4 
  Rooms(1)...............................................  49.7      47.1      45.0    45.9      44.7    52.6      49.0 
  Food and beverage(1)...................................  67.9      72.0      70.3    69.2      72.6    74.0      75.8 
  Entertainment(1).......................................  82.5      71.6      73.2    72.3      72.4    76.3      76.8 
  Other(1)...............................................  37.4      37.1      34.6    28.7      29.1    25.7      31.1 
  Selling, general and administrative....................  18.7      19.6      19.1    19.1      19.7    19.9      19.5 
  Depreciation and amortization..........................   3.7       4.5       5.0     4.8       6.6     5.1       7.4 
                                                          -----     -----     -----   -----     -----   -----     ----- 
        Total costs and expenses.........................  87.1      86.1      85.8    86.0      88.4    88.2      92.7 
                                                          -----     -----     -----   -----     -----   -----     ----- 
Income from operations...................................  12.9      13.9      14.2    14.0      11.6    11.8       7.3 
Interest expense, net....................................   8.0       7.5       6.7      --       9.4      --       3.9 
Other (income) expense, net..............................   0.0       0.0      (0.3)    1.1        --      .2           
                                                          -----     -----     -----   -----     -----   -----     ----- 
Income (loss) before provision (benefit) for income                                                                     
  taxes..................................................   4.9       6.4       7.8     7.3       2.6     5.1      (4.1)
Provision (benefit) for income taxes.....................   1.9       2.2       2.7    (2.5)     (0.9)   (1.6)      1.4 
                                                          -----     -----     -----   -----     -----   -----     ----- 
Net income (loss)........................................   3.0       4.2       5.1     4.9       1.7     3.5      (2.7)
                                                          -----     -----     -----   -----     -----   -----     ----- 
EBITDA margin............................................  16.6%     18.4%     19.2%   18.8%     18.2%   16.9%     14.7%

---------------                                                                 

(1) Shown as a percentage of corresponding departmental revenue.                

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  The following discussion and analysis should be read in conjunction with
the consolidated financial statements and the related notes thereto appearing   
elsewhere in this Prospectus.                                                   

THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED  
SEPTEMBER 30, 1996                                                              

  Revenues. Net revenues decreased by approximately $4.5 million, or 11.1%
from $40.9 million for the three months ended September 30, 1996 to $36.4       
million for the three months ended September 30, 1997 due to the general        
softness of the Las Vegas market.                                               

 Casino revenues decreased by approximately $4.0 million, or 19.1%, from
$21.0 million during 1996 to $17.0 million during 1997. Slot revenues decreased 
$1.8 million or 12.7% from $14.5 million in 1996 to $12.7 million in 1997 due to
a decrease in coin-in of $12.2 million, or 6.0% and a decrease in the hold      
percentage from 6.4% to 6.0%. These decreases were primarily in the $1 and $5   
slot machines due to competition from neighboring casinos. Table games win      
decreased $1.7 million or 33.0% from $5.2 million in 1996 to $3.5 million in    
1997 due to the competitive environment on the Las Vegas Strip. Table games drop
decreased $5.5 million, 21.0%, from $25.7 million in 1996 to $20.2 million in   
1997. Table games win percentage decreased 3.1%, from an unusually high 20.5% in
1996 to a normal 17.5% in 1997. The decrease in drop accounted for $1.1 in lower
revenues and the decrease in hold percentage accounted for $600,000 in lower    
revenues. Race book revenues decreased $390,000 due to the elimination of       
rebates (to selected high volume customers) under revised agreements between the
casinos and the Nevada Pari Mutuel Association.                                 

Room revenues increased by approximately $113,000, or 1.2%. from $9.1 
million during 1996 to $9.2 million during 1997 as a result of an increase of   
$0.81 in average room rate from $49.14 in 1996 to $49.95 in 1997. Hotel         
occupancy remained stable at 99.0% for 1996 and 98.4% in 1997.                  

    Food and beverage revenues decreased approximately $170,000, or 3.3%, from
$5.2 million during 1996 to $5.0 million during 1997 due primarily to reduced   
complimentary beverage in the casino and a 6.0% reduction in covers in the      
restaurants.                                                                    

   Entertainment revenues decreased by approximately $240,000, or 4.2%, from
$5.7 million during 1996 to $5.5 million during 1997 due to a 10% decrease in   
covers which was partially offset by a 7% increase in the average ticket price. 

Other revenues decreased by approximately $220,000, or 7.6%, from $2.9
million during 1996 to $2.7 million during 1997 due primarily to the $570,000   
rebate received in 1996 from a union health and welfare trust fund for reduced  
premiums for prior periods. Fees earned for the Four Queens management contract 
totaled $250,000 in 1997 compared to $142,000 in 1996.                          

     Promotional allowances were unchanged at $2.9 million during 1996 and 1997.
Lower food and beverage complimentaries were offset by increased room           
complimentaries                                                                 

    Direct Costs and Expenses of Operating Departments. Total direct costs and
expenses of operating departments decreased by approximately $1.9 million, or   
7.3%, from $25.8 million for the three months ended September 30, 1996 to $23.9 
million for the three months ended September 30, 1997.                          

 Casino expenses decreased by approximately $1.5 million, or 12.5%, from
$12.1 million during 1996 to $10.6 million during 1997 due to a corresponding   
decrease in casino revenues. Casino expenses as a percent of casino revenue     
increased from 57.7% to 62.4%, in spite of a 17.0% decrease in marketing        
expenses in 1997. Management is reviewing the competition and may increase      
marketing expenditures somewhat to stimulate additional revenues. However, the  
Company does not intend to significantly discount its gaming product or         
substantially increase its promotional allowances.                              

    Room costs decreased by approximately $270,000, or 5.7%, from $4.8 million
during the 1996 period to $4.5 million during the 1997 period and room costs as 
a percentage of room revenue decreased from 52.6% in 1996 to 49.0% in 1997 due  
to decreased payroll and direct operating costs.                                

   Food and beverage costs decreased by approximately $40,000, or 1.0%, from
$3.8 million in 1996 to $3.8 million in 1997. However, food and beverage costs  
as a percentage of revenues increased from 74.0% in                             

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1996 to 75.8% in 1997 because the costs transferred to the casino department for
promotional allowances decreased from 1996.                                     

     Entertainment costs decreased by approximately $200,000, or 3.6%, from $4.4
million in 1996 to $4.2 million in 1997 as a direct result of the lower revenues
in all shows. Entertainment expense as a percentage of entertainment revenues   
increased slightly from 76.3% in 1996 to 76.8% in 1997.                         

    Other expenses as a percentage of revenues increased from 25.7% in 1996 to
31.1% in 1997 because of the one time union premium refund recorded in revenues 
in 1996 with no associated costs.                                               

Other Operating Expenses. Selling, general and administrative expenses
decreased by approximately $1.1 million, or 13.1%, from $8.2 million for the    
three months ended September 30, 1996 to $7.1 million for the three months ended
September 30, 1997 due to reduced management incentives and company profit      
sharing plan contributions. Selling, general and administrative expenses        
decreased from 19.9% of total net revenues during the 1996 period to 19.5% in   
1997.                                                                           

Depreciation and amortization increased by approximately $600,000, or 
28.0%, from $2.1 million in 1996 to $2.7 million in 1997 and from 5.1% to 7.4%  
of net revenues due to the significant capital expenditures in the twelve months
ended September 30, 1997 totaling $16.8 million.                                

  Other Income (Expense). Interest income on Treasury Bills held to retire
the 11% Notes was $773,000 in 1997. Interest income, other increased $300,000 in
the Third Quarter 1997 because of the increased cash balances from the proceeds 
of the Notes.                                                                   

   Net Income (Loss). As a result of the factors discussed above, net income
decreased by approximately $2.4 million, from $1.4 million during the three     
months ended September 30, 1996, to a loss of $988,000 during the three months  
ended September 30, 1997.                                                       

     EBITDA. EBITDA decreased by approximately $1.6 million, or 22.9%, from $6.9
million during the three months ended September 30, 1996 to $5.3 million during 
the three months ended September 30, 1997. During the same periods, EBITDA      
margin decreased from 16.9% to 14.7% of net revenues. Although management       
reduced direct costs and operating expenses by 7.3%, such reduction was not     
sufficient to offset the $4 million decrease in casino revenues in 1997 and the 
$570,000 union health and welfare premium rebate received in September 1996.    

NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED    
SEPTEMBER 30, 1996                                                              

  Revenues. Net revenues decreased by approximately $7.7 million, or 6.2%,
from $124.2 million for the nine months ended September 30, 1996 to $116.5      
million for the nine months ended September 30, 1997.                           

 Casino revenues decreased by approximately $6.3 million, or 10.2%, from
$61.4 million during 1996 to $55.1 million during 1997 due to a general softness
in the gaming market in Las Vegas. Slot revenues decreased approximately $3.0   
million primarily in the dollar denomination due to competition from casinos at 
the north end of the Las Vegas Strip. This effected both coin in and revenue as 
the hold percent was reduced in response to the competitive pressure. Although  
the table games drop was down approximately $15.7 million or 17.4%, the win     
percentage increased 1.5%, which resulted in a net decrease in table games      
revenues of approximately $1.4 million. Elimination of three times odds on craps
and single deck blackjack games were major factors contributing to the increase 
in win percentage. Race book revenues decreased approximately $1.2 million due  
to the elimination of rebates (to selected high volume customers) under revised 
agreements between the casinos and the Nevada Pari Mutuel Association.          

Room revenues decreased by approximately $300,000, or 0.8%. from $30.9
million during 1996 to $30.6 million during 1997 due primarily to 4,600 more    
rooms being out of order for refurbishing. Hotel occupancy remained relatively  
constant at 98.3% in 1997 as compared to 99.0% in 1996 (based on available      
rooms). The average room rate increased $0.46, or 0.9%, from $55.73 to $56.19   
recovering from first quarter 1997 when the average room rate had fallen $2.15  
because of the shift of a major convention from the first quarter of 1997 to the
second quarter.                                                                 

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    Food and beverage revenues decreased approximately $900,000, or 5.6%, from
$17.2 million during 1996 to $16.3 million during 1997 primarily due to reduced 
complimentary beverage in the casino as well as lower food covers in the        
restaurants.                                                                    

   Entertainment revenues decreased by approximately $800,000, or 4.3%, from
$17.0 million during 1996 to $16.2 million during 1997 due to a 7.2% decrease in
covers with only Crazy Girls showing an increase in covers and revenues in 1997.
Splash(R) revenues decreased approximately $600,000.                            

Other revenues increased by approximately $270,000, or 3.5%, from $7.6
million during 1996 to $7.9 million during 1997 due to the management fees of   
$745,000 for operating the Four Queens Hotel/ Casino in downtown Las Vegas which
began in August 1996. These revenues were offset by a $570,000 union premium    
refund which was recognized in September 1996.                                  

   Promotional allowances decreased by approximately $200,000, or 2.0%, from
$9.9 million during 1996 to $9.7 million during 1997 due to lower food and      
beverage complimentaries of $600,000 which were partially offset by increased   
room complimentaries of $400,000.                                               

    Direct Costs and Expenses of Operating Departments. Total direct costs and
expenses of operating departments decreased by approximately $4.8 million, or   
6.2%, from $77.1 million for the nine months ended September 30, 1996 to $72.3  
million for the nine months ended September 30, 1997.                           

 Casino expenses decreased by approximately $3.8 million, or 10.3%, from
$36.6 million during 1996 to $32.8 million during 1997 due to a corresponding   
decrease in casino revenues. Casino expenses as a percent of casino revenue     
decreased from 59.6% to 59.5%, primarily due to a 15.2% decrease in marketing   
expenses in 1997. Management has reviewed the competition and has increased     
marketing expenditures somewhat to drive additional revenues. However, the      
Company does not intend to significantly discount its gaming product or         
substantially increase its promotional allowances.                              

     Room costs decreased by approximately $470,000, or 3.3%, from $14.2 million
during the 1996 period to $13.7 million during the 1997 period and room costs as
a percentage of room revenue decreased from 45.9% in 1996 to 44.7% in 1997      
because of increased costs transferred to the casino department for promotional 
allowances.                                                                     

 Food and beverage costs were relatively flat for 1997 compared to 1996,
however, food and beverage costs as a percentage of revenues increased from     
69.2% in 1996 to 72.6% in 1997 because the costs transferred to the casino      
department for promotional allowances decreased.                                

Entertainment costs decreased by approximately $500,000, or 4.2%, from
$12.3 million in 1996 to $11.8 million in 1997 due to fewer concerts and special
events in 1997 and the lower payments to the Splash(R) producer. Entertainment  
expense as a percentage of entertainment revenues remained flat at 72.3% for    
1996 and 1997.                                                                  

    Other expenses as a percentage of revenues increased from 28.7% in 1996 to
29.1% in 1997 because of the union premium refund of $570,000 recognized in     
September 1996 other revenues.                                                  

Other Operating Expenses. Selling, general and administrative expenses
decreased by approximately $800,000, or 3.5%, from $23.8 million for the nine   
months ended September 30, 1996 to $22.9 million for the nine months ended      
September 30, 1997 due to reductions in management incentives and profit sharing
contributions. As a percentage of total net revenues, selling, general and      
administrative expenses increased from 19.1% during the 1996 period to 19.7%    
during the 1997 period as a result of spreading of fixed costs over a lower     
revenue base in the 1997 period.                                                

   Depreciation and amortization increased by approximately $1.7 million, or
29.2%, from $6.0 million in 1996 to $7.7 million in 1997 and from 4.8.6% to 6.6%
of net revenues due to the significant capital expenditures in the twelve months
ended September 30, 1997, totaling $16.8 million.                               

  Other Income (Expense). Interest income on Treasury Bills held to retire
the 11% Notes was $773,000 in 1997. Interest income, other increased $300,000   
because of the increased cash balances from the proceeds of the Notes.          

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Net Income. As a result of the factors discussed above, net income    
decreased by approximately $4.0 million, or 66.5%, from $6.0 million during the 
nine months ended September 30, 1996 to $2.0 million during the nine months     
ended September 30, 1997.                                                       

     EBITDA. EBITDA decreased by approximately $2.1 million, or 9.0%, from $23.3
million during the nine months ended September 30, 1996 to $21.2 million during 
the nine months ended September 30, 1997. Moreover, during the same periods,    
EBITDA margin decreased from 18.8% to 18.2% of net revenues.                    

FISCAL 1996 COMPARED TO FISCAL 1995                                             

   Revenues. Net revenues increased by approximately $13.3 million, or 8.8%,
from $151.1 million in 1995 to $164.4 million in 1996. Casino revenues increased
by approximately $3.0 million, or 3.9%, from $77.3 million in 1995 to $80.4     
million in 1996 due primarily to a $2.9 million, or 5.4%, increase in slot      
revenues as a result of an increase in promotional activities directed at slot  
players. Room revenues increased by approximately $2.0 million, or 5.0%, from   
$39.8 million in 1995 to $41.8 million in 1996 as a result of an increase in    
hotel occupancy from 97.0% to 98.2% (based on available rooms) and an increase  
in average room rate of $2.40, or 4.4%. Food and beverage revenues increased    
approximately $700,000, or 3.4%, from $21.9 million in 1995 to $22.6 million in 
1996 due to additional covers in the bars and restaurants. Entertainment        
revenues increased by approximately $6.5 million, or 44.8%, from $14.4 million  
in 1995 to $20.9 million in 1996. This was principally due to the reopening of  
Splash(R), a variety show which had been closed during the first half of 1995   
for show revisions and theater remodeling. Other revenues increased by          
approximately $1.8 million, or 18.7%, from $9.5 million in 1995 to $11.3 million
in 1996 due primarily to a refund of $576,000 from a union health and welfare   
trust fund for reduced premiums and general increases in other revenues such as 
telephone, gift shops and box office commissions. In addition, the Company      
received management fees of approximately $400,000 for operating the Four Queens
in downtown Las Vegas beginning in August 1996. Promotional allowances increased
by approximately $700,000, or 6.4%, from $11.9 million in 1995 to $12.6 million 
in 1996 due to additional complimentary show tickets for Splash(R) and an       
increase in complimentaries associated with casino and slot marketing programs. 

    Direct Costs and Expenses of Operating Departments. Total direct costs and
expenses of operating departments increased by approximately $7.7 million, or   
8.2%, from $93.7 million in 1995 to $101.5 million in 1996. Casino expenses     
increased by approximately $2.2 million, or 4.8%, from $45.3 million in 1995 to 
$47.5 million in 1996 due to a corresponding increase in casino revenues and    
casino expenses as a percent of casino revenues increased from 58.6% to 59.1%,  
primarily due to increased entertainment promotional allowances upon the        
reopening of Splash(R) on June 23, 1995. Room costs were mostly flat for 1996   
compared to 1995, however, room costs as a percentage of room revenues decreased
from 47.1% in 1995 to 45.0% in 1996 as room revenues increased while room costs 
remained relatively constant. Food and beverage costs increased by approximately
$150,000, or 0.9%, from $15.8 million in 1995 to $15.9 million in 1996 resulting
from a corresponding increase in revenues. Food and beverage costs as a         
percentage of food and beverage revenues decreased from 72.0% in 1995 to 70.3%  
in 1996 because food and beverage revenue increased while payroll and other     
costs remained relatively constant. Entertainment costs increased by            
approximately $5.0 million, or 48.0%, from $10.3 million in 1995 to $15.3       
million in 1996, due to the additional expenses associated with operating       
Splash(R) for a full year in 1996. Entertainment expenses as a percentage of    
entertainment revenues increased from 71.6% in 1995 to 73.2% in 1996 due to a   
revision in the Splash(R) producer's agreement. Other expenses increased by     
approximately $400,000, or 10.9%, from $3.5 million to $3.9 million due to a    
corresponding increase in other revenues.                                       

Other Operating Expenses. Selling, general and administrative expenses
increased by approximately $1.8 million, or 6.2%, from $29.6 million in 1995 to 
$31.5 million in 1996 due to increased incentive plan costs required to retain  
personnel in the competitive gaming environment. As a percentage of total net   
revenues, selling, general and administrative expenses decreased from 19.6% in  
1995 to 19.1% in 1996 as a result of lower general marketing expenses and the   
spreading of fixed costs over a larger revenue base in 1996. Depreciation and   
amortization increased by approximately $1.4 million, or 20.6%, from $6.8       
million in 1995 to $8.2 million in 1996.                                        

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Other Income (Expense). Interest expense decreased by approximately   
$400,000, or 3.0%, from $12.5 million in 1995 to $12.1 million in 1996 while    
interest income remained constant at $1.1 million in 1995 and 1996. This was due
to a reduction in average debt outstanding, an increase in average cash balances
and a decrease in the investment yield in 1996. Other income increased by       
$505,000 due to a gain on the final payment of certain unsecured notes in the   
fourth quarter of 1996 offset by a loss due to the change in terms of one of the
Company's notes.                                                                

Net Income. As a result of the factors discussed above, net income    
increased by approximately $2.1 million, or 33.0%, from $6.3 million in 1995 to 
$8.4 million in 1996. The effective income tax rate was 34.4% for 1995 and 1996.

EBITDA. EBITDA increased by approximately $3.7 million, or 13.3%, from
$27.8 million in 1995 to $31.5 million in 1996. During the same periods, EBITDA 
margin increased from 18.4% to 19.2% of net revenues.                           

FISCAL 1995 COMPARED TO FISCAL 1994                                             

  Revenues. Net revenues decreased by approximately $2.8 million, or 1.8%,
from $153.9 million in 1994 to $151.1 million in 1995. Casino revenues decreased
by approximately $4.7 million, or 5.8%, from $82.1 million in 1994 to $77.3     
million in 1995 which was largely due to an approximately $5.9 million, or      
22.9%, decrease in table game revenues as a result of reduced "high-roller" play
and the elimination of unprofitable marketing programs offset by an             
approximately $1.3 million, or 2.8%, increase in slot machine revenues. Room    
revenues increased by approximately $4.4 million, or 12.5%, from $35.4 million  
in 1994 to $39.8 million in 1995 due to a slight decrease in occupancy offset by
an increase of $7.18 in the average room rate. Food and beverage revenues       
decreased approximately $1.1 million, or 4.6%, from $23.0 million in 1994 to    
$21.9 million in 1995, principally due to reduced covers resulting from the     
decline in customer traffic as a result of Splash(R) being closed for six months
in 1995 compared to one month in 1994. Entertainment revenues decreased by      
approximately $2.5 million, or 14.9%, from $16.9 million in 1994 to $14.4       
million in 1995 due primarily to the closure of Splash(R) from December 1994 to 
June 1995. Other revenues increased by approximately $125,000, or 1.3%, from    
$9.4 million in 1994 to $9.5 million in 1995. Promotional allowances decreased  
by approximately $1.0 million, or 7.7%, from $12.9 million in 1994 to $11.9     
million in 1995, primarily due to the elimination of certain marketing programs.

    Direct Costs and Expenses of Operating Departments. Total direct costs and
expenses of operating departments decreased by approximately $5.8 million, or   
5.8%, from $99.5 million in 1994 to $93.7 million in 1995. Casino expenses      
decreased by approximately $3.5 million, or 7.2%, from $48.8 million in 1994 to 
$45.3 million in 1995 due to a corresponding decrease in casino revenues. Casino
expenses as a percentage of casino revenues decreased from 59.5% in 1994 to     
58.6% in 1995 due to reduced complimentaries. Room costs increased by           
approximately $1.2 million, or 6.8%, from $17.6 million in 1994 to $18.8 million
in 1995, principally due to the payment of higher credit card and travel agent  
commissions associated with the increase in room revenues. Room costs as a      
percentage of room revenues decreased from 49.7% in 1994 to 47.1% in 1995 as a  
result of certain fixed costs being allocated over a larger revenue base. Food  
and beverage costs increased by approximately $180,000, or 1.2%, from $15.6     
million in 1994 to $15.8 million in 1995. As a percentage of food and beverage  
revenues, costs increased from 67.9% in 1994 to 72.0% in 1995 because certain   
fixed costs could not be reduced commensurate with the reduction of revenue.    
Entertainment costs decreased by approximately $3.7 million, or 26.1%, from     
$14.0 million in 1994 to $10.3 million in 1995 due to Splash(R) being closed    
during the first half of 1995. Entertainment costs as a percentage of           
entertainment revenues decreased from 82.5% in 1994 to 71.6% in 1995 due to     
better contract terms with the producer of Splash(R). Other expenses remained   
constant at $3.5 million in 1995.                                               

Other Operating Expenses. Selling, general and administrative expenses
increased by approximately $800,000, or 2.8%, from $28.8 million in 1994 to     
$29.6 million in 1995. As a percentage of total net revenues, selling, general  
and administrative expenses increased from 18.7% in 1994 to 19.6% in 1995 due to
increases in payroll and maintenance offset by a decrease in workers'           
compensation insurance expense resulting from the Company becoming self-insured 
and a decrease in the provision for bad debts as a result of stricter credit    

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policies during 1995. Depreciation and amortization increased by approximately  
$1.1 million, or 20.0%, from $5.7 million in 1994 to $6.8 million in 1995.      

Other Income (Expense). Interest expense decreased by approximately   
$311,000, or 2.4%, from $12.8 million in 1994 to $12.5 million in 1995, while   
interest income more than doubled from approximately $510,000 to $1.1 million.  
This was due to a reduction in average debt outstanding and an increase in      
average cash balances, respectively, during 1995 compared to 1994.              

Net Income. As a result of the factors discussed above, net income    
increased by approximately $1.6 million, or 32.4%, from $4.8 million in 1994 to 
$6.3 million in 1995. The effective income tax rate for 1995 was 34.4% compared 
to 37.5% for 1994.                                                              

     EBITDA. EBITDA increased by approximately $2.2 million, or 8.6%, from $25.6
million in 1994 to $27.8 million in 1995. During the same periods, EBITDA margin
increased from 16.6% to 18.4% of net revenues.                                  

LIQUIDITY AND CAPITAL RESOURCES                                                 

     The Company had cash and cash equivalents of $62.4 million at September 30,
1997, which was $37.0 million greater than balances at December 31, 1996.       

   The Company's net cash provided by operating activities was approximately
$5.8 million and $14.2 million for the quarter and nine months ended September  
30, 1997, and approximately $7.4 million and $15.5 million for the comparable   
prior year periods, respectively. EBITDA for the first nine months of 1996 and  
1997 was $23.3 million and $21.2 million, respectively, which was adequate to   
cover the Company's debt service and capital expenditures. Management believes  
that cash flow from operations, combined with the $62.4 million cash on hand,   
will be sufficient to cover the Company's debt service and enable investment in 
budgeted capital expenditures for the next twelve months.                       

Scheduled interest payments on the 11% Notes is provided by the       
"contractual defeasance" whereby a portion of the proceeds from the Existing    
Notes was used to acquire U.S. Treasury Securities sufficient to pay the        
interest on the 11% First Mortgage Notes in December 1997 and the interest,     
principal and premium due June 1, 1998 when the final defeasance will be        
accomplished through redemption of the 11% First Mortgage Notes. Substantially  
all of the covenants on the 11% First Mortgage Notes were released as a result  
of the "contractual defeasance."                                                

   Cash flow from operations is not expected to be sufficient to pay 100% of
the principal of the Notes at maturity on August 15, 2004. Accordingly, the     
ability of the Company to repay the Notes at maturity will be dependent upon its
ability to refinance those Notes. There can be no assurance that the Company    
will be able to refinance the principal amount of the Notes at maturity. The    
Notes are not redeemable at the option of the Company until August 15, 2001, and
thereafter are redeemable at premiums beginning at 105.0% and declining each    
subsequent year to par in 2003.                                                 

 The Indenture provides that, in certain circumstances, the Company must
offer to repurchase the Notes upon the occurrence of a change of control or     
certain other events. In the event of such mandatory redemption or repurchase   
prior to maturity, the Company would be unable to pay the principal amount of   
the Notes without a refinancing. The Merger is specifically excluded from the   
defined transactions which would be considered a change in control.             

 The Indenture contains certain covenants which limit the ability of the
Company and its restricted subsidiaries, subject to certain exceptions, to: (i) 
incur additional indebtedness; (ii) pay dividends or other distributions,       
repurchase capital stock or other equity interests or subordinated indebtedness;
(iii) enter into certain transactions with affiliates; (iv) create certain      
liens; sell certain assets; and (vi) enter into certain mergers and             
consolidations. As a result of these restrictions, the ability of the Company   
and ROC to incur additional indebtedness to fund operations or to make capital  
expenditures is limited. In the event that cash flow from operations is         
insufficient to cover cash requirements, the Company and ROC would be required  
to curtail or defer certain of their capital expenditure programs under these   
circumstances, which could have an                                              

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adverse effect on the Company's operations. Management believes the Company is  
in compliance with the covenants of the Indentures.                             

In February 1997, the Company entered into a $15.0 million, five year 
reducing revolving line of credit (the "Revolving Credit Facility"). The        
Revolving Credit Facility bears interest at prime plus 0.5% or LIBOR plus 2.9%. 
The Company has not utilized this line of credit. The Revolving Credit Facility 
was modified as a result of the sale of the Existing Notes and the proposed     
Merger. The modifications included an increase in the allowable funded debt to  
EBITDA ratio to 4.75 to one. The Company is not currently meeting this          
requirement and, therefore, cannot draw down on the Revolving Credit Facility at
this time. The Revolving Credit Facility is callable upon a change in control   
other than the Merger.                                                          

Management considers it important to the competitive position of the  
Riviera that expenditures be made to upgrade the property. Capital expenditures 
totaled approximately $8.9 million in 1994, $7.8 million in 1995, $14.9 million 
in 1996, and $11.4 million for the nine months ended September 30, 1997.        
Management has budgeted approximately $21.0 million for capital expenditures in 
1997. The Company expects to finance such capital expenditures from cash flow   
and the remaining proceeds from the Notes.                                      

The Company currently estimates that total costs for completion of the
Black Hawk Project will be approximately $60 million, a $5 million increase over
previous estimates resulting from the announcement of additional projects by    
competitors. The Company purchased the Black Hawk Land in August 1997 for $15   
million, which was financed by the net proceeds from the sale of the Existing   
Notes, and expects to finance the remainder of the Black Hawk Project from a    
combination of third party financing and additional investment by the Company,  
including up to an additional $15 million of the net proceeds from the sale of  
the Existing Notes. The Company expects to receive the necessary excavation and 
other permits in the near future, with construction of the casino commencing    
shortly thereafter. The casino is scheduled to open during mid-1999.            

COMPUTERIZED OPERATIONS AND THE YEAR 2000                                       

 During recent years, there has been significant global awareness raised
regarding the potential disruption to business operations worldwide resulting   
from the inability of current technology to process properly the change from the
year 1999 to 2000. Although, based on a review of its data processing, operating
and other computer-based systems, the Company does not currently believe that it
will experience any significant adverse effects or material unbudgeted costs    
resulting therefrom, the Company cannot provide any assurance in this regard,   
and any such costs or effect could materially and adversely effect the          
operations of the Company and thereby its ability to satisfy its obligations    
under the Notes.                                                                

FORWARD LOOKING STATEMENTS                                                      

The Private Securities Litigation Reform Act of 1995 provides a "safe 
harbor" for certain forward-looking statements. Certain matters discussed in    
this filing could be characterized as forward-looking statements such as        
statements relating to plans for future expansion, as well as other capital     
spending, financing sources and effects of regulation and competition. Such     
forward-looking statements involve important risks and uncertainties that could 
cause actual results to differ materially from those expressed in such          
forward-looking statements.                                                     

RECENTLY ADOPTED ACCOUNTING STANDARDS                                           

  During 1996 the Company adopted the provisions of Statement of Financial
Accounting Standards No. 121 ("SFAS 121") Accounting for the Impairment of      
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. SFAS 121 requires
that long-lived assets and certain identifiable intangibles be reviewed for     
impairment whenever events or changes in circumstances indicate that the        
carrying amount of an asset may not be recoverable. The adoption of SFAS 121 had
no impact on the financial statements of the Company.                           

   In October 1995, the Financial Accounting Standards Board ("FASB") issued
the Statement of Financial Accounting Standards No. 123 ("SFAS 123") Accounting 
for Stock-Based Compensation which                                              

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establishes financial accounting and reporting standards for stock-based        
employee compensation plans and for transactions in which an entity issues its  
equity instruments to acquire goods or services from non-employees. The Company 
continues to account for stock-based compensation arrangements in accordance    
with Accounting Principles Board No. 25, "Accounting for Stock Issued to        
Employees" and therefore the adoption of SFAS 123 had no effect on the financial
position or results of operations of the Company. The Company has provided the  
pro forma and other additional disclosures about stock-based employee           
compensation plans in its 1996 consolidated financial statements as required by 
SFAS 123.                                                                       

RECENTLY ISSUED ACCOUNTING STANDARDS                                            

The FASB recently issued Statement of Accounting Standards No. 128,   
Earnings Per Share. This statement establishes standards for computing and      
presenting earnings per share and is effective for financial statements issued  
for periods ending after December 15, 1997. Earlier application of this         
statement is not permitted and upon adoption requires restatement (as           
applicable) of all prior-period earnings per share data presented. Management   
believes that the implementation of this standard will not have a material      
impact on earnings per share.                                                   

  In addition, the FASB issued Statement of Financial Accounting Standards
No. 129, Disclosure of Information about Capital Structure in February 1997.    
This statement establishes standards for disclosing information about an        
entity's capital structure. Management intends to comply with the disclosure    
requirements of this statement which are effective for periods ending after     
December 15, 1997.                                                              

On June 30, 1997, the FASB issued Statement of Financial Accounting   
Standards No. 130, Reporting Comprehensive Income. This statement requires      
companies to classify items of other comprehensive income by their nature in a  
financial statement and display the accumulated balance of other comprehensive  
income separately from retained earnings and additional paid-in capital in the  
equity section of a statement of financial position, and is effective for       
financial statements issued for fiscal years beginning after December 15, 1997. 
Management does not believe this new FASB will have a material impact on their  
financial statements.                                                           

On June 30, 1997, the FASB issued Statement of Financial Accounting   
Standards No. 131, Disclosure About Segments of an Enterprise and Related       
Information. This Statement establishes additional standards for segment        
reporting in the financial statements and is effective for fiscal years         
beginning after December 15, 1997. The Company believes the segment information 
required to be disclosed under SFAS No. 131 will be more comprehensive than     
previously provided, including expanded disclosure of income statement and      
balance sheet items for each of its reportable segments under SFAS No. 131.     
However, the Company has not yet completed its analysis of which operating      
segments it will report on.                                                     

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THE EXCHANGE OFFER

PURPOSE OF THE EXCHANGE OFFER                                                   

The Existing Notes were sold by the Company on August 13, 1997 (the   
"Closing Date") to the Initial Purchasers pursuant to the Purchase Agreement.   
The Initial Purchasers subsequently resold the Existing Notes to qualified      
institutional buyers in reliance on Rule 144A under the Securities Act and a    
limited number of institutional accredited investors within the meaning of Rule 
501(a)(1), (2), (3) or (7) under the Securities Act. As a condition to the sale 
of the Existing Notes, the Company and the Restricted Subsidiaries were required
to enter into the Registration Rights Agreement. Pursuant to the Registration   
Rights Agreement, the Company agreed that, unless the Exchange Offer is not     
permitted by applicable law or Commission policy, it would (i) file with the    
Commission a Registration Statement under the Securities Act with respect to the
New Notes within 60 days after the Closing Date, (ii) use its best efforts to   
cause such Registration Statement to become effective under the Securities Act  
within 120 days after the Closing Date and (iii) upon effectiveness of the      
Registration Statement, to commence the Exchange Offer, maintain the            
effectiveness of the Registration Statement for at least 20 business days (or a 
longer period if required by law) and deliver to the Exchange Agent New Notes in
the same aggregate principal amount as the Existing Notes that were tendered by 
holders thereof pursuant to the Exchange Offer. A copy of the Registration      
Rights Agreement has been filed as an exhibit to the Registration Statement of  
which this Prospectus is a part. The Exchange Offer is intended to satisfy      
certain of the Company's and the Restricted Subsidiaries' obligations under the 
Registration Rights Agreement and the Purchase Agreement.                       

    The terms of the New Notes are identical in all material respects to those
of the Existing Notes, except that (i) the exchange will have been registered   
under the Securities Act and hence the New Notes will not bear legends          
restricting the transfer thereof, and (ii) holders of the New Notes will not be 
entitled to certain rights of holders of the Existing Notes under the           
Registration Rights Agreement, which rights will terminate upon the consummation
of the Exchange Offer. The New Notes will be issued pursuant to, and will be    
entitled to the benefits of, the Indenture governing the Existing Notes.        

TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING EXISTING NOTES                

   Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the    
Exchange Offer), the Company will accept for exchange Existing Notes which are  
properly tendered on or prior to the Expiration Date and not withdrawn as       
permitted below. As used herein, the term "Expiration Date" means 5:00 p.m., New
York City time, on Thursday, January 8, 1998; provided, however, that if the    
Company has extended the period of time for which the Exchange Offer is open,   
term "Expiration Date" means the latest time and date to which the Exchange     
Offer is extended.                                                              

As of the date of this Prospectus, $169.7 million aggregate principal 
amount of the Existing Notes are outstanding and registered in the name of Cede 
& Co., as nominee for the Depository Trust Company (the "Depositary") and $5.3  
million aggregate principal amount of the Existing Notes are registered in the  
names of certain accredited institutional investors who hold such notes in      
certificated form. Only a registered holder of the Existing Notes (or such      
holder's legal representative or attorney-in-fact) as reflected on the records  
of the Trustee under the Indenture may participate in the Exchange Offer. There 
will be no fixed record date for determining registered holders of the Existing 
Notes entitled to participate in the Exchange Offer. The Existing Notes may be  
tendered only in integral multiples of $1,000. This Prospectus, together with   
the Letter of Transmittal, is first being sent on or about December 11, 1997 to 
all holders of Existing Notes known to the Company. The Company's obligation to 
accept Existing Notes for exchange pursuant to the Exchange Offer is subject to 
certain conditions as set forth under "-- Certain Conditions to the Exchange    
Offer" below.                                                                   

The Company shall be deemed to have accepted validly tendered Existing
Notes when, as and if the Company has given oral or written notice thereof to   
the Exchange Agent. The Exchange Agent will act as agent for the tendering      
holders of Existing Notes for the purposes of receiving the New Notes from the  
Company.                                                                        

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     The Company expressly reserves the right, at any time or from time to time,
to extend the period of time during which the Exchange Offer is open, and       
thereby delay acceptance for any exchange of any Existing Notes, by giving      
notice of such extension to the Exchange Agent and the holders thereof. During  
any such extension, all Existing Notes previously tendered will remain subject  
to the Exchange Offer and may be accepted for exchange by the Company. Any      
Existing Notes not accepted for exchange for any reason will be returned without
expense to the tendering holder thereof as promptly as practicable after the    
expiration or termination of the Exchange Offer.                                

The Company reserves the right, in its sole discretion, (i) to delay  
accepting any Existing Notes, (ii) to extend the Exchange Offer, or (iii) if any
conditions set forth below under "The Exchange Offer -- Certain Conditions to   
the Exchange Offer" shall not have been satisfied, to terminate the Exchange    
Offer by giving oral or written notice of such delay, extension or termination  
to the Exchange Agent. Any such delay in acceptance, extension, termination or  
amendment will be followed as promptly as practicable by oral or written notice 
thereof to the registered holders. If the Exchange Offer is amended in a manner 
determined by the Company to constitute a material change, the Company will     
promptly disclose such amendment by means of a prospectus supplement that will  
be distributed to the registered holders, and the Company will extend the       
Exchange Offer for a period of five to 10 business days, depending upon the     
significance of the amendment and the manner of disclosure to the registered    
holders, if the Exchange Offer would otherwise expire during such five to 10    
business day period.                                                            

   Holders of Existing Notes do not have any appraisal or dissenters' rights
under the Nevada Corporation Law in connection with the Exchange Offer. The     
Company intends to conduct the Exchange Offer in accordance with the provisions 
of the Registration Rights Agreement and the applicable requirements of the     
Securities Act, the Exchange Act and the rules and regulations of the Commission
thereunder.                                                                     

PROCEDURES FOR TENDERING EXISTING NOTES                                         

   Only a registered holder of Existing Notes may tender such Existing Notes
in the Exchange Offer. To tender in the Exchange Offer, a holder must complete, 
sign and date the Letter of Transmittal, or facsimile thereof, have the         
signatures thereon guaranteed if required by the Letter of Transmittal, and mail
or otherwise deliver such Letter of Transmittal or such facsimile to the        
Exchange Agent at the address set forth below under "The Exchange               
Offer -- Exchange Agent" for receipt prior to the Expiration Date. In addition, 
either (i) certificates for such Existing Notes must be received by the Exchange
Agent along with the Letter of Transmittal, or (ii) a timely confirmation of a  
book-entry transfer (a "Book-Entry Confirmation") of such Existing Notes, if    
such procedure is available, into the Exchange Agent's account at the Depositary
pursuant to the procedure for book-entry transfer described below, must be      
received by the Exchange Agent prior to the Expiration Date, or (iii) the holder
must comply with the guaranteed delivery procedures described below.            

    The tender by a holder which is not withdrawn prior to the Expiration Date
will constitute an agreement between such holder and the Company in accordance  
with the terms and subject to the conditions set forth herein and in the Letter 
of Transmittal.                                                                 

    THE METHOD OF DELIVERY OF EXISTING NOTES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK  
OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE  
AN OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES,          
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT      
BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR EXISTING NOTES SHOULD BE
SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS,     
COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS  
FOR SUCH HOLDERS.                                                               

Any beneficial owner(s) of the Existing Notes whose Existing Notes are
registered in the name of a broker, dealer, commercial bank, trust company or   
other nominee and who wishes to tender should contact the registered holder     
promptly and instruct such registered holder to tender on such beneficial       
owner's behalf. If                                                              

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such beneficial owner wishes to tender on such owner's own behalf, such owner   
must, prior to completing and executing the Letter of Transmittal and delivering
such owner's Existing Notes, either make appropriate arrangements to register   
ownership of the Existing Notes in such owner's name or obtain a properly       
completed bond power from the registered holder. The transfer of registered     
ownership may take considerable time.                                           

   Signatures on a Letter of Transmittal or a notice of withdrawal described
below (see "The Exchange Offer -- Withdrawal of Tenders"), as the case may be,  
must be guaranteed by an Eligible Institution (as defined below) unless the     
Existing Notes tendered pursuant thereto are tendered (i) by a registered holder
who has not completed the box entitled "Special Delivery Instructions" on the   
Letter of Transmittal or (ii) for the account of an Eligible Institution. In the
event that signatures on a Letter of Transmittal or a notice of withdrawal, as  
the case may be, are required to be guaranteed, such guarantee must be made by a
member firm of a registered national securities exchange or of the National     
Association of Securities Dealers, Inc. a commercial bank or trust company      
having an office or correspondent in the United States or an "eligible guarantor
institution" within the meaning of Rule 17Ad-15 under the Exchange Act which is 
a member of one of the recognized signature guarantee programs identified in the
Letter of Transmittal (an "Eligible Institution").                              

If the Letter of Transmittal is signed by a person other than the     
registered holder of any Existing Notes listed therein, such Existing Notes must
be endorsed or accompanied by a properly completed bond power, signed by such   
registered holder as such registered holder's name appears on such Existing     
Notes.                                                                          

If the Letter of Transmittal or any Existing Notes or bond powers are 
signed by trustees, executors, administrators, guardians, attorneys-in-fact,    
officers of corporations or others acting in a fiduciary or representative      
capacity, such persons should so indicate when signing, and unless waived by the
Company, evidence satisfactory to the Company of their authority to so act must 
be submitted with the Letter of Transmittal.                                    

 The Exchange Agent and the Depositary have confirmed that any financial
institution that is a participant in the Depositary's system may utilize the    
Depositary's Automated Tender Offer Program to tender Existing Notes.           

All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Existing Notes will be          
determined by the Company in its sole discretion, which determination will be   
final and binding. The Company reserves the absolute right to reject any and all
Existing Notes not properly tendered or any Existing Notes the Company's        
acceptance of which would, in the opinion of counsel for the Company, be        
unlawful. The Company also reserves the right to waive any defects,             
irregularities or conditions of tender as to particular Existing Notes. The     
Company's interpretation of the terms and conditions of the Exchange Offer      
(including the instructions in the Letter of Transmittal) will be final and     
binding on all parties. Unless waived, any defects or irregularities in         
connection with tenders of Existing Notes must be cured within such time as the 
Company shall determine. Although the Company intends to notify holders of      
defects or irregularities with respect to tenders of Existing Notes, neither the
Company, the Exchange Agent nor any other person shall incur any liability for  
failure to give such notification. Tenders of Existing Notes will not be deemed 
to have been made until such defects or irregularities have been cured or       
waived.                                                                         

   While the Company has no present plan to acquire any Existing Notes which
are not tendered in the Exchange Offer or to file a registration statement to   
permit resales of any Existing Notes which are not tendered pursuant to the     
Exchange Offer, the Company reserves the right in its sole discretion to        
purchase or make offers for any Existing Notes that remain outstanding          
subsequent to the Expiration Date or, as set forth below under "-- Certain      
Conditions to the Exchange Offer," to terminate the Exchange Offer and, to the  
extent permitted by applicable law, purchase Existing Notes in the open market, 
in privately negotiated transactions or otherwise. The terms of any such        
purchases or offers could differ from the terms of the Exchange Offer.          

   By tendering, each holder will represent to the Company that, among other
things, (i) the New Notes to be acquired by the holder of the Existing Notes in 
connection with the Exchange Offer are being acquired by the holder in the      
ordinary course of business of the holder, (ii) the holder has no arrangement or

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understanding with any person to participate in the distribution of New Notes,  
(iii) the holder acknowledges and agrees that any person who is a broker-dealer 
registered under the Exchange Act or is participating in the Exchange Offer for 
the purposes of distributing the New Notes must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a     
secondary resale transaction of the New Notes acquired by such person and cannot
rely on the position of the staff of the Commission set forth in certain        
no-action letters, (iv) the holder understands that a secondary resale          
transaction described in clause (iii) above and any resales of New Notes        
obtained by such holder in exchange for Existing Notes acquired by such holder  
directly from the Company should be covered by an effective registration        
statement containing the selling securityholder information required by Item 507
or Item 508, as applicable, of Regulation S-K of the Commission, and (v) the    
holder is not an "affiliate," as defined in Rule 405 of the Securities Act, of  
the Company. If the holder is a broker-dealer that will receive New Notes for   
its own account in exchange for Existing Notes that were acquired as a result of
market-making activities or other trading activities, the holder is required to 
acknowledge in the Letter of Transmittal that it will deliver a prospectus in   
connection with any resale of such New Notes; however, by so acknowledging and  
by delivering a prospectus, the holder will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.                         

RETURN OF EXISTING NOTES                                                        

     If any tendered Existing Notes are not accepted for any reason set forth in
the terms and conditions of the Exchange Offer or if Existing Notes are         
withdrawn or are submitted for a greater principal amount than the holders      
desire to exchange, such unaccepted, withdrawn or non-exchanged Existing Notes  
will be returned without expense to the tendering holder thereof (or, in the    
case of Existing Notes tendered by book-entry transfer into the Exchange Agent's
account at the Depositary pursuant to the book-entry transfer procedures        
described below, such Existing Notes will be credited to an account maintained  
with the Depositary) as promptly as practicable.                                

BOOK-ENTRY TRANSFER                                                             

     The Exchange Agent will make a request to establish an account with respect
to the Existing Notes at the Depositary for purposes of the Exchange Offer      
within two business days after the date of this Prospectus, and any financial   
institution that is a participant in the Depositary's systems may make          
book-entry delivery of Existing Notes by causing the Depositary to transfer such
Existing Notes into the Exchange Agent's account at the Depositary in accordance
with the Depositary's procedures for transfer. However, although delivery of    
Existing Notes may be effected through book-entry transfer at the Depositary,   
the Letter of Transmittal or facsimile thereof, with any required signature     
guarantees and any other required documents, must, in any case, be transmitted  
to and received by the Exchange Agent at the address set forth below under "The 
Exchange Offer -- Exchange Agent" on or prior to the Expiration Date or pursuant
to the guaranteed delivery procedures described below.                          

GUARANTEED DELIVERY PROCEDURES                                                  

Holders who wish to tender their Existing Notes and (i) whose Existing
Notes are not immediately available or (ii) who cannot deliver their Existing   
Notes, the Letter of Transmittal or any other required documents to the Exchange
Agent prior to the Expiration Date, may effect a tender if:                     

(a) The tender is made through an Eligible Institution;     

      (b) Prior to the Expiration Date, the Exchange Agent receives from
    such Eligible Institution a properly completed and duly executed Notice of
   Guaranteed Delivery substantially in the form provided by the Company (by
   facsimile transmission, mail or hand delivery) setting forth the name and
     address of the holder, the certificate number(s) of such Existing Notes and
     the principal amount of Existing Notes tendered, stating that the tender is
being made thereby and guaranteeing that, within five New York Stock  
    Exchange trading days after the Expiration Date, the Letter of Transmittal
    (or a facsimile thereof) together with the certificate(s) representing the
Existing Notes in proper form for transfer or a Book-                 

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     Entry Confirmation, as the case may be, and any other documents required by
 the Letter of Transmittal will be deposited by the Eligible Institution
with the Exchange Agent; and                                          

  (c) Such properly executed Letter of Transmittal (or facsimile
    thereof), as well as the certificate(s) representing all tendered Existing
   Notes in proper form for transfer and all other documents required by the
  Letter of Transmittal are received by the Exchange Agent within five New
York Stock Exchange trading days after the Expiration Date.           

     Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Existing Notes according to the        
guaranteed delivery procedures set forth above.                                 

WITHDRAWAL OF TENDERS                                                           

Except as otherwise provided herein, tenders of Existing Notes may be 
withdrawn at any time prior to the Expiration Date.                             

    To withdraw a tender of Existing Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange    
Agent at its address set forth herein prior to the Expiration Date. Any such    
notice of withdrawal must (i) specify the name of the person having deposited   
the Existing Notes to be withdrawn (the "Depositor"), (ii) identify the Existing
Notes to be withdrawn (including the certificate number or numbers and aggregate
principal amount of such Existing Notes), and (iii) be signed by the holder in  
the same manner as the original signature on the Letter of Transmittal by which 
such Existing Notes were tendered (including any required signature guarantees).
All questions as to the validity, form and eligibility (including time of       
receipt) of such notices will be determined by the Company in its sole          
discretion, whose determination shall be final and binding on all parties. Any  
Existing Notes so withdrawn will be deemed not to have been validly tendered for
purposes of the Exchange Offer and no New Notes will be issued with respect     
thereto unless the Existing Notes so withdrawn are validly retendered. Properly 
withdrawn Existing Notes may be retendered by following one of the procedures   
described above under "The Exchange Offer -- Procedures for Tendering" at any   
time prior to the Expiration Date.                                              

CERTAIN CONDITIONS TO THE EXCHANGE OFFER                                        

Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue New Notes in exchange 
for, any Existing Notes and may terminate or amend the Exchange Offer if at any 
time before the acceptance of such Existing Notes for exchange or the exchange  
of New Notes for such Existing Notes, the Company determines that the Exchange  
Offer violates applicable law, rule or regulation, any applicable interpretation
of the staff of the Commission or any order of any governmental agency or court 
of competent jurisdiction.                                                      

     The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such 
condition or may be waived by the Company in whole or in part at any time and   
from time to time in its reasonable discretion. The failure by the Company at   
any time to exercise any of the foregoing rights shall not be deemed a waiver of
such right and each such right shall be deemed an ongoing right which may be    
asserted at any time and from time to time.                                     

  In addition, the Company will not accept for exchange any Existing Notes
tendered, and no New Notes will be issued in exchange for any such Existing     
Notes, if at such time any stop order shall be threatened or in effect with     
respect to the Registration Statement of which this Prospectus constitutes a    
part or the qualification of the Indenture under the Trust Indenture Act of     
1939, as amended (the "Trust Indenture Act"). In any such event, the Company is 
required to use every reasonable effort to obtain the withdrawal of any stop    
order at the earliest possible time.                                            

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EXCHANGE AGENT                                                                  

   Norwest Bank Minnesota, N.A. has been appointed as the Exchange Agent for
the Exchange Offer. All executed Letters of Transmittal should be directed to   
the Exchange Agent at one of the addresses set forth below. Questions and       
requests for assistance, requests for additional copies of this Prospectus or of
the Letter of Transmittal and requests for Notices of Guaranteed Delivery should
be directed to the Exchange Agent addressed as follows:                         

                                                        [Enlarge/Download Table]
                                                                                        
                               By Registered or Certified                               
By Hand:                       Mail:                        By Overnight Courier:       
Northwest Bank Minnesota, N.A. Norwest Bank Minnesota, N.A. Norwest Bank Minnesota, N.A.
Northstar East Building        Corporate Trust Operations   Corporate Trust Services    
608 Second Avenue South        P.O. Box 1517                Sixth and Marquette Avenue  
12th Floor                     Minneapolis, MN 55480-1517   Minneapolis, MN 55479-0113  
Corporate Trust Services                                                                
Minneapolis, MN                                                                         

By Facsimile: 

(612) 667-4927

For General Questions or to 

Confirm by Telephone: 

(612) 667-9764

Delivery other than as set forth above will not constitute a valid    
delivery.                                                                       

FEES AND EXPENSES                                                               

The expenses of soliciting tenders will be borne by the Company. The  
principal solicitation is being made by mail; however, additional solicitation  
may be made by facsimile, telephone or in person by officers and regular        
employees of the Company and its affiliates.                                    

The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others     
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.           

     The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company and are estimated in the aggregate to be approximately   
$150,000. Such expenses include registration fees, fees and expenses of the     
Exchange Agent and Trustee, accounting and legal fees and printing costs, among 
others.                                                                         

     The Company will pay all transfer taxes, if any, applicable to the exchange
of Existing Notes pursuant to the Exchange Offer. If, however, a transfer tax is
imposed for any reason other than the exchange of the Existing Notes pursuant to
the Exchange Offer, then the amount of any such transfer taxes (whether imposed 
on the registered holder or any other persons) will be payable by the tendering 
holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted with the Letter of Transmittal, the amount of such transfer    
taxes will be billed directly to such tendering holder.                         

ACCOUNTING TREATMENT                                                            

   The New Notes will be recorded at the same carrying value as the Existing
Notes, which is the principal amount as reflected in the Company's accounting   
records on the date of the exchange. Accordingly, no gain or loss for accounting
purposes will be recognized. The debt issuance costs will be capitalized for    
accounting purposes and will be amortized over the term of the debt.            

CONSEQUENCES OF FAILURE TO EXCHANGE; RESALES OF NEW NOTES                       

   Participation in the Exchange Offer is voluntary. Holders of the Existing
Notes are urged to consult their financial and tax advisors in making their own 
decisions on what action to take.                                               

  The Existing Notes which are not exchanged for the New Notes pursuant to
the Exchange Offer will remain restricted securities. Accordingly, such Existing
Notes may be resold only (i) to a person whom the                               

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seller reasonably believes is a qualified institutional buyer (as defined in    
Rule 144A under the Securities Act) in a transaction meeting the requirements of
Rule 144A, (ii) in a transaction meeting the requirements of Rule 144 under the 
Securities Act, (iii) outside the United States to a foreign person in a        
transaction meeting the requirements of Rule 904 under the Securities Act or    
(iv) in accordance with another exemption from the registration requirements of 
the Securities Act (and based upon an opinion of counsel if the Company so      
requests), (v) to the Company or (vi) pursuant to an effective registration     
statement and, in each case, in accordance with any applicable securities laws  
of any state of the United States or any other applicable jurisdiction.         

     With respect to the New Notes, based upon an interpretation by the staff of
the Commission set forth in certain no-action letters issued to third parties,  
the Company believes that a holder (other than (i) a broker-dealer who purchases
such New Notes directly from the Company to resell pursuant to Rule 144A or any 
other available exemption under the Securities Act or (ii) any such holder which
is an "affiliate" of the Company within the meaning of Rule 405 under the       
Securities Act) who exchanges the Existing Notes for the New Notes in the       
ordinary course of business and who is not participating, does not intend to    
participate, and has no arrangement with any person to participate, in the      
distribution of the New Notes, will be allowed to resell the New Notes to the   
public without further registration under the Securities Act and without        
delivering to the purchasers of the New Notes a prospectus that satisfies the   
requirements of Section 10 of the Securities Act. However, if any holder        
acquires the New Notes in the Exchange Offer for the purpose of distributing or 
participating in the distribution of the New Notes or is a broker-dealer, such  
holder cannot rely on the position of the staff of the Commission enumerated in 
certain no-action letters issued to third parties and must comply with the      
registration and prospectus delivery requirements of the Securities Act in      
connection with any resale transaction, unless an exemption from registration is
otherwise available. Each broker-dealer that receives New Notes for its own     
account in exchange for Existing Notes, where such Existing Notes were acquired 
by such broker-dealer as a result of market-making activities or other trading  
activities, must acknowledge that it will deliver a prospectus in connection    
with any resale of such New Notes. The Letter of Transmittal states that by so  
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.  
This Prospectus, as it may be amended or supplemented from time to time, may be 
used by a brokerdealer in connection with resales of New Notes received in      
exchange for Existing Notes where such Existing Notes were acquired by such     
broker-dealer as a result of market-making or other trading activities. Pursuant
to the Registration Rights Agreement, the Company has agreed to make this       
Prospectus, as it may be amended or supplemented from time to time, available to
broker-dealers for use in connection with any resale for a period of one year   
following the Effective Date. See "Plan of Distribution."                       

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS 

The following discussion summarizes the material United States federal
income tax consequences of the Exchange Offer to a holder of Existing Notes that
is an individual citizen or resident of the United States or a United States    
corporation that purchased the Existing Notes pursuant to their original issue  
(a "U.S. Holder"). It is based on the Internal Revenue Code of 1986, as amended 
to the date hereof (the "Code"), existing and proposed Treasury regulations, and
judicial and administrative determinations, all of which are subject to change  
at any time, possibly on a retroactive basis. The following relates only to the 
Existing Notes, and the New Notes received therefor, that are held as "capital  
assets" within the meaning of Section 1221 of the Code by U.S. Holders. It does 
not discuss state, local, or foreign tax consequences, nor does it discuss tax  
consequences to subsequent purchasers (persons who did not purchase the Existing
Notes pursuant to their original issue ), or to categories of holders that are  
subject to special rules, such as foreign persons, tax-exempt organizations,    
insurance companies, banks, and dealers in stocks and securities. Tax           
consequences may vary depending on the particular status of an investor. No     
rulings will be sought from the Internal Revenue Service with respect to the    
federal income tax consequences of the Exchange Offer.                          

   In the opinion of Dechert Price & Rhoads, counsel to the Company, (a) the
exchange of Notes pursuant to the Exchange Offer should not be a taxable event  
for a U.S. Holder as set forth below under the caption "-- The Exchange Offer", 
and (b) the summary of the United States federal income tax consequences to a   

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U.S. Holder that appears below under the captions "-- Stated Interest",         
"-- Sale, Exchange or Retirement of the Notes" and "-- Backup Withholding" is   
accurate in all material respects.                                              

  THIS SECTION DOES NOT PURPORT TO DEAL WITH ALL ASPECTS OF FEDERAL INCOME
TAXATION THAT MAY BE RELEVANT TO AN INVESTOR'S DECISION TO EXCHANGE EXISTING    
NOTES FOR NEW NOTES. EACH INVESTOR SHOULD CONSULT WITH ITS OWN TAX ADVISOR      
CONCERNING THE APPLICATION OF THE FEDERAL INCOME TAX LAWS AND OTHER TAX LAWS TO 
ITS PARTICULAR SITUATION BEFORE DETERMINING WHETHER TO EXCHANGE EXISTING NOTES  
FOR NEW NOTES.                                                                  

THE EXCHANGE OFFER                                                              

In the opinion of Dechert Price & Rhoads, counsel to the Company, the 
exchange of Existing Notes pursuant to the Exchange Offer should be treated as a
continuation of the corresponding Existing Notes because the terms of the New   
Notes are not materially different from the terms of the Existing Notes, and    
accordingly (i) such exchange should not constitute a taxable event to a U.S.   
Holder, (ii) no gain or loss should be realized by a U.S. Holder upon receipt of
a New Note, (iii) the holding period of the New Note should include the holding 
period of the Existing Note exchanged therefor and (iv) the adjusted tax basis  
of the New Note should be the same as the adjusted tax basis of the Existing    
Note exchanged therefor immediately before the exchange.                        

STATED INTEREST                                                                 

Stated interest on a Note will be taxable to a U.S. Holder as ordinary
interest income at the time that such interest accrues or is received, in       
accordance with the U.S. Holder's regular method of accounting for federal      
income tax purposes. The Notes are not considered to have been issued with      
original issue discount for federal income tax purposes.                        

SALE, EXCHANGE OR RETIREMENT OF THE NOTES                                       

A U.S. Holder's tax basis in a Note generally will be its cost. A U.S.
Holder generally will recognize gain or loss on the sale, exchange or retirement
of a Note in an amount equal to the difference between the amount realized on   
the sale, exchange or retirement and the tax basis of the Note. Gain or loss    
recognized on the sale, exchange or retirement of a Note (excluding amounts     
received in respect of accrued interest, which will be taxable as ordinary      
interest income) generally will be capital gain or loss. A U.S. Holder who is an
individual or other person not taxable as a corporation for federal income tax  
purposes who has held a Note for more than 18 months is subject to a maximum    
rate of tax of 20% on any capital gain recognized upon its disposition. A       
noncorporate U.S. Holder who has held a Note for more than 12 months but not    
more than 18 months is subject to a maximum rate of tax of 28% on any capital   
gain recognized upon its disposition. Gain recognized by a noncorporate U.S.    
Holder who has held a Note for 12 months or less may be taxed at ordinary income
rates. Capital losses of noncorporate U.S. Holders in excess of capital gains   
may be offset against ordinary income up to $3000; excess capital losses may be 
carried forward to subsequent years. Capital gains of a U.S. Holder taxable as a
corporation for federal income tax purposes is classified as long or short term 
depending upon whether the Note has been held for more than 12 months.          

BACKUP WITHHOLDING                                                              

Under certain circumstances, a U.S. Holder of a Note may be subject to
"backup withholding" at a 31% rate with respect to payments of interest thereon 
or the gross proceeds from the disposition thereof. This withholding generally  
applies if the U.S. Holder fails to furnish his or her social security number or
other taxpayer identification number in the specified manner and in certain     
other circumstances. Any amount withheld from a payment to a U.S. Holder under  
the backup withholding rules is allowable as a credit against such U.S. Holder's
federal income tax liability provided that the required information is furnished
to the IRS. Corporations and certain other entities described in the Code and   
Treasury regulations are exempt from backup withholding if their exempt status  
is properly established.                                                        

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BUSINESS

GENERAL                                                                         

The Company owns and operates the Riviera located on the Strip in Las 
Vegas, Nevada. Opened in 1955, the Riviera has developed a long-standing        
reputation for delivering high quality, traditional Las Vegas-style gaming and  
entertainment. The Riviera is situated on a 26-acre site, located across the    
Strip from Circus Circus and across Paradise Road from the Las Vegas Hilton and 
the Las Vegas Convention Center. The property features approximately 2,100 hotel
rooms, including 169 suites, 105,000 square feet of casino space, one of the    
largest convention, meeting and banquet facilities in Las Vegas, four           
full-service restaurants, a large buffet, four showrooms, an entertainment      
lounge, 43 food and retail concessions and approximately 2,900 parking spaces.  
The casino contains approximately 1,300 slot machines, 50 gaming tables, a keno 
lounge and a 200-seat race and sports book. The Riviera offers one of the most  
extensive entertainment programs in Las Vegas, including the award winning show,
Splash(R). The Company, through its gaming management subsidiary, also manages  
the Four Queens on Fremont Street in downtown Las Vegas.                        

From 1992 to the end of 1996, the Riviera's management team achieved  
consistent growth in EBITDA and profit margins. EBITDA has increased over 44%   
from $21.8 million in 1992 to $31.5 million in 1996 and EBITDA margins have     
improved from 15.1% to 19.2% over the same period. The Company achieved this    
growth through the implementation of a number of strategic initiatives that     
included (i) refocusing its marketing strategy from "high-rollers" to adult     
mid-level gaming customers, a niche that management believes has been           
underserved, (ii) focusing on conventioneers who pay higher room rates, causing 
Riviera's ADR to increase from $47 in 1992 to $57 in 1996, (iii) aggressively   
marketing its hotel facilities resulting in occupancy rates growing from 90.6%  
in 1992 to 98.2% in 1996, (iv) emphasizing higher margin slot play which        
increased slot revenue by 33.0% from 1992 to 1996 and (v) investing             
approximately $47 million in capital improvements since 1992. Management        
believes that it has also improved the stability of EBITDA by providing a broad 
entertainment experience (1996 non-gaming revenues: 55% vs. 47% for other       
casinos on the Strip), focusing on conventioneers (approximately 30% of midweek 
room nights pre-sold through June 1999) and developing a repeat and loyal       
customer base through proprietary database marketing.                           

GROWTH OPPORTUNITIES                                                            

The Company seeks to continue its growth in EBITDA and profits by     
maximizing the potential of the Riviera's prime Strip frontage and capitalizing 
on the proven strength of its management team by leveraging its talents across  
multiple properties. To achieve this goal, the Company is pursuing the following
opportunities:                                                                  

     Riviera Expansion. By the end of 1997, management expects to have completed
the upgrade of the slot machines and refurbished substantially all of the hotel 
rooms at the Riviera. To continue capitalizing on the Riviera's prime Strip     
frontage, the Company is developing the Nickel Plaza, a new 10,000 square-foot  
gaming area fronting the Strip complete with 350 slot machines, a bar, snack bar
and souvenir shop, which is expected to be completed by the end of December     
1997. Nickel Plaza will be ideally positioned to attract the additional walk-in 
traffic from the newly built 1,000 rooms directly across the Strip at Circus    
Circus and the expansions of the Las Vegas Hilton and the Las Vegas Convention  
Center. Management expects Nickel Plaza will be developed for an estimated cost 
of $5 million. To maintain and enhance its core conventioneer customer base, the
Company also plans to expand its convention center from 100,000 square feet to  
158,000 square feet by constructing new state-of-the-art, multi-level,          
convention, meeting and banquet facilities. Construction commenced in November  
1997 and is expected to be completed by the end of the third quarter of 1998.   
Management believes this expansion, which is estimated to cost approximately $15
million, will further solidify the Riviera as one of the premier convention     
sites in Las Vegas. In addition, the Company owns approximately six acres of    
contiguous property which is available for future expansion.                    

    The Black Hawk Project. As part of the Company's strategy to diversify its
revenue base and leverage both the Riviera name and its management team, the    
Company pursues development opportunities in both established and emerging      
gaming markets. The Company has acquired for $15 million a certain parcel of    
real property in Black Hawk, Colorado (the "Black Hawk Land"), which management 
believes to be the premier                                                      

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gaming site in Colorado. The Company intends to use this site to construct one  
of the largest gaming facilities in the adjacent gaming cities of Black Hawk and
Central City, Colorado (the "Black Hawk Project"). The Black Hawk Project is    
expected to feature approximately 1,000 slot machines, 14 table games, an       
approximately 520 space covered parking garage and entertainment and food       
service amenities. Management believes this market has attractive fundamentals, 
including (i) gaming limited to Black Hawk/Central City and Cripple Creek in    
Colorado, (ii) consistent gaming revenue growth since 1992 to over $300 million 
in 1996, (iii) slot machine dominated market due to statutory limited stakes,   
(iv) one hour drive from central Denver and (v) approximately 2.3 million adults
residing within 100 miles of Black Hawk. Management believes that the proposed  
Riviera facility will be highly successful due to the following attributes: (i) 
premier location: it will be the first gaming site encountered when arriving    
from Denver, (ii) size and quality: it will be one of the largest casinos in the
market complete with restaurant and entertainment options and (iii) superior    
parking: it will have on-site, covered self-parking, which is critical in this  
market where parking is currently extremely limited. The Black Hawk Project is  
an attractive investment opportunity that allows the Company to create a        
multi-jurisdictional gaming company. The Company currently estimates that total 
costs for completion of the Black Hawk Project will be approximately $60        
million, a $5 million increase over previous estimates resulting from the       
announcement of additional projects by competitors. The Company purchased the   
Black Hawk Land in August 1997 for $15 million, which was financed by the net   
proceeds from the sale of the Notes, and expects to finance the remainder of the
Black Hawk Project from a combination of third party financing and additional   
investment by the Company, including up to an additional $15 million of the net 
proceeds from the sale of the Notes. The Company expects to receive the         
necessary excavation and other permits in the near future, with construction of 
the casino commencing shortly thereafter. The casino is scheduled to open during
mid-1999.                                                                       

Casino/Hotel Management Contracts. The Company believes that there is 
increasing demand for the services of skilled gaming and hospitality            
professionals. In order to capitalize on management's reputation and experience 
as successful casino operators, the Company formed Riviera Gaming Management,   
Inc. ("RGM") for the primary purpose of obtaining casino management contracts   
with casinos/hotels in Nevada and other jurisdictions. Since August 1996, RGME, 
as subsidiary of RGM, has managed the Four Queens located adjacent to the Golden
Nugget on Fremont Street in downtown Las Vegas. Under the Four Queens management
contract, RGME receives a guaranteed minimum management fee plus additional     
compensation based on EBITDA improvement of the Four Queens, and Warrants to    
purchase 1,125,000 shares of Elsinore common stock (equal to 18.4% of the equity
of Elsinore on a fully diluted basis) at $1.00 per share. Such management       
contract provides significant revenues and upside equity potential with minimal 
additional overhead and capital expenditure. Under RGME, Four Queens' EBITDA    
improved by approximately 12% in the twelve months ended September 30, 1997,    
compared to the same period in 1996 and generated approximately $1.0 million in 
management fees for the Company. Management is continually evaluating           
opportunities to manage other casinos/hotels.                                   

THE RIVIERA                                                                     

     The Riviera is located on the corner of the Strip and Riviera Drive, across
from Circus Circus. The back of the 26-acre property fronts Paradise Road across
from the Las Vegas Hilton and the Las Vegas Convention Center. The Riviera is   
strategically located to take advantage of the high tourist traffic along the   
Strip as well as the increasing number of convention customers that use the Las 
Vegas Convention Center.                                                        

The Company is continuing an extensive capital investment program,    
including completion of the upgrade of its slot machines and refurbishment of   
substantially all of its hotel rooms by the end of 1997. When the Company       
acquired the Riviera on June 30, 1993, it embarked on a refurbishing and        
upgrading program and will have invested approximately $50 million in such      
efforts by the end of 1997. Between July 1, 1993 and December 31, 1997, the     
Company will have spent $21.6 million refurbishing its 2,100 rooms, including   
installation of a card key entry system and new telephone computer switch       
equipment and other similar upgrades; $8.7 million upgrading its slot machines  
so that they can be competitive with slot machines of other Las Vegas Strip     
casinos and reducing the average age of the equipment to less than three years; 
$2.6 million remodeling bars, restaurants and convention banquet areas; $1.3    
million remodeling the show rooms and                                           

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upgrading light and sound equipment; $10.7 million upgrading the life safety,   
heating and cooling and other back of the house support systems; and $4.6       
million upgrading its computer systems, including casino rating software, slot  
tracking systems and payroll management systems, all with the objective of      
controlling costs and enhancing customer service.                               

 Gaming. The Riviera has 105,000 square feet of casino space. The casino
currently has approximately 1,300 slot machines and 50 gaming tables, including 
blackjack, craps, roulette, pai gow poker, Caribbean Stud(R) poker, baccarat,   
Let It Ride(R) and poker. The casino also includes a keno lounge and a 200-seat 
race and sports book.                                                           

     Gaming operations at the Riviera are continually updated to respond to both
changing market conditions and customer demand in an effort to attract new      
customers and encourage repeat customer business through player tracking and    
database management. The Company maintains a slot players club, through which   
members receive special promotions and targeted mailings. New and innovative    
slot and table games have been introduced based on customer feedback. Management
devotes substantial time and attention to the type, location and player activity
of all its slot machines. The Company is continuing an extensive capital        
investment program for the upgrade of its slot machines which is expected to be 
completed by the end of 1997.                                                   

 The current management team has made an effort to redirect its business
away from high-stakes wagerers in favor of focusing on highly profitable, less  
volatile mid-level gaming customers consistent with its focused marketing       
efforts. In order to effectively pursue this strategy, management has made      
several strategic changes including reconfiguring the casino space to improve   
the flow of customer traffic, installing new slot machines and bill acceptors,  
reducing the number of gaming tables and de-emphasizing baccarat. In addition,  
management implemented stricter credit policies and reduced baccarat table      
limits. As a result, the percentage of table game dollar volume represented by  
credit play declined from approximately 24% in 1993 to 15% in 1996. Also, in    
1996, revenues from slots and tables were approximately 70% and 30%,            
respectively, as compared to 55% and 45%, respectively, in 1992. Because the    
extension of credit is not necessary for success with mid-level gaming          
customers, losses on uncollectible and discounted receivables have declined     
significantly. Receivables from casino operations declined from approximately   
$2.9 million at December 31, 1993 to approximately $2.3 million at December 31, 
1996 and the allowance for bad debts and discounts from casino operations       
declined from approximately $800,000 to $400,000 during the same period. These  
reductions have resulted primarily from the imposition of stricter credit       
standards.                                                                      

The Company currently has detailed plans to further capitalize on the 
Riviera's prime Strip frontage and proximity to the Las Vegas Convention Center 
through additional development and expansion on the existing 26-acre site. To   
attract walk-in traffic from the nearby hotel casinos and motels (Circus Circus,
Westward Ho, Stardust, Sahara, El Rancho) which have more than 10,000 rooms, the
Company is in the process of developing a 10,000 square-foot "Nickel Plaza" on  
the corner of Las Vegas Boulevard and Riviera Boulevard at the crosswalk from   
Circus Circus and the local Strip bus stop at an estimated cost of about $5     
million. The facility will contain 350 slot machines, a bar, snack bar and      
souvenir shop. Food and beverage items will be priced very attractively and     
promoted extensively. Dramatic signage and lighting effects compatible with the 
property's existing facade facing Las Vegas Boulevard will create a "must see"  
effect for passersby on both sides of Las Vegas Boulevard. The Company believes 
that the nickel player represents the most rapidly growing segment of the Las   
Vegas gaming market and is frequently neglected by the Company's major          
competitors who focus their slot products on higher denominations. Two-thirds of
the devices in Nickel Plaza will be nickel machines. The Company has commenced  
construction, with a completion date scheduled for December 31, 1997.           

Hotel. The Riviera's hotel is comprised of five hotel towers with     
approximately 2,100 rooms, including 169 suites. Built in 1955 as part of the   
original casino/hotel, the nine-story North Tower features 391 rooms and 11     
suites. In 1967, the 12-story South Tower was built with 147 rooms and 31       
suites. Another 220 rooms and 72 suites, including penthouse suites, were added 
to the property through the construction of the 17-story Monte Carlo Tower in   
1974. In 1977, the six-story San Remo Tower added 243 rooms and six suites to   
the south side of the resort. The most recent phase of hotel expansion was      
completed in 1988 upon the opening of the 930 room, 49 suite, 24-story Monaco   
Tower. The Company is currently refurbishing all of its rooms, with             

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approximately 2,000 completed through September 1997 and substantially all of   
the balance expected to be completed by the end of 1997 for an additional $2.5  
million. Despite the significant increase in rooms on the Strip in the last     
three years, management believes that the Riviera has attained room occupancy   
rates that are among the highest on the Strip with 97.5% for 1994, 97.0% for    
1995, and 98.2% for 1996 (based on available rooms). The average occupancy rate 
for the Strip was 91.4% in 1996. Room revenue has increased from $35.4 million  
in 1993 to $41.8 million in 1996, an increase of 18.1%. Management believes that
this performance can be attributed to its targeted and coordinated marketing    
strategy, particularly its focus on conventioneers.                             

   Restaurants. The quality, value and variety of food services are critical
to attracting Las Vegas visitors. The Riviera offers four bars and five         
restaurants and serves an average of approximately 5,000 meals per day,         
including banquets and room service. The following table outlines, for each     
restaurant, the type of service provided and total seating capacity:            

                                                        [Enlarge/Download Table]

                        NAME                                  TYPE         CAPACITY SEATING
-----------------------------------------------------  ------------------- ----------------
                                                                                           
Kady's...............................................  Coffee Shop                 290     
Kristofer's..........................................  Steak and Seafood           162     
Rik' Shaw............................................  Chinese                     124     
Ristorante Italian...................................  Italian                     126     
World's Fare Buffet..................................  All-you-can-eat             432     
                                                                                 -----     
     Total...........................................                            1,134     
                                                                                 =====     

     In addition, the Riviera has a food court operated by a third party under a
long-term lease with 200 seats and several branded, popular fast-food           
restaurants, including Burger King(R), Panda Express(R), Pizza Hut(R) and       
"TCBY"(R).                                                                      

    Convention Center. The Riviera features 100,000 square feet of convention,
meeting and banquet space. The convention center is one of the largest in Las   
Vegas and is an important feature that attracts customers. The facility can be  
reconfigured for multiple meetings of small groups or large gatherings of up to 
5,000 people. The Riviera hosts approximately 150 conventions per year. As of   
June 30, 1997, convention related advance bookings of rooms totaled             
approximately 446,000 for 1998 and 1999, which includes 331,000 definite        
bookings and 115,000 tentative bookings. On average, approximately 25% of the   
rooms are occupied for conventions.                                             

   The Company intends to increase its emphasis on the convention segment of
its business and the Clark County Planning Commission has recently approved the 
expansion of the Company's convention facility. In 1998, the Company plans to   
expand its convention center from 100,000 to 158,000 square feet by constructing
new state-of-the-art, multi-level, convention, meeting and banquet facilities.  
The new facility will feature 46,000 square feet of exhibit space, 10 breakout  
meeting rooms totaling 7,200 square feet and 20 sky box/ hospitality suites     
totaling 17,200 square feet. Overlooking the exhibit floor, the sky             
box/hospitality suites will range from 540 to 1,300 square feet and can be      
interconnected to accommodate larger groups. All units will have two tiers of 12
theater seats and the 1,300 square-foot boxes will be equipped with wet bars and
private restrooms. The new convention/entertainment facility will have a total  
concert seating capacity of 5,700 and will be able to accommodate up to 2,500   
for sit-down banquets. Other features will include a portable stage, ceiling    
tech booth, entertainer dressing rooms with full baths and an approximately 200 
space underground parking facility with elevator access to all floors. The new  
addition will connect to the existing convention facility and the main hotel    
buildings by a covered walkway.                                                 

Combined with the existing convention facility, the Riviera will offer
convention and meeting planners 90,640 square feet of exhibit space, 19 breakout
rooms with a total of 21,000 square feet, an additional 17,200 square feet in   
the 20 interconnecting sky box/hospitality suites and a 15,000 square-foot foyer
with two registration desks, a business center and connecting offices, and a    
full-service banquet kitchen. In addition to the new 192 space underground      
parking facility, the convention facility will have direct access to a 1,600    
space covered parking garage. The Company expects the expanded convention center
to be one of the premier convention facilities in Las Vegas, ideally positioned 
to take advantage of the growing convention business.                           

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    The new facility will generate increased banquet, rental and entertainment
revenue. In addition, the Company believes that with the expanded               
state-of-the-art facilities, hotel room nights occupied by conventioneers will  
increase as a percentage of total room nights. This will increase ADR since     
convention rates are considerably more than those for all other occupancy       
segments. The Company's architect is currently finalizing drawings for          
permitting and bidding. Construction commenced in November 1997 and is expected 
to be completed in the third quarter of 1998.                                   

Entertainment and Other. The Riviera has one of the most extensive    
entertainment programs in Las Vegas, offering four different regularly scheduled
shows and special appearances by headline entertainers in concert. The four     
in-house productions are regularly updated. In December 1994, the award winning 
Splash(R) production was closed in order to revise the show and remodel the     
showroom for the new Splash(R), which opened on June 23, 1995. The readers of   
the Las Vegas Review Journal recently voted The Riviera Comedy Club(SM) the     
number one comedy club in Las Vegas and Crazy Girls cast the most beautiful     
showgirls in Las Vegas. A summary of the shows and times is outlined below:     

                                                        [Enlarge/Download Table]

                                                                                           CAPACITY
            SHOW                          TYPE                    PERFORMANCE TIMES        SEATING 
-----------------------------  ---------------------------  -----------------------------  --------
                                                                                                   
Splash(R)....................  Variety show                 Twice a night, seven nights       950  
                                                            per week                               
An Evening at La Cage(R).....  Female impersonation         Twice a night, five nights        575  
                                                            per week; three times on               
                                                            Wednesday                              
Crazy Girls..................  Adult-oriented production    Twice a night, five nights        410  
                                                            per week; three times a night          
                                                            on Saturday                            
The Riviera Comedy                                                                                 
  Club(SM)...................  Stand-up comedy              Twice a night, five nights        350  
                                                            per week; three times a night          
                                                            on Friday & Saturday                   

  Other entertainment includes the 200-seat Le Bistro entertainment lounge
located in the casino which offers live performances six times per night. In    
addition, the Riviera sponsors special events, such as the Las Vegas Bowl       
football game, and presents major concerts such as the Beach Boys, the Pointer  
Sisters, Drew Carey and the Doobie Brothers.                                    

   Entertainment revenues have increased from $16.5 million in 1993 to $20.9
million in 1996, a 26.7% increase. Management believes that this increase is    
attributable to the increasing popularity of the in-house productions.          

FUTURE EXPANSIONS                                                               

   Future plans for the development of the Riviera include development of an
approximately 60,000 square-foot domed shopping center and entertainment complex
to be constructed directly over the casino and containing stores and            
entertainment that will appeal to the Riviera's main target audience, adults    
aged 45 to 65. The exit from the complex will be by an escalator which will     
deliver patrons to the casino. The Company expects to find partners to finance, 
develop and operate the entertainment attraction and retail stores.             

   The Company also has approximately six acres of its existing 26-acre site
available for additional development. The Company is exploring a number of      
options in order to make the best use of this valuable land, including a joint  
venture for the development of a time-share condominium tower. The Company      
expects it would contribute up to 6 acres of land to such a joint venture and a 
third party would construct and sell time-share units and arrange financing.    
Management believes that additional rooms adjacent to the Las Vegas Convention  
Center would be particularly attractive to business customers and would provide 
a base for additional casinos customers. The development of a time-share tower  
or parking facility would require additional financing and, in the case of the  
time-share tower, a joint venture partner, none of which the Company has in     
place at the time.                                                              

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MARKETING STRATEGY                                                              

  Since 1992, the Riviera's management team implemented numerous programs,
aimed at repositioning the Riviera and refocusing its marketing efforts. Such   
initiatives included targeting California and the southwestern United States and
emphasizing mid-level gaming customers, particularly slot players, as opposed to
"high rollers." Management believes that adult mid-level gaming customers are   
underserved. Management reconfigured the casino space to improve the flow of    
customer traffic, installed new slot machines and bill acceptors, reduced the   
number of gaming tables and de-emphasized baccarat. In addition, management     
reduced credit limits, outsourced the Company's sports book and shifted to      
parimutuel horse wagering, thereby decreasing the volatility of gaming revenues.
Also, improved hotel marketing efforts resulted in one of the highest room      
occupancy rates on the Strip.                                                   

  The Riviera will continue to emphasize marketing programs that appeal to
slot and mid-level table game customers with a focus on creating repeat         
customers and increasing walk-in traffic. In addition, a key marketing focus is 
maintaining and expanding Riviera's core conventioneer customer base. In        
developing its overall marketing programs, the Company conducts extensive,      
ongoing research of its target customers' preferences through written surveys,  
one-on-one interviews and focus groups.                                         

   Emphasize Slot Play. Management instituted a number of initiatives at the
Riviera to increase slot play, including the replacement of old slot machines,  
the installation of bill acceptors and the addition of slot hosts. The Company's
strategy is to continue to increase slot play through marketing programs and    
other improvements, including (i) completion of the Company's slot upgrade      
program by December 31, 1997, (ii) addition of new signage, (iii) promotion of  
the Riviera Player's Club, (iv) sponsorship of slot tournaments, (v) creation of
promotional programs and (vi) marketing of the "World's Loosest Corner of Slots"
and "$40 for $20" slot promotions.                                              

   One of the Company's most successful permanent promotions is its "$40 for
$20" slot promotion which attracts slot players to the casino. The promotion    
offers $40 of slot play on certain promotional machines for $20 cash. If the    
customer does not win a jackpot of at least $40, a prize with a retail value of 
at least $20 is awarded. While the Riviera's competitors' promotions normally   
result in a cost (loss) to the casino department, this innovative program has a 
positive EBITDA (exclusive of ancillary slot play) which is used to offset other
marketing costs, including "free pulls," drawings, advertising and general      
marketing. The sign-up counter and the promotion machines are located near an   
entrance to the casino and often draw long lines of patrons. The Company has    
introduced this promotion at the Four Queens and has been approached to license 
this promotion to other casinos as well, which it may do in the future. Another 
successful promotion is the "World's Loosest Corner of Slots" which is an area  
of the casino that contains banks of slot machines with the guaranteed highest  
payback percentages of any similar machines in Las Vegas. Like the "$40 for $20"
slot promotion, the "World's Loosest Corner of Slots" is located near an        
entrance to the casino to attract walk-in traffic. These promotions have        
produced significant income from both repeat and walk-in customers within the   
Riviera's targeted market segments.                                             

Create Repeat Customers. Generating customer loyalty is a critical    
component of management's business strategy as retaining customers is less      
expensive than attracting new ones. The Company has developed a focused and     
coordinated marketing program intended to develop a loyal customer base which   
emphasizes (i) providing a high level of service to its customers to ensure an  
enjoyable experience while at the Riviera, (ii) responding to customer surveys  
and (iii) focusing marketing efforts and promotional programs on customers with 
positive gaming profiles. The Company uses its research data to tailor          
promotional offers to the specific tastes of targeted customers. All slot and   
table players are encouraged to join the Riviera Player's Club and to fill out  
surveys that provide the Riviera with personal information and preferences and  
tracks their level of play. Members of the Riviera Player's Club earn bonus     
points based upon their level of play, redeemable for free gifts, complimentary 
services or cash rebates. Promotional offers are made to qualifying customers   
through direct mail and telemarketing. The Company designs promotional offers   
targeted at certain mid-level gaming patrons that are expected to provide       
significant revenues based upon their historical gaming patterns. The Company   
contacts these customers through a combination of direct mail and telemarketing 
by an in-house marketing staff and independent representatives located in major 
cities. The Riviera uses a                                                      

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proprietary database which is linked to its player tracking system to help      
identify customers' requirements and preferences; thereby allowing the Riviera  
to customize promotions to attract repeat visitors. The Company offers customers
personalized service, credit availability and access to a variety of            
complimentary or reduced-rate room, dinner and entertainment reservations.      
Management uses a specialized multi-tiered marketing approach to attract        
customers in each of its major market segments. Slot and table game tournaments 
and special events are designed for specific levels of play. Utilizing its      
proprietary database the Company's marketing department then targets and invites
the customers most appropriate for the customized events. In addition, the      
Company hosts an array of special events, including slot and table tournaments, 
designed to attract customers for an extended stay. Management has found that   
this individualized marketing approach has provided significant revenues and    
profitable repeat business.                                                     

    Provide Extensive Entertainment Options. The Company focuses on attracting
its guests through a range of entertainment opportunities. The Riviera has one  
of the most extensive entertainment programs in Las Vegas with four different   
regularly scheduled shows and special appearances by headline entertainers. In  
addition to providing a positive impact on the Company's profitability, the     
shows attract additional gaming revenue. Surveys indicate that approximately 80%
of the show patrons come from outside the hotel and approximately 66% of these  
individuals gamble at the Riviera before or after the shows. In addition, the   
Riviera offers a variety of quality dining options, a range of accommodations   
from deluxe rooms to penthouse suites, a 75,000 square-foot pool area with an   
olympic-size swimming pool, tennis courts, fitness center, spa and 43 retail    
outlets located throughout the property. The Company believes that it offers a  
value-oriented experience by providing a variety of hotel rooms, restaurants and
entertainment, with some of Las Vegas' most popular shows, all at reasonable    
prices.                                                                         

     Attract Walk-In Traffic. The Company seeks to maximize the number of people
who patronize the Riviera that are not guests in the hotel by capitalizing on   
Riviera's prime Strip location, convention center proximity and the Riviera's   
several popular in-house productions. The Riviera is well situated on the Las   
Vegas Strip near Circus Circus, The Stardust Hotel & Casino, the Westward Ho    
Casino & Hotel, the Las Vegas Hilton and the Las Vegas Convention Center.       
Management strives to attract customers from those facilities, as well as       
capitalize on the growth in Las Vegas visitors in general, with the goal of     
increasing walk-in traffic by (i) providing a variety of quality, value-priced  
entertainment and dining options, (ii) promoting the "World's Loosest Corner of 
Slots" and "$40 for $20" slot promotions, and placing them near the entrances to
the casino, (iii) upgrading the exterior of the Riviera including painting,     
lighting and landscaping and (iv) developing the Nickel Plaza.                  

    Focus on Convention Customers. This market segment consists of two groups:
(i) those trade organizations and groups that hold their events in the banquet  
and meeting space provided by a single hotel and (ii) those attending citywide  
events, usually held at the Las Vegas Convention Center. The Riviera targets    
convention business because it typically provides patrons willing to pay higher 
room rates and provides certain advance planning benefits, since conventions are
usually booked two years in advance of the event date. The Riviera has 100,000  
square feet of exhibit, meeting and banquet space (one of the largest convention
facilities provided by a casino/hotel in Las Vegas), making it attractive to    
large groups. Management focuses its marketing efforts on conventions whose     
participants have the most active gaming profile and higher room rate, banquet  
and function spending habits. The Riviera also benefits from its proximity to   
the Las Vegas Convention Center which makes it attractive to city-wide          
conventioneers looking to avoid the congestion that occurs during a major       
convention, particularly at the south end of the Strip. The Riviera currently   
has 251 conventions scheduled through June 1999 to use the Riviera's convention 
facilities. Management believes that its plans to further develop the Riviera's 
convention center will attract significant additional convention business. After
completion of its expanded convention center to 158,000 square feet at the end  
of the third quarter of 1998, the Company believes its competitive position in  
the market for convention space and the corresponding hotel room occupancy by   
convention attendees will be significantly increased.                           

     The Company focuses its marketing efforts in the southwestern United States
during the spring and summer months and in the midwestern United States during  
the fall and winter months to effectively capitalize on the vacation patterns of
the Riviera's target customers in those markets. Marketing efforts in California
are consistent throughout the year reflecting the constant flow of California   
residents to Las Vegas.                                                         

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Management has found that many of its customers use tour and travel "package"   
options to reduce the cost of travel, lodging and entertainment. These packages 
are produced by wholesale operators and travel agents and emphasize mid-week    
stays. Tour and travel patrons often book at off-peak periods enabling the      
Company to maintain occupancy rates at the highest levels throughout the year.  
Management has developed specialized marketing programs and cultivated          
relationships with wholesale operators, travel agents and major domestic air    
carriers to expand this market. The Company's four largest tour and travel      
operators, including America West Vacations, currently account for approximately
524 room bookings per night. The Company has successfully converted many tour   
and travel customers who meet the Company's target customer profile into repeat 
customers.                                                                      

RIVIERA GAMING MANAGEMENT                                                       

In order to capitalize on management's expertise and reputation as    
successful operators of casino properties, the Company formed RGM, a wholly     
owned subsidiary of the Company, for the primary purpose of obtaining casino    
management contracts in Nevada and other jurisdictions. RGM provides services   
such as assisting new venue licensee applicants in designing and planning their 
gaming operations and managing the start-up of new gaming operations. These     
services include casino design, equipment selection, employee recruitment and   
training, control and accounting systems and marketing programs. Management     
believes that management contracts provide high margin income with limited      
additional overhead and little or no capital expenditure requirements.          
Management is continually evaluating opportunities to manage other casinos/     
hotels. The Company's objective is to obtain the right to a substantial equity  
position in projects it would manage as part of the compensation for its        
services.                                                                       

     Four Queens Management Agreement. Since August 1996, RGM has been operating
the Four Queens located adjacent to the Golden Nugget on Fremont Street in      
downtown Las Vegas under an interim management agreement for a fee of $83,333   
per month. A long-term management agreement with Elsinore, the owner of the Four
Queens, went into effect on February 28, 1997, the effective date of the Chapter
11 plan of reorganization of Elsinore.                                          

     The term of the management agreement is approximately 40 months, subject to
earlier termination or extension. Either party may terminate if the Four Queens'
cumulative EBITDA for the first two fiscal years is less than $12.8 million. The
term can be extended by an additional 24 months at RGM's option, if the Four    
Queens' cumulative EBITDA for the three fiscal years of the term is at least    
$19.2 million. RGM will be paid a fee of 25% of any increase in the Four Queens'
annual EBITDA over $4.0 million, subject to a $1.0 million minimum fee, payable 
in equal monthly installments. RGM has received warrants to purchase 1,125,000  
shares of common stock of Elsinore, exercisable during the term or extended term
of the management agreement at an exercise price of $1.00 per share. If the     
proposed acquisition of Elsinore by an affiliate of Mr. Allen E. Paulson is     
consummated (see "The Proposed Merger -- The Elsinore Transaction"), the Company
would receive $2,430,000 (i.e., the spread between the per share warrant price  
and the per share merger price multiplied by 1,125,000).                        

  Either party can terminate the management agreement if (i) substantially
all the Four Queens' assets are sold, (ii) the Four Queens is merged or (iii) a 
majority of the Four Queens' or Elsinore's shares are sold. Upon such           
termination, RGM will receive a $2.0 million termination bonus minus any amount 
realized or realizable upon exercise of the warrants.                           

LAS VEGAS MARKET                                                                

   Las Vegas is one of the largest and fastest growing entertainment markets
in the country. According to the Las Vegas Convention and Visitors Authority    
(the "LVCVA"), the number of visitors traveling to Las Vegas has increased at a 
steady and significant rate for the last eleven years from 15.2 million in 1986 
to 29.6 million in 1996, a compound annual growth rate of 6.9%. Clark County    
gaming has continued to be a strong and growing business with Clark County      
gaming revenues increasing at a compound annual growth rate of 9.2% from $2.4   
billion in 1986 to $5.8 billion in 1996.                                        

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  The Riviera targets the large and expanding Las Vegas tourist and gaming
market. Las Vegas is the largest city in Nevada, with a local population in     
excess of one million, and is Nevada's principal tourist center. Gaming and     
tourism are the major attractions, complemented by warm weather and the         
availability of many year-round recreational activities. Although Las Vegas'    
principal markets are the western region of the United States, most             
significantly Southern California and Arizona, Las Vegas also serves as a       
destination resort for visitors from all over the world. A significant          
percentage of visitors originate from Latin America and Pacific Rim countries   
such as Japan, Taiwan, Hong Kong and Singapore.                                 

   Historically, Las Vegas has had one of the strongest hotel markets in the
country. The number of hotel and motel rooms in Las Vegas has increased by over 
40% from approximately 67,000 at the end of 1989 to 95,000 at the end of 1996,  
giving Las Vegas the most hotel and motel rooms of any metropolitan area in the 
country. Despite this significant increase in the supply of rooms, the Las Vegas
hotel occupancy rate exceeded 91% for each of 1993, 1994, 1995 and 1996. Since  
January 1, 1996, approximately 4,700 new hotel rooms opened and as of December  
31, 1996, there were over 9,200 hotel rooms under construction (which combined  
constitutes a 14.7% increase in the number of hotel and motel rooms in Las      
Vegas) and the LVCVA estimated that approximately 60,000 additional hotel rooms 
were proposed for construction. However, the Company believes that many of these
projects will not materialize. The new rooms under construction are primarily   
being designed to attract the high end gaming and convention customers, and     
based on construction costs will be priced at rates well above those which have 
been or can be charged by the Riviera based on the investment in its facility.  

The Company believes that the growth in the Las Vegas market has been 
enhanced as a result of (i) a dedicated program by the LVCVA and major Las Vegas
casino/hotels to promote Las Vegas as a major convention site, (ii) the         
increased capacity of McCarran Airport and (iii) the introduction of large      
themed "must see" destination resorts in Las Vegas. In 1987, approximately 1.7  
million people attended conventions in Las Vegas and generated approximately    
$1.2 billion of non-gaming economic impact. In 1996, the number of convention   
delegates had increased to 3.3 million with approximately $3.9 billion of       
non-gaming economic impact. According to the LVCVA, Las Vegas was the largest   
convention market in the country in 1996.                                       

     During the past five years, McCarran Airport has expanded its facilities to
accommodate the increased number of airlines and passengers which it services.  
The number of passengers traveling through McCarran Airport has increased from  
approximately 15.6 million in 1987 to 30.5 million in 1996. Construction is     
currently underway on numerous roadway enhancements to improve access to the    
airport. The airport has additional long-term expansion plans underway which    
will provide additional runways, three new satellite concourses, 60 additional  
gates and other facilities.                                                     

COMPETITION                                                                     

    Intense competition exists among companies in the gaming industry, many of
which have significantly greater resources than the Company. The Riviera faces  
competition from all other casinos and hotels in the Las Vegas area. Management 
believes that the Riviera's most direct competition comes from certain large    
casino/hotels located on or near the Strip which offer amenities and marketing  
programs similar to those offered by the Riviera.                               

  Las Vegas gaming square footage and room capacity are continuing to grow
and are expected to continue to increase significantly during the next several  
years. Since January 1, 1996 approximately 4,700 new hotel rooms opened. As of  
December 31, 1996 there were over 9,200 hotel rooms under construction (which   
combined constitutes a 14.7% increase in the number of hotel and motel rooms in 
Las Vegas) and the Las Vegas Convention and Visitors Authority estimates that   
approximately 60,000 additional hotel rooms are proposed for construction.      
Existing and future expansions, additions and enhancements to existing          
properties and construction of new properties by the Company's competitors could
divert additional business from the Company's facilities. There can be no       
assurance that the Company will compete successfully in the Las Vegas market in 
the future.                                                                     

    Compared to the first eight months ended August 31, 1996, during the first
eight months of 1997, available rooms in the Las Vegas market increased by      
11.2%, while total room nights occupied increased by                            

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only 6.8%. This has had the effect of intensifying competition, resulting in    
declining occupancy and average room rates throughout the Las Vegas market.     
Although the Company was able to increase its room rates nominally which offset 
a less than 1% decline in occupancy, there is no certainty that the Company can 
continue to maintain its present level of room revenue considering the          
competitive situation.                                                          

Intense competition also characterizes the Black Hawk/Central City,   
Colorado market. There are approximately 31 casinos currently operating in this 
market in addition to casinos located in Cripple Creek. Several new development 
projects and expansion plans have been announced, including construction of a   
casino by a joint venture between Jacobs Entertainment, Ltd. and the            
owner/operator of Gilpin Hotel Casino and a casino on property adjacent to the  
Black Hawk Land (as defined) by a joint venture between Casino America and      
Nevada Gold. Colorado does not limit the total number of gaming licenses        
available for issuance in Colorado and there are no minimum facility size       
requirements. The Company believes that many Colorado casinos may not be        
operating profitably. A number of Colorado casinos have ceased operations, and  
others have either filed for bankruptcy protection, closed temporarily or       
reduced the number of their employees.                                          

In May 1997, the Colorado Legislature passed a bill mandating the     
installation of a minimum of 500 video lottery terminals at each licensed horse 
and greyhound racetrack then located in Colorado Springs, Pueblo, Byers,        
Loveland, Commerce City and Arapahoe County. The Governor of Colorado vetoed the
bill on June 4, 1997 labeling it as a "back-door expansion of gambling." There  
is no reason, however, to believe that there will not be renewed efforts to pass
similar legislation during the 1998 or subsequent legislative sessions.         

  The Company also competes, to some extent, with casinos in other states,
riverboat and Native American gaming ventures, state-sponsored lotteries, on-   
and off-track wagering, card parlors and other forms of legalized gaming in the 
United States, as well as with gaming on cruise ships and international gaming  
operations. In addition, certain states have recently legalized or are          
considering legalizing casino gaming in specific geographical areas within those
states. Any future development of casinos, lotteries or other forms of gaming in
other states, particularly areas close to Nevada, such as California, could have
a material adverse effect on the Company's results of operations.               

    The current business of the Company is entirely dependent on gaming in Las
Vegas. The Riviera derives a substantial percentage of its business from        
tourists, principally from Southern California and the southwestern United      
States. Weakness in the economy of Southern California has in the past and could
in the future adversely affect the financial results of the Company. Until the  
Black Hawk Casino opens, the Company's operations will be primarily dependent   
upon the results of operations achieved by the Riviera on the Las Vegas Strip.  
Any significant disruption in operations at the Riviera would have a material   
adverse effect on the Company.                                                  

THE BLACK HAWK PROJECT                                                          

    In August 1997, the Company acquired the Black Hawk Land, which management
believes to be the premier gaming site in Black Hawk, Colorado. See "Risk       
Factors -- The Black Hawk Project." The property is currently the closest gaming
site to Denver and is the first site encountered when traveling from Denver to  
Black Hawk/Central City. The Black Hawk/Central City market primarily serves the
metropolitan Denver area and is approximately an hour drive and 40 miles west of
central Denver.                                                                 

Located on South Main Street, the property is directly across from the
Colorado Central Station, owned by Anchor Gaming, which management believes is  
the most successful casino in Colorado due to its location, size and            
availability of parking. Unlike many other sites, the Riviera development site  
is level and has a relatively broad footprint, which is expected to provide     
significant cost and time savings in construction relative to other projects in 
the market and can accommodate a large Las Vegas-style casino on one floor.     

  The development site comprises 71,000 square feet, zoned for gaming. The
casino building is expected to be approximately 62,000 square feet and include  
approximately 1,000 slot machines and 14 table games. In addition, the facility 
will provide entertainment, food and beverage service and will incorporate an   
attached covered parking facility for approximately 520 vehicles. The Company   
believes that the Black Hawk Project                                            

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could be expanded beyond its currently permitted scope based on zoning waivers  
or variances similar to those granted to other casino developers.               

The Company currently estimates that total costs for completion of the
Black Hawk Project will be approximately $60 million, a $5 million increase over
previous estimates resulting from the announcement of additional projects by    
competitors. The Company purchased the Black Hawk Land in August 1997 for $15   
million, which was financed by the net proceeds from the sale of the Existing   
Notes, and expects to finance the remainder of the Black Hawk Project from a    
combination of third party financing and additional investment by the Company,  
including up to an additional $15 million of the net proceeds from the sale of  
the Existing Notes. The Company expects to receive the necessary excavation and 
other permits in the near future, with construction of the casino commencing    
shortly thereafter. The casino is scheduled to open during mid-1999. See "Risk  
Factors -- Competition" and "Risk Factors -- The Black Hawk Project" for a      
discussion of the risk factors involved in investing in the Black Hawk Project. 

Black Hawk Operating Company will not initially be a Guarantor of the 
Notes. See "Description of Notes -- Security." At September 30, 1997, Black Hawk
Operating Company had assets of approximately $15.5 million, which represents   
the cost of the Black Hawk Land, and no liabilities or operations. Therefore,   
separate financial statements have not been included in this Prospectus.        

COLORADO MARKET                                                                 

    In November 1990, Colorado voters approved limited stakes gaming ($5.00 or
less per wager) in two historic gold mining areas, Black Hawk/Central City and  
Cripple Creek. Because of the $5.00 maximum bet, the casinos in Colorado        
emphasize gaming machine play. Black Hawk and Central City are contiguous, with 
Black Hawk being closer to Denver, and are located approximately 40 miles west  
of Denver and 10 miles north of Interstate 70, the main highway connecting      
Denver to many of Colorado's major ski resorts. Cripple Creek is located        
approximately 45 miles from Colorado Springs and 75 miles from Pueblo. Casinos  
located in the Black Hawk/Central City area serve primarily the residents of    
Denver and Boulder, Colorado and surrounding communities. Approximately three   
million people live within a 100-mile radius of the Black Hawk/Central City     
area.                                                                           

The following table sets forth statistical information relating to the
growth of the Black Hawk/Central City market compiled from data published by the
Colorado Department of Revenue:                                                 

                                                        [Enlarge/Download Table]

                                                           YEARS ENDED DECEMBER 31,     
                                                       ---------------------------------
                                                        1993     1994     1995     1996 
                                                       ------   ------   ------   ------
                                                                                        
Aggregate Gaming Revenues (Dollars in millions)....... $  182   $  243   $  291   $  309
Revenue Per Slot Machine Per Day......................     70       80       85       93
Average Number of Slot Machines.......................  6,922    7,705    8,636    8,446
Average Number of Casinos in Operation................     36       34       32       33

  See "Risk Factors -- Competition" for a discussion of competition in the
Colorado gaming market.                                                         

EMPLOYEES AND LABOR RELATIONS                                                   

    As of September 30, 1997, the Riviera employed approximately 2,100 persons
and had collective bargaining contracts with eight unions covering approximately
1,300 of such employees including food and beverage employees, rooms department 
employees, carpenters, engineers, stage hands, musicians, electricians, painters
and teamsters. The Company's agreements with the Southern Nevada Culinary and   
Bartenders Union and Stage Hands Union, which cover the majority of the         
Company's unionized employees, were renegotiated in 1994 and expired on May 31, 
1997 and June 1, 1997, respectively. The Riviera, along with the other Las Vegas
hotels are currently negotiating with these unions and anticipate that new      
contracts will be agreed upon during the first quarter of 1998. The Culinary and
Bartenders Union is currently concentrating on its negotiations with the larger 
gaming companies and is expected to intensify its negotiations with the Riviera 
after preliminary agreements have been reached with the larger gaming companies.
The Stage Hands Union's negotiations are proceeding at a steady pace and        
agreement on details of the contract is anticipated during the                  

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first quarter of 1998. The Teamsters, Operating Engineers, Carpenters, Painters 
and Electricians Unions' collective bargaining agreements were renewed in 1995  
and generally expire in or after 1998. The Musicians Union's collective         
bargaining agreement expires on September 21, 1999. Although unions have been   
active in Las Vegas, management considers its employee relations to be          
satisfactory. There can be no assurance, however, that new agreements will be   
reached without union action or will be on terms satisfactory to the Company.   

REGULATION AND LICENSING                                                        

 Nevada Gaming Regulations. The ownership and operation of casino gaming
facilities in Nevada are subject to: (i) The Nevada Gaming Control Act and the  
regulations promulgated thereunder (collectively the "Nevada Act") and (ii)     
various local ordinances and regulations. The Company's gaming operations are   
subject to the licensing and regulatory control of the Nevada Commission, the   
Nevada Board, the Clark County Liquor and Gaming Licensing Board (the "Clark    
County Board") and the City of Las Vegas. The Nevada Commission, the Nevada     
Board, the Clark County Board and the City of Las Vegas are collectively        
referred to as the "Nevada Gaming Authorities."                                 

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

     ROC is required to be licensed by the Nevada Gaming Authorities. The gaming
license held by ROC requires the periodic payment of fees and taxes and is not  
transferable. ROC is also licensed as a manufacturer and distributor of gaming  
devices. Such licenses also require the periodic payment of fees and are not    
transferable. The Company is registered by the Nevada Commission as a publicly  
traded corporation (a "Registered Corporation") and has been found suitable to  
own the stock of ROC. ROC is also registered by the Nevada commission as an     
Intermediary Company and has been found suitable to own the stock of RGM which  
has been registered by the Nevada Commission as an Intermediary Company and has 
been found suitable to own the stock of RGME. RGME has been licensed as the     
manager of the Four Queens and such license is not transferable. ROC and RGME   
are each a Corporate Licensee (collectively, the "Corporate Licensees") under   
the terms of the Nevada Act. As a Registered Corporation, the Company is        
required periodically to submit detailed financial and operating reports to the 
Nevada Commission and to furnish any other information which the Nevada         
Commission may require. No person may become a stockholder of, or receive any   
percentage of profits from, the Corporate Licensees without first obtaining     
licenses and approvals from the Nevada Gaming Authorities. The Company, ROC, RGM
and RGME have obtained from the Nevada Gaming Authorities the various           
registrations, approvals, permits, findings of suitability and licenses required
in order to engage in gaming activities and manufacturing and distribution      
activities in Nevada.                                                           

  All gaming devices that are manufactured, sold or distributed for use or
play in Nevada, or for distribution outside of Nevada, must be manufactured by  
licensed manufacturers, distributed or sold by licensed distributors and        
approved by the Nevada Commission. The approval process includes rigorous       
testing by the Nevada Board, a field trial and a determination as to whether the
gaming device meets strict technical standards that are set forth in the        
regulations of the Nevada Gaming Authorities. Associated equipment must be      
administratively approved by the Chairman of the Nevada Board before it is      
distributed for use in Nevada.                                                  

The Nevada Gaming Authorities may investigate any individual who has a
material relationship to, or material involvement with, the Company, ROC, RGM or
RGME in order to determine whether such individual is suitable or should be     
licensed as a business associate of a gaming licensee. Officers, directors and  

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certain key employees of ROC and RGME must file applications with the Nevada    
Gaming Authorities and may be required to be licensed or found suitable by the  
Nevada Gaming Authorities. Officers, directors and key employees of the Company 
and RGM who are actively and directly involved in the gaming activities of ROC  
or RGME may be required to be licensed or found suitable by the Nevada Gaming   
Authorities. The Nevada Gaming Authorities may deny an application for licensing
for any cause which they deem reasonable. A finding of suitability is comparable
to licensing, and both require submission of detailed personal and financial    
information followed by a thorough investigation. The applicant for licensing or
a finding of suitability must pay all the costs of the investigation. Any change
in a corporate position by a licensed person must be reported to the Nevada     
Gaming Authorities and, in addition to their authority to deny an application   
for a finding of suitability or licensure, the Nevada Gaming Authorities have   
jurisdiction to disapprove a change in a corporate position.                    

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

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

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

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

The Nevada Act requires any person who acquires more than 5% of a     
Registered Corporation's voting securities to report the acquisition to the     
Nevada Commission. The Nevada Act requires that beneficial owners of more than  
10% of a Registered Corporation's voting securities apply to the Nevada         
Commission for a finding of suitability within thirty days after the Chairman of
the Nevada Board mails the written notice requiring such filing. Under certain  
circumstances, an "institutional investor," as defined in the Nevada Act, which 
acquires more than 10%, but not more than 15%, of a Registered Corporation's    
voting securities may apply to the Nevada Commission for a waiver of such       
finding of suitability if such institutional investor holds the voting          
securities for investment purposes only. An institutional investor shall not be 
deemed to hold voting securities for investment purposes unless the voting      
securities were acquired and are held in the ordinary course of business as an  
institutional investor and not for the purpose of causing, directly or          
indirectly, the election of a majority of the members of the board of directors 
of the Registered Corporation, any change in the corporate charter, bylaws,     
management, policies or operations of the Registered Corporation, or any of its 
gaming affiliates, or any other action which the Nevada Commission finds to be  
inconsistent with holding the Registered Corporation's voting securities for    
investment purposes only. Activities which are deemed to be consistent with     
holding voting securities for investment purposes only include: (i) voting on   
all matters voted on by stockholders; (ii) making financial and other inquiries 
of management of the type normally made by securities analysts for informational
purposes and not to cause a change in its management, policies or               

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operations; and (iii) such other activities as the Nevada Commission may        
determine to be consistent with such investment intent. If the beneficial holder
of voting securities who must be found suitable is a corporation, partnership or
trust, it must submit detailed business and financial information including a   
list of beneficial owners. The applicant is required to pay all costs of        
investigation.                                                                  

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

 The Nevada Commission may, in its discretion, require the holder of any
debt security of a Registered Corporation such as the 11% First Mortgage Notes, 
the Existing Notes or the New Notes to file applications, be investigated and be
found suitable to own the debt security of a Registered Corporation, if it has  
reason to believe that such ownership would be inconsistent with the declared   
policies of the State of Nevada. If the Nevada Commission determines that a     
person is unsuitable to own such security, then pursuant to the Nevada Act, the 
Registered Corporation can be sanctioned, including the loss of its approvals,  
if without the prior approval of the Nevada Commission, it: (i) pays to the     
unsuitable person any dividend, interest, or any distribution whatsoever; (ii)  
recognizes any voting right by such unsuitable person in connection with such   
securities; (iii) pays the unsuitable person remuneration in any form; or (iv)  
makes any payment to the unsuitable person by way of principal, redemption,     
conversion, exchange, liquidation, or similar transaction.                      

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

  The Company may not make a public offering of its securities without the
prior approval of the Nevada Commission if the securities or proceeds therefrom 
are intended to be used to construct, acquire or finance gaming facilities in   
Nevada, or to retire or extend obligations incurred for such purposes. The      
Exchange Offer constitutes a public offering (as defined in the Nevada Act) and 
requires the prior approval of the Nevada Commission upon the recommendation of 
the Nevada Board. Such approval was granted on November 20, 1997. In addition,  
(i) a Corporate Licensee may not guarantee a security issued by a Registered    
Corporation pursuant to a public offering, or hypothecate its assets to secure  
the payment or performance of the obligations evidenced by such a security,     
without the prior approval of the Nevada Commission, (ii) the pledge of the     
stock of a Corporate Licensee or Intermediary Company ("Stock Pledge"), such as 
ROC, RGM and RGME, is void without the prior approval of the Nevada Commission, 
and (iii) restrictions upon the transfer of an equity security issued by a      
Corporate Licensee, or Intermediary Company and agreements not to encumber such 
securities (collectively, "Stock Restrictions") are ineffective without the     
prior approval of the Nevada Commission. The Stock Pledge and the Stock         
Restrictions in respect of the Notes require the prior approval of the Nevada   
Commission to be effective. In connection with the approval of the Exchange     
Offer, the Subsidiary Guaranty of ROC, RGM & RGME, the hypothecation of the     
assets of ROC and RGME, the                                                     

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Stock Pledge and the Stock Restrictions also require the prior approval of the  
Nevada Commission. All such approvals were granted on November 20, 1997. The    
approval of the Stock Pledge does not constitute approval to foreclose on the   
Stock Pledge. Separate approval will be required to foreclose on the Stock      
Pledge and such approval will require the licensing of the Trustee unless such  
requirement is waived upon the application of the Trustee. Approval of a public 
offering such as the Exchange Offer does not constitute a finding,              
recommendation or approval by the Nevada Commission or the Nevada Board as to   
the accuracy or adequacy of the prospectus or the investment merits of the      
securities offered. Any representation to the contrary is unlawful.             

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

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

   License fees and taxes, computed in various ways depending on the type of
gaming or activity involved, are payable to the State of Nevada and to the      
County in which the ROC's and RGME's operations are conducted. Depending upon   
the particular fee or tax involved, these fees and taxes are payable either     
monthly, quarterly or annually and are based upon either: (i) a percentage of   
the gross revenues received; (ii) the number of gaming devices operated; or     
(iii) the number of table games operated. A casino entertainment tax is also    
paid by casino operations where entertainment is furnished in connection with   
the selling of food, refreshments or merchandise. Nevada Licensees that hold a  
license to manufacture and distribute slot machines and gaming devices, such as 
ROC, also pay certain fees and taxes to the State of Nevada.                    

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

    Other Nevada Regulation. The sale of alcoholic beverages at the Riviera is
subject to licensing, control and regulation by the Clark County Board. All     
licenses are revocable and are not transferable. The Clark                      

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County Board has full power to limit, condition, suspend or revoke any such     
license, and any such disciplinary action could (and revocation would) have a   
material adverse affect upon the operations of ROC.                             

Colorado Gaming Regulation. Pursuant to an amendment to the Colorado  
Constitution (the "Colorado Amendment"), limited stakes gaming became lawful in 
the cities of Central City, Black Hawk and Cripple Creek on October 1, 1991. The
Colorado Amendment defines limited stakes gaming as the use of slot machines and
the card games of blackjack and poker, with a maximum single bet of five        
dollars.                                                                        

Limited stakes gaming is confined to the commercial districts of these
cities as defined by Central City on October 7, 1981, by Black Hawk on May 4,   
1978, and by Cripple Creek on December 3, 1973. In addition, the Colorado       
Amendment restricts limited stakes gaming to structures that conform to the     
architectural styles and designs that were common to the areas prior to World   
War I, and which conform to the requirements of applicable city ordinances      
regardless of the age of the structures. The Colorado Amendment provides that no
more than 35% of the square footage of any building and no more than 50% of any 
one floor of any building may be used for limited stakes gaming. The Colorado   
Amendment prohibits limited stakes gaming between the hours of 2:00 a.m. and    
8:00 a.m., and allows limited stakes gaming to occur in establishments licensed 
to sell alcoholic beverages.                                                    

 Further, the Colorado Amendment provides that, in addition to any other
applicable license fees, up to a maximum of 40% of the Adjusted Gross Proceeds  
("AGP") of limited stakes gaming operations may be payable by a licensee for    
conducting limited stakes gaming. Such percentage is to be established by the   
Colorado Limited Gaming Control Commission (the "Colorado Commission") per the  
Colorado Limited Gaming Act of 1991 (the "Colorado Act").                       

The Colorado legislature promulgated the Colorado Act to implement the
provisions of the Colorado Amendment. The Colorado Act became effective on June 
4, 1991 and has been amended subsequently.                                      

The Colorado Act declares public policy on limited stakes gaming to be
that: (i) the success of limited stakes gaming is dependent upon public         
confidence and trust that licensed limited stakes gaming is conducted honestly  
and competitively; the rights of the creditors of licensees are protected;      
gaming is free from criminal and corruptive elements; (ii) public confidence and
trust can be maintained only by strict regulation of all persons, locations,    
practices, associations and activities related to the operation of licensed     
gaming establishments and the manufacture or distribution of gaming devices and 
equipment; (iii) all establishments where limited stakes gaming is conducted and
where gambling devices are operated and all manufacturers, sellers and          
distributors of certain gambling devices and equipment must be licensed,        
controlled and assisted to protect the inhabitants of the state to foster the   
stability and success of limited stakes gaming and to preserve the economy and  
free competition in Colorado; and (iv) no applicant for a license or other      
approval has any right to a license or to the granting of the approval sought.  

 The Colorado Act subjects the ownership and operation of limited stakes
gaming facilities in Colorado to extensive regulation by the Colorado Commission
and prohibits persons under the age of 21 from participating in limited stakes  
gaming. No limited stakes gaming may be conducted in Colorado unless all        
appropriate gaming licenses are approved by and obtained from the Colorado      
Commission. The Colorado Commission has full and exclusive authority to         
promulgate, and has promulgated, rules and regulations governing the licensing, 
conducting and operating of limited stakes gaming (the "Colorado Regulations"). 
Such authority does not require any approval by or delegation of authority from 
the Colorado Department of Revenue (the "Colorado Revenue Department"). The     
Colorado Act also created the Division of Gaming within the Colorado Revenue    
Department to license, implement, regulate and supervise the conduct of limited 
stakes gaming in Colorado, supervised and administered by the Director of the   
Division of Gaming ("Division Director").                                       

The Colorado Commission may issue: (i) slot machine manufacturer or   
distributor, (ii) operator, (iii) retail gaming, (iv) support and (v) key       
employee gaming licenses. The first three licenses require annual renewal by the
Colorado Commission. Support and key employee licenses are issued for two year  
periods and are renewable by the Division Director. The Colorado Commission has 
broad discretion to condition, suspend for up to six months, revoke, limit or   
restrict a license at any time and also has the authority to impose fines.      

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   An applicant for a gaming license must complete comprehensive application
forms, pay required fees and provide all information required by the Colorado   
Commission and the Division of Gaming. Prior to licensure, applicants must      
satisfy the Colorado Commission that they are suitable for licensing. Applicants
have the burden of proving their qualifications and must pay the full cost of   
any background investigations. There is no limit on the cost of such background 
investigations.                                                                 

    Gaming employees must hold either a support or key employee license. Every
retail gaming licensee must have a key employee licensee in charge of all       
limited stakes gaming activities when limited stakes gaming is being conducted. 
The Colorado Commission may determine that a gaming employee is a key employee  
and, require that such person apply for a key employee license.                 

A retail gaming license is required for all persons conducting limited
stakes gaming on their premises. In addition, an operator license is required   
for all persons who engage in the business of placing and operating slot        
machines on the premises of a retailer. However, a retailer is not required to  
hold an operator license. No person may have an ownership interest in more than 
three retail licenses. A slot machine manufacturer or distributor license is    
required for all persons who manufacture, import or distribute slot machines in 
Colorado.                                                                       

    The Colorado Act requires that every officer, director, and stockholder of
private corporations or equivalent office or ownership holders for non-corporate
applicants, and every officer, director or stockholder holding either a 5% or   
greater interest or controlling interest of a publicly traded corporation or    
owners of an applicant or licensee shall be a person of good moral character and
submit to a full background investigation conducted by the Division of Gaming   
and the Colorado Commission. The Colorado Commission may require any person     
having an interest in a license to undergo a full background investigation and  
pay such costs in the same manner as an applicant.                              

Persons found unsuitable by the Colorado Commission may be required   
immediately to terminate any interest, association or agreement with or         
relationship to a licensee. A finding of unsuitability with respect to any      
officer, director, employee, associate, lender or beneficial owner of a licensee
or applicant also may jeopardize the licensee's license or the applicant's      
application. A license approval may be conditioned upon the termination of any  
relationship with unsuitable persons.                                           

    An applicant or licensee must report to the Division of Gaming or Colorado
Commission all leases not later than 30 days after the effective date of the    
lease. Also, an applicant or a licensee, upon the request of the Colorado       
Commission or the Division Director, must submit copies of all written gaming   
contracts and summaries of all oral gaming contracts to which it is or intends  
to become a party. The Division Director or the Colorado Commission may require 
changes in the lease or gaming contract before an application is approved or    
participation in such agreement is allowed or may require termination of the    
lease or gaming contract.                                                       

     The Colorado Act and the Colorado Regulations require licensees to maintain
detailed records that account for all business transactions. Records must be    
furnished upon demand to the Colorado Commission, the Division of Gaming and    
other law enforcement authorities. The Colorado Regulations also establish      
extensive playing procedures and rules of play for poker, blackjack and slot    
machines. Retail gaming licensees must adopt comprehensive internal control     
procedures. Such procedures must be approved in advance by the Division of      
Gaming and include the areas of accounting, surveillance, security, cashier     
operations, key control and fill and drop procedures, among others. No gaming   
devices may be used in limited stakes gaming without the approval of the        
Division Director or the Colorado Commission.                                   

   Licensees have a continuing duty to immediately report to the Division of
Gaming the name, date of birth and social security number of all persons who    
obtain an ownership, financial or equity interest in the licensee of five (5)   
percent or greater, or who have the ability to control the licensee, or who have
the ability to exercise significant influence over the licensee, or who loan any
money or other thing of value to the licensee. Licensees must report to the     
Division of Gaming all licenses, and all applications for licenses, in foreign  
jurisdictions.                                                                  

  With limited exceptions applicable to licensees that are publicly traded
entities, no person may sell, lease, purchase, convey or acquire any interest in
a retail gaming or operator license or business without the prior approval of   
the Colorado Commission.                                                        

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All agreements, contracts, leases, or arrangements in violation of the
Colorado Act or the Colorado Regulations are void and unenforceable.            

    The Colorado Amendment requires an annual tax of as much as 40% on the AGP
from limited stakes gaming. Effective October 1 of each year, the Colorado      
Commission establishes the gaming tax for the following 12 months. Currently,   
the gaming tax on AGP is: 2% on the first $2 million of AGP; 4% on AGP from $2  
million to $4 million; 14% on AGP from $4 million to $5 million; 18% on AGP from
$5 million to $10 million; and 20% on AGP over $10 million.                     

The Colorado Commission requires all gaming licensees to pay an annual
device fee for each slot machine, blackjack table and poker table of $75. The   
municipality of Black Hawk assesses an annual device fee of $750 per device.    
There is no statutory limit on state or city device fees, which may be increased
at the discretion of the Colorado Commission or the city. In addition, a        
business improvement fee of as much as $102 per device and a transportation     
authority device fee of $77 per device also may apply depending upon the        
location of the licensed premises in Black Hawk. The current annual business    
improvement fee is $89.04.                                                      

   Black Hawk also imposes taxes and fees on other aspects of the businesses
of gaming licensees, such as parking, alcoholic beverage licenses and other     
municipal taxes and fees. Significant increases in these fees and taxes, or the 
imposition of new taxes and fees, may occur.                                    

Violation of the Colorado Act or any of the Colorado Regulations is a 
criminal offense. Gaming licensees violating the Colorado Act or the Colorado   
Regulations may, in addition to being subject to fines, suspension for as long  
as six months or revocation of the gaming license, commit a class 1 misdemeanor 
which may result in incarceration or fines or both.                             

The sale of alcoholic beverages in gaming establishments is subject to
strict licensing, control and regulation by state and local authorities and     
requires a liquor license. Alcoholic beverage licenses are revocable and        
nontransferable. State and local licensing authorities have full power to limit,
condition, suspend for as long as six months or revoke any such licenses.       
Violation of state alcoholic beverage laws may constitute a criminal offense    
resulting in incarceration or fines or both.                                    

There are various classes of retail liquor licenses under the Colorado
Liquor Code. A gaming licensee may sell malt, vinous or spirituous liquors only 
by the individual drink for consumption on the premises. Even though a retail   
gaming licensee may be issued various classes of retail liquor licenses such    
gaming licensee may only hold liquor licenses of the same class. An application 
for an alcoholic beverage license in Colorado requires notice, posting and a    
public hearing before the local liquor licensing authority prior to approval of 
the same. The Colorado Department of Revenue's Liquor Enforcement Division must 
also approve the application.                                                   

     The Colorado Commission has enacted Rule 4.5, which imposes requirements on
publicly traded corporations holding gaming licenses in Colorado and on gaming  
licensees owned directly or indirectly by a publicly traded corporation whether 
through a subsidiary or intermediary company. The term "publicly traded         
corporation" includes corporations, firms, limited liability companies, trusts, 
partnerships and other forms of business organizations even if created under the
laws of a foreign country. Such requirements shall automatically apply to any   
ownership interest held by a publicly traded corporation, holding company or    
intermediary company thereof, where such ownership interest directly or         
indirectly is, or will be upon approval of the Colorado Commission, 5% or more  
of the entire licensee. In any event, if the Colorado Commission determines that
a publicly traded corporation, or a subsidiary, intermediary company or holding 
company has the actual ability to exercise influence over a licensee, regardless
of the percentage of ownership possessed by said entity, the Colorado Commission
may require that entity to comply with the disclosure regulations contained in  
Rule 4.5.                                                                       

Under Rule 4.5, gaming licensees, affiliated companies and controlling
persons commencing a public offering of voting securities must notify the       
Colorado Commission within 10 days of the initial filing of a registration      
statement with the Securities and Exchange Commission. Licensed publicly traded 
corporations are also required to send proxy statements to the Division of      
Gaming within 5 days after distribution of such statement. Licensees to whom    
Rule 4.5 applies must include in their articles of organization or similar      
charter                                                                         

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documents provisions that: restrict the rights of the licensees to issue voting 
interests or securities except in accordance with the Colorado Act and the      
Colorado Regulations; limit the rights of persons to transfer voting interests  
or securities of licensees except in accordance with the Colorado Act and the   
Colorado Regulations; and provide that holders of voting interests or securities
of licensees found unsuitable by the Colorado Commission may, within 60 days of 
such finding of unsuitability, be required to sell their interests or securities
back to the issuer at the lesser of the cash equivalent of the holders'         
investment or the market price as of the date of the finding of unsuitability.  
Alternatively, the holders may, within 60 days after the finding of             
unsuitability, transfer the voting interests or securities to a suitable person 
(as determined by the Colorado Commission). Until the voting interests or       
securities are held by suitable persons, the issuer may not pay dividends or    
interest, the securities may not be voted, they may not be included in the      
voting or securities of the issuer, and the issuer may not pay any remuneration 
in any form to the holders of the securities.                                   

 Pursuant to Rule 4.5, persons who acquire direct or indirect beneficial
ownership of (i) 5% or more of any class of voting securities of a publicly     
traded corporation required to include in its articles of organization the Rule 
4.5 charter language provisions, or (ii) 5% or more of the beneficial interest  
in a gaming licensee directly or indirectly through any class of voting         
securities of any holding company or intermediary company of a licensee (all    
such persons hereinafter referred to as "qualifying persons"), shall notify the 
Division of Gaming within 10 days of such acquisition, are required to submit   
all requested information and are subject to a finding of suitability as        
required by the Division of Gaming or the Colorado Commission. Licensees also   
must notify any qualifying persons of these requirements. A qualifying person   
whose interests equal 10% or more must apply to the Colorado Commission for a   
finding of suitability within 45 days after acquiring such securities. Licensees
must also notify any qualifying persons of these requirements. Whether or not   
notified, qualifying persons are responsible for complying with these           
requirements.                                                                   

     A qualifying person who is an institutional investor under Rule 4.5 and who
individually or in association with others, acquires, directly or indirectly,   
the beneficial ownership of 15% or more of any class of voting securities must  
apply to the Colorado Commission for a finding of suitability within 45 days    
after acquiring such interests. A qualifying person who is an institutional     
investor and whose interests equal 10%, but less than 15%, may not be required  
to apply for suitability, provided such person fulfills reporting requirements  
required by the Colorado Regulations.                                           

   Pursuant to Rule 4.5, persons found unsuitable by the Colorado Commission
must be removed from any position as an officer, director, or employee of a     
licensee, or from a holding or intermediary company. Such unsuitable persons    
also are prohibited from any beneficial ownership of the voting securities of   
any such entities. Licensees, or affiliated entities of licensees, are subject  
to sanctions for paying dividends or distributions to persons found unsuitable  
by the Colorado Commission, or for recognizing voting rights of, or paying a    
salary or any remuneration for services to, unsuitable persons. Licensees or    
their affiliated entities also may be sanctioned for failing to pursue efforts  
to require unsuitable persons to relinquish their interests. The Colorado       
Commission may determine that anyone with a material relationship to, or        
material involvement with, a licensee or an affiliated company must apply for a 
finding of suitability or must apply for a key employee license.                

  Currently, no gaming or liquor licenses in Colorado have been granted in
connection with the Black Hawk Project. Applications have been made for a retail
gaming license and for a hotel and restaurant liquor license. Applications for  
key employee gaming licenses have also been made. Additional gaming and support 
license applications will have to be made and approved prior to the opening of  
the casino.                                                                     

FEDERAL REGISTRATION                                                            

  ROC is required to annually file with the Attorney General of the United
States in connection with the sales, distribution, or operations of slot        
machines. All requisite filings for the present year have been made.            

LEGAL PROCEEDINGS                                                               

     The Company is a party to several routine lawsuits both as plaintiff and as
defendant arising from the normal operations of a hotel. Management does not    
believe that the outcome of such litigation, in the aggregate, will have a      
material adverse effect on the financial position or results of operations of   
the Company.                                                                    

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THE PROPOSED MERGER 

AGREEMENT AND PLAN OF MERGER                                                    

Pursuant to the terms and subject to the conditions of the Merger     
Agreement, the Company would become a wholly owned subsidiary of R&E Gaming     
Corp., a Delaware corporation controlled by Mr. Paulson ("Gaming"), and ROC     
would continue its existence as a wholly owned subsidiary of the Company.       

    Also, pursuant to the Merger Agreement, each share of Common Stock that is
issued and outstanding immediately prior to the Effective Time (as defined in   
the Merger Agreement) (other than shares of Common Stock owned by Gaming or its 
subsidiary or which are held in the treasury of the Company or any of its       
subsidiaries, which shares shall be canceled without payment) will be converted 
into the right to receive the Merger Consideration (as defined below).          

   The Merger Agreement defines "Merger Consideration" as $15.00 in cash per
share of Common Stock, plus an amount of additional consideration (the          
"Additional Consideration") equal to the daily portion on the accrual on $15.00 
at 7% compounded annually, accruing from June 1, 1997 to the Effective Time;    
provided that the Merger Consideration to be paid to each Option Seller (as     
defined in the Merger Agreement) will be reduced by an amount of Additional     
Consideration paid to such Option Seller pursuant to the terms and subject to   
the conditions of the Option Agreement (as defined below).                      

  The obligations of the Company, Gaming, and its subsidiary to consummate
the Merger are subject to, among other things, satisfaction or waiver on or     
prior to the Effective Time of the following conditions: (i) any waiting period 
applicable to the consummation of the Merger under the Hart-Scott-Rodino        
Antitrust Improvements Act of 1976, as amended, shall have expired or been      
terminated, and no action shall have been instituted by the Department of       
Justice or Federal Trade Commission challenging or seeking to enjoin the        
consummation of the Merger, (ii) the Merger Agreement shall have been approved  
and adopted by the affirmative vote of the holders of at least sixty percent of 
all of the issued and outstanding shares of Common Stock (excluding the shares  
of Common Stock owned by Gaming, its subsidiary and Mr. Paulson), (iii) there   
shall not have been any statute, rule, regulation, judgment, order or injunction
promulgated, entered, enforced, enacted or issued applicable to the Merger by   
any governmental entity which, including without limitation, prohibits the      
consummation of the Merger, and (iv) other than the filing of the articles of   
merger in accordance with the Nevada Corporation Law, all licenses, permits,    
registrations, authorizations, consents, waivers, orders or other approvals     
required to be obtained, and all filings, notices or declarations required to be
made by Gaming, its subsidiary, Mr. Paulson and the Company in order to         
consummate the Merger and continue the Company's business as conducted prior to 
the Effective Time shall have been obtained or made.                            

   The obligations of Gaming and its subsidiary to consummate the Merger are
subject to, among other things, satisfaction on or prior to the Effective Time  
of, the following additional conditions: (i) the Company shall have performed in
all material respects all of its obligations under the Merger Agreement required
to be performed by it and, subject to certain exceptions, the representations   
and warranties of the Company contained in the Merger Agreement shall be true   
and correct in all material respects as of the date of the Merger Agreement and 
at and as of the Effective Time as if made at and as of such time, (ii) the     
actual Consolidated EBITDA (as defined in the Merger Agreement) as reflected in 
the consolidated statement of operations of the Company for the period from     
April 1, 1997 to the month for which the Company's financial statements are then
available shall not have declined by 7.5% or more when compared to the Projected
Results (as defined in the Merger Agreement) for such period, (iii) the Option  
Agreement shall have been entered into concurrently with the execution of the   
Merger Agreement, and the Option Agreement shall be in full force and effect and
the Option Sellers shall have complied in all respects with the terms thereof,  
(iv) Mr. Paulson shall not have become deceased or Disabled (as defined in the  
Merger Agreement), and (v) Gaming shall have received certain documents as      
Gaming may reasonably request.                                                  

 The obligations of the Company to consummate the Merger are subject to,
among other things, the satisfaction on or prior to the Effective Time of the   
following additional conditions: (i) each of Gaming and its subsidiary shall    
have performed in all material respects all of its obligations under the Merger 
Agreement and, subject to certain exceptions, the representations and warranties
of Gaming and its subsidiary contained in the Merger Agreement shall be true and
correct in all respects as of the date of the Merger Agreement and at and as of 
the Effective Time, (ii) Gaming shall have in cash, or immediately available    
funds, an amount equal to                                                       

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the aggregate Merger Consideration, and (iii) the Company shall have received   
certain documents as the Company may reasonably request.                        

    It is anticipated that the owner of Gaming will offer key employees of the
Company the opportunity to participate in the continued growth of the           
corporation which survives the Merger. Although no definitive plan has yet been 
formulated, it is possible that certain key employees might receive a type of   
equity participation in lieu of receiving the amount contemplated to be paid to 
them under the Merger Agreement on their present options in cash at the         
Effective Time.                                                                 

   If the Merger does not occur by April 1, 1998, subject to extension until
June 1, 1998, under certain circumstances, the Merger Agreement will terminate. 
There can be no assurance that the conditions to the Merger will be satisfied or
waived or that the Merger will be consummated. The Merger requires the prior    
approval of the Nevada Gaming Authorities and there can be no assurance that    
such approval will be obtained.                                                 

OPTION AND VOTING AGREEMENT                                                     

    Contemporaneously with the execution and delivery of the Merger Agreement,
Gaming, Morgens, Waterfall, Vintiadis & Company, Inc. ("Morgens Waterfall"), on 
behalf of certain investment accounts, Stein Roe & Farnham, Incorporated ("Stein
Roe"), on behalf of certain investment accounts, and Sun Life Insurance Company,
a Nevada corporation ("Sun Life," and together with Morgens Waterfall and Stein 
Roe, the "Sellers") entered into an option and voting agreement (the "Option    
Agreement"). Pursuant to the terms and subject to the conditions of the Option  
Agreement, each Seller has granted to Gaming an irrevocable option to purchase  
(the "Purchase Option") all the shares of Common Stock owned by such Seller.    
Upon exercise of the Purchase Option, Gaming would pay to each of the Sellers an
aggregate amount equal to $15 per share, subject to certain adjustments under   
the Option Agreement. An aggregate amount of $43,374,600 would be payable as    
follows: (i) $19,088,400 to Morgens Waterfall, (ii) $12,857,400 to Stein Roe and
(iii) $11,428,800 to Sun Life, in addition to any accrued but unpaid interest   
payments required under the Option Agreement.                                   

    In addition, each Seller has agreed and covenanted with Gaming that at any
meeting of stockholders of the Company called to vote upon the Merger and the   
Merger Agreement or in any other circumstances upon which a vote, consent or    
other approval with respect to the Merger and the Merger Agreement is sought,   
such Seller will cause its shares of Common Stock to be present for quorum      
purposes and to vote (or caused to be voted) its shares of Common Stock in favor
of the terms thereof and each of the other transactions contemplated by the     
Merger Agreement.                                                               

The obligations of each of the Sellers under the Option Agreement are 
subject to, among other things, satisfaction or, in certain cases, waiver, on   
the Closing Date (as defined in the Option Agreement) of the following          
conditions: (i) no temporary restraining order or preliminary or permanent      
injunction of any court or administrative agency of competent jurisdiction      
prohibiting the transactions contemplated by the Option Agreement shall be in   
effect, (ii) all approvals shall have been obtained and shall not have expired  
or been rescinded, (iii) subject to certain exceptions, the representations and 
warranties of Gaming in the Option Agreement shall be true and correct in all   
material respects on and as of the Closing Date, as though made on and as of the
Closing Date, and (iv) Gaming shall have performed all obligations required to  
be performed by it under the Option Agreement on or prior to the Closing Date.  

THE ELSINORE TRANSACTION                                                        

    On September 16, 1997, affiliates of Gaming and its subsidiary executed an
agreement to purchase the outstanding common stock of Elsinore, the primary     
asset of which is the Four Queens. Based upon reports filed pursuant to the     
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of November
10, 1997, Morgens Waterfall, one of the majority stockholders, beneficially     
owned approximately 94% of the common stock of Elsinore. The Company believes it
is the intention of the parties to the Elsinore merger agreement to consummate  
the Elsinore merger at approximately the same time as the Merger. There can be  
no assurance, however, that the conditions to the Elsinore merger will be       
satisfied or waived or that the Elsinore merger will occur. The Elsinore merger 
requires the prior approval of the Nevada Gaming Authorities and there can be no
assurance that such approval will be obtained.                                  

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MANAGEMENT

EXECUTIVE OFFICERS & DIRECTORS                                                  

     The executive officers and directors of the Company and ROC are as follows:

                                                        [Enlarge/Download Table]

           NAME             AGE                         POSITION                        
--------------------------  ---  -------------------------------------------------------
                                                                                        
William L. Westerman        66   Chairman of the Board and Chief Executive Officer of   
                                 the Company and ROC, and President of the Company      
Duane R. Krohn              51   Treasurer of the Company and Vice President of Finance 
                                 and Treasurer of ROC                                   
John A. Wishon, Esq.        52   Vice President and General Counsel of ROC, Secretary of
                                 the Company and ROC                                    
Michael L. Falba            55   Vice President of Casino Operations of ROC             
Jerome P. Grippe            55   Vice President of Operations of ROC                    
Martin R. Gross             40   Vice President of Hotel Marketing of ROC               
Ronald P. Johnson           49   Vice President of Gaming Operations of ROC             
Robert E. Nickels, Sr.      67   Vice President of Administration of ROC                
Robert A. Vannucci          50   Vice President of Marketing and Entertainment of ROC   
Robert R. Barengo           55   Director of the Company and ROC                        
William Friedman            55   Director of the Company and ROC                        
Philip P. Hannifin          62   Director of the Company and ROC                        

   William L. Westerman assumed the positions referred to above in February,
1993. Mr. Westerman was a consultant to Riviera, Inc. from July 1, 1991 until he
was appointed Chairman of the Board and Chief Executive Officer of Riviera, Inc.
on January 1, 1992. From 1973 to June 30, 1991, Mr. Westerman was President and 
Chief Executive Officer of Cellu-Craft Inc., a manufacturer of flexible         
packaging primarily for food products. Alusuisse, a multi-national aluminum and 
chemical company, acquired Cellu-Craft on June 30, 1989. On January 1, 1990, Mr.
Westerman was appointed President of Alusuisse Flexible Packaging (Alusuisse's  
wholly-owned U.S. subsidiary engaged in the manufacture of flexible packaging   
for food and pharmaceutical products). Additionally, Mr. Westerman was named a  
member of the team responsible for all of Alusuisse multi-national packaging    
operations with annual sales volume in excess of $1 billion. Mr. Westerman      
resigned from all his positions with Alusuisse on June 30, 1991.                

   Duane R. Krohn, CPA, assumed the position of Treasurer of the Company and
ROC on June 30, 1993 and was elected Vice President of Finance of ROC on April  
26, 1994. Mr. Krohn was initially employed by Riviera, Inc. in April 1990, as   
Director of Corporate Finance and served as Vice President -- Finance from March
1992 to June 30, 1993. Mr. Krohn served as Chief Financial Officer of Imperial  
Palace, Inc. (a casino/hotel operator in Las Vegas) from February 1987 to March 
1990. Prior to 1987, Mr. Krohn was Chief Financial Officer of the Mint and the  
Dunes in Las Vegas, Nevada, and Bally's Park Place in Atlantic City, New Jersey.

John A. Wishon, Esq. was elected Secretary of the Company and ROC, and
General Counsel of ROC in September 1994, and was elected Vice President of ROC 
in November 1996. Mr. Wishon was initially employed by ROC as a Marketing       
Analyst in February 1994. From January 1992 to February 1994, Mr. Wishon was a  
legal and management consultant to Gold River Gambling Hall & Resort, the       
Bicycle Club Casino, and Tierra del Sol Casino Resort. From October 1990 to     
January 1992, Mr. Wishon served as Vice President of Hotel Operations and later 
as Vice President of Administration and Legal Affairs at the Sands Hotel Casino 
in Las Vegas. Prior to December, 1988, Mr. Wishon served as General Manager of  
the Airtel Plaza and Westwood Plaza Hotels in Los Angeles, California. From 1976
until 1988, Mr. Wishon was Senior Vice President of the Hotel del Coronado      
Corporation and held the positions of Resident Manager and General Counsel. Mr. 
Wishon is a member of the Nevada and California Bars, has practiced law with    
emphasis on real estate and contract law and has been employed in law           
enforcement.                                                                    

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    Michael L. Falba was elected Vice President of Casino Operations of ROC on
April 26, 1994. Mr. Falba became Director of Casino Operations of ROC on June   
30, 1993. Mr. Falba was employed by the Riviera, Inc. from March 1989 until     
November 1991 as Assistant Casino Manager, and from November 1991 to June 30,   
1993 as Vice President of Casino Operations.                                    

   Jerome P. Grippe was elected Vice President of Operations of ROC on April
26, 1994. Mr. Grippe became Director of Operations of ROC on June 30, 1993. Mr. 
Grippe was Assistant to the Chairman of the Board of Riviera, Inc. from July    
1990 until May 1993. Mr. Grippe had served in the United States Army from 1964  
until his retirement as a Colonel in July 1990.                                 

 Martin R. Gross was elected Vice President of Hotel Marketing of ROC on
April 26, 1994. Mr. Gross became Director of Hotel Marketing of ROC on June 30, 
1993. Mr. Gross was Vice President -- Hotel Marketing of Riviera, Inc. from     
April 1992 until June 30, 1993. Mr. Gross was Vice President -- Marketing and   
Sales for Alexis Park Resort Hotel (a 500-suite non-gaming resort) in Las Vegas 
from August 1988 until April 1992. From 1980 to 1988, Mr. Gross held key        
marketing positions with the Mirage and MGM Grand hotels. On August 12, 1996,   
concurrent with RGM taking over the management of the Four Queens, Mr. Gross    
assumed the responsibilities of Acting General Manager of the Four Queens and in
February of 1997, Mr. Gross became General Manager of the Four Queens. Mr. Gross
remains an officer and employee of ROC.                                         

Ronald P. Johnson became Vice President of Gaming Operations of ROC in
September 1994. Mr. Johnson became Director of Slots of ROC on June 30, 1993 and
was elected Vice President of Slot Operations and Marketing on April 26, 1994.  
Mr. Johnson was Vice President -- Slot Operations and Marketing of Riviera, Inc.
from April 1991 until June 30, 1993. Mr. Johnson was Vice President -- Slot     
Operations for Sands Hotel and Casino Inc. from September 1989 until he joined  
Riviera, Inc. From September 1986 until September 1989, Mr. Johnson was         
Assistant Slot Manager at Bally's Grand Las Vegas.                              

    Robert E. Nickels, Sr. was elected Vice President of Administration of ROC
on June 30, 1993. From March 1992 until June 30, 1993 Mr. Nickels was Vice      
President -- Administration of Riviera, Inc. From November 1991 to February 1992
Mr. Nickels was a self-employed business consultant. From March 1979 to April   
1986, Mr. Nickels was Director of Internal Audit for MGM-Reno. From April 1986  
to November 1991, Mr. Nickels served as Vice President of Administration at     
Bally's Reno and Las Vegas.                                                     

Robert A. Vannucci was elected Vice President of Marketing and        
Entertainment of ROC on April 26, 1994. Mr. Vannucci had been Director of       
Marketing of ROC since July 19, 1993. Mr. Vannucci was Senior Vice President of 
Marketing and Operations at the Sands Casino Hotel in Las Vegas from April 1991 
to February 1993. Mr. Vannucci was Vice President and General Manager of        
Fitzgerald's Las Vegas (a casino/hotel operator) from 1988 to January 1991. In  
July 1993, Robert Vannucci filed for personal bankruptcy protection under       
Chapter 13 of the Bankruptcy Code. Pursuant to his bankruptcy plan, Mr. Vannucci
has made 100% repayment to all creditors.                                       

Robert R. Barengo has been a Director of the Company and ROC since    
February, 1993. Mr. Barengo was a consultant to Riviera, Inc. from January 1993 
until June 30, 1993. Since 1972, Mr. Barengo has been engaged in the private    
practice of law in Reno, Nevada. From 1978 to 1983, Mr. Barengo was Speaker Pro 
Tempore and Speaker of the Nevada Assembly. From October 1992 to May 1996, Mr.  
Barengo was a director and 10% stockholder of Leroy's Horse & Sports Place, Inc.
("Leroy's"). In May 1996, Leroy's became a wholly owned subsidiary of American  
Wagering, Inc. ("AWI"), a publicly held corporation listed on NASDAQ. Since May 
1996, Mr. Barengo has been a director of AWI and currently owns 7% of the       
outstanding stock of AWI. Since 1993, Mr. Barengo has been the President and the
sole stockholder of Silver State Disseminators Company, a company licensed by   
Nevada gaming authorities to disseminate racing information in the State of     
Nevada and Chairman of the Nevada Dairy Commission.                             

    William Friedman has been a Director of the Company and ROC since February
1993. Mr. Friedman was a consultant to Riviera, Inc. from January 1993 until    
June 30, 1993. During 1989 and 1990, Mr. Friedman was President and General     
Manager of the Las Vegas Casino Division of United Gaming Inc., the largest slot
route operator in Nevada. In 1988 and 1989, Mr. Friedman was Chief Executive    
Officer and Executive Vice                                                      

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President of Rio Suite Hotel & Casino, Inc. (formerly MarCor Resorts. Inc.) and 
President and General Manager of Rio Suite Hotel & Casino in Las Vegas.         

Philip P. Hannifin has been a Director of the Company and ROC since   
February 1993. Mr. Hannifin was a consultant to Riviera, Inc. from January 1993 
until June 30, 1993. Mr. Hannifin was a Director from 1986 to 1995 and an       
Executive Vice President of Fitzgerald's Reno, Inc. (a casino/hotel operator)   
since 1991. From 1987 to 1990, Mr. Hannifin was a Director and Executive Vice   
President of MGM Grand Inc. (a casino/hotel operator). From January 1971 to     
September 1977, Mr. Hannifin was Chairman of the Nevada Gaming Control Board.   

  Officers of each of the Company and ROC serve at the discretion of their
respective Boards of Directors and are also subject to the licensing            
requirements of the Gaming Commission.                                          

DIRECTOR COMPENSATION AND ARRANGEMENTS                                          

 Each of Messrs. Barengo, Friedman and Hannifin is paid an annual fee of
$50,000 for services as a director of the Company and ROC. Each director is also
reimbursed for expenses incurred in connection with attendance at meetings of   
the Board of Directors. Mr. Hannifin was granted options to purchase 24,000     
shares in 1993, 12,000 shares in 1994 and none in 1995 and 1996. On March 5,    
1996 the Board of Directors adopted a Nonqualified Stock Option Plan for        
Non-Employee Directors (the "Directors' Option Plan"), which was approved by the
stockholders on May 10, 1996. Under the Directors' Option Plan, each individual 
elected, re-elected or continuing as a non-employee director will automatically 
receive a non-qualified stock option for 2,000 shares of Common Stock, with an  
option exercise price equal to the fair market value of the Common Stock on the 
date of grant. 50,000 shares have been reserved for issuance under the          
Directors' Option Plan. Options to purchase 2,000 shares at an exercise price of
$13.25 were granted to each of Messrs. Barengo and Friedman on May 10, 1996     
under the Directors' Option Plan. In addition, options to purchase 2,000 shares 
at an exercise price of $13.50 were granted to each of Messrs. Barengo, Friedman
and Hannifin on May 27, 1997 under the Director's Option Plan. Directors who are
also officers or employees of the Company or ROC do not receive any additional  
compensation for services as a director. Currently, Mr. Westerman is the only   
such director. The Board of Directors has granted the members of the            
Compensation Committee the right to elect to receive all or part of their annual
fees in the form of the Company's Common Stock in a number of shares having a   
fair market value equal to the cash compensation subject to such election       
pursuant to the Company's Compensation Plan for Directors serving on the        
Compensation Committee. Of the 50,000 shares reserved for issuance under this   
plan, 3,103 shares have been issued to Mr. Barengo for his director's fees in   
1996.                                                                           

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COMPENSATION OF EXECUTIVE OFFICERS                                              

  The following table sets forth a summary of the compensation paid by the
Company in the years ended December 31, 1994, 1995 and 1996, to the Chief       
Executive Officer of the Company and ROC, and to the Company's four most highly 
compensated executive officers who received over $100,000 in compensation during
1996 from the Company (collectively, the "Named Executive Officers").           

SUMMARY COMPENSATION TABLE

                                                        [Enlarge/Download Table]

                                                                OTHER             ALL      
          NAME AND                                              ANNUAL           OTHER     
     PRINCIPAL POSITION       YEAR   SALARY     BONUS        COMPENSATION   COMPENSATION(1)
----------------------------  ----  --------  ----------     ------------   ---------------
                                                                                           
William L. Westerman........  1996  $400,000  $1,213,969(2)    $441,375(3)      $ 1,566    
  Chairman of the Board and   1995   375,000     855,961        431,315(3)        1,630    
  Chief Executive Officer of  1994   350,000     592,379        389,040(3)        1,630    
  the Company and ROC                                                                      
Ronald P. Johnson...........  1996   170,961     100,000          6,875             791    
  Vice President of Gaming    1995   155,840      70,000          8,529             772    
  Operations of ROC           1994   131,813      50,000          5,446             497    
Martin R. Gross.............  1996   148,653     100,000          6,875             536    
  Vice President of Hotel     1995   140,049      70,000          8,079             541    
  Marketing of ROC            1994   125,302      50,000          5,316             442    
Robert Vannucci.............  1996   145,961     100,000          6,875             536    
  Vice President of           1995   130,569      70,000          6,879             541    
  Marketing and               1994   110,852      50,000          2,717             365    
  Entertainment of ROC                                                                     
Jerome P. Grippe............  1996   118,653     100,000          6,873             408    
  Vice President of           1995   108,950      70,000          7,115             442    
  Operations of ROC           1994   103,654      50,000          4,646             398    

---------------                                                                 

(1) Includes premiums paid by the Company for excess life insurance.            

(2) Includes $614,000 of Mr. Westerman's 1996 Incentive Bonus which was credited
to his retirement account pursuant to his employment agreement.         

(3) Includes contributions to Mr. Westerman's retirement account of $425,000 in 
1996, $400,000 in 1995 and $375,000 in 1994 (See "-- Employment         
Agreements").                                                           

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OPTION GRANTS                                                                   

The number of shares available for purchase under the Company's 1993  
Employee Stock Option Plan, as amended (the "Stock Option Plan") is 1,000,000   
(as adjusted pursuant to antidilution provisions). Options for an aggregate of  
774,000 shares have been granted under the Stock Option Plan. During the        
Company's 1996 fiscal year, options covering a total of 410,000 shares of Common
Stock were granted under the Stock Option Plan.                                 

The following table sets forth certain information regarding options  
granted during the fiscal year ended December 31, 1996 to the Named Executive   
Officers:                                                                       

OPTION GRANTS IN LAST FISCAL YEAR 
INDIVIDUAL GRANTS 

                                                        [Enlarge/Download Table]

                                                                              POTENTIAL REALIZABLE   
                                                                                      VALUE          
                                                                             AT ASSUMED ANNUAL RATES 
                        NUMBER OF     PERCENT OF                                 OF STOCK PRICE      
                        SECURITIES       TOTAL                                    APPRECIATION       
                        UNDERLYING  OPTIONS GRANTED  EXERCISE                  FOR OPTIONS TERM(1)   
                         OPTIONS     TO EMPLOYEES    PRICE PER  EXPIRATION  -------------------------
                         GRANTED    IN FISCAL YEAR     SHARE       DATE         5%            10%    
                        ----------  ---------------  ---------  ----------  ----------     ----------
                                                                                                     
William L. Westerman...   320,000        78.05%       $ 13.625    11/20/06  $2,741,981     $6,948,717
Ronald P. Johnson......     7,000         1.71          13.625    11/20/06      59,981        152,003
Martin R. Gross........     7,000         1.71          13.625    11/20/06      59,981        152,003
Robert Vannucci........     7,000         1.71          13.625    11/20/06      59,981        152,003
Jerome P. Grippe.......     7,000         1.71          13.625    11/20/06      59,981        152,003

---------------                                                                 

(1) "Potential Realizable Value" is based on the difference between the         
potential market value of shares issuable (based upon assumed 5% and 10%
   appreciation rates) upon exercise of such options and the exercise price of
    such options. The values disclosed are not intended to be, and should not be
interpreted as, representations or projections of future value of the   
Company's stock or of the stock price.                                  

OPTION EXERCISES AND YEAR-END OPTIONS VALUES                                    

The following table presents at June 30, 1997 the value of unexercised
in-the-money options held by the Named Executive Officers. No options have ever 
been exercised.                                                                 

                                                        [Enlarge/Download Table]

                                                     NUMBER OF            VALUE OF UNEXERCISED,   
                                                UNEXERCISED OPTIONS       IN-THE-MONEY OPTIONS    
                                               ----------------------  ---------------------------
                    NAME                       VESTED      NOT VESTED    VESTED         NOT VESTED
---------------------------------------------  -------     ----------  ----------       ----------
                                                                                                  
William L. Westerman.........................  245,000       255,000   $1,679,376        $148,125 
Ronald P. Johnson............................   18,250         6,750      167,938          14,813 
Martin R. Gross .............................   18,250         6,750      167,938          14,813 
Robert Vannucci .............................   18,250         6,750      167,938          14,813 
Jerome P. Grippe.............................   18,250         6,750      167,938          14,813 

EMPLOYMENT AGREEMENTS                                                           

   William L. Westerman serves as Chairman of the Board, President and Chief
Executive Officer of the Company, and as Chairman of the Board and Chief        
Executive Officer of ROC.                                                       

    Under Mr. Westerman's existing employment agreement with the Company which
was last amended on November 21, 1996 and approved by the stockholders of the   
Company on May 8, 1997, the term of Mr. Westerman's employment will expire on   
December 31, 1998 and Mr. Westerman's employment will be automatically renewed  
for successive one-year terms unless the Company gives Mr. Westerman 90 days    
written notice or Mr. Westerman gives the Company 180 days notice. Mr.          
Westerman's base compensation is $600,000.                                      

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     Under the employment agreement, Mr. Westerman is entitled to participate in
the Company's Senior Management Compensation Plan or such other executive bonus 
plan as shall be established by the Company's Board of Directors (collectively  
the "Plan"). If at least 80% of targeted net income, as defined by the Plan, is 
met, Mr. Westerman shall be entitled to receive a bonus under the Plan expressed
as a percentage of his $600,000 base salary depending on the percentage of      
targeted net income realized by the Company in a particular year, with a maximum
bonus of $900,000.                                                              

The employment agreement provides that the Company fund a retirement  
account for Mr. Westerman. Pursuant to the employment agreement, an aggregate of
$2,924,000 had been credited to the retirement account from its inception       
through January 1, 1997. Under the employment agreement, each year that Mr.     
Westerman continues to be employed, an amount equal to Mr. Westerman's base     
salary for that year will be credited to the account on January 1 of that year  
and in the event that Mr. Westerman is no longer employed by the Company (except
for termination for cause, in which case Mr. Westerman would forfeit all rights 
to monies in the retirement account), Mr. Westerman will be entitled to receive 
the amount in the retirement account as of the date he ceases to be employed by 
the Company in 20 quarterly installments. Pursuant to the employment agreement, 
the retirement account was credited with $79,027 on April 1, 1997, $85,672 on   
July 1, 1997, and $90,757 on October 1, 1997 and shall be credited with         
additional amounts on the first day of each succeeding calendar quarter equal to
the product of (i) the Company's average borrowing cost for the immediately     
preceding fiscal year, as determined by the Company's chief financial officer   
and (ii) the average outstanding balance in the retirement account during the   
preceding calendar quarter. In the event of Mr. Westerman's death, an amount    
equal to the applicable federal estate tax (now 60%) on the retirement account  
will be pre-paid prior to the date or dates such taxes are due.                 

  The Company retains beneficial ownership of all monies in the retirement
account, which monies are earmarked to pay Mr. Westerman's retirement benefits. 
However, upon (i) the vote of a majority of the outstanding shares of Common    
Stock approving a "Change of Control" (as defined below), (ii) the occurrence of
a Change of Control without Mr. Westerman's consent, (iii) a breach by the      
Company of a material term of the employment Agreement or (iv) the expiration or
earlier termination of the term of the employment agreement for any reason other
than cause, Mr. Westerman may require the Company to establish a "Rabbi Trust"  
for the benefit of Mr. Westerman and to fund such trust with an amount of cash  
equal to the amount then credited to the retirement account, including any      
amount to be credited to the retirement account upon a Change of Control        
discussed below.                                                                

    The employment agreement provides that Mr. Westerman will receive the same
life, health and disability benefits offered to other key executives of the     
Company and ROC, will be reimbursed for all business expenses and will be       
entitled to four weeks vacation per year.                                       

  Under the employment agreement, Mr. Westerman will be entitled to rights
exercisable upon a "Change of Control." A "Change of Control" is defined        
generally as transactions involving (i) a sale of substantially all of the      
assets of the Company, (ii) a merger, sale or other transaction resulting in    
holders of Common Stock immediately prior to such transaction holding less than 
a majority in voting interest to elect the directors of the Company or any other
surviving entity, (iii) any person that held less than 10% of the Common Stock  
acquiring a majority in voting interest to elect the directors of the Company or
(iv) any person acquiring 50% or more of voting power to elect directors of the 
Company or any surviving entity or acquiror of substantially all of the assets  
of the Company. Under the employment agreement, a Change of Control without Mr. 
Westerman's consent is a special event of default entitling Mr. Westerman, upon 
at least 90 days prior notice to the Company, to terminate his employment with  
the Company and to (i) have an amount equal to one year of base salary credited 
to his retirement account and (ii) 100% vesting of stock options held by him.   
With respect to the Merger, Mr. Westerman and Mr. Paulson are negotiating Mr.   
Westerman's waiver of his rights under the "Change of Control" provisions of the
employment agreement and amending the agreement with respect to the             
establishment of a "Rabbi Trust" for the benefit of Mr. Westerman upon notice by
Mr. Westerman at any time and crediting Mr. Westerman's retirement account with 
an amount equal to one year's base salary in the event the Company terminates   
his employment or does not renew his employment agreement for any successive one
year term.                                                                      

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TERMINATION FEE AGREEMENTS                                                      

 Twelve significant employees of ROC are party to agreements pursuant to
which each such employee is entitled to receive one year's salary and benefits  
if his or her employment is terminated without cause within one year of a change
of control (as defined in the termination fee agreements) of the Company or ROC.
The estimated total amount that would be payable under all such agreements is   
approximately $1.4 million in salaries and $425,000 in benefits as of September 
30, 1997.                                                                       

STAY BONUS AGREEMENTS                                                           

Seven significant employees of ROC are party to agreements pursuant to
which each such employee is entitled to receive one year's salary (less the     
amount of any incentive bonus paid in 1997 for 1996) in the event there is a    
change of control (as defined in the stay bonus agreements) of the Company. The 
agreements expire on December 31, 1997. The estimated total amount that would be
payable under all such agreements is approximately $352,500 if the Merger is    
consummated prior to December 31, 1997. The Company has renewed the stay bonus  
agreements for these employees in which case, upon a change of control, each    
such employee would be entitled to receive one year's salary less the amount of 
any incentive bonus paid in 1998 for 1997 if the Merger is consummated in 1998. 

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OWNERSHIP OF THE COMPANY

  The Common Stock is traded on the American Stock Exchange. The following
table sets forth certain information regarding the beneficial ownership of the  
Common Stock as of November 4, 1997 by (i) each person who, to the knowledge of 
the Company, beneficially owns more than 5% of the outstanding Common Stock,    
(ii) the directors and certain officers of the Company and (iii) all directors  
and officers of the Company and ROC as a group. The percentages of shares of    
Common Stock held or beneficially owned by any stockholder or group of          
stockholders are based upon the total number of shares of Common Stock          
outstanding as of October 31, 1997. Except as indicated, each person listed     
below has sole voting and investment power with respect to the shares set forth 
opposite such person's name.                                                    

                                                                [Download Table]

                                                      SHARES BENEFICIALLY OWNED
                                                      -------------------------
                        NAME                           NUMBER       PERCENTAGE 
----------------------------------------------------  ---------     -----------
                                                                               
William L. Westerman(1)(7)..........................    329,200          6.4%  
Ronald P. Johnson(1)(7).............................     30,250            *   
Martin R. Gross(1)(7)...............................     19,250            *   
Robert Vannucci(1)(7)...............................     18,850            *   
Jerome P. Grippe(1)(7)..............................     19,250            *   
Robert R. Barengo(1)(7).............................      4,380            *   
William M. Friedman(1)(7)...........................        400            *   
Philip P. Hannifin(1)(7)............................     33,000            *   
Keyport Life Insurance Co.(2)(8)....................    857,160         17.5   
SunAmerica Life Insurance Company(3)(8).............    761,920         15.5   
Morgens Entities:(4)(8)                                                        
  Betje Partners....................................     29,360            *   
  Morgens Waterfall Income Partners.................     43,920            *   
  MWV Employee Retirement Plan Group Trust..........      7,760            *   
  Phoenix Partners..................................     79,440          1.6   
  Restart Partners, L.P.............................    282,000          5.7   
  Restart Partners II, L.P..........................    440,600          9.0   
  Restart Partners III, L.P.........................    298,600          6.1   
  The Common Fund...................................     90,880          1.8   
                                                      ---------         ----   
          Total Morgens Entities....................  1,272,560         25.9   
James D. Bennett(5).................................    484,265          9.9   
Allen E. Paulson(6).................................    463,655          9.4   
All executive officers and directors as a group                                
  (12 persons)(1)(7)................................    521,480          9.8   

---------------                                                                 

*  Less than 1%.                                                              

(1) The address for each director and officer of the Company or ROC is c/o      
Riviera Holdings Corporation, 2901 Las Vegas Boulevard South, Las Vegas,
Nevada 89109.                                                           

(2) The address for Keyport Life Insurance Company ("Keyport") is 125 High      
   Street, Boston, Massachusetts 02110. Stein Roe, an affiliate of Keyport, is
  Keyport's investment advisor, and, as such, has the power and authority to
  direct the disposition of the securities, and accordingly, could be deemed
   to be a "beneficial" owner within the meaning of Rule 13d-3 of the Exchange
Act. Stein Roe, however, disclaims actual beneficial ownership of such  
securities.                                                             

(3) The address for SunAmerica Life Insurance Company is One Sun America Center,
Century City, California 90067.                                         

(4) The address for Morgens Waterfall is 10 East 50th Street, New York, New York
 10022. Morgens Waterfall or its principals are either investment advisors
to, or trustees or general partners of, the eight entities listed in the
above table ("Morgens Entities") that are the owners of Common Stock.   
Morgens                                                                 

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Waterfall or its principals have the power and authority to direct the  
disposition of these securities and, accordingly, could be deemed to be 
 "beneficial" owners within the meaning of Rule 13d-3 of the Exchange Act.
    Each of Morgens Waterfall, its principals and the Morgens Entities, however,
  disclaims beneficial ownership with respect to any securities not actually
beneficially owned by it.                                               

(5) Includes (i) 323,003 shares held by Restructuring Capital Associates, L.P.  
    and Bennett Restructuring Fund, L.P. and (ii) 161,262 shares held by Bennett
Offshore Restructuring Fund, Inc. The address for Restructuring Capital 
Associates, L.P. is 450 Park Avenue, New York, New York 10022.          

(6) The address for Mr. Paulson is Del Mar Country Club, 6001 Clubhouse Drive,  
Rancho Santa Fe, California 92067.                                      

(7) Includes vested portion of options to purchase shares of Common Stock       
    granted pursuant to the Stock Option Plan and Nonqualified Stock Option Plan
for Non-Employee Directors.                                             

(8) Pursuant to the Option Agreement, Morgens Waterfall, Sun Life and Stein Roe,
  Keyport's investment advisor, have agreed to vote their shares in favor of
the Merger Agreement and the Merger. See "The Proposed Merger."         

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

   Robert R. Barengo was formerly a director and 10% stockholder of Leroy's.
In May 1996, Leroy's became a wholly owned subsidiary of AWI, a publicly held   
corporation listed on NASDAQ. Mr. Barengo is currently a director of AWI and    
owns 7% of the outstanding stock of AWI, which leases approximately 12,000      
square feet of the Riviera casino floor. AWI is the operator of the Riviera's   
sports book operations. This lease was assumed by the Company from Riviera, Inc.
and is still in effect. The lease provides for rental payments based upon the   
monthly and annual revenues derived by AWI from the location. From January 1,   
1996 through December 31, 1996, AWI paid aggregate rent to ROC of $168,705 and  
$88,600 from January 1, 1997 through June 30, 1997. The Company believes that   
the terms of the lease with AWI are at least as favorable to the Company and ROC
as could have been obtained from unaffiliated third parties and are at least as 
favorable as terms obtained by other casino/hotels in Las Vegas. AWI also owns  
Howard Johnson Hotel & Casino located at the intersection of Tropicana Avenue   
and Interstate 15 in Las Vegas, Nevada. The hotel's operations include an       
International House of Pancakes restaurant, on-site food and beverage sales, 150
guest rooms (no suites) and approximately 53 gaming machines. The Company       
believes that this casino/hotel's operations are not competitive with the       
Riviera.                                                                        

  From August 1996 until February 1997, RGME, a wholly owned subsidiary of
the Company, has been operating the Four Queens located adjacent to the Golden  
Nugget on Fremont Street in downtown Las Vegas under an interim management      
agreement for a fee of $83,333 per month. The long-term management agreement    
with Elsinore, the owner of the Four Queens, went into effect on February 28,   
1997, the effective date of the Chapter 11 plan of reorganization of Elsinore.  
The Morgens Entities, beneficial owners of approximately 25.9% of the Common    
Stock of the Company, own more than 90% of the common stock of Elsinore. The    
Company believes that the terms of the management agreement are no less         
favorable to the Company than if the Company had negotiated with an independent 
third party.                                                                    

     The term of the management agreement is approximately 40 months, subject to
earlier termination or extension. Either party may terminate if EBITDA of the   
Four Queens for the first two fiscal years is less than $12.8 million. The term 
can be extended by an additional 24 months at RGME's option, if cumulative      
EBITDA of the Four Queens for the three fiscal years of the term is at least    
$19.2 million. RGME will be paid a fee of 25% of any increase in annual EBITDA  
of the Four Queens over $4.0 million, subject to a $1.0 million minimum fee,    
payable in equal monthly installments. RGME has received warrants to purchase   
1,125,000 shares of common stock of Elsinore, exercisable during the term or    
extended term of the management agreement at an exercise price of $1.00 per     
share. If the proposed acquisition of Elsinore by an affiliate of Allen E.      
Paulson is consummated (see "The Proposed Merger -- The Elsinore Transaction"), 
the Company would receive approximately $2.4 million, net of the exercise price 
of the warrants. To facilitate RGME's performance of the management agreement,  
Mr. William L. Westerman is the sole Director, President and Treasurer of the   
Four Queens. He receives no compensation and has been licensed by the Nevada    
Gaming Commission to hold these positions.                                      

  Either party can terminate the management agreement if (i) substantially
all the Four Queens' assets are sold, (ii) the Four Queens is merged or (iii) a 
majority of the Four Queens' or Elsinore's shares are sold. Upon such           
termination, RGM will receive a $2.0 million termination bonus minus any amount 
realized or realizable upon exercise of the warrants.                           

Since June 23, 1997 Mr. Westerman has been a Director of Darling      
International Inc., a publicly held company. Morgens Waterfall entities own     
46.13% of the stock of Darling International Inc. which is primarily in the     
business of processing animal and bakery waste by-products.                     

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DESCRIPTION OF CERTAIN INDEBTEDNESS 

   The following is a summary of certain indebtedness of the Company and ROC
which will be outstanding following consummation of the Transactions. To the    
extent such summary contains descriptions of the Revolving Credit Facility and  
other loan documents, such descriptions do not purport to be complete and are   
qualified in their entirety by reference to such documents, which are available 
upon request from the Company.                                                  

REVOLVING CREDIT FACILITY                                                       

The revolving credit facility (the "Revolving Credit Facility") was   
established as of February 28, 1997 on behalf of the Company and ROC pursuant to
agreements among the Company, ROC and U.S. Bank of Nevada, as lender ("USBN").  
The Revolving Credit Facility provides for borrowings of up to $15,000,000,     
which amount is reduced on a quarterly basis, commencing April 1998. The        
Revolving Credit Facility matures on January 1, 2002, unless accelerated earlier
by USBN upon an event of default. Interest on outstanding principal under the   
Revolving Credit Facility accrues at either the prime rate plus .50% per annum  
or LIBOR plus 2.90% per annum, at the Company's option. Funds under the         
Revolving Credit Facility could be used by the Company to acquire gaming and    
other equipment when and as needed. Availability of loans under the Revolving   
Credit Facility is subject to compliance by the Company and ROC with certain    
conditions precedent, including the maintenance of certain financial ratios. The
Revolving Credit Facility was modified as a result of the sale of the Existing  
Notes and the proposed Merger. The modifications included an increase in the    
allowable funded debt to EBITDA ratio to 4.75 to one. The Company is not        
currently meeting this requirement and, therefore, cannot draw down on the      
Revolving Credit Facility at this time. The Revolving Credit Facility is        
callable upon a change in control other than the Merger.                        

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DESCRIPTION OF NOTES

GENERAL                                                                         

    The Existing Notes were issued pursuant to an Indenture (the "Indenture"),
dated as of August 13, 1997, between the Company and Norwest Bank Minnesota,    
N.A. as trustee (the "Trustee") in a private transaction that is not subject to 
the registration requirements of the Securities Act. See "Notice to Investors." 
The terms of the indenture apply to the Existing Notes and to the New Notes to  
be issued in exchange therefor pursuant to the Exchange Offer (all such Notes   
being referred to herein collectively as the "Notes"). The terms of the Notes   
include those stated in the Indenture and those made part of the Indenture by   
reference to the Trust Indenture Act of 1939, as amended (the "Trust Indenture  
Act"). The Notes are subject to all such terms, and Holders of the Notes are    
referred to the Indenture and the Trust Indenture Act for a statement thereof.  
The following summary of certain provisions of the Indenture, the Collateral    
Documents (as defined) and the Registration Rights Agreement between the Company
and the Initial Purchasers (the "Registration Rights Agreement") does not       
purport to be complete and is qualified in its entirety by reference to the     
Indenture, the Collateral Documents and the Registration Rights Agreement,      
including the definitions therein of certain terms used below. Copies of the    
proposed form of Indenture, the Collateral Documents and the Registration Rights
Agreement will be made available as set forth below under "-- Additional        
Information." The definitions of certain terms used in the following summary are
set forth below under "-- Certain Definitions." For purposes of this summary,   
the term "Company" refers to Riviera Holdings Corporation and not to any of its 
Subsidiaries.                                                                   

    The Notes are senior secured obligations of the Company and rank senior in
right of payment to all existing and future subordinated Indebtedness of the    
Company and pari passu in right of payment with all existing and future senior  
Indebtedness of the Company, including borrowings under the Revolving Credit    
Facility. As of September 30, 1997, after giving effect to the redemption of the
11% First Mortgage Notes, the total senior Indebtedness of the Company          
(including the Notes) would have been approximately $173.8 million. The Notes   
are guaranteed (the "Subsidiary Guarantees") on a senior secured basis by each  
of the Company's existing and future Restricted Subsidiaries. The Notes and the 
Subsidiary Guarantees will be secured by the Collateral as set forth below under
"-- Security."                                                                  

PRINCIPAL, MATURITY AND INTEREST                                                

   The Notes are limited in aggregate principal amount to $175.0 million and
mature on August 15, 2004. Interest on the Notes will accrue at the rate of 10% 
per annum and will be payable semi-annually in arrears on February 15 and August
15, commencing on February 15, 1998, to Holders of record on the immediately    
preceding February 1 and August 1. Interest on the Notes will accrue from the   
most recent date to which interest has been paid or, if no interest has been    
paid, from the date of original issuance. Interest will be computed on the basis
of a 360-day year comprised of twelve 30-day months. Principal, premium, if any,
interest and Liquidated Damages, if any, on the Notes will be payable at the    
office or agency of the Company maintained for such purpose within the City and 
State of New York or, at the option of the Company, payment of interest and     
Liquidated Damages, if any, may be made by check mailed to the Holders at their 
respective addresses set forth in the register of Holders of the Notes; provided
that all payments of principal, premium, interest and Liquidated Damages, if    
any, with respect to the Notes, the Holders of which have given wire transfer   
instructions to the Company, will be required to be made by wire transfer of    
immediately available funds to the accounts specified by the Holders thereof.   
Until otherwise designated by the Company, the Company's office or agency in New
York will be the office of the Trustee maintained for such purpose. The Notes   
will be issued in denominations of $1,000 and integral multiples thereof.       

SECURITY                                                                        

   The Notes and the Subsidiary Guarantees are secured by the Collateral (as
defined below) owned by the Company or any Guarantor, respectively, whether now 
owned or hereafter acquired. "Collateral" means, subject to Permitted Liens, (i)
a first mortgage lien on the Riviera property in Las Vegas, Nevada, including   
all improvements thereon, provided, that up to six undeveloped acres of the     
Riviera property located adjacent                                               

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to the Riviera hotel-casino (the "Six Acre Tracts") may be released without     
consideration from the mortgage for purposes of future development; (ii) a first
priority lien on FF&E, excluding Gaming Equipment, of the Company and all       
existing and future Restricted Subsidiaries; (iii) a first priority lien on     
certain contract rights and other general intangibles, trademarks, trade names  
and other personal property of the Company and all existing and future          
Restricted Subsidiaries, and licenses and permits entered into by, or granted   
to, the Company or any Guarantor, in each case to the extent permitted by       
applicable gaming and other laws, but not including inventory, accounts         
receivables, or Gaming Licenses; (iv) subject to approval of Nevada Gaming      
Authorities, a pledge of the Capital Stock of all existing and future Guarantors
and other Subsidiaries directly owned by the Company or such Guarantors; and (v)
until the Net Proceeds of the sale of the Existing Notes are applied in         
accordance with the provisions set forth in the Prospectus under "Use of        
Proceeds," a lien on the bank account into which such Net Proceeds have been    
deposited.                                                                      

The Company and the Guarantors will enter into security agreements,   
mortgages, deeds of trust, certain other collateral assignment agreements and   
pledge agreements (collectively, the "Collateral Documents") that will provide  
for the grant of a security interest in or pledge of the Collateral to the      
Trustee, as collateral agent (in such capacity, the "Collateral Agent") for the 
Holders of the Notes. Such pledges and security interests will secure the       
payment and performance when due of all of the Obligations of the Company and   
the Guarantors under the Indenture, the Notes, the Subsidiary Guarantees and the
Collateral Documents.                                                           

The Company has used $15.0 million of the net proceeds of the Existing
Notes to purchase the Black Hawk Land (and the Company may contribute additional
cash amounts to the development of the Black Hawk Project in accordance with the
terms of the covenant entitled "Restricted Payments"). The Black Hawk Land was  
purchased by or contributed to Black Hawk Operating Company. The Indenture will 
allow Black Hawk Operating Company to incur Indebtedness, and to create Liens on
the purchased or contributed land, only in respect of third-party financing for 
the Black Hawk Project ("Permitted Black Hawk Debt"). The Indenture will not    
restrict Black Hawk Operating Company's ability to create Liens on equipment,   
receivables or other personal property. Holders of Notes will have no mortgage  
or other security interest in the land or potential improvements relating to the
Black Hawk Project, except as set forth below. Under certain circumstances if   
and when the inclusion of Black Hawk Operating Company as a Restricted          
Subsidiary would result in an increase in the Fixed Charge Coverage Ratio of the
Company, provided that no Default or Event of Default shall have occurred and be
continuing and provided that a Default or Event of Default would not thereby be 
created, Black Hawk Operating Company (i) automatically will become and remain a
Restricted Subsidiary, and (ii) will execute a Subsidiary Guarantee and such    
Collateral Documents as are necessary to create and convey a perfected first    
priority Lien on the Black Hawk Land and other Collateral (subject to Permitted 
Liens) held by such Restricted Subsidiary; provided, that no such Subsidiary    
Guarantee shall be executed, and no such Lien shall be created or conveyed with 
respect to the Black Hawk Land or other real or personal property owned by Black
Hawk Operating Company, if the execution, creation or conveyance thereof would  
violate or conflict with any law or the provisions of any Permitted Black Hawk  
Debt outstanding at the time of such conversion. Notwithstanding the foregoing, 
if the execution, creation or conveyance thereof would satisfy the conditions in
the preceding sentence but for any filing with or approval of any Gaming        
Authority or other regulatory entity, the Company shall use, and shall cause    
Black Hawk Operating Company to use, its best efforts to make all such required 
filings and obtain all such required approvals in order to permit such          
execution, creation and conveyance. See "Certain Covenants -- Additional        
Subsidiary Guarantees." See "Certain Covenants -- Additional Subsidiary         
Guarantees."                                                                    

   So long as no Event of Default shall have occurred and be continuing, and
subject to certain terms and conditions in the Indenture and the Collateral     
Documents, the Company and its Restricted Subsidiaries will be entitled to      
receive all cash dividends, interest and other payments made upon or with       
respect to the Capital Stock pledged by them and to exercise any voting and     
other consensual rights pertaining to the Collateral pledged by them. Upon the  
occurrence and during the continuance of an Event of Default, and subject to the
prior approval of Nevada Gaming Authorities, (a) all rights of the Company and  
its Restricted Subsidiaries to exercise such voting or other consensual rights  
will cease, and all such rights will become vested in the Collateral Agent,     
which, to the extent permitted by law, will have the sole right to exercise such
voting and other consensual rights and (b) all rights of the Company and its    
Restricted Subsidiaries to receive all cash                                     

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dividends, interest and other payments made upon or with respect to the pledged 
Collateral will cease and such cash dividends, interest and other payments will 
be paid to the Collateral Agent, and (c) the Collateral Agent may sell the      
pledged Collateral or any part thereof in accordance with the terms of the      
Collateral Documents. All funds distributed under the Collateral Documents and  
received by the Collateral Agent for the benefit of the Holders of the Notes    
will be distributed by the Collateral Agent in accordance with the provisions of
the Indenture.                                                                  

Under the terms of the Collateral Documents, the Collateral Agent will
determine the circumstances and manner in which the Collateral shall be disposed
of, including, but not limited to, the determination of whether to release all  
or any portion of the Collateral from the Liens created by the Collateral       
Documents and whether to foreclose on the pledged Collateral following an Event 
of Default. Moreover, upon the full and final payment and performance of all    
Obligations of the Company under the Indenture and the Notes, the Collateral    
Documents will terminate and the Collateral will be released. In addition, in   
the event that Collateral is sold and the Net Proceeds are applied in accordance
with the terms of the covenant entitled "Asset Sales," the Collateral Agent will
release the Liens in favor of the Collateral Agent in the assets sold; provided 
that in no event shall the Riviera property, or any improvements thereon (except
for the SixAcre Tracts) be sold or released from such Lien, and provided        
further, that the Collateral Agent will have received from the Company an       
Officers' Certificate that such Net Proceeds have been or will be so applied,   
and after giving effect to such sale, no Default or Event of Default shall have 
occurred and be continuing or would occur as a consequence thereof.             

Certain Gaming Law Limitations                                              

   The Trustee's ability to foreclose upon the Collateral will be limited by
relevant gaming laws, which generally require that persons who own or operate a 
casino or own equity securities of a gaming licensee (including capital stock)  
or purchase, possess or sell gaming equipment hold a valid gaming license. No   
person can hold a license in the States of Nevada or Colorado unless the person 
is found qualified or suitable by the relevant Gaming Authorities. In order for 
the Trustee or a purchaser at or after foreclosure to be found qualified or     
suitable, such Gaming Authorities would have discretionary authority to require 
the Trustee, any or all of the Holders of the Notes or any such purchaser to    
file applications, be investigated and be found qualified or suitable as an     
owner or operator of gaming establishments. The applicant for qualification, a  
finding of suitability or licensing must pay filing fees as well as all costs of
such investigation to determine suitability to hold a gaming license or         
interest. If the Trustee is unable or chooses not to qualify, be found suitable,
or licensed to own, operate or sell such assets, it would have to retain or sell
to an entity licensed to operate or sell such assets. In addition, in any       
foreclosure sale or subsequent resale by the Trustee, licensing requirements    
under the relevant gaming laws may limit the number of potential bidders and may
delay any sale, either of which events would have an adverse effect on the sale 
price of the Collateral. Moreover, the gaming industry could become subject to  
different or additional regulations during the term of the Notes, which could   
further adversely affect the practical rights and remedies of the Trustee.      
Therefore, the practical value of realizing on the Collateral may, without the  
appropriate approvals, be limited.                                              

Certain Bankruptcy Limitations                                              

  The right of the Trustee to repossess and dispose of the Collateral upon
the occurrence of an Event of Default is likely to be significantly impaired by 
applicable bankruptcy law if a bankruptcy proceeding were to be commenced by or 
against the Company or a Guarantor prior to the Trustee having repossessed and  
disposed of the Collateral. Under the Bankruptcy Code, a secured creditor such  
as the Trustee is prohibited from repossessing its security from a debtor in a  
bankruptcy case, or from disposing of security repossessed from such debtor,    
without bankruptcy court approval. Moreover, the Bankruptcy Code permits the    
debtor to continue to retain and to use collateral (and the proceeds, products, 
offspring, rents or profits of such collateral) even though the debtor is in    
default under the applicable debt instruments, provided that the secured        
creditor is given "adequate protection." The meaning of the term "adequate      
protection" may vary according to circumstances, but it is intended in general  
to protect the value of the secured creditor's interest in the collateral and   
may include, if approved by the court, cash payments or the granting of         
additional                                                                      

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security for any diminution in the value of the collateral as a result of the   
stay of repossession or the disposition or any use of the collateral by the     
debtor during the pendency of the bankruptcy case. The court has broad          
discretionary powers in all these matters, including the valuation of the       
Collateral. In addition, since the enforcement of the Lien of the Trustee in    
cash, deposit accounts and cash equivalents may be limited in a bankruptcy      
proceeding, the Holders of the Notes may not have any consent rights with       
respect to the use of those funds by the Company or any of its Subsidiaries     
during the pendency of the proceeding. In view of these considerations, it is   
impossible to predict how long payments under the Notes could be delayed        
following commencement of a bankruptcy case, whether or when the Trustee could  
repossess or dispose of the Collateral or whether or to what extent Holders of  
the Notes would be compensated for any delay in payment or loss of value of the 
Collateral.                                                                     

Subsidiary Guarantees                                                       

     The Company's payment obligations under the Notes are jointly and severally
guaranteed by the Guarantors, which consist of all of the Company's present and 
future Restricted Subsidiaries, except for three immaterial Subsidiaries that   
will be dissolved following issuance of the Notes. The Subsidiary Guarantees    
provide that the obligations of each Guarantor under its Subsidiary Guarantee   
will be limited so as not to constitute a fraudulent conveyance under applicable
law. See "Risk Factors -- Fraudulent Transfer Considerations."                  

     The Indenture provides that no Guarantor may consolidate with or merge with
or into (whether or not such Guarantor is the surviving Person), another        
corporation, Person or entity whether or not affiliated with such Guarantor     
(other than any other Guarantor or the Company) unless (i) subject to the       
provisions of the following paragraph, the Person formed by or surviving any    
such consolidation or merger (if other than such Guarantor, any other Guarantor 
or the Company) assumes all the obligations of such Guarantor pursuant to a     
supplemental indenture and appropriate Collateral Documents in form and         
substance reasonably satisfactory to the Trustee, under the Notes, the Indenture
and the Collateral Documents; (ii) immediately after giving effect to such      
transaction, no Default or Event of Default exists; (iii) such Guarantor, or any
Person formed by or surviving any such consolidation or merger, would have      
Consolidated Net Worth (immediately after giving effect to such transaction but 
without giving effect to purchase accounting adjustments), equal to or greater  
than the Consolidated Net Worth of such Guarantor immediately preceding the     
transaction; (iv) the Company would be permitted by virtue of the Company's pro 
forma Fixed Charge Coverage Ratio, immediately after giving effect to such      
transaction, to incur at least $1.00 of additional Indebtedness pursuant to the 
Fixed Charge Coverage Ratio test set forth in the covenant described below under
the caption "-- Incurrence of Indebtedness and Issuance of Preferred Stock," and
(v) such transaction would not result in the loss or suspension or material     
impairment of any Gaming License (unless a replacement Gaming License is        
effective prior to or simultaneously with such loss, suspension or material     
impairment).                                                                    

    The Indenture provides that in the event of a sale or other disposition of
all of the assets of any Guarantor (other than ROC), by way of merger,          
consolidation or otherwise, or a sale or other disposition of all of the Capital
Stock of any Guarantor (other than ROC), then such Guarantor (in the event of a 
sale or other disposition, by way of such a merger, consolidation or otherwise, 
of all of the capital stock of such Guarantor) or the corporation acquiring the 
property (in the event of a sale or other disposition of all of the assets of   
such Guarantor) will be released and relieved of any obligations under its      
Subsidiary Guarantee and any Liens in favor of the Collateral Agent upon the    
Collateral owned by such Guarantor will be released; provided that (i)          
immediately after giving effect to such transaction, no Default or Event of     
Default shall have occurred and be continuing or would occur as a consequence   
thereof and (ii) the Net Proceeds of such sale or other disposition are applied 
in accordance with the applicable provisions of the Indenture. See "Repurchase  
at the Option of Holders -- Asset Sales."                                       

     The Indenture further provides that in the event that a Guarantor that is a
Restricted Subsidiary is properly designated as an Unrestricted Subsidiary in   
accordance with the Indenture, then such Guarantor will be released and relieved
of any obligations under its Subsidiary Guarantee, and any Liens in favor of the
Collateral Agent upon the Collateral owned by such Guarantor will be released.  

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OPTIONAL REDEMPTION                                                             

  The Notes will not be redeemable at the Company's option prior to August
15, 2001. Thereafter, the Notes will be subject to redemption at any time at the
option of the Company, in whole or in part, upon not less than 30 nor more than 
60 days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest and Liquidated Damages,
if any, thereon to the applicable redemption date, if redeemed during the       
twelve-month period beginning on August 15 of the years indicated below:        

                                                                [Download Table]

                           YEAR                             PERCENTAGE
----------------------------------------------------------  ----------
                                                                      
2001......................................................    105.000%
2002......................................................    102.500%
2003 and thereafter.......................................    100.000%

    Notwithstanding the foregoing or any other provisions of the Indenture, if
any Gaming Authority requires that a Holder or beneficial owner of the Notes    
must be licensed, qualified or found suitable under any applicable Gaming Law in
order to maintain any or obtain any applied-for Gaming License or franchise of  
the Company or any of its Subsidiaries under any applicable Gaming Law, and such
Holder or beneficial owner fails to apply for a license, qualification or       
finding of suitability within 30 days after being requested to do so by such    
Gaming Authority (or such lesser period that may be required by such Gaming     
Authority or Gaming Law) or if such Holder or beneficial owner is not so        
licensed, qualified or found suitable by such Gaming Authority (a "Disqualified 
Holder"), the Company shall have the right, at its option, (i) to require such  
Disqualified Holder or beneficial owner to dispose of such Disqualified Holder's
or beneficial owner's Notes within 30 days of notice of such finding by the     
applicable Gaming Authority that such Disqualified Holder or beneficial owner   
will not be licensed, qualified or found suitable as directed by such Gaming    
Authority (or such earlier date as may be required by the applicable Gaming     
Authority or Gaming Law) or (ii) to call for redemption of the Notes of such    
Holder or beneficial owner at a redemption price equal to the lesser of 100% of 
the principal amount thereof or the price at which the Holder or beneficial     
owner acquired such Notes together with, in either case, accrued and unpaid     
interest and Liquidated Damages, if any, thereon to the earlier of the date of  
redemption or the date of the finding of unsuitability by such Gaming Authority,
which may be less than 30 days following the notice of redemption if so ordered 
by such Gaming Authority. In connection with any such redemption, and except as 
otherwise may be required by a Gaming Authority, the Company will comply with   
the procedures contained in the Indenture for redemption of the Notes.          
Immediately upon a determination of unsuitability, the Disqualified Holder shall
have no further rights whatsoever with respect to the Notes (i) to exercise,    
directly or indirectly, through any trustee, nominee or any other Person or     
entity, any right conferred by the Notes or (ii) to receive any interest or any 
other distribution or payment with respect to the Notes, or any remuneration in 
any form from the Company for services rendered or otherwise, except the        
redemption price of the Notes. Under the Indenture, the Company is not required 
to pay or reimburse any Holder or beneficial owner of Notes who is required to  
apply for such license, qualification or finding of suitability for the costs of
such application including investigatory costs. Such expenses will, therefore,  
be the obligation of such Holder or beneficial owner. See "Risk Factors --      
Regulation."                                                                    

   Notwithstanding the foregoing, during the period commencing upon issuance
of the Notes and ending on August 15, 2000, the Company may redeem up to        
one-third of the principal amount of Notes at a redemption price of 110.0% of   
the principal amount thereof, plus accrued and unpaid interest and Liquidated   
Damages thereon, if any, to the redemption date, with the net cash proceeds of  
an offering of common stock of the Company; provided that at least $116.7       
million in aggregate principal amount of Notes remain outstanding immediately   
after the occurrence of such redemption; and provided further, that the call for
such redemption shall occur within 30 days of the date of the closing of such   
offering.                                                                       

SELECTION AND NOTICE                                                            

    If less than all of the Notes are to be redeemed at any time, selection of
the Notes for redemption will be made by the Trustee in compliance with the     
requirements of the principal national securities exchange, if any,             

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on which the Notes are listed, or, if the Notes are not so listed, on a pro rata
basis, by lot or by such method as the Trustee shall deem fair and appropriate; 
provided that no Notes of $1,000 or less shall be redeemed in part. Notices of  
redemption shall be mailed by first class mail at least 30 but not more than 60 
days before the redemption date to each Holder of the Notes to be redeemed at   
its registered address. Notices of redemption may not be conditional. If any    
Note is to be redeemed in part only, the notice of redemption that relates to   
such Note shall state the portion of the principal amount thereof to be         
redeemed. A new Note in principal amount equal to the unredeemed portion thereof
will be issued in the name of the Holder thereof upon cancellation of the       
original Note. Notes called for redemption become due on the date fixed for     
redemption. On and after the redemption date, interest ceases to accrue on the  
Notes or portions of them called for redemption.                                

MANDATORY REDEMPTION                                                            

    Except as set forth below under "Repurchase at the Option of Holders," the
Company is not required to make mandatory redemption, purchase or sinking fund  
payments with respect to the Notes.                                             

REPURCHASE AT THE OPTION OF HOLDERS                                             

Change of Control                                                           

    Upon the occurrence of a Change of Control, each Holder of Notes will have
the right to require the Company to repurchase all or any part (equal to $1,000 
or an integral multiple thereof) of such Holder's Notes pursuant to the offer   
described below (the "Change of Control Offer") at an offer price in cash equal 
to 101% of the aggregate principal amount thereof plus accrued and unpaid       
interest and Liquidated Damages thereon, if any, to the date of purchase (the   
"Change of Control Payment"). Within 30 days following any Change of Control,   
the Company will mail a notice to each Holder describing the transaction or     
transactions that constitute the Change of Control and offering to repurchase   
Notes on the date specified in such notice, which date shall be no earlier than 
30 days and no later than 60 days from the date such notice is mailed (the      
"Change of Control Payment Date"), pursuant to the procedures required by the   
Indenture and described in such notice.                                         

On the Change of Control Payment Date, the Company will, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered  
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an   
amount equal to the Change of Control Payment in respect of all Notes or        
portions thereof so tendered and (3) deliver or cause to be delivered to the    
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the  
Company. The Paying Agent will promptly mail to each Holder of Notes so tendered
the Change of Control Payment for such Notes, and the Trustee will promptly     
authenticate and mail (or cause to be transferred by book entry) to each Holder 
a new Note equal in principal amount to any unpurchased portion of the Notes    
surrendered, if any; provided that each such new Note will be in a principal    
amount of $1,000 or an integral multiple thereof. The Company will publicly     
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.                                       

     The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as described
above with respect to a Change of Control, the Indenture does not contain       
provisions that permit the Holders of the Notes to require that the Company     
repurchase or redeem the Notes in the event of a takeover, recapitalization or  
similar transaction.                                                            

  The Company's Revolving Credit Facility contains prohibitions of certain
events that would constitute a Change of Control. In addition, the exercise by  
the Holders of Notes of their right to require the Company to repurchase the    
Notes could cause a default under such other senior indebtedness, even if the   
Change of Control itself does not, due to the financial effect of such          
repurchases on the Company. Finally, the Company's ability to pay cash to the   
Holders of Notes upon a repurchase may be limited by the Company's then existing
financial resources.                                                            

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   The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the     
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of     
Control Offer.                                                                  

     The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"  
of the assets of the Company and its Restricted Subsidiaries taken as a whole.  
Although there is a developing body of case law interpreting the phrase         
"substantially all," there is no precise established definition of the phrase   
under applicable law. Accordingly, the ability of a Holder of Notes to require  
the Company to repurchase such Notes as a result of a sale, lease, transfer,    
conveyance or other disposition of less than all of the assets of the Company   
and its Restricted Subsidiaries taken as a whole to another Person or group may 
be uncertain.                                                                   

Asset Sales                                                                 

   The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the      
Company (or the Restricted Subsidiary, as the case may be) receives             
consideration at the time of such Asset Sale at least equal to the fair market  
value (evidenced by a resolution of the Board of Directors set forth in an      
Officers' Certificate delivered to the Trustee) of the assets or Equity         
Interests issued or sold or otherwise disposed of and (ii) at least 80% of the  
consideration therefor received by the Company or such Restricted Subsidiary is 
in the form of cash; provided that the amount of (x) any liabilities (as shown  
on the Company's or such Restricted Subsidiary's most recent balance sheet), of 
the Company or any Restricted Subsidiary (other than contingent liabilities and 
liabilities that are by their terms subordinated to the Notes or any guarantee  
thereof) that are assumed by the transferee of any such assets and (y) any      
securities, notes or other obligations received by the Company or any such      
Restricted Subsidiary from such transferee that, within 30 days of such receipt,
are converted by the Company or such Restricted Subsidiary into cash (to the    
extent of the cash received), will be deemed to be cash for purposes of this    
provision.                                                                      

     Within 360 days after the receipt of any Net Proceeds from an Asset Sale or
Event of Loss, the Company may apply such Net Proceeds to the acquisition of an 
interest in another business, the making of a capital expenditure, cost of      
construction or real property improvements or the acquisition of other assets,  
in each case, in the same line of business as the Permitted Businesses. Any Net 
Proceeds received from the sale of assets that do not constitute Collateral may 
be applied also to the repayment of any senior debt secured by such assets.     
Pending the final application of any such Net Proceeds, the Company may         
temporarily reduce the Revolving Credit Facility or otherwise invest such Net   
Proceeds in any manner that is not prohibited by the Indenture. Any Net Proceeds
from Asset Sales that are not applied or invested as provided in the first two  
sentences of this paragraph will be deemed to constitute "Excess Proceeds."     
Within fifteen days of each date on which when the aggregate amount of Excess   
Proceeds exceeds $5.0 million, the Company will be required to commence an offer
to all Holders of Notes (an "Asset Sale Offer") to purchase the maximum         
principal amount of Notes that may be purchased out of the Excess Proceeds, at  
an offer price in cash in an amount equal to 100% of the principal amount       
thereof plus accrued and unpaid interest and Liquidated Damages, if any,        
thereon, to the date of purchase, in accordance with the procedures set forth in
the Indenture. To the extent that the aggregate amount of Notes tendered        
pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company   
may use any remaining Excess Proceeds for general corporate purposes. If the    
aggregate principal amount of Notes surrendered by Holders thereof exceeds the  
amount of Excess Proceeds, the Trustee will select the Notes to be purchased on 
a pro rata basis. Upon completion of such offer to purchase, the amount of      
Excess Proceeds will be reset at zero.                                          

Conduct of Offers                                                           

Any Change of Control Offer or Asset Sale Offer will remain open for a
period of 20 business days, and the purchase date thereunder will not be more   
than 60 days after the commencement of the applicable offer. Notwithstanding any
other provisions of the Indenture, any Change of Control Offer or Asset Sale    
Offer will                                                                      

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be conducted in compliance with applicable regulations under the federal        
securities laws, including Rule 14e-1 under the Exchange Act.                   

CERTAIN COVENANTS                                                               

Restricted Payments                                                         

   The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay   
any dividend or make any other payment or distribution on account of the        
Company's or any of its Restricted Subsidiaries' Equity Interests or to the     
direct or indirect holders of the Company's or any of its Restricted            
Subsidiaries' Equity Interests in their capacity as such (other than payments,  
dividends or distributions payable in Equity Interests (other than Disqualified 
Stock) of the Company or payments, dividends or distributions payable to the    
Company or any Restricted Subsidiary); (ii) purchase, redeem or otherwise       
acquire or retire for value any Equity Interests of the Company or any          
Restricted Subsidiary (other than any such Equity Interests owned by the Company
or any Restricted Subsidiary); (iii) make any payment on or with respect to, or 
purchase, redeem, defease or otherwise acquire or retire for value any          
Indebtedness that is subordinated to the Notes, except for payment of interest  
when due or principal at Stated Maturity; or (iv) make any Restricted Investment
(all such payments and other actions set forth in clauses (i) through (iv) above
being collectively referred to as "Restricted Payments"), unless, at the time of
and after giving effect to such Restricted Payment:                             

 (a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and               

     (b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto (in the case of a Restricted    
     Investment, as if such Restricted Investment had been made at the beginning
 of the applicable four-quarter period), have been permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Fixed Charge   
Coverage Ratio test set forth in the first paragraph of the covenant  
   described above under caption "-- Incurrence of Indebtedness and Issuance
of Preferred Stock"; and                                              

          (c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted      
     Subsidiaries after the date of the Indenture (excluding Restricted Payments
   permitted by clauses (ii) through (xi) of the next succeeding paragraph),
is less than the sum of (i) 50% of the Consolidated Net Income of the 
    Company for the period (taken as one accounting period) from the beginning
   of the first fiscal quarter commencing after the date of the Indenture to
the end of the Company's most recently ended fiscal quarter for which 
    internal financial statements are available at the time of such Restricted
    Payment (or, if such Consolidated Net Income for such period is a deficit,
less 100% of such deficit), plus (ii) 100% of the aggregate net cash  
   proceeds received by the Company from the issue or sale since the date of
   the Indenture of Equity Interests of the Company (other than Disqualified
     Stock) or of Disqualified Stock or debt securities of the Company that have
    been converted into such Equity Interests (other than Equity Interests (or
    Disqualified Stock or convertible debt securities) sold to a Subsidiary of
the Company and other than Disqualified Stock or convertible debt     
     securities that have been converted into Disqualified Stock), plus (iii) to
   the extent that any Restricted Investment that was made after the date of
    the Indenture is sold for cash or otherwise liquidated or repaid for cash,
the lesser of (A) the cash return of capital with respect to such     
  Restricted Investment (less the cost of disposition, if any) and (B) the
initial amount of such Restricted Investment, plus (iv) 50% of any    
   dividends received by the Company or a Wholly Owned Restricted Subsidiary
after the date of the Indenture from an Unrestricted Subsidiary of the
   Company, to the extent that such dividends were not otherwise included in
Consolidated Net Income for such period.                              

    The foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of        
declaration such payment would have complied with the provisions of the         
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other     
acquisition of any subordinated Indebtedness of the Company or a Restricted     
Subsidiary or Equity Interests of the Company in exchange for, or out of the net
cash proceeds of the substantially concurrent sale (other than to a Subsidiary  
of the                                                                          

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Company) of, other Equity Interests of the Company (other than any Disqualified 
Stock); provided that the amount of any such net cash proceeds that are utilized
for any such redemption, repurchase, retirement, defeasance or other acquisition
shall be excluded from clause (c) (ii) of the preceding paragraph; (iii) the    
redemption, repurchase, retirement, defeasance or other acquisition of          
subordinated Indebtedness of the Company or a Restricted Subsidiary or          
Disqualified Stock of the Company, in either case in exchange for or with the   
net cash proceeds from an incurrence of Permitted Refinancing Indebtedness or   
from the issuance of Disqualified Stock; (iv) the redemption, repurchase,       
retirement, defeasance or other acquisition, substantially concurrently with the
consummation of the sale of the Existing Notes, of subordinated Indebtedness of 
the Company or a Restricted Subsidiary with Net Proceeds of the sale of the     
Existing Notes; (v) the repurchase, redemption or other acquisition or          
retirement for value of any Equity Interests of the Company or any Restricted   
Subsidiary of the Company held by any employee of the Company (or any of its    
Restricted Subsidiaries); provided that the aggregate price paid for all such   
repurchased, redeemed, acquired or retired Equity Interests under this clause   
(v) will not exceed $1.0 million in any calendar year, provided further that    
commencing the second full calendar year following the date of the Indenture,   
the aggregate price that may be so paid shall be increased by any amount of such
$1.0 million that was not used for the repurchase of Equity Interests in the    
immediately preceding calendar year; (vi) loans or advances to employees of the 
Company or its Restricted Subsidiaries; provided that all such loans and        
advances will not exceed $1.0 million in any twelve-month period; (vii) payment 
of dividends on preferred stock of the Company that was permitted to be issued  
pursuant to the Indenture; (viii) the repurchase, redemption or other           
acquisition or retirement for value of any Equity Interests of the Company held 
by any member of the Company's management, in connection with the Merger and    
provided that the aggregate price paid for all such repurchased, redeemed,      
acquired or retired Equity Interests under this clause (viii) will not exceed   
$6.0 million; (ix) Restricted Investments in an aggregate amount, taken together
since the date of the Indenture, of not more than $10,000,000 (it being         
understood that if any Restricted Investment acquired with a Restricted Payment 
after the date of original issuance of the Notes pursuant to this clause (ix) is
sold, transferred or otherwise conveyed to any person other than the Company or 
a Restricted Subsidiary, the portion of the net cash proceeds or fair market    
value of securities or properties paid to the Company and its Restricted        
Subsidiaries in connection with such sale, transfer or conveyance that relates  
or corresponds to the repayment or return of the original cost of such a        
Restricted Investment will replenish or increase the amount of Restricted       
Investments permitted to be made pursuant to this clause (ix), so that up to    
$10,000,000 of Restricted Investments may be outstanding under this clause (ix) 
at any given time); (x) following the Merger, distributions, loans or payments  
from the Company or its Restricted Subsidiaries to the Company's direct parent  
corporation pursuant to intercompany Indebtedness, intercompany tax sharing     
agreements (so long as the distributions, loans or payments thereunder by the   
Company and its Subsidiaries shall not exceed the amount of taxes the Company   
would be required to pay if it were the filing person for all applicable taxes, 
and other intercompany payments for the purpose of enabling the parent          
corporation to perform accounting, legal, corporate reporting and administrative
functions (including, without limitation, amounts necessary to pay fees and     
expenses in connection with the Merger); and (xi) additional Restricted Payments
in an aggregate amount, taken together since the date of the Indenture, of not  
more than $5,000,000; provided that with respect to the actions described in    
clauses (i), (v), (vii), (viii), (ix) and (xi), no Default or Event of Default  
shall have occurred and be continuing, or would occur as a consequence of such  
actions.                                                                        

 The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default; provided 
that in no event shall the business currently operated by ROC or RGM be         
transferred to or held by an Unrestricted Subsidiary, and provided, further that
following any conversion of Black Hawk Operating Company to a Restricted        
Subsidiary pursuant to the provisions described above under "-- Security," in no
event shall the Black Hawk Project or related business thereafter operated by   
Black Hawk Operating Company be transferred to or held by an Unrestricted       
Subsidiary. For purposes of making such determination, all outstanding          
Investments by the Company and its Restricted Subsidiaries (except to the extent
repaid in cash) in the Subsidiary so designated will be deemed to be Restricted 
Payments at the time of such designation and will reduce the amount available   
for Restricted Payments under the first paragraph of this covenant. All such    
outstanding Investments will be deemed to constitute Investments in an amount   
equal to the greatest of (x) the net book value of such Investments at the time 
of                                                                              

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such designation, (y) the fair market value of such Investments at the time of  
such designation and (z) the original fair market value of such Investments at  
the time they were made. Such designation will only be permitted if such        
Restricted Payment would be permitted at such time and if such Restricted       
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.        

  The amount of all Restricted Payments (other than cash) will be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Subsidiary, as the  
case may be, pursuant to the Restricted Payment. The fair market value of any   
non-cash Restricted Payment shall be determined by the Board of Directors whose 
resolution with respect thereto shall be delivered to the Trustee, such         
determination to be based upon an opinion or appraisal issued by an accounting, 
appraisal or investment banking firm of national standing if such fair market   
value exceeds $5.0 million. Not later than the date of making any Restricted    
Payment, the Company shall deliver to the Trustee an Officers' Certificate      
stating that such Restricted Payment is permitted and setting forth the basis   
upon which the calculations required by the covenant "Restricted Payments" were 
computed, together with a copy of any fairness opinion or appraisal required by 
the Indenture.                                                                  

Incurrence of Indebtedness and Issuance of Preferred Stock                  

The Indenture provides that following the issuance of the Notes and   
Subsidiary Guarantees, the Company will not, and will not permit any of its     
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,   
with respect to (collectively, "incur") any Indebtedness (including Acquired    
Debt) and that the Company will not issue any Disqualified Stock and will not   
permit any Restricted Subsidiary to issue any shares of preferred stock;        
provided, however, that the Company or its Subsidiaries may incur Indebtedness  
(including Acquired Debt) and the Company may issue shares of Disqualified Stock
if (i) the Fixed Charge Coverage Ratio for the Company's most recently ended    
four full fiscal quarters for which internal financial statements are available 
immediately preceding the date on which such additional Indebtedness is incurred
or such stock is issued would have been at least equal to 2.00 to 1, determined 
on a pro forma basis (including a pro forma application of the net proceeds     
therefrom), as if the additional Indebtedness had been incurred, or the stock   
had been issued, as the case may be, at the beginning of such four-quarter      
period and (ii) except with respect to revolving credit Indebtedness, the       
Weighted Average Life to Maturity of such Indebtedness is greater than the      
remaining Weighted Average Life to Maturity of the Notes.                       

  The provisions of the first paragraph of this covenant will not apply to
the incurrence of any of the following items of Indebtedness, so long as after  
giving effect to such incurrence, no Default or Event of Default shall have     
occurred and be continuing or would occur as a consequence thereof              
(collectively, "Permitted Debt"):                                               

      (i) the incurrence of revolving credit Indebtedness and letters of
credit (with letters of credit being deemed to have a principal amount
equal to the maximum potential liability of the Company and its       
     Subsidiaries thereunder) under the Revolving Credit Facility; provided that
the aggregate principal amount outstanding under the Revolving Credit 
  Facility after giving effect to such incurrence, including all Permitted
     Refinancing Indebtedness incurred to refund, refinance or replace any other
Indebtedness incurred pursuant to this clause (i), does not exceed an 
amount equal to $20.0 million;                                        

(ii) the incurrence by the Company or any of its Restricted 
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
  mortgage financings or purchase money obligations, in each case incurred
    for the purpose of financing all or any part of the purchase price or cost
   of construction or improvement of property, plant or equipment (including
slot machines and other gaming equipment) used in the business of the 
     Company or such Restricted Subsidiary, in an aggregate principal amount not
to exceed $15.0 million at any time outstanding;                      

     (iii) the incurrence by the Company or any of its Subsidiaries of
    Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace Indebtedness that was  
  permitted by the Indenture to be incurred or was existing on the date of
the Indenture;                                                        

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    (iv) the incurrence by the Company or any of its Subsidiaries of
    Hedging Obligations that are incurred for the purpose of fixing or hedging
   interest rate risk with respect to any floating rate Indebtedness that is
permitted by the terms of this Indenture to be outstanding;           

(v) the guarantee by the Company or any of the Guarantors of
    Indebtedness of the Company or a Restricted Subsidiary of the Company that
was permitted to be incurred by another provision of this covenant;   

  (vi) the incurrence of additional Indebtedness in an aggregate
principal amount (or accreted value, as applicable) at any time       
   outstanding, including all Permitted Refinancing Indebtedness incurred to
  refund, refinance or replace any other Indebtedness incurred pursuant to
this clause (vi), not to exceed $10.0 million;                        

          (vii) the incurrence by the Company of additional Indebtedness that is
   subordinated to the Notes pursuant to customary subordination provisions,
  that has no mandatory obligation to pay principal on a date earlier than
 the final maturity date of, and has a Weighted Average Life to Maturity
equal to or greater than the Weighted Average Life to Maturity of, the
    Notes, and that is in an aggregate principal amount (or accreted value, as
  applicable) at any time outstanding, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any other       
  Indebtedness incurred pursuant to this clause (vii), not to exceed $10.0
million;                                                              

      (viii) the incurrence by Black Hawk Operating Company of Permitted
Black Hawk Debt;                                                      

         (ix) the incurrence by the Company's Unrestricted Subsidiaries (other
     than Black Hawk Operating Company) of Non-Recourse Debt, provided, however,
  that if any such Indebtedness ceases to be Non-Recourse Debt, such event
    will be deemed to constitute an incurrence of Indebtedness by a Restricted
    Subsidiary of the Company; and provided, further, that any Permitted Black
 Hawk Debt outstanding at the time, if at all, that Black Hawk Operating
Company becomes a Restricted Subsidiary pursuant to the provisions    
 described above under "-- Security" shall not be deemed at such time to
   constitute an incurrence of Indebtedness for purposes of this covenant so
   long as such Indebtedness is taken into account in the calculation of the
Fixed Charge Coverage Ratio of the Company as described above under   
"-- Security";                                                        

          (x) reimbursement obligations with respect to letters of credit issued
in the ordinary course of business, indemnifications, adjustments of  
  purchase prices, performance bonds, appeal bonds, surety bonds, workers'
compensation obligations, insurance obligations or bonds, completion  
    guaranties and other similar bonds or obligations incurred in the ordinary
course of business;                                                   

        (xi) Indebtedness owed by (i) a Restricted Subsidiary to the Company
 or to another Restricted Subsidiary or (ii) the Company to a Restricted
Subsidiary;                                                           

   (xii) Indebtedness arising from the honoring by a bank or other
     financial institution of a check, draft or similar instrument inadvertently
drawn against insufficient funds in the ordinary course of business;  

       (xiii) Indebtedness representing the balance deferred and unpaid of
    the purchase price of any property or services used in the ordinary course
   of the business of the Company and its Restricted Subsidiaries that would
constitute ordinarily a trade payable to trade creditors;             

         (xiv) a bond or surety obligation posted in order to prevent the loss
   or material impairment of a Gaming License or as otherwise required by an
order of any Gaming Authority, in each case to the extent required by 
applicable law and consistent in character and amount with customary  
industry practice; and                                                

        (xv) guarantees, "keep well" provisions or other evidences of credit
  support by the Company or its Restricted Subsidiaries of Permitted Black
    Hawk Debt, provided that the terms of such guarantees or other instruments
shall not require or permit payments thereunder by the Company or its 
Restricted Subsidiaries in an amount greater than $5.0 million in any 
twelve-month period.                                                  

 For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the         
categories of Permitted Debt described in clauses (i) through (xv)              

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above or is entitled to be incurred pursuant to the first paragraph of this     
covenant, the Company will, in its sole discretion, classify such item of       
Indebtedness in any manner that complies with this covenant and such item of    
Indebtedness will be treated as having been incurred pursuant to only one of    
such clauses or pursuant to the first paragraph hereof. Accrual of interest and 
the accretion of accreted value will not be deemed to be an incurrence of       
Indebtedness for purposes of this covenant.                                     

Liens                                                                       

   The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume
or suffer to exist any Lien on any asset now owned or hereafter acquired, or any
income or profits therefrom or assign or convey any right to receive income     
therefrom, except Permitted Liens. So long as Black Hawk Operating Company is an
Unrestricted Subsidiary, the Indenture will allow Black Hawk Operating Company  
to create, incur, assume or suffer to exist (i) Liens (in addition to Permitted 
Liens) on the Black Hawk Land only in respect of Permitted Black Hawk Debt and  
(ii) Liens upon any other assets without restriction. See "-- Incurrence of     
Indebtedness and Issuance of Preferred Stock."                                  

Dividend and Other Payment Restrictions Affecting Subsidiaries              

   The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create or otherwise  
cause or suffer to exist or become effective any encumbrance or restriction on  
the ability of any Restricted Subsidiary to (i)(a) pay dividends or make any    
other distributions to the Company or any of its Restricted Subsidiaries (1) on 
its Capital Stock or (2) with respect to any other interest or participation in,
or measured by, its profits, or (b) pay any indebtedness owed to the Company or 
any of its Restricted Subsidiaries, (ii) make loans or advances to the Company  
or any of its Restricted Subsidiaries or (iii) transfer any of its properties or
assets to the Company or any of its Restricted Subsidiaries, except for such    
encumbrances or restrictions existing under or by reason of (a) the Indenture   
and the Notes, (b) Indebtedness outstanding upon the acquisition of a           
Subsidiary, or upon the conversion of Black Hawk Operating Company to a         
Restricted Subsidiary pursuant to the provisions described above under          
"-- Security," provided, that such Indebtedness was not incurred in connection  
with, or in contemplation of, such acquisition or conversion, and such          
encumbrance or restriction is not applicable to any Person or the property or   
assets of any Person other than the new Restricted Subsidiary, (c) a Permitted  
Lien, solely to the extent that such Lien limits the sale, disposition or       
transfer of the property which is the subject thereof, (d) applicable law, (e)  
by reason of customary non-assignment, subletting and net worth provisions in   
leases entered into in the ordinary course of business and consistent with past 
practices, (f) purchase money obligations for property acquired in the ordinary 
course of business that impose restrictions of the nature described in clause   
(iii) above on the property so acquired, or (g) Permitted Refinancing           
Indebtedness, provided that the restrictions contained in the agreements        
governing such Permitted Refinancing Indebtedness are no more restrictive than  
those contained in the agreements governing the Indebtedness being refinanced.  

Merger, Consolidation or Sale of Assets                                     

   The Indenture provides that the Company may not consolidate or merge with
or into (whether or not the Company is the surviving corporation), or sell,     
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets in one or more related transactions, to another     
corporation, Person or entity unless (i) the Company is the surviving           
corporation or the entity or the Person formed by or surviving any such         
consolidation or merger (if other than the Company) or to which such sale,      
assignment, transfer, lease, conveyance or other disposition shall have been    
made is a corporation organized or existing under the laws of the United States,
any state thereof or the District of Columbia; (ii) the entity or Person formed 
by or surviving any such consolidation or merger (if other than the Company) or 
the entity or Person to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made assumes all the obligations of the    
Company under the Notes and the Indenture pursuant to a supplemental indenture  
in a form reasonably satisfactory to the Trustee; (iii) immediately after such  
transaction no Default or Event of Default exists; (iv) except in the case of a 
merger of the Company with or into a Wholly Owned Restricted Subsidiary of the  
Company, the Company or the entity or Person formed by or surviving any such    

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consolidation or merger (if other than the Company), or to which such sale,     
assignment, transfer, lease, conveyance or other disposition shall have been    
made (A) will have Consolidated Net Worth immediately after the transaction     
equal to or greater than the Consolidated Net Worth of the Company immediately  
preceding the transaction and (B) will, at the time of such transaction and     
after giving pro forma effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at least 
$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio    
test set forth in the first paragraph of the covenant described above under the 
caption "-- Incurrence of Indebtedness and Issuance of Preferred Stock," and (v)
such transaction would not require any Holder or beneficial owner of Notes to   
obtain a Gaming License or be qualified or found suitable under the law of any  
applicable gaming jurisdiction; provided, that such Holder or beneficial owner  
would not have been required to obtain a Gaming License or be qualified or found
suitable under the laws of any applicable gaming jurisdiction in the absence of 
such transaction. The foregoing provision will not prohibit the Merger.         

Transactions with Affiliates                                                

   The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer
or otherwise dispose of any of its properties or assets to, or purchase any     
property or assets from, or enter into or make or amend any transaction,        
contract, agreement, understanding, loan, advance or guarantee with, or for the 
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"),  
unless (i) such Affiliate Transaction is on terms that are no less favorable to 
the Company or the relevant Restricted Subsidiary than those that would have    
been obtained in a comparable transaction by the Company or such Restricted     
Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee
(a) with respect to any Affiliate Transaction or series of related Affiliate    
Transactions involving aggregate consideration in excess of $1.0 million, a     
resolution of the Board of Directors set forth in an Officers' Certificate      
certifying that such Affiliate Transaction complies with clause (i) above and   
that such Affiliate Transaction has been approved by a majority of the          
disinterested members of the Board of Directors and (b) with respect to any     
Affiliate Transaction or series of related Affiliate Transactions involving     
aggregate consideration in excess of $5.0 million (except with respect to any   
Management Agreement, in which case the following requirement will not apply),  
an opinion as to the fairness to the Holders of such Affiliate Transaction from 
a financial point of view issued by an accounting, appraisal or investment      
banking firm of national standing; provided that (u) purchases of goods and     
services in the ordinary course of business, (v) any employment agreement       
entered into by the Company or any of its Restricted Subsidiaries in the        
ordinary course of business and consistent with the past practice of the Company
or such Restricted Subsidiary, (w) registration rights agreements, existing on  
the date of the Indenture, (x) transactions between or among the Company and/or 
its Restricted Subsidiaries, (y) Restricted Payments that are permitted by the  
provisions of the Indenture described above under the caption "-- Restricted    
Payments," and (z) reasonable fees and compensation (including, without         
limitation, bonuses retirement plans and securities, stock options and stock    
ownership plans) paid or issued to and indemnity provided on behalf of,         
officers, directors, employees or consultants of the Company or any Restricted  
Subsidiary in the ordinary course of business, in each case, shall not be deemed
Affiliate Transactions.                                                         

Business Activities                                                         

 The Company will not, and will not permit any Restricted Subsidiary to,
engage in any business other than Permitted Businesses, except to such extent as
would not be material to the Company and its Restricted Subsidiaries taken as a 
whole.                                                                          

Use of Proceeds                                                             

    The Company and its Subsidiaries will apply the Net Proceeds from the sale
of the Existing Notes in accordance with the disclosure set forth under the     
caption "Use of Proceeds."                                                      

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Additional Subsidiary Guarantees                                            

The Indenture provides that if the Company or any of its Restricted   
Subsidiaries acquires or creates another Subsidiary after the date of the       
Indenture, then such newly acquired or created Subsidiary will execute a        
supplemental indenture setting forth its Subsidiary Guarantee, together with    
such Collateral Documents as are necessary to create and convey to the Trustee  
or other Collateral Agent, for the benefit of the Holders, a perfected          
first-priority Lien on all Collateral (subject to Permitted Liens) held by such 
Subsidiary, provided such Subsidiary shall have first obtained all approvals    
required, if any, by Gaming Authorities to execute the supplemental indenture   
and such Collateral Documents, and deliver an opinion of counsel, in accordance 
with the terms of the Indenture, except in either case for all Subsidiaries that
have properly been designated as Unrestricted Subsidiaries in accordance with   
the Indenture for so long as they continue to constitute Unrestricted           
Subsidiaries. Upon any conversion of (i) Black Hawk Operating Company from an   
Unrestricted Subsidiary to a Restricted Subsidiary pursuant to the provisions   
described above under "-- Security," or (ii) any other Unrestricted Subsidiary  
to a Restricted Subsidiary pursuant to the definition below of "Unrestricted    
Subsidiary," the newly-created Restricted Subsidiary will also be subject to the
requirements of the preceding sentence; provided, that no such Subsidiary       
Guarantee shall be executed, and no such Lien shall be created or conveyed with 
respect to the Black Hawk Land or other real or personal property owned by Black
Hawk Operating Company, if the execution, creation or conveyance thereof would  
violate or conflict with any law or the provisions of any Permitted Black Hawk  
Debt outstanding at the time of such conversion. In addition, if the Company or 
any of its Restricted Subsidiaries acquires or creates another Subsidiary after 
the date of the Indenture, whether such acquired or newly-created Subsidiary is 
a Restricted Subsidiary or an Unrestricted Subsidiary, the Company or such      
Restricted Subsidiary that is the owner of Capital Stock of such Subsidiary     
shall execute a Pledge Agreement with respect to such Capital Stock, in         
substantially the same form as the Pledge Agreements executed as of the date of 
the Indenture, pledging to the Trustee or other Collateral Agent designated by  
the Trustee all of such Capital Stock owned by pledgor.                         

Maintenance of Insurance                                                    

The Indenture provides that, from and at all times after the date of  
issuance of the Notes until the Notes have been paid in full, the Company and   
the Guarantors will, and will cause their Restricted Subsidiaries to, have and  
maintain in effect insurance with responsible carriers against such risks and in
such amounts as is customarily carried by similar businesses with such          
deductibles, retentions, self insured amounts and coinsurance provisions as are 
customarily carried by similar businesses of similar size, including, without   
limitation, property and casualty coverage.                                     

Reports                                                                     

The Indenture provides that, whether or not required by the rules and 
regulations of the Securities and Exchange Commission (the "Commission"), so    
long as any Notes are outstanding, the Company will furnish to the Trustee and  
the Holders of Notes (i) all quarterly and annual financial information that    
would be required to be contained in a filing with the Commission on Forms 10-Q 
and 10-K if the Company were required to file such Forms that describe the      
financial condition and results of the Company and its consolidated Subsidiaries
(showing in reasonable detail, either on the face of the financial statements or
in the footnotes thereto and in "Management's Discussion and Analysis of        
Financial Condition and Results of Operations," the financial condition and     
results of operations of the Company and its Restricted Subsidiaries separate   
from the financial condition and results of operations of the Unrestricted      
Subsidiaries of the Company) and, with respect to the annual information only, a
report thereon by the Company's certified independent accountants and (ii) all  
current reports that would be required to be filed with the Commission on Form  
8-K if the Company were required to file such reports. In addition, whether or  
not required by the rules and regulations of the Commission, the Company will   
file a copy of all such information and reports with the Commission for public  
availability (unless the Commission will not accept such a filing) and make such
information available to securities analysts and prospective investors upon     
request. In addition, the Company and the Guarantors have agreed that, for so   
long as any Notes remain outstanding, they will furnish to the                  

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trustee and all Holders and to securities analysts and prospective investors,   
upon their request, the information required to be delivered pursuant to Rule   
144A(d)(4) under the Securities Act.                                            

EVENTS OF DEFAULT AND REMEDIES                                                  

   The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on, or     
Liquidated Damages with respect to, the Notes; (ii) default in payment when due 
of the principal of or premium, if any, on the Notes; (iii) failure by the      
Company to comply with the provisions described under the captions "-- Change of
Control" or "-- Merger, Consolidation or Sale of Assets"; (iv) failure by the   
Company for 60 days after notice to comply with any of its other agreements in  
the Indenture or the Notes; (v) default under any mortgage, indenture or        
instrument under which there may be issued or by which there may be secured or  
evidenced any Indebtedness for money borrowed by the Company or any of its      
Restricted Subsidiaries (or the payment of which is guaranteed by the Company or
any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now  
exists, or is created after the date of the Indenture, which default (a) is     
caused by a failure to pay principal of or premium, if any, or interest on such 
Indebtedness prior to the expiration of the grace period provided in such       
Indebtedness on the date of such default (a "Payment Default") or (b) results in
the acceleration of such Indebtedness prior to its express maturity and, in each
case, the principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been a Payment      
Default or the maturity of which has been so accelerated, aggregates $5.0       
million or more; (vi) failure by the Company or any of its Restricted           
Subsidiaries to pay final judgments aggregating in excess of $5.0 million, which
judgments are not paid, discharged or stayed for a period of 60 days; (vii)     
breach by the Company or any Guarantor in any material respect of any           
representation or warranty set forth in the Collateral Documents, or default by 
the Company or any Guarantor in the performance of any covenant set forth in the
Collateral Documents (in either case, continuing for 60 days after receiving    
notice of such breach), or repudiation by the Company or any Guarantor of its   
obligations under the Collateral Documents or the unenforceability of the       
Collateral Documents against the Company or any Guarantor for any reason; (viii)
certain events of bankruptcy or insolvency with respect to the Company or any of
its Restricted Subsidiaries; (ix) except as permitted by the Indenture, any     
Subsidiary Guarantee shall be held in any judicial proceeding to be             
unenforceable or invalid or shall cease for any reason to be in full force and  
effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall 
deny or disaffirm its obligations under its Subsidiary Guarantee; and (x) under 
certain circumstances if a Gaming License of the Company is revoked or          
suspended, resulting in the cessation of operation of the Company's casino      
business for 90 days.                                                           

If any Event of Default occurs and is continuing, the Trustee or the  
Holders of at least 25% in principal amount of the then outstanding Notes may   
declare all the Notes to be due and payable immediately. Notwithstanding the    
foregoing, in the case of an Event of Default arising from certain events of    
bankruptcy or insolvency, with respect to the Company, any Significant          
Subsidiary or any group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary, all outstanding Notes will become due and payable       
without further action or notice. Holders of the Notes may not enforce the      
Indenture or the Notes except as provided in the Indenture. Subject to certain  
limitations, Holders of a majority in principal amount of the then outstanding  
Notes may direct the Trustee in its exercise of any trust or power. The Trustee 
may withhold from Holders of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the payment of     
principal or interest) if it determines that withholding notice is in their     
interest.                                                                       

In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with   
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes pursuant to the      
optional redemption provisions of the Indenture, an equivalent premium shall    
also become and be immediately due and payable to the extent permitted by law   
upon the acceleration of the Notes. If an Event of Default occurs prior to      
August 15, 2001 by reason of any willful action (or inaction) taken (or not     
taken) by or on behalf of the Company with the intention of avoiding the        
prohibition on redemption of the Notes prior to                                 

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August 15, 2001, then the premium specified in the Indenture shall also become  
immediately due and payable to the extent permitted by law upon the acceleration
of the Notes.                                                                   

   The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the 
Notes waive any existing Default or Event of Default and its consequences under 
the Indenture except a continuing Default or Event of Default in the payment of 
interest on, or the principal of, the Notes.                                    

The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon       
becoming aware of any Default or Event of Default, to deliver to the Trustee a  
statement specifying such Default or Event of Default.                          

NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS        

     No director, officer, employee, incorporator or stockholder of the Company,
Subsidiary or Affiliate thereof, as such, shall have any liability for any      
obligations of the Company under the Notes, the Indenture or the Collateral     
Documents or for any claim based on, in respect of, or by reason of, such       
obligations or their creation. Each Holder of Notes by accepting a Note waives  
and releases all such liability. The waiver and release are part of the         
consideration for issuance of the Notes. Such waiver may not be effective to    
waive liabilities under the federal securities laws and it is the view of the   
Commission that such a waiver is against public policy.                         

LEGAL DEFEASANCE AND COVENANT DEFEASANCE                                        

  The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Notes ("Legal            
Defeasance") except for (i) the rights of Holders of outstanding Notes to       
receive payments in respect of the principal of, premium, if any, and interest  
and Liquidated Damages on such Notes when such payments are due from the trust  
referred to below, (ii) the Company's obligations with respect to the Notes     
concerning issuing temporary Notes, registration of Notes, mutilated, destroyed,
lost or stolen Notes and the maintenance of an office or agency for payment and 
money for security payments held in trust, (iii) the rights, powers, trusts,    
duties and immunities of the Trustee, and the Company's obligations in          
connection therewith and (iv) the Legal Defeasance provisions of the Indenture. 
In addition, the Company may, at its option and at any time, elect to have the  
obligations of the Company released with respect to certain material covenants  
that are described herein ("Covenant Defeasance") and thereafter any omission to
comply with such obligations shall not constitute a Default or Event of Default 
with respect to the Notes. In the event Covenant Defeasance occurs, certain     
events (not including non-payment, bankruptcy, receivership, rehabilitation and 
insolvency events) described under "Events of Default" will no longer constitute
an Event of Default with respect to the Notes.                                  

  In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders of the Notes, cash in U.S. dollars, non-callable Government      
Securities, or a combination thereof, in such amounts as will be sufficient, in 
the opinion of a nationally recognized firm of independent public accountants,  
to pay the principal of, premium, if any, and interest and Liquidated Damages on
the outstanding Notes on the stated maturity or on the applicable redemption    
date, as the case may be, and the Company must specify whether the Notes are    
being defeased to maturity or to a particular redemption date; (ii) in the case 
of Legal Defeasance, the Company shall have delivered to the Trustee an opinion 
of counsel in the United States reasonably acceptable to the Trustee confirming 
that (A) the Company has received from, or there has been published by, the     
Internal Revenue Service a ruling or (B) since the date of the Indenture, there 
has been a change in the applicable federal income tax law, in either case to   
the effect that, and based thereon such opinion of counsel shall confirm that,  
the Holders of the outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and will be    
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not         
occurred; (iii) in the case of Covenant Defeasance, the Company shall have      
delivered to the Trustee an opinion of counsel in the United States reasonably  
acceptable to the Trustee confirming that the Holders of the outstanding Notes  

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will not recognize income, gain or loss for federal income tax purposes as a    
result of such Covenant Defeasance and will be subject to federal income tax on 
the same amounts, in the same manner and at the same times as would have been   
the case if such Covenant Defeasance had not occurred; (iv) no Default or Event 
of Default shall have occurred and be continuing on the date of such deposit    
(other than a Default or Event of Default resulting from the borrowing of funds 
to be applied to such deposit); (v) such Legal Defeasance or Covenant Defeasance
will not result in a breach or violation of, or constitute a default under any  
material agreement or instrument (other than the Indenture) to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its     
Subsidiaries is bound; (v) the Company must deliver to the Trustee an Officers' 
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders of Notes over the other creditors of the Company with 
the intent of defeating, hindering, delaying or defrauding creditors of the     
Company or others; and (vi) the Company must deliver to the Trustee an Officers'
Certificate and an opinion of counsel, each stating, subject to certain factual 
assumptions and bankruptcy and insolvency exceptions that all conditions        
precedent provided for relating to the Legal Defeasance or the Covenant         
Defeasance have been complied with.                                             

TRANSFER AND EXCHANGE                                                           

   A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to      
furnish appropriate endorsements and transfer documents and the Company may     
require a Holder to pay any taxes and fees required by law or permitted by the  
Indenture. The Company is not required to transfer or exchange any Note selected
for redemption. Also, the Company is not required to transfer or exchange any   
Note for a period of 15 days before a selection of Notes to be redeemed.        

    The registered Holder of a Note will be treated as the owner of it for all
purposes.                                                                       

AMENDMENT, SUPPLEMENT AND WAIVER                                                

    Except as provided in the next two succeeding paragraphs, the Indenture or
the Notes may be amended or supplemented with the consent of the Holders of at  
least a majority in principal amount of the Notes then outstanding (including,  
without limitation, consents obtained in connection with a purchase of, or      
tender offer or exchange offer for, Notes), and any existing default or         
compliance with any provision of the Indenture or the Notes may be waived with  
the consent of the Holders of a majority in principal amount of the then        
outstanding Notes (including consents obtained in connection with a tender offer
or exchange offer for Notes).                                                   

     Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder): (i) reduce the     
principal amount of Notes whose Holders must consent to an amendment, supplement
or waiver, (ii) reduce the principal of or change the fixed maturity of any Note
or alter the provisions with respect to the timing of, and payment with respect 
to, redemption of the Notes (other than provisions relating to the covenants    
described above under the caption "-- Repurchase at the Option of Holders" or   
"-- Asset Sales"), (iii) reduce the rate of or change the time for payment of   
interest on any Note, (iv) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the Notes (except a rescission  
of acceleration of the Notes by the Holders of at least a majority in aggregate 
principal amount of the Notes and a waiver of the payment default that resulted 
from such acceleration), (v) make any Note payable in money other than that     
stated in the Notes, (vi) make any change in the provisions of the Indenture    
relating to waivers of past Defaults or the rights of Holders of Notes to       
receive payments of principal of or premium, if any, or interest on the Notes,  
(vii) waive a redemption payment with respect to any Note (other than a payment 
required by one of the covenants described above under the caption              
"-- Repurchase at the Option of Holders" or "-- Asset Sales") or (viii) make any
change in the foregoing amendment and waiver provisions.                        

    Notwithstanding the foregoing, without the consent of any Holder of Notes,
the Company and the Trustee may amend or supplement the Indenture or the Notes  
to cure any ambiguity, defect or inconsistency, to provide for uncertificated   
Notes in addition to or in place of certificated Notes, to provide for the      

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assumption of the Company's obligations to Holders of Notes in the case of a    
merger or consolidation, to make any change that would provide any additional   
rights or benefits to the Holders of Notes or that does not adversely affect the
legal rights under the Indenture of any such Holder, to release Collateral that 
is permitted to be released under the Indenture, or to comply with requirements 
of the Commission in order to effect or maintain the qualification of the       
Indenture under the Trust Indenture Act.                                        

CONCERNING THE TRUSTEE                                                          

    The Indenture provides that the Trustee may make loans to, accept deposits
from, and perform services for, the Company and its affiliates, and may         
otherwise deal with the Company or its affiliates, as if it were not the        
Trustee. However, if the Trustee acquires any conflicting interest it must      
eliminate such conflict within 90 days, apply to the Commission for permission  
to continue or resign.                                                          

     The Holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any      
proceeding for exercising any remedy available to the Trustee, subject to       
certain exceptions. The Indenture provides that in case an Event of Default     
shall occur (which shall not be cured), the Trustee will be required, in the    
exercise of its power, to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to such provisions, the Trustee will be under no    
obligation to exercise any of its rights or powers under the Indenture at the   
request of any Holder of Notes, unless such Holder shall have offered to the    
Trustee security and indemnity satisfactory to it against any loss, liability or
expense.                                                                        

ADDITIONAL INFORMATION                                                          

    Anyone who receives this Prospectus may obtain a copy of the Indenture and
the Collateral Documents without charge by writing to Riviera Holdings          
Corporation, 2901 Las Vegas Boulevard South, Las Vegas, Nevada 89109, Attention:
Chief Financial Officer.                                                        

BOOK-ENTRY, DELIVERY AND FORM                                                   

     Except as set forth in the next paragraph, the Notes to be exchanged as set
forth herein will initially be issued in the form of one Global Note (the       
"Global Note"). The Global Note will be deposited on the date of the closing of 
the sale of the Notes offered hereby (the "Closing Date") with, or on behalf of,
The Depository Trust Company (the "Depositary") and registered in the name of   
Cede & Co., as nominee of the Depositary (such nominee being referred to herein 
as the "Global Note Holder").                                                   

     Notes that are issued as described below under "-- Certificated Securities"
will be issued in the form of registered definitive certificates (the           
"Certificated Securities"). Upon the transfer of Certificated Securities, such  
Certificated Securities may, unless the Global Note has previously been         
exchanged for Certificated Securities, be exchanged for an interest in the      
Global Note representing the principal amount of Notes being transferred.       

    The Depositary is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the "Participants"
or the "Depositary's Participants") and to facilitate the clearance and         
settlement of transactions in such securities between Participants through      
electronic book-entry changes in accounts of its Participants. The Depositary's 
Participants include securities brokers and dealers (including the Initial      
Purchasers), banks and trust companies, clearing corporations and certain other 
organizations. Access to the Depositary's system is also available to other     
entities such as banks, brokers, dealers and trust companies (collectively, the 
"Indirect Participants" or the "Depositary's Indirect Participants") that clear 
through or maintain a custodial relationship with a Participant, either directly
or indirectly. Persons who are not Participants may beneficially own securities 
held by or on behalf of the Depositary only thorough the Depositary's           
Participants or the Depositary's Indirect Participants.                         

The Company expects that pursuant to procedures established by the    
Depositary (i) upon deposit of the Global Note, the Depositary will credit the  
accounts of Participants designated by the Initial Purchasers with portions of  
the principal amount of the Global Note and (ii) ownership of the Notes         
evidenced by the Global                                                         

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Note will be shown on, and the transfer of ownership thereof will be effected   
only through, records maintained by the Depositary (with respect to the         
interests of the Depositary's Participants), the Depositary's Participants and  
the Depositary's Indirect Participants. Prospective purchasers are advised that 
the laws of some states require that certain persons take physical delivery in  
definitive form of securities that they own. Consequently, the ability to       
transfer Notes evidenced by the Global Note will be limited to such extent. For 
certain other restrictions on the transferability of the Notes, see "Notice to  
Investors."                                                                     

     So long as the Global Note Holder is the registered owner of any Notes, the
Global Note Holder will be considered the sole Holder under the Indenture of any
Notes evidenced by the Global Note. Beneficial owners of Notes evidenced by the 
Global Note will not be considered the owners or Holders thereof under the      
Indenture for any purpose, including with respect to the giving of any          
directions, instructions or approvals to the Trustee thereunder. Neither the    
Company nor the Trustee will have any responsibility or liability for any aspect
of the records of the Depositary or for maintaining, supervising or reviewing   
any records of the Depositary relating to the Notes.                            

Payments in respect of the principal of, premium, if any, interest and
Liquidated Damages, if any, on any Notes registered in the name of the Global   
Note Holder on the applicable record date will be payable by the Trustee to or  
at the direction of the Global Note Holder in its capacity as the registered    
Holder under the Indenture. Under the terms of the Indenture, the Company and   
the Trustee may treat the persons in whose names Notes, including the Global    
Note, are registered as the owners thereof for the purpose of receiving such    
payments. Consequently, neither the Company nor the Trustee has or will have any
responsibility or liability for the payment of such amounts to beneficial owners
of Notes. The Company believes, however, that it is currently the policy of the 
Depositary to immediately credit the accounts of the relevant Participants with 
such payments, in amounts proportionate to their respective holdings of         
beneficial interests in the relevant security as shown on the records of the    
Depositary. Payments by the Depositary's Participants and the Depositary's      
Indirect Participants to the beneficial owners of Notes will be governed by     
standing instructions and customary practice and will be the responsibility of  
the Depositary's Participants or the Depositary's Indirect Participants.        

CERTIFICATED SECURITIES                                                         

   Subject to certain conditions, any person having a beneficial interest in
the Global Note may, upon request to the Trustee, exchange such beneficial      
interest for Notes in the form of Certificated Securities. Upon any such        
issuance, the Trustee is required to register such Certificated Securities in   
the name of, and cause the same to be delivered to, such person or persons (or  
the nominee of any thereof). All such certificated Notes would be subject to the
legend requirements described herein under "Notice to Investors." In addition,  
if (i) the Company notifies the Trustee in writing that the Depositary is no    
longer willing or able to act as a depositary and the Company is unable to      
locate a qualified successor within 90 days or (ii) the Company, at its option, 
notifies the Trustee in writing that it elects to cause the issuance of Notes in
the form of Certificated Securities under the Indenture, then, upon surrender by
the Global Note Holder of its Global Note, Notes in such form will be issued to 
each person that the Global Note Holder and the Depositary identify as being the
beneficial owner of the related Notes.                                          

 Neither the Company nor the Trustee will be liable for any delay by the
Global Note Holder or the Depositary in identifying the beneficial owners of    
Notes and the Company and the Trustee may conclusively rely on, and will be     
protected in relying on, instructions from the Global Note Holder or the        
Depositary for all purposes.                                                    

SAME DAY SETTLEMENT AND PAYMENT                                                 

     The Indenture requires that payments in respect of the Notes represented by
the Global Note (including principal, premium, if any, interest and Liquidated  
Damages, if any) be made by wire transfer of immediately available funds to the 
accounts specified by the Global Note Holder. With respect to Certificated      
Securities, the Company will make all payments of principal, premium, if any,   
interest and Liquidated Damages, if any, by wire transfer of immediately        
available funds to the accounts specified by the Holders thereof or, if no such 
account is specified, by mailing a check to each such Holder's registered       
address.                                                                        

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REGISTRATION RIGHTS; LIQUIDATED DAMAGES                                         

  Pursuant to the Registration Rights Agreement, the Company has agreed to
file with the Commission the Exchange Offer Registration Statement on the       
appropriate form under the Securities Act with respect to the New Notes. Upon   
the effectiveness of the Exchange Offer Registration Statement, the Company will
offer to the Holders of Transfer Restricted Securities pursuant to the Exchange 
Offer who are able to make certain representations the opportunity to exchange  
their Transfer Restricted Securities for New Notes. If (i) the Company is not   
required to file the Exchange Offer Registration Statement or permitted to      
consummate the Exchange Offer because the Exchange Offer is not permitted by    
applicable law or Commission policy or (ii) any Holder of Transfer Restricted   
Securities notifies the Company within 20 business days of the consummation of  
the Exchange Offer that (A) it is prohibited by law or Commission policy from   
participating in the Exchange Offer or (B) that it may not resell the New Notes 
acquired by it in the Exchange Offer to the public without delivering a         
prospectus and the prospectus contained in the Exchange Offer Registration      
Statement is not appropriate or available for such resales or (C) that it is a  
broker-dealer and owns Existing Notes acquired directly from the Company or an  
affiliate of the Company, the Company will file with the Commission a Shelf     
Registration Statement to cover resales of all Transfer Restricted Securities by
the Holders thereof who satisfy certain conditions relating to the provision of 
information in connection with the Shelf Registration Statement. The Company    
will use its best efforts to cause the applicable registration statement to be  
declared effective by the Commission on or prior to the 120th day following such
filing. For purposes of the foregoing, "Transfer Restricted Securities" means   
each Existing Note until the earliest to occur of (a) the date on which such    
Existing Note is exchanged in the Exchange Offer and entitled to be resold to   
the public by the Holder thereof without complying with the prospectus delivery 
requirements of the Act, (b) the date on which such Existing Note has been      
effectively registered under the Act and disposed of in accordance with a Shelf 
Registration Statement and (c) the date on which such Existing Note is          
distributed to the public pursuant to Rule 144 under the Act or by a            
Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the        
Exchange Offer Registration Statement (including delivery of the Prospectus     
contained herein).                                                              

The Registration Rights Agreement provides that the Company and the   
Restricted Subsidiaries will (i) file an Exchange Offer Registration Statement  
with the Commission on or prior to 60 days after the Closing Date, (ii) use     
their best efforts to have the Exchange Offer Registration Statement declared   
effective by the Commission on or prior to 120 days after the Closing Date,     
(iii) unless the Exchange Offer would not be permitted by applicable law or     
Commission policy, the Company will commence the Exchange Offer and use its best
efforts to issue on or prior to 30 business days after the date on which the    
Exchange Offer Registration Statement was declared effective by the Commission, 
New Notes in exchange for all Existing Notes tendered prior thereto in the      
Exchange Offer and (iv) if obligated to file the Shelf Registration Statement,  
the Company will file the Shelf Registration Statement with the Commission on or
prior to 60 days after such filing obligation arises and use its best efforts to
cause the Shelf Registration to be declared effective by the Commission on or   
prior to 120 days after such obligation arises. If (a) the Company fails to file
any of the Registration Statements required by the Registration Rights Agreement
on or before the date specified for such filing, (b) any of such Registration   
Statements is not declared effective by the Commission on or prior to the date  
specified for such effectiveness (the "Effectiveness Target Date"), or (c) the  
Company fails to consummate the Exchange Offer within 30 business days of the   
Effectiveness Target Date with respect to the Exchange Offer Registration       
Statement, or (d) the Shelf Registration Statement or the Exchange Offer        
Registration Statement is declared effective but thereafter ceases to be        
effective or usable in connection with resales of Transfer Restricted Securities
during the periods specified in the Registration Rights Agreement (each such    
event referred to in clauses (a) through (d) above a "Registration Default"),   
then the Company will pay Liquidated Damages to each Holder of Notes, with      
respect to the first 90-day period immediately following the occurrence of the  
first Registration Default in an amount equal to $.05 per week per $1,000       
principal amount of Notes held by such Holder. The amount of the Liquidated     
Damages will increase by an additional $.05 per week per $1,000 principal amount
of Notes with respect to each subsequent 90-day period until all Registration   
Defaults have been cured, up to a maximum amount of Liquidated Damages of $.50  
per week per $1,000 principal amount of Notes. All accrued Liquidated Damages   
will be paid by the Company on each Damages Payment Date to the Global Note     
Holder by wire transfer of immediately available funds or by                    

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federal funds check and to Holders of Certificated Securities by wire transfer  
to the accounts specified by them or by mailing checks to their registered      
addresses if no such accounts have been specified. Following the cure of all    
Registration Defaults, the accrual of Liquidated Damages will cease.            

  Holders of Notes will be required to make certain representations to the
Company (as described in the Registration Rights Agreement) in order to         
participate in the Exchange Offer and will be required to deliver information to
be used in connection with the Shelf Registration Statement and to provide      
comments on the Shelf Registration Statement within the time periods set forth  
in the Registration Rights Agreement in order to have their Notes included in   
the Shelf Registration Statement and benefit from the provisions regarding      
Liquidated Damages set forth above.                                             

CERTAIN DEFINITIONS                                                             

    Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.        

"Acquired Debt" means, with respect to any specified Person, (i)      
Indebtedness of any other Person existing at the time such other Person is      
merged with or into or became a Subsidiary of such specified Person, including, 
without limitation, Indebtedness incurred in connection with, or in             
contemplation of, such other Person merging with or into or becoming a          
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien    
encumbering any asset acquired by such specified Person.                        

"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common      
control with such specified Person. For purposes of this definition, "control"  
(including, with correlative meanings, the terms "controlling," "controlled by" 
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the     
direction of the management or policies of such Person, whether through the     
ownership of voting securities, by agreement or otherwise; provided that        
beneficial ownership of 10% or more of the voting securities of a Person shall  
be deemed to be control.                                                        

    "Asset Sale" means (i) the sale, lease, conveyance or other disposition by
the Company or a Restricted Subsidiary of any assets or rights (including,      
without limitation, by way of a sale and leaseback) other than sales of assets  
(excluding capital assets) or rights in the ordinary course of business         
consistent with past practices (provided that the sale, lease, conveyance or    
other disposition of all or substantially all of the assets of the Company and  
its Restricted Subsidiaries taken as a whole will be governed by the provisions 
of the Indenture described above under the caption "-- Change of Control" and/or
the provisions described above under the caption "-- Merger, Consolidation or   
Sale of Assets" and not by the provisions of the Asset Sale covenant), and (ii) 
the issuance of Equity Interests by the Company or any Restricted Subsidiary, or
the sale by the Company or any of its Restricted Subsidiaries of Equity         
Interests of any of the Company's Subsidiaries (other than directors' qualifying
shares), in the case of either clause (i) or (ii), whether in a single          
transaction or a series of related transactions (a) that have a fair market     
value in excess of $1.0 million or (b) for net proceeds in excess of $1.0       
million. Notwithstanding the foregoing: (i) a transfer of assets by the Company 
to a Restricted Subsidiary or by a Restricted Subsidiary to the Company or to   
another Restricted Subsidiary, (ii) an issuance of Equity Interests by a        
Restricted Subsidiary to the Company or to another Restricted Subsidiary, (iii) 
a Restricted Payment that is permitted by the covenant described above under the
caption "-- Restricted Payments," (iv) the surrender or waiver of contract      
rights or the settlement, release or surrender of contract, tort or other claims
of any kind, and (v) the grant in the ordinary course of business of any        
non-exclusive license of patents, trademarks, registrations therefor and other  
similar intellectual property, will not be deemed to be Asset Sales. In         
addition, no sale or disposition of the Riviera real property or any improvement
thereon (except a sale or disposition of the Six Acre Tracts) shall be a        
permitted Asset Sale.                                                           

   "Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value (discounted at the rate of      
interest implicit in such transaction, determined in accordance with GAAP) of   
the obligation of the lessee for net rental payments during the remaining term  
of the lease                                                                    

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included in such sale and leaseback transaction (including any period for which 
such lease has been extended or may, at the option of the lessor, be extended). 

"Black Hawk Land" means that certain 71,000 square foot parcel of real
property in Black Hawk, Colorado which has been purchased by the Company as     
described in the Prospectus.                                                    

"Black Hawk Project" means the pending project to develop, construct, 
equip, open and operate a casino, substantially as described in this Prospectus,
which will be located on the Black Hawk Land. See "Business -- The Black Hawk   
Project."                                                                       

    "Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.                                                                           

  "Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,      
interests, participations, rights or other equivalents (however designated) of  
corporate stock, (iii) in the case of a partnership or limited liability        
company, partnership or membership interests (whether general or limited), and  
(iv) any other interest or participation that confers on a Person the right to  
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.                                                                 

    "Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or  
any agency or instrumentality thereof having maturities of not more than twelve 
months from the date of acquisition, (iii) certificates of deposit and          
eurodollar time deposits with maturities of six months or less from the date of 
acquisition, bankers' acceptances with maturities not exceeding twelve months   
and overnight bank deposits, in each case with any domestic commercial bank     
having capital and surplus in excess of $500 million and a Keefe Bank Watch     
Rating of "B" or better, provided that any deposit accounts with balances at all
times less than $250,000 individually or $1,000,000 in the aggregate need not   
meet such capital, surplus or rating requirements, (iv) repurchase obligations  
with a term of not more than seven days for underlying securities of the types  
described in clauses (ii) and (iii) above entered into with any financial       
institution meeting the qualifications specified in clause (iii) above, (v)     
commercial paper having the highest rating obtainable from Moody's Investors    
Service, Inc. or Standard & Poor's Corporation and in each case maturing within 
twelve months after the date of acquisition, and (vi) money market funds,       
substantially all the assets of which comprise securities of the types described
in clauses (ii) through (v) above.                                              

   "Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of    
merger or consolidation), in one or a series of related transactions, of all or 
substantially all of the assets of the Company and its Restricted Subsidiaries  
taken as a whole to any "person" (as such term is used in Section 13(d)(3) of   
the Exchange Act) other than any Controlling Person or its Related Parties, (ii)
the adoption of a plan relating to the liquidation or dissolution of the        
Company, (iii) the consummation of any transaction (including, without          
limitation, any merger or consolidation) the result of which is that any        
"person" (as defined above), other than any Controlling Person and its Related  
Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3  
and Rule 13d-5 under the Exchange Act, except that a person shall be deemed to  
have "beneficial ownership" of all securities that such person has the right to 
acquire, whether such right is currently exercisable or is exercisable only upon
the occurrence of a subsequent condition), directly or indirectly, of more than 
35% of the outstanding Voting Stock of the Company (measured by voting power    
rather than number of shares) and a greater percentage of the outstanding Voting
Stock of the Company than the percentage of such Voting Stock beneficially owned
by the Controlling Person and its Related Parties, holding the largest such     
percentage, (iv) the first day prior to the Merger, if any, on which a majority 
of the members of the Board of Directors of the Company are not Continuing      
Directors, or (v) the Company consolidates with, or merges with or into, any    
Person or sells, assigns, conveys, transfers, leases or otherwise disposes of   
all or substantially all of its assets to any Person, or any Person consolidates
with, or merges with or into, the Company, in any such event pursuant to a      
transaction in which any of the outstanding Voting Stock of the Company is      
converted into or exchanged for cash, securities or other property, other than  
any such transaction where the Voting Stock of the Company outstanding          
immediately prior to such transaction is converted into or                      

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exchanged for Voting Stock (other than Disqualified Stock) of the surviving or  
transferee Person constituting a majority of the outstanding shares of such     
Voting Stock of such surviving or transferee Person (immediately after giving   
effect to such issuance). Notwithstanding the foregoing clauses (i) through (v),
neither the consummation of the Merger nor any acquisition of Elsinore by the   
Company (whether effected by way of merger, stock or asset purchase, or         
otherwise) will constitute an event of "Change of Control."                     

    "Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount   
equal to any extraordinary loss plus any net loss realized in connection with an
Asset Sale (to the extent such losses were deducted in computing such           
Consolidated Net Income), plus (ii) provision for taxes based on income or      
profits of such Person and its Subsidiaries for such period, to the extent that 
such provision for taxes was included in computing such Consolidated Net Income,
plus (iii) consolidated interest expense of such Person and its Subsidiaries for
such period, whether paid or accrued and whether or not capitalized (including, 
without limitation, amortization of debt issuance costs and original issue      
discount, non-cash interest payments, the interest component of any deferred    
payment obligations, the interest component of all payments associated with     
Capital Lease Obligations, imputed interest with respect to Attributable Debt,  
commissions, discounts and other fees and charges incurred in respect of letter 
of credit or bankers' acceptance financings, and net payments (if any) pursuant 
to Hedging Obligations), to the extent that any such expense was deducted in    
computing such Consolidated Net Income, plus (iv) depreciation, amortization    
(including amortization of goodwill and other intangibles but excluding         
amortization of prepaid cash expenses, other than pre-opening expenses, that    
were paid in a prior period) and other non-cash expenses (excluding any such    
non-cash expense to the extent that it represents an accrual of or reserve for  
cash expenses in any future period or amortization of a prepaid cash expense,   
other than preopening expenses, that was paid in a prior period) of such Person 
and its Subsidiaries for such period to the extent that such depreciation,      
amortization and other non-cash expenses were deducted in computing such        
Consolidated Net Income, plus (v) all expenses relating to the defeasance and   
redemption of the Company's Exiting First Mortgage Notes, including any         
redemption premium and the excess, if any, of the interest expense over interest
income earned from the amounts deposited in trust for the defeasance to the     
extent such expenses were deducted in computed such Consolidated Net Income,    
minus (vi) non-cash items increasing such Consolidated Net Income for such      
period, in each case, on a consolidated basis and determined in accordance with 
GAAP. Notwithstanding the foregoing, the provision for taxes based on the income
or profits of, and the depreciation and amortization and other non-cash charges 
of, a Subsidiary of the referent Person shall be added to Consolidated Net      
Income to compute Consolidated Cash Flow only to the extent (and in the same    
proportion) that the Net Income of such Subsidiary was included in calculating  
the Consolidated Net Income of such Person and only if a corresponding amount   
would be permitted at the date of determination to be dividended to the Company 
by such Subsidiary without prior governmental approval (that has not been       
obtained), and without direct or indirect restriction pursuant to the terms of  
its charter and all agreements, instruments, judgments, decrees, orders,        
statutes, rules and governmental regulations applicable to that Subsidiary or   
its stockholders.                                                               

     "Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries  
for such period, on a consolidated basis, determined in accordance with GAAP;   
provided that (i) the Net Income (but not loss) of any Person that is not a     
Subsidiary or that is accounted for by the equity method of accounting shall be 
included only to the extent of the amount of dividends or distributions paid in 
cash to the referent Person or a Wholly Owned Restricted Subsidiary thereof,    
(ii) the Net Income of any Restricted Subsidiary shall be excluded to the extent
that the declaration or payment of dividends or similar distributions by that   
Restricted Subsidiary of that Net Income is not at the date of determination    
permitted without any prior governmental approval (that has not been obtained)  
or, directly or indirectly, by operation of the terms of its charter or any     
agreement, instrument, judgment, decree, order, statute, rule or governmental   
regulation applicable to that Restricted Subsidiary or its stockholders, (iii)  
the Net Income of any Person acquired in a pooling of interests transaction for 
any period prior to the date of such acquisition shall be excluded, (iv) the    
cumulative effect of a change in accounting principles shall be excluded and (v)
the Net Income of any Unrestricted Subsidiary will be excluded, whether or not  
distributed to the Company or one of its Subsidiaries.                          

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    "Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date plus (ii) the respective      
amounts reported on such Person's balance sheet as of such date with respect to 
any series of preferred stock (other than Disqualified Stock), but only to the  
extent of any cash received by such Person upon issuance of such preferred      
stock, less (x) all write-ups (other than write-ups resulting from foreign      
currency translations and write-ups of tangible assets of a going concern       
business made within 12 months after the acquisition of such business)          
subsequent to the date of the Indenture in the book value of any asset owned by 
such Person or a consolidated Subsidiary of such Person, (y) all investments as 
of such date in unconsolidated Subsidiaries and in Persons that are not         
Subsidiaries (except, in each case, Permitted Investments), and (z) all         
unamortized debt discount and expense and unamortized deferred charges as of    
such date, all of the foregoing determined in accordance with GAAP.             

   "Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of  
Directors on the date of the Indenture or (ii) was nominated for election or    
elected to such Board of Directors with the approval of a majority of the       
Continuing Directors who were members of such Board at the time of such         
nomination or election.                                                         

"Controlling Person" means Mr. Allen Paulson, Morgens Waterfall or the
"Morgens Entities" referred to in this Prospectus, Sun America Life Insurance   
Company, or Keyport Life Insurance Co.                                          

     "Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.                                 

    "Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is           
exchangeable), or upon the happening of any event, matures or is mandatorily    
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the Holder thereof, in whole or in part, on or prior to the date  
that is 91 days after the date on which the Notes mature.                       

"Elsinore" means Elsinore Corporation, a Nevada corporation.          

   "Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is        
convertible into, or exchangeable for, Capital Stock).                          

   "Event of Loss" means, with respect to any property or asset (tangible or
intangible, real or personal) constituting Collateral owned by the Company or   
any Restricted Subsidiary, any of the following: (i) any loss, destruction or   
damage of such property or asset; (ii) any actual condemnation, seizure or      
taking by exercise of the power of eminent domain or otherwise of such property 
or asset, or confiscation of such property or asset or the requisition of the   
use of such property or asset; or (iii) any settlement in lieu of clause (ii)   
above, in the case of clause (i), (ii) or (iii), whether in a single event or a 
series of related events, which results in Net Proceeds in excess of $500,000.  

    "Fixed Charges" means, with respect to any Person for any period, the sum,
without duplication, of (i) the consolidated interest expense, of such Person   
and its Restricted Subsidiaries for such period, whether paid or accrued        
(excluding amortization of debt issuance costs and issuance discount in         
connection with the sale of the Existing Notes and costs of extinguishing       
Indebtedness to be repaid with the net proceeds of the sale of the Existing     
Notes, but including, without limitation, amortization of other debt issuance   
costs and original issue discount, non-cash interest payments, the interest     
component of any deferred payment obligations, the interest component of all    
payments associated with Capital Lease Obligations, imputed interest with       
respect to Attributable Debt, commissions, discounts and other fees and charges 
incurred in respect of letter of credit or bankers' acceptance financings, and  
net payments (if any) pursuant to Hedging Obligations) and (ii) the consolidated
interest expense of such Person and its Restricted Subsidiaries that was        
capitalized during such period, and (iii) any interest expense on Indebtedness  
of another Person that is Guaranteed by such Person or any of its Restricted    
Subsidiaries or secured by a Lien on assets of such Person or any of its        
Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon)  
and (iv) the product of (a) all dividend payments, whether or not in cash, on   
any series of preferred stock of such Person or any of its Restricted           
Subsidiaries, other than dividend payments on Equity Interests payable solely in
Equity                                                                          

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Interests of the Company, times (b) a fraction, the numerator of which is one   
and the denominator of which is one minus the then current combined federal,    
state and local statutory tax rate of such Person, expressed as a decimal, in   
each case, on a consolidated basis and in accordance with GAAP.                 

"FF&E" means furnitures, fixtures and equipment.                      

"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its          
Restricted Subsidiaries for such period to the Fixed Charges of such Person or  
its Restricted Subsidiaries for such period. In the event that the Company or   
any of its Restricted Subsidiaries incurs, assumes, guarantees or redeems any   
Indebtedness (other than revolving credit borrowings) or issues preferred stock 
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, Guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the   
beginning of the applicable four-quarter reference period. In addition, for     
purposes of making the computation referred to above, (i) acquisitions that have
been made by the Company or any of its Restricted Subsidiaries, including       
through mergers or consolidations and including any related financing           
transactions, during the four-quarter reference period or subsequent to such    
reference period and on or prior to the Calculation Date shall be given pro     
forma effect as though they had occurred on the first day of the four-quarter   
reference period and Consolidated Cash Flow for such reference period shall be  
calculated without giving effect to clause (iii) of the proviso set forth in the
definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow      
attributable to discontinued operations, as determined in accordance with GAAP, 
and operations or businesses disposed of prior to the Calculation Date, shall be
excluded on a pro forma basis, and (iii) the Fixed Charges attributable to      
discontinued operations, as determined in accordance with GAAP, and operations  
or businesses disposed of prior to the Calculation Date, shall be excluded on a 
pro forma basis, but only to the extent that the obligations giving rise to such
Fixed Charges will not be obligations of the referent Person or any of its      
Restricted Subsidiaries following the Calculation Date.                         

"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American  
Institute of Certified Public Accountants and statements and pronouncements of  
the Financial Accounting Standards Board or in such other statements by such    
other entity as have been approved by a significant segment of the accounting   
profession, which are in effect on the date of the Indenture.                   

    "Gaming Authority" means any agency, authority, board, bureau, commission,
department, office or instrumentality of any nature whatsoever of the United    
States of America or foreign government, any state, province or any city or     
other political subdivision, whether now or hereafter existing, or any officer  
or official thereof, including without limitation, the Nevada Commission, the   
Nevada Board, the Colorado Commission and any other agency with authority to    
regulate any gaming operation (or proposed gaming operation) owned, managed or  
operated by the Company or any of its Subsidiaries.                             

"Gaming Equipment" means slot machines, gaming tables and other gaming
devices, including, without limitation, gaming devices as defined in Nevada     
Revised Statutes Section 463.0155, and related equipment.                       

    "Gaming Law" means the gaming laws of any jurisdiction or jurisdictions to
which the Company, any of its Subsidiaries or any of the Guarantors is, or may  
at any time after the date of the Indenture, be subject.                        

"Gaming License" means every material license, franchise or other     
authorization required to own, lease, operate or otherwise conduct gaming       
activities of the Company or any of its Subsidiaries, including without         
limitation all such licenses granted under the Nevada Gaming Act, the           
regulations promulgated pursuant thereto, and other applicable federal, state,  
foreign or local laws.                                                          

"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or       
indirect, in any manner (including, without limitation, letters of credit and   
reimbursement agreements in respect thereof), of all or any part of any         
Indebtedness.                                                                   

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    "Guarantors" means each of (i) ROC, RGM, RGMC, and RGME and (ii) any other
subsidiary that executes a Subsidiary Guarantee in accordance with the          
provisions of the Indenture, and their respective successors and assigns.       

     "Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap          
agreements and interest rate collar agreements and (ii) other agreements or     
arrangements designed to protect such Person against fluctuations in interest   
rates.                                                                          

    "Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by 
bonds, notes, debentures or similar instruments or letters of credit (or        
reimbursement agreements in respect thereof) or banker's acceptances or         
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except  
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letters of credit and  
Hedging Obligations) would appear as a liability upon a balance sheet of such   
Person prepared in accordance with GAAP, as well as all indebtedness of others  
secured by a Lien on any asset of such Person (whether or not such indebtedness 
is assumed by such Person) and, to the extent not otherwise included, the       
Guarantee by such Person of any indebtedness of any other Person but excluding  
the Company's 11% First Mortgage Notes and any guaranty by ROC of payment       
thereof. The amount of any Indebtedness outstanding as of any date shall be (i) 
the accreted value thereof, in the case of any Indebtedness that does not       
require current payments of interest, and (ii) the principal amount thereof,    
together with any interest thereon that is more than 30 days past due, in the   
case of any other Indebtedness.                                                 

  "Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or        
indirect loans (including guarantees of Indebtedness or other obligations),     
advances or capital contributions (excluding commission, travel and similar     
advances to officers and employees made in the ordinary course of business),    
purchases or other acquisitions for consideration of Indebtedness, Equity       
Interests or other securities, together with all items that are or would be     
classified as investments on a balance sheet prepared in accordance with GAAP.  
Investments do not include amounts deposited in trust for employee benefit      
plans, and without limiting the generality of the foregoing, do not include     
amounts deposited by the Company in any "rabbi" trust for the benefit of        
executive officers or other employees of the Company. If the Company or any     
Subsidiary of the Company sells or otherwise disposes of any Equity Interests of
any direct or indirect Restricted Subsidiary of the Company such that, after    
giving effect to any such sale or disposition, such Person is no longer a       
Subsidiary of the Company, the Company shall be deemed to have made an          
Investment on the date of any such sale or disposition equal to the fair market 
value of the Equity Interests of such Restricted Subsidiary not sold or disposed
of in an amount determined as provided in the final paragraph of the covenant   
described above under the caption "-- Restricted Payments."                     

"Lien" means, with respect to any asset, any mortgage, lien, pledge,  
charge, security interest or encumbrance of any kind in respect of such asset,  
whether or not filed, recorded or otherwise perfected under applicable law      
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security    
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).      

   "Management Agreement" means an agreement providing for the management by
the Company or any of its Restricted Subsidiaries of a Person engaged in        
Permitted Businesses, provided that the only cash consideration payable         
thereunder shall be payable to the Company or a Restricted Subsidiary.          

"Merger" means the acquisition of the Company by one or more entities 
controlled by Mr. Allen Paulson.                                                

  "Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in     
respect of preferred stock dividends, excluding, however, (i) any net gain or   
loss, together with any related provision for taxes on such gain or loss,       
realized in connection with (a) any Asset Sale (including, without limitation,  
dispositions pursuant to sale and leaseback                                     

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transactions) or (b) the disposition of any securities by such Person or any of 
its Restricted Subsidiaries or the extinguishment of any Indebtedness of such   
Person or any of its Restricted Subsidiaries and (ii) any extraordinary or      
nonrecurring net gain or loss, together with any related provision for taxes on 
such extraordinary or nonrecurring net gain or loss.                            

     "Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale or Event of Loss
or in respect of the initial issuance and sale of the Notes (including, without 
limitation, any cash received upon the sale or other disposition of any non-cash
consideration received in any Asset Sale or Event of Loss and insurance         
proceeds), net of the direct costs relating to such Asset Sale, Event of Loss or
sale of Notes (including, without limitation, legal, accounting and investment  
banking fees, and sales commissions) and any relocation expenses incurred as a  
result thereof, taxes paid or payable as a result thereof (after taking into    
account any available tax credits or deductions and any tax sharing             
arrangements), amounts required to be applied to the repayment of Indebtedness  
(other than the Revolving Credit Facility) secured by a Lien on the asset or    
assets that were the subject of such Asset Sale and any reserve for adjustment  
in respect of the sale price of such asset or assets, or for liabilities        
retained by the Company or its Restricted Subsidiaries at the time of the Asset 
Sale, in each case established in accordance with GAAP.                         

    "Non-Recourse Debt" means Indebtedness as to which neither the Company nor
any of its Restricted Subsidiaries (a) provides credit support of any kind      
(including any undertaking, agreement or instrument that would constitute       
Indebtedness), (b) is directly or indirectly liable as a guarantor or           
otherwise), or (c) constitutes the lender.                                      

"Obligations" means any principal, interest, penalties, fees,         
indemnifications, reimbursements, damages and other liabilities payable under   
the documentation governing any Indebtedness.                                   

"Permitted Businesses" means the lines of business engaged in by the  
Company and its Subsidiaries on the date of the Indenture, and all businesses   
related, complementary, or incidental thereto, including but not limited to     
gaming, lodging, entertainment and food and beverage service, retail store      
leasing and concessions, licensing products, services and trade names, and      
consulting with and managing third parties who are engaged in the foregoing and 
similar lines of businesses.                                                    

 "Permitted Investments" means (a) any Investment in the Company or in a
Restricted Subsidiary of the Company that is a Guarantor; (b) any Investment in 
Cash Equivalents; (c) any Investment by the Company or any Restricted Subsidiary
of the Company in a Person if as a result of such Investment (i) such Person    
becomes a Restricted Subsidiary of the Company and a Guarantor; or (ii) such    
Person is merged, consolidated or amalgamated with or into, or transfers or     
conveys substantially all of its assets to, or is liquidated into, the Company  
or a Restricted Subsidiary of the Company that is a Guarantor; (d) any          
Investment made as a result of the receipt of non-cash consideration from an    
Asset Sale that was made pursuant to and in compliance with the covenant        
described above under the caption "-- Repurchase at the Option of               
Holders -- Asset Sales"; (e) any acquisition of assets solely in exchange for   
the issuance of Equity Interests (other than Disqualified Stock) of the Company;
(f) Hedging Obligations; (g) any Investment in the Black Hawk Project (or an    
alternative project as to which the Company is permitted to invest Net Proceeds 
of the sale of the Existing Notes pursuant to the covenant described under "Use 
of Proceeds") not to exceed $30.0 million; (h) any Investment in an entity      
formed for the purpose of developing the Six Acre Tracts not to exceed $5.0     
million (plus the value of the underlying real property, if contributed to such 
entity); and (i) credit extensions to gaming customers.                         

  "Permitted Liens" means (i) Liens created or permitted by the Collateral
Documents; (ii) Liens on Gaming Equipment, inventory and receivables securing   
Indebtedness that was permitted by the terms of the Indenture to be incurred;   
(iii) Liens in favor of the Company; (iv) Liens on property of a Person existing
at the time such Person is merged into, consolidated with or acquired by the    
Company or any Subsidiary of the Company; provided that such Liens were in      
existence prior to the contemplation of such merger, consolidation or           
acquisition and do not extend to any assets other than those of the Person      
merged into, consolidated with or acquired by the Company; (v) Liens on property
(other than the Black Hawk Land) existing at the time of acquisition thereof by 
the Company or any Subsidiary of the Company, provided that such Liens were in  

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existence prior to the contemplation of such acquisition and do not extend to   
any property other than the property acquired; (vi) Liens to secure the         
performance of statutory obligations, surety or appeal bonds, performance bonds 
or other obligations of a like nature incurred in the ordinary course of        
business; (vii) Liens to secure Indebtedness (including Capital Lease           
Obligations) permitted by clause (ii) of the third paragraph of the covenant    
entitled "Incurrence of Indebtedness and Issuance of Preferred Stock" (and any  
refinancing thereof) covering only the assets acquired, constructed or improved 
with such Indebtedness; (viii) Liens existing on the date of the Indenture; (ix)
Liens for taxes, assessments or governmental charges or claims that are not yet 
delinquent or that are being contested in good faith by appropriate proceedings 
promptly instituted and diligently conducted, provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have   
been made therefor; (x) Liens incurred in the ordinary course of business of the
Company or any Subsidiary of the Company with respect to obligations that do not
exceed $5.0 million at any one time outstanding and that (a) are not incurred in
connection with the borrowing of money or the obtaining of advances or credit   
(other than trade credit in the ordinary course of business) and (b) do not in  
the aggregate materially detract from the value of the property or materially   
impair the use thereof in the operation of business by the Company or such      
Subsidiary; (xi) Liens incurred in the ordinary course of business in respect of
Hedging Obligations; (xii) Liens arising by reason of any judgment, decree or   
order of any court with respect to which the Company or any of its Restricted   
Subsidiaries is then in good faith diligently prosecuting an appeal or other    
proceedings for review, provided that the existence of such judgment, decree or 
order is not a Default or Event of Default under the Indenture and any reserve  
or other appropriate provision as shall be required in conformity with GAAP     
shall have been made therefor; (xiii) Liens securing the Permitted Black Hawk   
Debt in existence on the date, if any, on which Black Hawk Operating Company    
becomes a Restricted Subsidiary pursuant to the provisions described above under
"Security"; (xiv) carriers' liens, warehousemen's liens, repairmen's liens,     
vendors' liens, and similar encumbrances, rights or restrictions on personal    
property, not in existence on the date of the Indenture and not interfering in  
any material respect with the ordinary conduct of the business of the Company or
any of its Subsidiaries and not impairing in any material respect the value of  
the Collateral; (xv) leases, subleases, easements, licenses and rights of way   
not in existence on the date of the Indenture and not interfering in any        
material respect with the ordinary conduct of the business of the Company or any
of its Subsidiaries and not impairing in any material respect the value of the  
Collateral; (xvi) mechanics' liens incurred in the ordinary course of business, 
provided that the same are being contested in good faith by appropriate         
proceedings and (if required) bonded in an amount sufficient to cover the amount
of any such lien; (xvii) Liens securing Permitted Refinancing Indebtedness in   
compliance with the Indenture with respect to secured Indebtedness, provided    
that the Liens securing such Permitted Refinancing Indebtedness do not extend to
any assets other than those that secured the Indebtedness refinanced; (xviii)   
with respect to any vessel included in the Collateral, certain maritime liens,  
including liens for crew's wages and salvage; and (xix) any extension, renewal, 
or replacement (or successive extensions, renewals or replacements) in whole or 
in part, of Liens described in clauses (i) through (xviii) above.               

    "Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Subsidiaries issued in exchange for, or the net proceeds of which 
are used to extend, refinance, renew, replace, defease or refund other          
Indebtedness of the Company or any of its Restricted Subsidiaries; provided     
that: (i) the principal amount (or accreted value, if applicable) of such       
Permitted Refinancing Indebtedness does not exceed the principal amount of (or  
accreted value, if applicable), plus accrued interest on, the Indebtedness so   
extended, refinanced, renewed, replaced, defeased or refunded (plus the amount  
of reasonable expenses incurred in connection therewith); (ii) except for       
revolving credit Indebtedness, such Permitted Refinancing Indebtedness has no   
mandatory obligation to pay principal on a date earlier than the final maturity 
date of, and has a Weighted Average Life to Maturity equal to or greater than   
the Weighted Average Life to Maturity of, the Indebtedness being extended,      
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness  
being extended, refinanced, renewed, replaced, defeased or refunded is          
subordinated in right of payment to the Notes, such Permitted Refinancing       
Indebtedness is subordinated in right of payment to the Notes on terms at least 
as favorable to the Holders of Notes as those contained in the documentation    
governing the Indebtedness being extended, refinanced, renewed, replaced,       
defeased or refunded; and (iv) such Indebted-                                   

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ness is incurred either by the Company, or by the Restricted Subsidiary who is  
the obligor on the Indebtedness being extended, refinanced, renewed, replaced,  
defeased or refunded.                                                           

   "pro forma" means, with respect to any calculation made or required to be
made pursuant to the terms of the Indenture, a calculation in accordance with   
Article 11 of Regulation S-X under the Securities Act of 1933, as amended, as   
interpreted by the Company's chief financial officer or Board of Directors in   
consultation with its independent certified public accountants.                 

"Related Party" with respect to any Controlling Person means (a) any  
Affiliate, or spouse or immediate family member (in the case of an individual)  
of such Controlling Person, or (b) any trust, corporation, partnership or other 
entity, the beneficiaries, stockholders, partners, owners or Persons            
beneficially holding a majority interest of which consist of such Controlling   
Person and/or such other Persons referred to in the immediately preceding clause
(a), or (c) any trustee, executor or receiver appointed to manage or administer 
the assets of a Controlling Person who is an individual following the death of  
such individual.                                                                

"Restricted Investment" means an Investment other than a Permitted    
Investment.                                                                     

  "Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.                                  

"Revolving Credit Facility" means the Revolving Line of Credit Loan   
Agreement, entered into on February 28, 1997 between the Company and the lender 
named therein, as the same may be further amended, modified, renewed, refunded, 
replaced or refinanced from time to time, including (i) any related notes,      
letters of credit, guarantees, collateral documents, instruments and agreements 
executed in connection therewith, and in each case as amended, modified,        
renewed, refunded, replaced or refinanced from time to time, and (ii) any notes,
guarantees, collateral documents, instruments and agreements executed in        
connection with such amendments, modification, renewal, refunding, replacement  
or refinancing.                                                                 

  "Significant Subsidiary" means any Restricted Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,  
promulgated pursuant to the Securities Act, as such Regulation is in effect on  
the date hereof.                                                                

 "Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of      
interest or principal was scheduled to be paid in the original documentation    
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date    
originally scheduled for the payment thereof.                                   

"Subsidiary" means, with respect to any Person, (i) any corporation,  
association or other business entity of which more than 50% of the total voting 
power of shares of Capital Stock entitled (without regard to the occurrence of  
any contingency) to vote in the election of directors, managers or trustees     
thereof is at the time owned or controlled, directly or indirectly, by such     
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing  
general partner of which is such Person or a Subsidiary of such Person or (b)   
the only general partners of which are such Person or of one or more            
Subsidiaries of such Person (or any combination thereof).                       

  "Unrestricted Subsidiary" means (i) any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a Board        
Resolution; but only to the extent that such Subsidiary: (a) has no Indebtedness
other than Non-Recourse Debt; (b) is not party to any agreement, contract,      
arrangement or understanding with the Company or any Restricted Subsidiary of   
the Company unless the terms of any such agreement, contract, arrangement or    
understanding are no less favorable to the Company or such Restricted Subsidiary
than those that might be obtained at the time from Persons who are not          
Affiliates of the Company; (c) is a Person with respect to which neither the    
Company nor any of its Restricted Subsidiaries has any direct or indirect       
obligation, except as permitted pursuant to clause (xv) under the caption       
"Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred      
Stock," (x) to subscribe for additional Equity Interests or (y) to maintain or  
preserve such Person's financial condition or to cause such Person to achieve   
any specified levels of operating results; and (d) has not guaranteed or        
otherwise directly or indirectly provided                                       

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credit support for any Indebtedness of the Company or any of its Restricted     
Subsidiaries. Any such designation by the Board of Directors shall be evidenced 
to the Trustee by filing with the Trustee a certified copy of the Board         
Resolution giving effect to such designation and an Officers' Certificate       
certifying that such designation complied with the foregoing conditions and was 
permitted by the covenant described above under the caption "Certain Covenants  
Restricted Payments." If, at any time, any Unrestricted Subsidiary would fail to
meet the foregoing requirements as an Unrestricted Subsidiary, it shall         
thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture 
and any Indebtedness of such Subsidiary shall be deemed to be incurred by a     
Restricted Subsidiary of the Company as of such date (and, if such Indebtedness 
is not permitted to be incurred as of such date under the covenant described    
under the caption "Incurrence of Indebtedness and Issuance of Preferred Stock," 
the Company shall be in default of such covenant). The Board of Directors of the
Company may at any time designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that such designation shall be deemed to be an incurrence  
of Indebtedness by a Restricted Subsidiary of the Company of any outstanding    
Indebtedness of such Unrestricted Subsidiary and such designation shall only be 
permitted if (i) such Indebtedness is permitted under the covenant described    
under the caption "Certain Covenants -- Incurrence of Indebtedness and Issuance 
of Preferred Stock," calculated on a pro forma basis as if such designation had 
occurred at the beginning of the four-quarter reference period, and (ii) no     
Default or Event of Default would be in existence following such designation.   

     "Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of     
Directors of such Person.                                                       

     "Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the        
products obtained by multiplying (a) the amount of each then remaining          
installment, sinking fund, serial maturity or other required payments of        
principal, including payment at final maturity, in respect thereof, by (b) the  
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.                                                    

"Wholly Owned Restricted Subsidiary" of any Person means a Restricted 
Subsidiary of such Person all of the outstanding Capital Stock or other         
ownership interests of which (other than directors' qualifying shares) shall at 
the time be owned by such Person or by one or more Wholly Owned Restricted      
Subsidiaries of such Person.                                                    

PLAN OF DISTRIBUTION

    Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in        
connection with any resale of such New Notes. This Prospectus, as it may be     
amended or supplemented from time to time, may be used by a broker-dealer in    
connection with resales of New Notes received in exchange for Existing Notes    
where such Existing Notes were acquired as a result of market-making activities 
or other trading activities. The Company has agreed that, for a period of one   
year after the Effective Date, it will make this Prospectus, as amended or      
supplemented, available to any broker-dealer for use in connection with any such
resale. In addition, until March 10, 1998 (90 days after the date of this       
Prospectus), all dealers effecting transactions in the New Notes may be required
to deliver a prospectus.                                                        

 The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account      
pursuant to the Exchange Offer may be sold from time to time in one or more     
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of     
resale, at market prices prevailing at the time of resale, at prices related to 
such prevailing market price or negotiated prices. Any such resale may be made  
directly to purchasers or to or through brokers or dealers who may receive      
compensation in the form of commissions or concessions from any such            
broker-dealer or the purchasers of any such New Notes. Any broker-dealer that   
resells New Notes that were received by it for its own account pursuant to the  
Exchange Offer and any broker or dealer that participates in a distribution of  
such New Notes may be deemed to be an "underwriter" within the meaning of the   
Securities Act and any profit on any such resale of New Notes and               

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any commissions or concessions received by any such persons may be deemed to be 
underwriting compensation under the Securities Act. The Letter of Transmittal   
states that, by acknowledging that it will deliver and by delivering a          
prospectus, a broker-dealer will not be deemed to admit that it is an           
"underwriter" within the meaning of the Securities Act. For a period of one year
after the Effective Date, the Company will promptly send additional copies of   
this Prospectus and any amendment or supplement to this Prospectus to any       
broker-dealer that requests such documents in the Letter of Transmittal. The    
Company has agreed to pay all expenses incident to the Exchange Offer (including
the expenses of one counsel for the holders of the Existing Notes) other than   
commissions or concessions of any brokers or dealers and will indemnify the     
holders of the Existing Notes (including any broker-dealers) against certain    
liabilities, including liabilities under the Securities Act.                    

The Company is required to file with the Commission this Registration 
Statement under the Securities Act with respect to the New Notes, use its best  
efforts to cause this Registration Statement to become effective under the      
Securities Act, and offer to the holders of Existing Notes who are not          
prohibited by law or policy of the Commission from participating in the Exchange
Offer the opportunity to exchange their Existing Notes for New Notes, which New 
Notes will be substantially identical in all respects to the Existing Notes     
(except that the New Notes generally will not contain terms with respect to     
transfer restrictions). Under certain circumstances, the Company has agreed to  
file a Shelf Registration Statement and to use its best efforts to cause such   
Shelf Registration Statement to be declared effective. The Company, under       
certain circumstances, will be required to pay liquidated damages if the Company
is not in compliance with certain of its obligations under the Registration     
Rights Agreement. See "Description of Notes -- Registration Rights; Liquidated  
Damages."                                                                       

Under a letter agreement dated July 14, 1997 between the Company and  
Jefferies & Company, Inc., the Company has agreed to engage Jefferies & Company,
Inc. as exclusive financial advisor and sole placement agent to the Company for 
a period ending October 30, 1997 in connection with the structuring and         
consummation of project financing for the Company's Black Hawk Project ("Project
Financing"). In consideration of the services rendered by Jefferies & Company,  
Inc. as exclusive financial advisor and sole placement agent in connection with 
the Project Financing, the Company has agreed to pay to Jefferies & Company,    
Inc. a customary fee.                                                           

LEGAL MATTERS 

  The validity of the New Notes offered hereby will be passed upon for the
Company by Dechert Price & Rhoads, New York, New York.                          

     The statements as to matters of law and legal conclusions concerning Nevada
gaming laws included under the caption "Business -- Regulation and Licensing"   
have been prepared by Schreck Morris, Las Vegas, Nevada, Nevada gaming counsel  
for the Company. The statements as to matters of law and legal conclusions      
concerning Colorado gaming laws included under the caption                      
"Business -- Regulation and Licensing" have been prepared by Holme Roberts &    
Owen LLP, Denver, Colorado, Colorado gaming counsel for the Company.            

EXPERTS 

   The consolidated financial statements of Riviera Holdings Corporation and
its subsidiaries as of December 31, 1995 and 1996 and for each of the three     
years in the period ended December 31, 1996 included in this Prospectus have    
been audited by Deloitte & Touche LLP, independent auditors, as stated in their 
report appearing herein and elsewhere in the Registration Statement, and is     
included in reliance upon the report of such firm given upon their authority as 
experts in accounting and auditing.                                             

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RIVIERA HOLDINGS CORPORATION

TABLE OF CONTENTS 

                                                        [Enlarge/Download Table]

                                                                                        PAGE
                                                                                        ----
                                                                                            
Independent Auditors' Report..........................................................  F-2 
Consolidated Balance Sheets as of December 31, 1995 and 1996, and September 30, 1997        
  (unaudited).........................................................................  F-3 
Consolidated Statements of Operations for the Years Ended December 31, 1994, 1995 and       
  1996, and for the Nine Months and Three Months Ended September 30, 1996 and 1997          
  (unaudited).........................................................................  F-4 
Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 1994,      
  1995 and 1996, and for the Nine Months and Three Months Ended September 30, 1997          
  (unaudited).........................................................................  F-5 
Consolidated Statements of Cash Flows for the Years Ended December 31, 1994, 1995 and       
  1996, and for the Nine Months and Three Months Ended September 30, 1996 and 1997          
  (unaudited).........................................................................  F-6 
Notes to Consolidated Financial Statements............................................  F-7 

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INDEPENDENT AUDITORS' REPORT

Riviera Holdings Corporation                                                    
d.b.a. Riviera Hotel & Casino                                                   
Las Vegas, Nevada                                                               

 We have audited the accompanying consolidated balance sheets of Riviera
Holdings Corporation and subsidiaries (the "Company") d.b.a. Riviera Hotel &    
Casino as of December 31, 1995 and 1996, and the related consolidated statements
of operations, stockholders' equity, and cash flows for each of the three years 
in the period ended December 31, 1996. These financial statements are the       
responsibility of the Company's management. Our responsibility is to express an 
opinion on these financial statements based on our audits.                      

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

   In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the Company as of December 31, 
1995 and 1996, and the results of their operations and their cash flows for each
of the years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.                                                 

DELOITTE & TOUCHE LLP                                                           

Las Vegas, Nevada                                                               
February 28, 1997                                                               

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RIVIERA HOLDINGS CORPORATION

CONSOLIDATED BALANCE SHEETS 
(IN THOUSANDS, EXCEPT SHARE DATA) 

ASSETS

                                                        [Enlarge/Download Table]

                                                               DECEMBER 31,                     
                                                           ---------------------   SEPTEMBER 30,
                                                             1995         1996         1997     
                                                           --------     --------   -------------
                                                                                    (UNAUDITED) 
                                                                                                
CURRENT ASSETS:                                                                                 
  Cash and cash equivalents (Note 1).....................  $ 21,962     $ 25,747     $  62,407  
  Accounts receivable, net (Notes 1 and 2)...............     4,334        5,113         5,117  
  Inventories (Note 1)...................................     2,186        3,039         3,191  
  Prepaid expenses and other assets......................     2,602        2,692         3,554  
                                                           --------     --------     ---------  
          Total current assets...........................    31,084       36,591        74,269  
U.S. TREASURY BILLS HELD TO RETIRE $100 MILLION NOTES....        --           --       110,602  
PROPERTY AND EQUIPMENT, NET                                                                     
  (Notes 1, 3, 6 and 8)..................................   121,049      127,760       146,440  
OTHER ASSETS.............................................     4,759        2,853        10,376  
RESTRICTED CASH FOR PERIODIC SLOT PAYMENTS (Notes 1 and                                         
  5).....................................................     1,039          461           208  
                                                           --------     --------     ---------  
TOTAL ASSETS.............................................  $157,931     $167,665     $ 341,895  
                                                           ========     ========     =========  

                               LIABILITIES AND STOCKHOLDERS' EQUITY                             
CURRENT LIABILITIES:                                                                            
  Current portion of long-term debt (Note 6).............  $  2,005     $  1,297     $     356  
  Accounts payable (Notes 1 and 4).......................     8,364        8,530         7,168  
  Current income taxes payable (Note 7)..................        51          413            --  
  Accrued interest on $100 million notes.................        --           --         2,750  
  Accrued interest, other................................        --           --         2,195  
  Accrued expenses (Notes 1 and 4).......................     9,640        9,757         9,872  
                                                           --------     --------     ---------  
          Total current liabilities......................    20,060       19,997        22,341  
                                                           --------     --------     ---------  
DEFERRED INCOME TAXES PAYABLE (Note 7)...................     3,023        4,626         4,665  
                                                           --------     --------     ---------  
$100 MILLION NOTES TO BE RETIRED BY U.S. TREASURY BILLS                                         
  (Note 13)..............................................                              100,000  
                                                                                     ---------  
OTHER LONG-TERM LIABILITIES (Note 5).....................     2,749        3,210         3,837  
                                                           --------     --------     ---------  
LONG-TERM DEBT, NET OF CURRENT PORTION                                                          
  (Notes 1, 6 and 13)....................................   105,817      104,581       173,453  
                                                           --------     --------     ---------  
COMMITMENTS AND CONTINGENCIES                                                                   
  (Notes 8, 9, 10, 11 and 13)                                                                   
STOCKHOLDERS' EQUITY: (Note 1)                                                                  
Common stock ($.001 par value; 20,000,000 shares                                                
  authorized; 4,800,000 shares at December 31, 1995,                                            
  4,922,503 shares at December 31, 1996, and 4,908,180                                          
  shares at September 30, 1997, issued and                                                      
  outstanding)...........................................         5            5             5  
  Additional paid-in capital.............................    12,537       13,919        13,751  
  Notes receivable from Employee Stockholders............        --         (853)         (353) 
  Retained earnings......................................    13,740       22,180        24,196  
                                                           --------     --------     ---------  
          Total stockholders' equity.....................    26,282       35,251        37,599  
                                                           --------     --------     ---------  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY...............  $157,931     $167,665     $ 341,895  
                                                           ========     ========     =========  

See notes to consolidated financial statements. 

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RIVIERA HOLDINGS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS 
(IN THOUSANDS, EXCEPT SHARE DATA) 

                                                        [Enlarge/Download Table]

                                                                                                THREE MONTHS    
                                                                          NINE MONTHS ENDED         ENDED       
                                            YEAR ENDED DECEMBER 31,         SEPTEMBER 30,       SEPTEMBER 30,   
                                         ------------------------------   -----------------   ----------------- 
                                           1994       1995       1996      1996      1997      1996      1997   
                                         --------   --------   --------   -------   -------   -------   ------- 
                                                                             (UNAUDITED)         (UNAUDITED)    
                                                                                                                
REVENUES: (Note 1)                                                                                              
  Casino...............................  $ 82,060   $ 77,337   $ 80,384   $61,378   $55,123   $20,996   $16,989 
  Rooms................................    35,422     39,848     41,835    30,869    30,635     9,098     9,211 
  Food and beverage....................    22,961     21,895     22,641    17,228    16,260     5,185     5,012 
  Entertainment........................    16,945     14,423     20,883    16,961    16,233     5,714     5,475 
  Other (Notes 8 and 10)...............     9,390      9,515     11,293     7,636     7,904     2,884     2,663 
                                         --------   --------   --------   -------   -------   -------   ------- 
                                          166,778    163,018    177,036   134,072   126,155    43,877    39,350 
  Less promotional allowances (Note                                                                             
     1)................................    12,857     11,873     12,627     9,867     9,670     2,946     2,967 
                                         --------   --------   --------   -------   -------   -------   ------- 
          Net revenues.................   153,921    151,145    164,409   124,205   116,485    40,931    36,383 
                                         --------   --------   --------   -------   -------   -------   ------- 
COSTS AND EXPENSES: (Notes 1, 8, and                                                                            
  11)                                                                                                           
  Direct costs and expenses of                                                                                  
     operating departments:                                                                                     
  Casino...............................    48,826     45,325     47,509    36,592    32,809    12,116    10,604 
  Rooms................................    17,594     18,787     18,834    14,155    13,685     4,787     4,516 
  Food and beverage....................    15,588     15,768     15,916    11,924    11,801     3,837     3,798 
  Entertainment........................    13,982     10,329     15,290    12,262    11,752     4,361     4,203 
  Other................................     3,516      3,527      3,913     2,194     2,300       742       827 
Other operating expenses:                                                                                       
  Selling, general and                                                                                          
     administrative....................    28,822     29,618     31,454    23,755    22,923     8,153     7,085 
  Depreciation and amortization........     5,674      6,811      8,212     5,959     7,700     2,097     2,690 
                                         --------   --------   --------   -------   -------   -------   ------- 
          Total costs and expenses.....   134,002    130,165    141,128   106,841   102,970    36,093    33,723 
                                         --------   --------   --------   -------   -------   -------   ------- 
INCOME FROM OPERATIONS.................    19,919     20,980     23,281    17,364    13,515     4,838     2,660 
                                         --------   --------   --------   -------   -------   -------   ------- 
OTHER INCOME (EXPENSE):                                                                                         
  Interest expense on $100 million                                                                              
     notes.............................        --         --         --    (8,250)   (8,300)   (2,750)   (2,767)
  Interest income on Treasury Bills                                                                             
     held to retire $100 million                                                                                
     notes.............................        --         --         --        --       773        --       773 
  Interest expense, other (Notes 6 and                                                                          
     8)................................   (12,764)   (12,453)   (12,085)     (865)   (3,015)     (265)   (2,505)
  Interest income, other...............       510      1,149      1,167       857     1,175       264       551 
  Other, net (Notes 4 and 13)..........        --         --        505        --    (1,070)       --      (220)
                                         --------   --------   --------   -------   -------   -------   ------- 
          Total other income                                                                                    
            (expense)..................   (12,254)   (11,304)   (10,413)   (8,258)  (10,437)   (2,751)   (4,168)
                                         --------   --------   --------   -------   -------   -------   ------- 
INCOME (LOSS) BEFORE PROVISION                                                                                  
  (BENEFIT) FOR INCOME TAXES...........     7,665      9,676     12,868     9,106     3,078     2,087    (1,508)
PROVISION (BENEFIT) FOR INCOME TAXES                                                                            
  (Notes 1 and 7)......................     2,875      3,332      4,428     3,072     1,062       670      (520)
                                         --------   --------   --------   -------   -------   -------   ------- 
NET INCOME (LOSS)......................  $  4,790   $  6,344   $  8,440   $ 6,034   $ 2,016   $ 1,417   $  (988)
                                         ========   ========   ========   =======   =======   =======   ======= 
Weighted average common and common                                                                              
  equivalent shares outstanding (Notes                                                                          
  1 and 12)............................     4,800      5,040      5,177     5,127     5,241     5,227     5,234 
                                         ========   ========   ========   =======   =======   =======   ======= 
Net income (loss) per common and common                                                                         
  equivalent shares (Notes 1 and 12)...  $   1.00   $   1.26   $   1.63   $  1.18   $  0.38   $  0.27   $ (0.19)
                                         ========   ========   ========   =======   =======   =======   ======= 

See notes to consolidated financial statements. 

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RIVIERA HOLDINGS CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY 
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996 
AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA) 

                                                        [Enlarge/Download Table]

                                                                                   NOTES             
                                                                                 RECEIVABLE          
                                                          ADDITIONAL                FROM             
                                       SHARES     COMMON   PAID-IN    RETAINED    EMPLOYEE           
                                     OUTSTANDING  STOCK    CAPITAL    EARNINGS  STOCKHOLDERS   TOTAL 
                                     -----------  ------  ----------  --------  ------------  -------
                                                                                                     
Balances, January 1, 1994...........  4,800,000    $  5    $ 12,537   $  2,606          --    $15,148
Net Income..........................                                     4,790          --      4,790
                                      ---------    ----    --------   --------    --------    -------
Balances, December 31, 1994.........  4,800,000       5      12,537      7,396          --     19,938
Net Income..........................                                     6,344          --      6,344
                                      ---------    ----    --------   --------    --------    -------
Balances, December 31, 1995.........  4,800,000       5      12,537     13,740          --     26,282
Stock Issued Under Employee Stock                                                                    
  Purchase Plan.....................    137,000      --       1,543         --    $ (1,383)       160
Collections of Stockholders'                                                                         
  Receivables.......................         --      --          --         --         332        332
Refunds on Employee Stock                                                                            
  Purchases.........................    (17,600)     --        (198)        --         198           
Director Compensation Plan..........      3,103      --          37         --          --         37
Net Income..........................         --      --          --      8,440                  8,440
                                      ---------    ----    --------   --------    --------    -------
Balances, December 31, 1996.........  4,922,503       5      13,919     22,180        (853)    35,251
Stock Issued Under Employee Stock                                                                    
  Purchase Plan (unaudited).........      6,200      --          71         --         (71)        --
Collections of Stockholders'                                                                         
  Receivables                                                                                        
  (unaudited).......................         --      --          --         --         319        319
Refunds on Employee Stock Purchases                                                                  
  (unaudited).......................    (21,400)     --        (252)        --         252         --
Director Compensation Plan                                                                           
  (unaudited).......................        877      --          13         --          --         13
Net Income (unaudited)..............         --      --          --      2,016          --      2,016
                                      ---------    ----    --------   --------    --------    -------
Balances, September 30, 1997                                                                         
  (unaudited).......................  4,908,180    $  5    $ 13,751   $ 24,196    $   (353)   $37,599
                                      =========    ====    ========   ========    ========    =======

See notes to consolidated financial statements. 

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RIVIERA HOLDINGS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS 
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                                                           NINE MONTHS          THREE MONTHS     
                                                                                              ENDED                 ENDED        
                                                        YEARS ENDED DECEMBER 31,          SEPTEMBER 30,         SEPTEMBER 30,    
                                                    --------------------------------   -------------------   ------------------- 
                                                      1994        1995        1996      1996       1997       1996       1997    
                                                    --------    --------    --------   -------   ---------   -------   --------- 
                                                                                           (UNAUDITED)           (UNAUDITED)     
                                                                                                                                 
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                            
  Net income (loss)...............................  $  4,790    $  6,344    $  8,440   $ 6,034   $   2,016   $ 1,417   $    (988)
  Adjustments to reconcile net income (loss) to                                                                                  
    net cash provided by operating activities:                                                                                   
    Depreciation and amortization.................     5,674       6,811       8,212     5,959       7,700     2,097       2,690 
    Provision for bad debts.......................       991         478         524       363           5       123          67 
    Provision for gaming discounts................       133         143         232        33         (78)       19         (12)
    Write-off of secondary offering and other                                                                                    
      costs.......................................        --          --          --        --       1,070        --         220 
    Gain on disposition of long-term debt, net....        --          --        (505)       --          --        --          -- 
    Interest expense..............................    12,764      12,453      12,085     9,115      11,315     3,015       5,272 
    Interest paid.................................   (13,052)    (12,489)    (12,072)   (6,222)     (5,899)     (102)       (265)
    Changes in operating assets and liabilities:                                                                                 
      Decrease (increase) in accounts                                                                                            
        receivable................................    (1,116)        126      (1,535)      (16)         69        65        (726)
      Decrease (increase) in inventories..........      (508)         86        (853)     (660)       (153)     (333)       (400)
      Decrease (increase) in prepaid expenses and                                                                                
        other assets..............................      (310)       (212)        (90)     (864)       (196)      (34)       (622)
      Decrease in restricted cash for periodic                                                                                   
        slot payments.............................       591         318         578       577         253       325          -- 
      Increase (decrease) in accounts payable.....     1,064       1,033         166      (996)     (1,169)      (87)        621 
      Increase (decrease) in accrued expenses.....     2,393         758         104       573        (549)      526       1,155 
      Increase (decrease) in current income taxes                                                                                
        payable...................................       573        (522)        362       (51)     (1,079)       --      (1,244)
      Increase (decrease) in deferred income taxes                                                                               
        payable...................................     2,010       1,013       1,603     1,289          39       281        (219)
      Increase in non-qualified pension plan                                                                                     
        obligation to CEO upon retirement.........       375         400       1,039       319         880       107         240 
                                                    --------    --------    --------   -------   ---------   -------   --------- 
        Net cash provided by operating                                                                                           
          activities..............................    16,372      16,740      18,290    15,453      14,224     7,419       5,789 
                                                    --------    --------    --------   -------   ---------   -------   --------- 
CASH FLOWS FROM INVESTING ACTIVITIES:                                                                                            
  Capital expenditures for property and                                                                                          
    equipment.....................................    (8,933)     (7,836)    (14,923)   (9,502)    (11,379)   (4,242)     (4,494)
  Purchase of Land -- Black Hawk, Colorado........        --          --          --        --     (15,000)       --     (15,000)
  Increase in other assets -- Black Hawk,                                                                                        
    Colorado......................................        --          --          --        --        (531)       --        (531)
  Increase (decrease) in other assets.............    (1,506)       (382)      1,906     2,691      (7,842)       (8)     (6,742)
                                                    --------    --------    --------   -------   ---------   -------   --------- 
        Net cash used in investing activities.....   (10,439)     (8,218)    (13,017)   (6,811)    (34,752)   (4,250)    (26,767)
                                                    --------    --------    --------   -------   ---------   -------   --------- 
CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                            
  Proceeds from long-term borrowings..............       675         176         209       154     172,886        56     172,886 
  US Treasury Bills purchased to retire $100                                                                                     
    Million Notes.................................        --          --          --        --    (110,602)       --    (110,602)
  Payments on long-term borrowings................    (3,371)     (3,159)     (2,226)   (2,132)     (5,427)     (511)     (4,601)
  Proceeds from issuance of stock to employees and                                                                               
    directors.....................................        --          --         197     1,523        (168)    1,511         (77)
  Collections of notes receivable from                                                                                           
    employees.....................................        --          --         332    (1,163)        499    (1,323)        154 
                                                    --------    --------    --------   -------   ---------   -------   --------- 
        Net cash provided by (used in) financing                                                                                 
          activities..............................    (2,696)     (2,983)     (1,488)   (1,618)     57,188      (267)     57,760 
                                                    --------    --------    --------   -------   ---------   -------   --------- 
INCREASE IN CASH AND CASH EQUIVALENTS.............     3,237       5,539       3,785     7,024      36,660     2,902      36,782 
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD:...    13,186      16,423      21,962    21,962      25,747    26,083      25,625 
                                                    --------    --------    --------   -------   ---------   -------   --------- 
CASH AND CASH EQUIVALENTS, END OF PERIOD..........  $ 16,423    $ 21,962    $ 25,747   $28,986   $  62,407   $28,985   $  62,407 
                                                    ========    ========    ========   =======   =========   =======   ========= 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                                                                                 
  Income taxes paid...............................  $    292    $  2,852    $  2,463   $ 2,032   $   1,860                       
                                                    ========    ========    ========   =======   =========                       
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING                                                                                    
  ACTIVITIES                                                                                                                     
  Stock issued to employees for notes                                                                                            
    receivable....................................        --          --    $  1,383                                             
  Non-cash reductions of long-term debt...........        --          --    $    845                                             

See notes to consolidated financial statements. 

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RIVIERA HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                 

Basis of Presentation                                                       

Riviera Holdings Corporation (the "Company") and its wholly-owned     
subsidiary Riviera Operating Corporation ("ROC") were incorporated on January   
27, 1993, in order to acquire all assets and liabilities of Riviera, Inc.       
Casino-Hotel Division on June 30, 1993, pursuant to a plan of reorganization.   

In July 1994, management established a new division, Riviera Gaming   
Management, Inc. ("RGM") for the purpose of obtaining management contracts in   
Nevada and other jurisdictions. In August 1995, RGM incorporated in the state of
Nevada as a wholly owned subsidiary of ROC.                                     

Nature of Operations                                                        

     The primary line of business of the Company is the operation of the Riviera
Hotel and Casino on the "Strip" in Las Vegas, Nevada. The Company is engaged in 
a single industry segment, the operation of a hotel/casino with restaurants and 
related facilities. The Company also manages the Four Queens Hotel & Casino in  
downtown Las Vegas (see Note 10).                                               

Casino operations are subject to extensive regulation in the State of 
Nevada by the Gaming Control Board and various other state and local regulatory 
agencies. Management believes that the Company's procedures for supervising     
casino operations, for recording casino and other revenues and for granting     
credit comply, in all material respects, with the applicable regulations.       

Interim Financial Information                                               

    The financial information at September 30, 1997 and for the three and nine
months ended September 30, 1996 and 1997, is unaudited. However, such           
information reflects all adjustments (consisting solely of normal recurring     
adjustments) that are, in the opinion of management, necessary to a fair        
presentation of the financial position results of operations and cash flows for 
the interim period. The results of operations for the three and nine months     
ended September 30, 1996 and 1997, are not necessarily indicative of the results
that will be achieved for the entire year.                                      

Principles of Consolidation                                                 

   The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries ROC and RGM entities. All material            
intercompany accounts and transactions have been eliminated.                    

Cash and Cash Equivalents                                                   

     All highly liquid investments securities with a maturity of three months or
less when acquired are considered to be cash equivalents. The Company accounts  
for investment securities in accordance with Statement of Financial Accounting  
Standards No. 115 ("SFAS 115"), Accounting for Certain Investments in Debt and  
Equity Securities.                                                              

The Company's investment securities, along with certain cash and cash 
equivalents that are not deemed securities under SFAS 115, are carried on the   
consolidated balance sheets in the cash and cash equivalents category. SFAS 115 
addresses the accounting and reporting for investments in equity securities that
have readily determinable fair values and for all investments in debt           
securities, and requires such securities to be classified as either             
held-to-maturity, trading or available-for-sale. Management determines the      
appropriate classification of its investment securities at the time of purchase 
and re-evaluates such determination at each balance sheet date. Held to maturity
securities are required to be carried at amortized cost. At December 31, 1995   
and 1996, securities classified as held to maturity were comprised of debt      
securities issued by the U.S.                                                   

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RIVIERA HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Treasury and other U.S. government corporations and agencies and repurchase     
agreements with an amortized cost of $15,000,000 and $19,756,000 maturing in    
three months or less.                                                           

Inventories                                                                 

    Inventories consist primarily of food, beverage, gift shop and promotional
inventories and are stated at the lower of cost (determined on a first-in,      
first-out basis) or market.                                                     

Property and Equipment                                                      

     Property and equipment are stated at cost, and capitalized lease assets are
stated at the present value of future minimum lease payments at the date of     
lease inception. Interest incurred during construction of new facilities or     
major additions to facilities is capitalized and amortized over the life of the 
asset. Depreciation is computed by the straight-line method over the shorter of 
the estimated useful lives or lease terms, if applicable, of the related assets,
which range from 5 to 40 years. The costs of normal maintenance and repairs is  
charged to expense as incurred. Gains or losses on disposals are recognized as  
incurred.                                                                       

Restricted Cash for Periodic Slot Payments                                  

  At December 31, 1995 and 1996, the Company had interest-bearing deposits
with a commercial bank in the amount of $1,039,000 and $461,000 respectively,   
which are restricted as to use. These amounts represent deposits required by the
State of Nevada Gaming Control Board to fund periodic slot payments due         
customers through the year 2000.                                                

Fair Value Disclosure as of December 31, 1996                               

Cash and cash equivalents, accounts receivable, restricted cash for   
periodic slot payments, accounts payable and accrued liabilities -- The carrying
value of these items are a reasonable estimate of their fair value.             

Long-term Debt -- The fair value of the Company's long-term debt is   
estimated based on the quoted market prices for the same or similar issues or on
the current rates offered to the Company for debt of the same remaining         
maturities. Based on the borrowing rates currently available to the Company for 
debt with similar terms and average maturities, the estimated fair value of     
long-term debt is approximately $112,588,000.                                   

Casino Revenue                                                              

The Company recognizes, as gross revenue, the net win from gaming     
activities, which is the difference between gaming wins and losses.             

Promotional Allowances                                                      

    Promotional allowances consist primarily of accommodations, entertainment,
and food and beverage services furnished without charge to customers. The retail
value of such services is included in the respective revenue classifications and
is then deducted as promotional allowances.                                     

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RIVIERA HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

   The estimated costs of providing promotional allowances are classified as
costs of the casino operating department through interdepartmental allocations. 
These allocations for the years ended December 31, 1994, 1995 and 1996, are as  
follows:                                                                        

                                                                [Download Table]

                                                 1994        1995        1996  
                                                -------     -------     -------
                                                        (IN THOUSANDS)         
                                                                               
Food and beverage.............................  $ 7,225     $ 6,570     $ 6,671
Rooms.........................................    1,843       1,451       1,410
Entertainment.................................    2,121       2,280       2,592
                                                -------     -------     -------
Total costs allocated to casino...............  $11,189     $10,301     $10,673
                                                =======     =======     =======

Federal Income Taxes                                                        

  The Company and its subsidiaries file a consolidated federal tax return.
The Company accounts for income taxes in accordance with SFAS 109, Accounting   
for Income Taxes. SFAS 109 requires recognition of deferred tax assets and      
liabilities for the expected future tax consequences of events that have been   
included in the financial statements or tax returns. Deferred income taxes      
reflect the net tax effects of (i) temporary differences between the carrying   
amounts of assets and liabilities for financial reporting purposes and the      
amounts used for income tax purposes, and (ii) operating loss and tax credit    
carryforwards.                                                                  

Net Income Per Share                                                        

Earnings per common and common equivalent share is computed using the 
weighted average number of shares outstanding adjusted for the incremental      
shares attributed to outstanding options to purchase common stock. Fully diluted
per share amounts are substantially the same as primary per share amounts for   
the periods presented.                                                          

     On November 16, 1995, the stockholders of the Company approved an amendment
to the Company's Amended and Restated Articles of Incorporation to increase the 
authorized shares of common stock from 5,000,000 to 20,000,000 and a four for   
one stock split. Accordingly, per share information, average number of shares   
outstanding and number of shares outstanding in the accompanying consolidated   
financial statements have been adjusted for the stock split as of the earliest  
date presented (January 1, 1994).                                               

Estimates and Assumptions                                                   

The preparation of financial statements in conformity with generally  
accepted accounting principles requires management to make estimates and        
assumptions that affect the reported amounts of assets and liabilities and      
disclosure of contingent assets and liabilities at the date of the financial    
statements and the reported amounts of revenues and expenses during the         
reporting period. Actual results may differ from estimates.                     

Reclassifications                                                           

 Certain reclassifications have been made to the 1994 and 1995 financial
statements to conform with the current year presentation.                       

Recently Adopted Accounting Standards                                       

 In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement No. 121 ("SFAS 121"), Accounting for the Impairment of Long-Lived     
Assets and for Long-Lived Assets to Be Disposed Of. During 1996 the Company     
adopted the provisions of SFAS 121. SFAS 121 requires that long-lived assets and
certain identifiable intangibles be reviewed for impairment whenever events or  
changes in circumstances indicate that the carrying amount of an asset may not  
be recoverable. SFAS 121 is effective for                                       

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RIVIERA HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

fiscal years beginning after December 15, 1995. Adoption of SFAS 121 in the     
current year did not have a material impact on the consolidated financial       
statements of the Company.                                                      

     In October 1995, the FASB issued Statement No. 123 ("SFAS 123"), Accounting
for Stock-Based Compensation, which establishes financial accounting and        
reporting standards for stock-based employee compensation plans and for         
transactions in which an entity issues its equity instruments to acquire goods  
or services from nonemployees. The Company continues to account for stock based 
compensation arrangements in accordance with Accounting Principles Board No. 25,
Accounting for Stock Issued to Employees, and therefore the adoption of SFAS No.
123 had no effect on the financial position or results of operations of the     
Company. The Company has included additional disclosures about stock-based      
employee compensation plans as required by SFAS 123 (see Note 12).              

Recently Issued Accounting Standards                                        

   The FASB recently issued SFAS No. 128, Earnings Per Share. This statement
establishes standards for computing and presenting earnings per share and is    
effective for financial statements issued for periods ending after December 15, 
1997. Earlier application of this statement is not permitted and upon adoption  
requires restatement (as applicable) of all prior-period earnings per share data
presented. Management believes that the implementation of this standard will not
have a significant impact on earnings per share.                                

    In addition, the FASB issued SFAS No. 129, Disclosure of Information about
Capital Structure in February 1997. This statement establishes standards for    
disclosing information about an entity's capital structure. Management intends  
to comply with the disclosure requirements of this statement which are effective
for periods ending after December 15, 1997.                                     

2. ACCOUNTS RECEIVABLE                                                        

Accounts receivable consist of the following at December 31:          

                                                                [Download Table]

                                                              1995       1996 
                                                             ------     ------
                                                              (IN THOUSANDS)  
                                                                              
Casino.....................................................  $2,581     $2,280
Hotel......................................................   2,494      3,479
                                                             ------     ------
Total......................................................   5,075      5,759
Less allowance for bad debts and discounts.................     741        646
                                                             ------     ------
Total......................................................  $4,334     $5,113
                                                             ======     ======

   Changes in the casino and hotel allowance for bad debts and discounts for
the years ended December 31, 1995, and 1996, consist of the following:          

                                                                [Download Table]

                                                             1995       1996  
                                                            -------     ----- 
                                                             (IN THOUSANDS)   
                                                                              
Beginning balance.........................................  $ 1,424     $ 741 
Write-offs................................................   (1,358)     (912)
Recoveries................................................       54        61 
Provision for bad debts...................................      478       524 
Provision for gaming discounts............................      143       232 
                                                            -------     ----- 
Ending balance............................................  $   741     $ 646 
                                                            =======     ===== 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. PROPERTY AND EQUIPMENT                                                     

Property and equipment consist of the following at December 31:       

                                                                [Download Table]

                                                           1995         1996  
                                                         --------     --------
                                                            (IN THOUSANDS)    
                                                                              
Land and improvements..................................  $ 21,751     $ 21,751
Buildings and improvements.............................    75,875       77,455
Equipment, furniture, and fixtures.....................    38,307       51,650
                                                         --------     --------
  Total property and equipment.........................   135,933      150,856
Less accumulated depreciation..........................    14,884       23,096
                                                         --------     --------
Net property and equipment.............................  $121,049     $127,760
                                                         ========     ========

4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES                                      

Accounts payable consist of the following at December 31:             

                                                                [Download Table]

                                                              1995       1996 
                                                             ------     ------
                                                              (IN THOUSANDS)  
                                                                              
Outstanding chip and token liability.......................  $  854     $  836
Casino account deposits....................................     642        498
Unpaid race and sports book winners........................      26         17
Miscellaneous gaming.......................................     850        762
                                                             ------     ------
  Total liabilities related to gaming activities...........   2,372      2,113
Accounts payable to vendors................................   4,497      5,118
Hotel deposits.............................................   1,415      1,123
Other......................................................      80        176
                                                             ------     ------
Total......................................................  $8,364     $8,530
                                                             ======     ======

Accrued expenses consist of the following at December 31:             

                                                                [Download Table]

                                                              1995       1996 
                                                             ------     ------
                                                              (IN THOUSANDS)  
                                                                              
Payroll, related payroll taxes and vacation................  $5,095     $5,244
Health and other liability claims..........................     548        450
Union benefits and dues....................................     816        663
Progressive slot machine liability.........................     226        203
Taxes......................................................     518        631
Professional fees..........................................     208        176
Incentive plans............................................   2,209      2,357
Interest...................................................      20         33
                                                             ------     ------
Total......................................................  $9,640     $9,757
                                                             ======     ======

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RIVIERA HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. OTHER LONG TERM LIABILITIES                                                

Other long term liabilities consist of the following at December 31:  

                                                                [Download Table]

                                                              1995       1996 
                                                             ------     ------
                                                              (IN THOUSANDS)  
                                                                              
Periodic slot payments due to customers through 2000,                         
  prefunded by restricted cash (see Note 1)................  $1,039     $  461
Non-qualified pension plan obligation to the CEO of the                       
  Company, payable in 20 quarterly installments upon                          
  expiration of his employment contract....................   1,710      2,749
                                                             ------     ------
                                                             $2,749     $3,210
                                                             ======     ======

6. LONG-TERM DEBT                                                             

Long-term debt consists of the following at December 31:              

                                                        [Enlarge/Download Table]

                                                                   1995         1996  
                                                                 --------     --------
                                                                    (IN THOUSANDS)    
                                                                                      
First Mortgage Notes maturing on December 31, 2002, bearing                           
  interest at the rate of 11% per annum, payable semi-annually                        
  on June 30 and December 31, redeemable beginning June 1, 1998,                      
  at 104.3125%; 1999 at 102.8750%; 2000 at 101.4375%; and 2001                        
  and thereafter at 100%. These notes are collateralized by the                       
  physical structures comprising the Riviera Hotel and Casino... $100,000     $100,000
Unsecured, non-interest bearing notes to settle Class 4, 5 and                        
  12 claims, discounted at 16.8%, paid in 1996..................    2,056           --
Unsecured, non-interest bearing promissory note in an original                        
  principal amount of $8,000,000 (the "Class 13/14 Note") to                          
  settle the claims of the former sole shareholder, and his                           
  affiliates, payable to a bank in semi-annual installments of                        
  $250,000 until the Class 12 Note is paid in full and                                
  commencing on the next payment due thereafter in semi-annual                        
  installments of $500,000 to $750,000 discounted at 12%........    4,159        4,707
Capitalized lease obligations (see Note 8)......................    1,341          986
Unsecured, promissory notes in the original principal amount of                       
  $441,262, bearing interest at the rate of 8.5% per annum,                           
  payable monthly and maturing December 31, 1998................      266          185
                                                                 --------     --------
Total long-term debt............................................  107,822      105,878
Less current maturities by terms of debt........................    2,005        1,297
                                                                 --------     --------
          Total................................................. $105,817     $104,581
                                                                 ========     ========

Maturities of long-term debt for the years ending December 31, were as
follows:                                                                        

                                                                [Download Table]

                                                                 (IN THOUSANDS)
                                                                               
1997...........................................................     $  1,297   
1998...........................................................        1,181   
1999...........................................................        1,215   
2000...........................................................        1,491   
2001...........................................................          694   
Thereafter.....................................................      100,000   
                                                                    --------   
Total..........................................................     $105,878   
                                                                    ========   

The Indenture for the First Mortgage Notes imposes certain financial  
covenants and restrictions on the Company, including but not limited to the     
maintenance of a minimum consolidated net worth, which should                   

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not be less than $2,542,000 for any two consecutive fiscal quarters, and        
limitations on (i) dividends on common stock, (ii) liquidation of assets, (iii) 
incurrence of indebtedness, (iv) creation of subsidiaries and joint ventures and
(v) capital purchases. Capital purchases are limited to cash expenditures of    
$6,000,000 plus 80% of cumulative available cash flow from the Company's        
inception at July 1, 1993, to the extent that this cash flow has not been       
utilized in any prior year. Management believes the Company is in compliance    
with the covenants of the Indenture as of December 31, 1996.                    

   Effective September 8, 1995, the Board of Directors and holders of 94% of
the Company's First Mortgage Notes approved amendments to certain note          
restrictive covenants. Noteholders who consented to the modification of the     
restrictive covenants were paid a fee of $5.00 for each $1,000 of Notes held for
a total payment of $500,000 which is included in other assets at December 31,   
1995 and 1996 and amortized over the life of the related debt. These costs are  
being amortized using the straight-line method which approximates the effective 
interest method over the life of the indebtedness. The amendments to the        
restrictive covenants were designed to permit the Company's management team to  
utilize its expertise in turning around troubled gaming properties which are    
either in or on the verge of bankruptcy and to manage casinos in so called "new 
venues".                                                                        

  During the fourth quarter of 1996, the Company made the final payment on
the note issued to settle the Class 12 claim, which was less than what was      
recorded and resulted in income of approximately $845,000. Also during the      
fourth quarter of 1996, the terms of the Class 13/14 Note was revised, which    
resulted in a decrease in the discount rate from 16.8% to 12.0% and increased   
principal, resulting in additional expense of $340,000. Other, net income for   
the year ended December 31, 1996, includes the net effect of the above          
transactions.                                                                   

In February, 1997, the Company entered into a $15.0 million five year 
reducing revolving line of credit collateralized by equipment. The revolving    
line of credit bears interest at 0.5% or LIBOR plus 2.9%. Availability of loans 
under the Revolving Credit Facility is subject to compliance by the Company and 
ROC with certain conditions precedent, including the maintenance of certain     
financial ratios. As a result of the sale of the Existing Notes, the Company    
ceased to meet such conditions for borrowing availability. The Company intends  
to renegotiate the conditions to borrowing under the Revolving Credit Facility  
or to seek a replacement facility. There can be no assurance, however, that such
renegotiations or replacement will be successful. The Company has not utilized  
this line of credit.                                                            

    The Company has credit facilities totaling $1,100,000 at banks for letters
of credit issued periodically to foreign vendors for purchases of merchandise.  

7. FEDERAL INCOME TAXES                                                       

   SFAS 109 requires the Company to compute deferred income taxes based upon
the difference between the financial statement and tax basis of assets and      
liabilities using enacted tax rates in effect in the years in which the         
differences are expected to reverse.                                            

The effective income tax rates on income attributable to continuing   
operations differ from the statutory federal income tax rates for the years     
ended December 31, 1994, 1995 and 1996, as follows:                             

                                                                [Download Table]

                                   1994              1995              1996       
                              ---------------   ---------------   --------------- 
                              AMOUNT     RATE   AMOUNT     RATE   AMOUNT     RATE 
                              ------     ----   ------     ----   ------     ---- 
                                                (IN THOUSANDS)                    
                                                                                  
Taxes at federal statutory                                                        
  rate....................... $2,680     35.0%  $3,386     35.0%  $4,504     35.0%
Other........................    195      2.5      (54)    (1.0)     (76)    (1.0)
                              ------     ----   ------     ----   ------     ---- 
Provision for income taxes... $2,875     37.5%  $3,332     34.0%  $4,428     34.0%
                              ======     ====   ======     ====   ======     ==== 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The tax effects of the items comprising the Company's net deferred tax
liability consist of the following at December 31:                              

                                                                [Download Table]

                                                              1995       1996 
                                                             ------     ------
                                                              (IN THOUSANDS)  
                                                                              
Deferred Tax Liabilities:                                                     
  Basis in long-term debt obligations......................  $  640     $  457
  Reserve differential for hospitality and gaming                             
     activities............................................   1,090      1,133
  Difference between book and tax depreciable property.....   4,430      5,226
  Other....................................................     383        806
                                                             ------     ------
     Total.................................................   6,543      7,622
                                                             ------     ------
Deferred Tax Assets:                                                          
  Reserves not currently deductible........................   1,500      1,806
  Bad debt reserves........................................     260        226
  AMT credit...............................................   1,760        964
                                                             ------     ------
     Total.................................................   3,520      2,996
                                                             ------     ------
  Net deferred tax liability...............................  $3,023     $4,626
                                                             ======     ======

 The Company has $964,000 of alternative minimum tax credit available to
offset future income tax liabilities. The credit has no expiration date.        

8. LEASING ACTIVITIES                                                         

     The Company leases certain equipment under capital leases. These agreements
have been capitalized at the present value of the future minimum lease payments 
at lease inception and are included with property and equipment. Management     
estimates the fair market value of the property and equipment subject to the    
leases approximates the net present value of the leases. The leased property and
equipment consist primarily of signs and air conditioning equipment.            

The following is a schedule by year of the minimum rental payments due
under capital leases, as of December 31, 1996:                                  

                                                                [Download Table]

                                                                 (IN THOUSANDS)
                                                                               
1997...........................................................      $  441    
1998...........................................................         441    
1999...........................................................         429    
2000...........................................................         227    
                                                                     ------    
Total minimum lease payments...................................       1,538    
Less taxes, maintenance and insurance..........................         390    
Less interest portion of payments..............................         162    
                                                                     ------    
Present value of net minimum lease payments....................      $  986    
                                                                     ======    

  Rental expense for the years ended December 31, 1994, 1995 and 1996, was
approximately $295,000, $406,000 and $334,000, respectively.                    

   In addition, the Company leases retail space to third parties under terms
of noncancelable operating leases which expire in various years through 1999.   
Rental income, which is included in other income, for the years ended December  
31, 1994, 1995 and 1996, was approximately $1,687,000, $1,533,000 and           
$1,573,000, respectively.                                                       

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   At December 31, 1996, the Company had future minimum annual rental income
due under noncancelable operating leases as follows:                            

                                                                [Download Table]

                                                                 (IN THOUSANDS)
                                                                               
1997...........................................................      $1,159    
1998...........................................................         946    
1999...........................................................         748    
2000...........................................................         494    
2001...........................................................         351    
Thereafter.....................................................         993    
                                                                     ------    
     Total.....................................................      $4,691    
                                                                     ======    

9. COMMITMENTS AND CONTINGENCIES                                              

The Company is party to several routine lawsuits both as plaintiff and
defendant arising from normal operations of a hotel. Management does not believe
that the outcome of such litigation in the aggregate, will have a material      
adverse effect on the financial position, results of operations, or cash flows  
of the Company.                                                                 

10. MANAGEMENT AGREEMENTS                                                       

From August 1996 until February 1997, RGM has been operating the Four 
Queens located adjacent to the Golden Nugget on Fremont Street in downtown Las  
Vegas under an interim management agreement for a fee of $83,333 per month. The 
long-term management agreement (the "Management Agreement") with Elsinore       
Corporation ("Elsinore"), the owner of the Four Queens, went into effect on     
February 28, 1997, the effective date of the Chapter 11 plan of reorganization  
of Elsinore. The Company believes that the terms of the Management Agreement are
no less favorable to the Company than if the Company had negotiated with an     
independent party.                                                              

     The term of the Management Agreement is approximately 40 months, subject to
earlier termination or extension. Either party may terminate if cumulative      
earnings before interest, taxes, depreciation and amortization ("EBITDA") for   
the first two fiscal years is less than $12.8 million. The term can be extended 
by an additional 24 months at RGM's option, if cumulative EBITDA for the three  
fiscal years of the term is at least $19.2 million. RGM will be paid a fee of   
25% of any increase in annual EBITDA over $4.0 million, subject to a $1.0       
million minimum fee, payable in equal monthly installments. In addition, the    
management agreement entitles RGM to receive warrants for 1,125,000 shares of   
common stock of Elsinore, exercisable during the term or extended term of the   
management agreement at an exercise price based on the higher of (i) the per    
share book value on the effective date of the Elsinore bankruptcy plan or (ii)  
total stockholders' equity of $5.0 million.                                     

  Either party can terminate the management agreement if (i) substantially
all the Four Queens' assets are sold, (ii) the Four Queens is merged or (iii) a 
majority of the Four Queens' or Elsinore's shares are sold. Upon such           
termination, RGM will receive a $2.0 million termination bonus minus any amount 
realized or realizable upon exercise of the warrants.                           

11. EMPLOYMENT AGREEMENTS AND EMPLOYEE BENEFIT PLANS                            

     The Company has an employment agreement with Mr. Westerman, Chairman of the
Board and Chief Executive Officer of the Company. This agreement includes an    
annual base salary, an incentive bonus based upon the extent of adjusted        
operating earnings, contributions to a Non-Qualified Pension Plan and           
contributions to a Profit Sharing and 401(k) Plan. In addition, the Company has 
termination fee agreements with each of the Directors, Executive Officers and   
Significant Employees pursuant to which each of such employees will be entitled 
to receive one year's salary and health insurance benefits if their employment  
with the Company is terminated within one year of a change of control of the    
Company and without cause, or the involuntary termination of Mr. Westerman. On  
November 21, 1996, the Company amended Mr. Westerman's employment agreement     
subject to stockholder approval, which was granted at the annual meeting held on
May 8, 1997.                                                                    

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   The Company has an incentive compensation plan, covering employees of the
Company who, in the opinion of the Chairman of the Board, either serve in key   
executive, administrative, professional or technical capacities with the Company
or other employees who also have made a significant contribution to the         
successful and profitable operation of the Company. The amount of the bonus is  
based on operating earnings before depreciation, amortization, interest expense,
provision for income taxes, extraordinary losses and gains, any provisions or   
payments made pursuant to the Plan, and any provisions or payments made pursuant
to the incentive compensation of the Chairman and Chief Executive Officer.      
During the years ended December 31, 1994, 1995 and 1996, the Company recorded   
accrued bonuses of $1,430,000 and $2,123,000 and $2,588,000, respectively, based
upon the above incentive compensation plan and the incentive compensation plan  
established for the Chairman of the Board under his employment agreement.       

     The Company contributes to multi-employer pension plans under various union
agreements to which the Company is a party. Contributions, based on wages paid  
to covered employees, were approximately $1,725,000, $1,576,000 and $1,650,000  
for the years ended December 31, 1994, 1995 and 1996. These contributions were  
for approximately 1,364 employees including food and beverage employees, room   
department employees, carpenters, engineers, stage hands, electricians, painters
and teamsters. The Company's share of any unfunded liability related to         
multi-employer plans, if any, is not determinable.                              

The Company sponsors a Profit Sharing and 401(k) Plan which incurred  
administrative expenses of approximately $67,000, $59,000 and $34,000 for the   
years ended 1994, 1995 and 1996.                                                

     The profit sharing component of the Profit Sharing and 401(k) Plan provides
that the Company will make a contribution equal to 1% of each eligible          
employee's annual compensation if a prescribed annual operating earnings target 
is attained and an additional 1/10th of 1% thereof for each $200,000 by which   
operating earnings is exceeded, up to a maximum of 3% thereof. The Company may  
elect not to contribute to the Profit Sharing and 401(k) Plan if it notifies its
employees by January of the Profit Sharing and 401(k) Plan year. An employee    
will become vested in the Company's contributions based on the employee's years 
of service. An employee will receive a year of vesting service for each plan    
year in which the employee completed 1,000 hours of service. Vesting credit will
be allocated in 20% increments for each year of service commencing with the     
attainment of two years of service. An employee will be fully vested following  
the completion of six years of service.                                         

  The 401(k) component of the Profit Sharing and 401(k) Plan provides that
each eligible employee may contribute up to 15% of such employee's annual       
compensation, and that the Company will contribute 1% of each employee's annual 
compensation for each 4% of compensation contributed by the employee, up to a   
maximum of 2%. All non-union employees of the Company are eligible to           
participate in the Profit Sharing and 401(k) Plan after twelve consecutive      
months of service with the Company.                                             

ROC is a party to termination fee agreements with certain significant 
employees pursuant to which each such employee is entitled to receive one year's
salary and benefits if his or her employment with ROC is terminated within one  
year of a change of control of the Company or ROC, or the involuntary           
termination of Mr. Westerman's employment. The estimated total amount that would
be payable under all such agreements at December 31, 1996 is approximately $1.3 
million in salaries and $400,000 in benefits.                                   

    ROC is a party to stay bonus agreements with certain significant employees
pursuant to which each such employee is entitled to receive one year's salary   
(less the amount of any incentive bonus paid in 1997 for 1996) in the event     
there is a change of control of the Company. The agreements expire on December  
31, 1997. The estimated total amount that would be payable under all such       
agreements is approximately $300,000.                                           

12. STOCK OPTION PLANS                                                          

At a meeting held on July 27, 1993, the Company's Board of Directors  
adopted a stock option plan providing for the issuance of both non-qualified and
incentive stock options (as defined in the Internal                             

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Revenue Code). This stock option plan was ratified by the Company's stockholders
at the April 26, 1994 annual meeting. The number of shares available for        
purchase under the Stock Option Plan as adopted was 120,000 (as adjusted        
pursuant to antidilution provisions). The stockholders approved a four-for-one  
stock split, increasing the number of shares of Common Stock available for      
purchase under the Stock Option Plan to 480,000. Options were granted for       
228,000 shares for 1993, 132,000 shares for 1994, none for 1995, and 110,000 for
1996, leaving a balance available for future grants of 10,000 shares. No options
were exercised in 1994, 1995 or 1996. On November 21, 1996, the Company amended 
the Stock Option Plan, which was approved at the annual meeting held on May 8,  
1997, to increase the number of shares available under the Stock Option Plan    
from 480,000 shares to 1,000,000 shares and granted options to purchase 300,000 
additional shares to Mr. Westerman. Options vest 25% one year after the date of 
grant and 25% each subsequent year. The term of an option can in no event be    
exercisable more than ten years (five years in the case of an incentive option  
granted to a shareholder owning more than 10% of the Common Stock), or such     
shorter period, if any, as may be necessary to comply with the requirements of  
state securities laws, from the date such option is granted.                    

     On March 5, 1996, the Board of Directors adopted an employee stock purchase
plan (the "Stock Purchase Plan"), which was approved by the stockholders on May 
10, 1996. A total of 300,000 shares of common stock (subject to adjustment for  
capital changes) in the aggregate may be granted under the stock purchase plan. 
The Stock Purchase Plan is administered by the compensation committee. The      
purchase price per share of stock shall be 85% of per share market value of the 
common stock on the purchase date. On May 31, 1996, approximately 560 union and 
non-union employees participated in the 1996 employee stock purchase plan. Under
the plan, 137,000 shares were issues to employees at $11.26 (85 percent of      
market price at May 10, 1996), for $160,000 cash and the balance in notes       
receivable of $1,383,000 which are payable over two years via payroll deduction.
During 1996, 17,600 shares were returned through the plan as the result of      
refunds through the employees.                                                  

     On May 10, 1996, the stockholders approved a Nonqualified Stock Option Plan
for Non-Employee Directors (the "Nonqualified Stock Option Plan") and a Stock   
Compensation Plan for Directors serving on the Compensation Committee (the      
"Stock Compensation Plan"). The total number of shares available for purchase   
under each plan is 50,000. Pursuant to the Nonqualified Stock Option Plan, two  
directors were granted options to purchase 4,000 shares at an exercise price of 
$13.25, which represented fair market value. As of December 31, 1996, 3,103     
shares were issued pursuant to the Stock Compensation Plan at $12.08 per share. 

The Company has adopted the disclosures-only provision of Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation.
Accordingly, no compensation cost has been recognized for the stock option plan.
Had compensation cost for the Company's stock option plan been determined based 
on the fair value at the date of grant for awards consistent with the provisions
of SFAS 123, the Company's net income and pro forma net income common share and 
common share equivalent would have been decreased to the pro forma amounts      
indicated below.                                                                

                                                        [Enlarge/Download Table]

                                                                YEAR ENDED     YEAR ENDED 
                                                               DECEMBER 31,   DECEMBER 31,
                                                                   1995           1996    
                                                               ------------   ------------
                                                                     (IN THOUSANDS,       
                                                                 EXCEPT PER SHARE DATA)   
                                                                                          
Net income -- as reported.....................................    $6,344         $8,440   
Net income -- pro forma.......................................    $6,289         $8,380   
Net income per common and common share equivalent -- as                                   
  reported....................................................    $ 1.26         $ 1.63   
Net income per common and common share equivalent -- pro                                  
  forma.......................................................    $ 1.25         $ 1.61   

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13. SUBSEQUENT EVENTS (UNAUDITED)                                               

     Secondary Offering Costs -- The Company withdrew its secondary offering due
to market conditions and, as a result, charged costs totaling $850,000 to       
earnings for the quarter ended March 31, 1997.                                  

Proposed Merger -- On September 15, 1997 the Company entered into a   
Agreement and Plan of Merger with R&E Gaming Corp., an entity controlled by     
Allen E. Paulson, pursuant to which Riviera would be acquired by R&E Gaming and 
Riviera shareholders would receive $15 per share in cash for each share of      
Riviera common stock owned by them, plus an amount equal to 7% per annum from   
June 1, 1997 to the date of the closing. As part of its review of the           
transaction, Riviera's Board of Directors received an opinion from its financial
advisor. Ladenburg, Thalmann & Co., Inc., as to the fairness, from a financial  
point of view, of the consideration to be received in the merger by Riviera's   
shareholders. In connection with the execution of the merger agreement,         
shareholders owning approximately 56% of the outstanding, fully diluted Riviera 
shares have granted R&E Gaming an option to purchase their shares at the same   
price that all shareholders would receive in the merger and have agreed to vote 
in favor of the transaction. Closing of the merger is subject to a number of    
conditions, including approval by the holders of at least 60% of the Riviera    
shares (excluding the shares owned by Mr. Paulson or his affiliates) at a       
meeting of shareholders scheduled to be held in December 1997, and the receipt  
of all necessary approvals by the Nevada Gaming Authorities. There can be no    
assurance that the conditions to the merger will be met or that the merger will 
be consummated.                                                                 

  A subsidiary of R&E Gaming has entered into an agreement to purchase the
outstanding common stock of Elsinore Corporation, the primary asset of which is 
the Four Queens Hotel and Casino in Downtown Las Vegas, Nevada. Since August,   
1996, Riviera Gaming Management-Elsinore, Inc. (RGME), an indirect subsidiary of
the Company, has been managing the Four Queens under a contract which guarantees
RGME a minimum management fee plus additional compensation based on EBITDA      
improvement of the Four Queens, and warrants to purchase 1,125,000 shares of    
Elsinore common stock (equals to 18.4% of the equity of Elsinore on a fully     
diluted basis) at $1.00 per share. Upon consummation of the Elsinore Merger, the
Company would receive approximately $2.4 million, net of the exercise price of  
the warrants.                                                                   

     Proposed Black Hawk Project -- The Company intends to construct a casino in
Black Hawk, Colorado on a site which was purchased for $15 million in August    
1997. The Company expects to receive the necessary excavation and other permits 
in the near future. As of September 30, 1997 the Company had expended           
approximately $15.5 million on the project.                                     

  Subsequent Financing -- On August 13, 1997, the Company issued 10% First
Mortgage Notes ("the 10% Notes") with a principal amount of $175 million        
dollars. The Notes were issued at a discount in the amount of $2.2 million. The 
discount is being amortized over the life of the note on a straight line basis. 
On August 13, 1997, the Company used part of these proceeds to purchase United  
States Government securities ("the Securities") at a cost of $109.8 million     
which were deposited into an irrevocable trust. These Securities, together with 
interest that will be earned by the Securities will be used to pay the          
principal, interest and call premium due on the 11% First Mortgage Notes ("the  
11% Notes") on June 1, 1998, the earliest date the 11% Notes can be redeemed.   
Interest earned from the Securities is included in interest income. The interest
expense from the 10% Notes and from the 11% Notes is included in interest       
expense. The 10% Note Indenture contains certain covenants, which limit the     
ability of the Company and its restricted subsidiaries, subject to certain      
exceptions, to: (i) incur additional indebtedness; (ii) pay dividends or other  
distributions, repurchase capital stock or other equity interests or            
subordinated indebtedness; (iii) enter into certain transactions with           
affiliates; (iv) create certain liens; sell certain assets; and (v) enter into  
certain mergers and consolidations. A portion of the proceeds from the 10% Notes
totaling $4.5 million was paid to a bank to retire the Class 13/14 Notes.       

     The First Mortgage Notes are unconditionally guaranteed by all existing and
future restricted subsidiaries of the Company, which will not initially include 
Black Hawk Operating Company. As of September 30, 1997, Black Hawk Operating    
Company had no operations. At September 30, 1997, Black Hawk Operating          

F-18

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RIVIERA HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Company only had assets of approximately $15.5 million, which represents the    
cost of the land of the Black Hawk project. Therefore the Company has not       
included separate financial information for the guarantors as of September 30,  
1997. The Company intends to disclose such additional information in the future 
as the subsidiary develops.                                                     

   The Company is obligated to register under the Securities Act of 1933, as
amended, securities identical to the 10% First Mortgage Notes and to exchange   
such registered securities for the First Mortgage Notes.                        

Recently Issued Accounting Standards                                        

 On June 30, 1997, the FASB issued SFAS No. 130, Reporting Comprehensive
Income. This statement requires companies to classify items of other            
comprehensive income by their nature in a financial statement and display the   
accumulated balance of other comprehensive income separately from retained      
earnings and additional paid-in capital in the equity section of a statement of 
financial position, and is effective for financial statements issued for fiscal 
years beginning after December 15, 1997. Management does not believe this new   
FASB will have material impact on their financial statements.                   

   On June 30, 1997, the FASB issued SFAS No. 131, Disclosure About Segments
of an Enterprise and Related Information. This statement establishes additional 
standards for segment reporting in the financial statements and is effective for
fiscal years beginning after December 15, 1997. The Company believes the segment
information required to be disclosed under SFAS No. 131 will be more            
comprehensive than previously provided, including expanded disclosure of income 
statement and balance sheet items for each of its reportable segments under SFAS
No. 131. However, the Company has not yet completed its analysis of which       
operating segments it will report on.                                           

F-19

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======================================================                          

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY      
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,    
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED   
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT         
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY OF THE   
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS       
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE   
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY        
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS  
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO  
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.                           

------------------------

                                                                [Download Table]

                                        PAGE 
                                        -----
                                             
Available Information.................      i
Summary...............................      1
Risk Factors..........................      9
Use of Proceeds.......................     16
Capitalization........................     17
Selected Historical Financial and            
  Operating Data......................     18
Ratio of Earnings to Fixed Charges....     20
Management's Discussion and Analysis         
  of Financial Condition and Results         
  of Operations.......................     21
The Exchange Offer....................     30
Certain Federal Income Tax                   
  Considerations......................     36
Business..............................     38
The Proposed Merger...................     57
Management............................     59
Ownership of the Company..............     66
Certain Relationships and Related            
  Transactions........................     68
Description of Certain Indebtedness...     69
Description of Notes..................     70
Plan of Distribution..................     99
Legal Matters.........................    100
Experts...............................    100
Index to Combined Financial Statements       
  and Information.....................    F-1

 UNTIL MARCH 10, 1998 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE NEW NOTES, WHETHER OR NOT PARTICIPATING IN THE    
ORIGINAL DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN      
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS    
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.      

======================================================                          
======================================================                          

$175,000,000

LOGO

------------------------------

PROSPECTUS
------------------------------
OFFER TO EXCHANGE 
10% FIRST MORTGAGE NOTES
DUE 2004
FOR ALL OUTSTANDING 
10% FIRST MORTGAGE NOTES
DUE 2004

DECEMBER 10, 1997 

======================================================                          

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘424B3’ Filing		Date		First		Last			Other Filings
		8/15/04		1		73
		12/31/02		115					10-K,  10-K/A
		1/1/02		72
		8/15/01		1		88
		8/15/00		10		77
		9/21/99		52
		12/31/98		15		115			10-K,  10-K/A
		6/1/98		20		121
		4/1/98		61
		3/10/98		102		123
		2/15/98		1		73
		1/8/98		1		33
		12/31/97		42		119			10-K,  10-K/A
		12/15/97		32		122
Filed on:		12/11/97		33
		12/10/97		1		123
		11/20/97		16		55
		11/10/97		61
		11/4/97		69
		10/31/97		69
		10/30/97		103
		10/1/97		67					PRE 14A,  PREM14A
		9/30/97		5		122			10-Q
		9/16/97		61
		9/15/97		121					8-K
		8/13/97		1		121			8-K
		7/14/97		103
		7/1/97		67
		6/30/97		32		122			10-Q
		6/23/97		71
		6/4/97		13		50
		6/1/97		51		121
		5/31/97		51
		5/27/97		64
		5/8/97		66		120			DEF 14A,  SC 13D
		4/1/97		6		67
		3/31/97		121					10-Q
		2/28/97		48		118
		1/1/97		67		71
		12/31/96		11		120			10-K,  10-K/A
		11/21/96		66		120
		9/30/96		11		110			10-Q
		8/31/96		13		49
		8/12/96		63
		8/3/96		16
		5/31/96		120
		5/10/96		64		120			10-Q,  8-A12B/A
		3/5/96		64		120
		1/1/96		13		71
		12/31/95		21		119
		12/15/95		113
		11/16/95		112
		9/8/95		116
		6/23/95		28		45
		12/31/94		21		119
		4/26/94		62		120
		1/1/94		108		112
		12/31/93		11		43
		9/30/93		21
		7/27/93		119
		7/19/93		63
		7/1/93		42		116
		6/30/93		11		110
		1/27/93		110
		12/31/92		11		22
		1/1/92		62
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