Selling, General and Administrative Expenses and Management Fees

        Selling, general and administrative expenses and management fees decreased by approximately 3.9% to $7.4 million for the three months ended September 30, 2002 from $7.7 million during the same period in 2001. The decrease is primarily due to decreases in management fees and payroll expenditures.

Equity in Income of Unconsolidated Affiliates

        Earnings from the Company's unconsolidated affiliates, the Silver Legacy Joint Venture and Tamarack (which commenced operations on September 4, 2001), for the three months ending September 30, 2002 were $4.4 million as compared to $3.6 million for the same period in 2001, an increase of approximately $0.9 million, or 23.8%. Of this increase, $600,000 was attributable to an increase in equity in income of the Silver Legacy Joint Venture for the three months ended September 30, 2002 as compared to the same period in 2001. The 2001 earnings reflect a $103,000 loss from Tamarack due to the write-off of pre-opening expenses.

Depreciation

        Depreciation for the three months ended September 30, 2002 was approximately $2.9 million compared to $3.2 million during the same period in 2001, a decrease of 11.0%, due to certain assets becoming fully depreciated.

Other Income (Expense)

        Other income (expense) is comprised of interest expense, net of capitalized interest, and interest rate swap income. Interest expense, net of capitalized interest, our interest rate swap and interest income, decreased approximately $0.6 million, or 20.4%, to $2.4 million in the third quarter of 2002 compared to $3.1 million for the same period in 2001 primarily as a result of a lower average interest rate and a decrease in the average outstanding borrowings in the third quarter of 2002 as compared to the same period in 2001. The decrease in average outstanding borrowings is partly due to the Company's purchase of $10.2 million, $2.0 million and $5.2 million principal amount of its 10¹/2% Notes on the open market in October 2001, June 2002 and August 2002, respectively. The Company also recognized interest rate swap income of $1.1 million for the three months ended September 30, 2002.

Net Income

        As a result of the factors described above, net income for the three months ended September 30, 2002 increased by approximately $4.8 million, or 90.8%, to $10.0 million compared to $5.3 million during the same period in 2001.

Nine Months Ended September 30, 2002 Compared to
Nine Months Ended September 30, 2001

Net Revenues

        Net revenues decreased by approximately $5.8 million, or 5.0%, to $110.2 million for the nine months ended September 30, 2002 compared to $116.0 million for the same period in 2001. The decrease in net revenues during the 2002 period included decreases in casino, hotel, food, beverage and entertainment revenues. The Company's management feels that revenues have been negatively impacted due to increased competition from Native American casinos in northern California and a weak California economy. The absence in 2002 of the American Bowling Congress National Championship, that began in February and ended in June of 2001, also negatively impacted our mid-week business levels as compared to the prior year.

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        Casino revenues decreased by approximately $3.0 million, or 4.0%, to $73.1 million for the nine months ended September 30, 2002 compared to $76.1 million for the same period in 2001. The decrease in casino revenues was primarily due to lower slot revenue as a result of decreased slot volume partially offset by increased table games revenue due to a higher games hold percentage for the nine months ended September 30, 2002 as compared to the same period in 2001.

        Food, beverage and entertainment revenues decreased by approximately $1.9 million, or 5.3%, to $33.9 million for the nine months ended September 30, 2002 compared to $35.8 million during the same period in 2001. The decrease is primarily due to lower showroom occupancy and lower restaurant customer counts in the 2002 period.

        Hotel revenues decreased by approximately $1.1 million, or 7.8%, to $12.6 million for the nine months ended September 30, 2002 compared to $13.7 million during the same period in 2001. The decrease was due to the Eldorado'sCompany’s average daily rate (“ADR”) and hotel occupancy decreasing to approximately $57$52 and 91%87%, respectively, in the 2002 periodfirst quarter of 2003 as compared to approximately $60$49 and 92%86%, respectively, in the 2001 period. Thefirst quarter of 2002.  In 2002, the hotel occupancy decrease was partly due toaffected by an energy conservation retrofit of our hotel rooms, completed in March 2002, which reduced the number of available room nights in the first quarter by approximately 3,300.  Also contributing toFor the decrease inthree months ended March 31, 2003, the Company's hotel occupancy and average daily rate was affected by hotel remodeling which reduced the absence in 2002number of the American Bowling Congress National Championship Bowling Tournament that was held in 2001 beginning in February and ending in June.available room nights by approximately 800.

Promotional allowances, expressed as a percentage of casino revenues, were 18.3%21.1% for the nine months ended September 30, 2002first quarter of 2003 compared to 17.8%19.8% for the same period in 2001.2002.  This increase is primarily related to the enhanced “Club Eldorado” program.

Operating Expenses

The Company'sCompany’s operating expenses decreased by approximately $5.8$0.1 million, or 5.6%0.4%, to $96.7$30.5 million for the ninethree months ended September 30, 2002March 31, 2003 from $102.5$30.6 million during the same period in 2001. This2002. The decrease is primarily attributable to a decreasedecreases in casino, hotel, food, beverage and entertainment expenses, and management fees. Payroll expenditures were lower than the same periodpartially offset by an increase in 2001 reflecting the continued staff reductions implemented in September 2001 as a result of reduced business levels following the September 11 terrorist attacks.casino expenses.

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Casino expenses decreasedincreased by approximately $1.6$0.5 million, or 4.1%4.6%, to $37.0$11.9 million for the ninethree months ended September 30, 2002March 31, 2003 from $38.6$11.4 million during the same period in 2001 primarily2002 due to decreasesincreases in gaming taxes, charter buses and payroll expenditures.casino promotions in the first quarter of 2003.

Food, beverage and entertainment expenses decreased by approximately $1.1$0.6 million, or 4.6%7.8%, to $23.6approximately $6.8 million for the ninethree months ended September 30, 2002March 31, 2003 from approximately $24.8$7.4 million during the same period in 2001.2002. The decrease is primarily due to lower food cost of sales, payroll expendituresexpenses, partly due to lower restaurant customer counts, and lower showroom professional services in the 2002 period.and advertising expenses.

Hotel expenses decreased $0.6by approximately $0.1 million, or 10.0%7.4%, to $5.3$1.6 million for the ninethree months ended September 30, 2002March 31, 2003 from $5.9$1.7 million during the same period in 20012002 primarily due to decreases in payroll expenditures and overall hotel operating expenses.

Selling, General and Administrative Expenses and Management Fees

Selling, general and administrative expenses and management fees decreasedincreased by 6.6%$0.3 million, or 5.0%, to $20.6$7.0 million for the ninethree months ended September 30, 2002March 31, 2003 from $6.6 million as compared to $22.0 million during the same period in 20012002 primarily due to decreasesas a result of an increase in payroll expendituresutility expenses and management feesgeneral liability insurance costs for the ninethree months ended September 30, 2002March 31, 2003 as compared to the 2001 period.same period in 2002.

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Depreciation

Depreciation for the three months ended March 31, 2003 was $2.8 million compared to $3.1 million for the same period in 2002, a decrease of 8.6%, due to some assets becoming fully depreciated.

Equity in Income of Unconsolidated Affiliates

Earnings from the Company'sCompany’s unconsolidated affiliates, the Silver Legacy Joint Venture and Tamarack, (which commenced operations on September 4, 2001), for the nine month ending September 30, 2002three months ended March 31, 2003 were $8.7 million$31,000 as compared to $8.0$1.8 million for the same period in 2001, an increase2002, a decrease of approximately $0.7 million, or 9.1%.$1.8 million.  Equity in income of the Silver Legacy Joint Venture increaseddecreased approximately $235,000$1.8 million for the ninethree months ended September 30, 2002March 31, 2003 compared to the same period in 2001. The 2001 earnings reflect a $103,000 loss from2002.  Equity in income in Tamarack due to the write-off of pre-opening expenses.

Depreciation

        Depreciationincreased approximately $100,000 for the ninethree months ended September 30, 2002 was $8.9 millionMarch 31, 2003 compared to $9.7 million for the same period in 2001, a decrease of 7.8%, due to certain assets becoming fully depreciated.2002.

Other Income (Expense)

Other income (expense) is comprised of interest expense, equity in loss of unconsolidated affiliate, loss on repurchase of bonds and interest rate swap loss.  Interest expense is net of capitalized interest and interest rate swap income.  InterestFor the three months ended March 31, 2003, interest expense net of capitalized interest, our interest rate swap and interest income, decreased by approximately $1.5$0.4 million, or 16.1%16.0%, to $7.8$2.3 million for the ninethree months ended September 30, 2002March 31, 2003 compared to $9.3$2.7 million for the same period in 20012002 primarily due to a decrease in the average outstanding borrowings and a lower average interest rate duringfor the first ninethree months of 2002ended March 31, 2003 as compared to the same period in 2001.2002.  The decrease in average outstanding borrowings is partly due to the Company'sCompany’s purchase of $10.2 million, $2.0 million and $5.2 million principal amount of its 10¹/210½% Notes on the open market in October 2001, June 2002 and August 2002, respectively.  In January 2003, the Company purchased an additional $7.9 million principal amount of its 10½% Notes on the open market.  The Company recognized a $267,000 loss on the January 2003 purchase of 10½% Notes, net of unamortized fees relating to the debt issue.  The Company also recognized a $0.2 million loss from an interest rate swap incomeagreement and equity in loss of $1.1 million for the nine months ended September 30, 2002.its unconsolidated affiliate of $78,000.

Net Income (Loss)

As a result of the factors described above, net income for the nine months ended September 30, 2002 increased by approximately $3.7 million, or 32.3%, to $15.3Company incurred a loss of $0.4 million compared to $11.5a gain of $0.7 million during the same period in 2001.2002.

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Liquidity and Capital Resources

The Company'sCompany’s primary sources of liquidity and capital resources have been through cash flow from operations, borrowings under various credit agreements and the issuance in July 1996 of $100 million in aggregate principal amount of 10¹/2the 10½% Senior Subordinated Notes due 2006 (the "10¹/2% Notes").Notes.  Since 1996, the Company has completed several expansion and remodeling projects, accounting for a significant use of cash flow from operations and borrowed funds.  The Company's earnings before interest, taxes, depreciation and amortization as adjusted to exclude equity in income of its unconsolidated affiliates was $22.4 million for the nine months ended September 30, 2002, as compared to $23.2 million for the same period in 2001. Net cash provided by operating activities was $12.7$1.4 million for the ninethree months ended September 30, 2002March 31, 2003 compared to $11.7net cash provided by operating activities of $1.9 million forduring the same period of the prior year.

At September 30, 2002,March 31, 2003, the Company had approximately $7.8$7.1 million of cash and cash equivalents and, after giving effect to then outstanding borrowings and a letter of credit, it had approximately $33.3$29.2 million unutilized borrowing capacity underavailable pursuant to its New Credit Facility (as defined below) all of which all could be utilized under the most restrictive of our loan covenants.  The Company'sCompany’s borrowing capacity under thesethose covenants can fluctuate substantially from quarter to quarter depending upon our operating cash flow.  On July 17, 2002,2001, the Company'sCompany’s credit facility was amended and restated (the

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"New “New Credit Facility"Facility”).  The New Credit Facility provides for a senior secured revolving credit facility of $40 million.  The amount of credit available pursuant to the New Credit Facility reduces by $1.6reduced to $38.4 million on March 31, 2003 and reduces by $1.6 million at the end of each subsequent quarter until March 31, 2006, when the facility terminates and any balance then outstanding becomes due and payable.  Borrowings under the New Credit Facility bear interest, at the Company'sCompany’s option, at either (i) the greater of (a) the rate publicly announced from time to time by Bank of America as its "Prime Rate"“Prime Rate” or (b) the Federal Funds Rate plus .50% ("(“Base Rate"Rate”) or (ii) a Eurodollar rate determined in accordance with the New Credit Facility.  The effective rate of interest on borrowings under the New Credit Facility at September 30, 2002March 31, 2003 was 4.32%3.67% per annum.

The New Credit Facility is secured by substantially all of the Company'sCompany’s real property.  The New Credit Facility includes various restrictions and other covenants including: (i) restrictions on the disposition of property, (ii) restrictions on investments and acquisitions, (iii) restrictions on distributions to members of Resorts, (iv) restrictions on the incurrence of liens and negative pledges, (v) restrictions on the incurrence of indebtedness and the issuance of guarantees, (vi) restrictions on transactions with affiliates and, (vii) restrictions on annual capital expenditures including capital leases.  The New Credit Facility also contains financial covenants including a maximum total debt to EBITDA ratio, a maximum senior debt to EBITDA ratio, a minimum fixed charge coverage ratio and a minimum equity requirement.  As of September 30, 2002March 31, 2003 the Company was in compliance with all of the provisions of the New Credit Facility.

As of September 30, 2002,March 31, 2003, the Company had outstanding (i) $82.7$74.8 million in aggregate principal amount of 10¹/2the 10½% Notes, (ii) $6.0$8.5 million of borrowings and an additional $0.7 million of letter of credit under the New Credit Facility and (iii) $1.1$0.9 million of other long term debt (net of current portion).

Cash used in investing activities for the three months ended March 31, 2003 was $1.9 million compared to cash provided by investing activities of $12.2 million for the three months ended March 31, 2002.  In 2003, cash used in investing activities related primarily to capital expenditures relating to slot purchases, our hotel remodeling and various equipment purchases.  Distributions from unconsolidated affiliates decreased $13.6 million to $0.3 million for the three months ended March 31, 2003 compared to $13.9 million for the same period in 2002 when ELLC received from the Silver Legacy Joint Venture a special distribution of $10.0 million at the time of issuance of the Silver Legacy Notes and a $2.6 million prior year tax distribution which was made on February 28, 2002.  Capital spending for the three months ended March 31, 2003 increased $1.1 million to $2.2 million compared to $1.2 million for the three months ended March 31, 2002.

Cash used in financing activities was $0.6 million for the three months ended March 31, 2003, compared to $14.8 million for the three months ended March 31, 2002.  For the three months ended March 31, 2003, the Company purchased $7.9 million principal amount of its 10½% Notes facilitated by borrowing $8.0 million under the New Credit Facility.  For the three months ended March 31, 2002, the Company reduced the outstanding portion of the New Credit Facility by $14.75 million utilizing the aforementioned distributions to ELLC from the Silver Legacy Joint Venture in the aggregate amount of $12.6 million.

The Operating Agreement of Resorts dated June 28, 1996 obligates Resorts to distribute each year for as long as it is not taxed as a corporation to each of its members an amount equal to such member'smembers’ allocable share of the taxable income of Resorts multiplied by the highest marginal combined Federal, state and local income tax rate applicable to individuals for that year.  For the ninethree months ended September 30,March 31, 2003 and 2002, Resorts made no distributions of $4.6 million to its members as compared to $6.0 million during the same period in 2001.members.

 During the nine months ended September 30, 2002, the Company's principal uses of funds remaining after the aforementioned distributions to the members of Resorts were related to debt service and recurring capital expenditures. Total capital expenditures for the nine months ended September 30, 2002 were $3.0 million.

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The Company'sCompany’s future sources of liquidity are anticipated to be from its operating cash flow, funds available from the New Credit Facility and capital lease financing for certain of its fixed asset purchases.  The Company'sCompany’s anticipated uses of cash in the near term will be for recurring capital expenditures and debt service.  We believe our capital resources are adequate to meet our obligations including the funding orof our debt service and recurring capital expenditures.  On November 6, 2002,The Company has placed on the Company received $2.4 million from themarket for sale its 90 acres of property at 444 North Center Street, Reno, Nevada, on which the Company's human resources offices are located.land located in Verdi, Nevada.

Forward-Looking Statements

Certain information included in this report and other materials filed or to be filed by the Company with the Securities and Exchange Commission (as well as information included in oral statements or written statements made or to be made by the Company) contains statements that are forward-looking within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  These statements can be identified by the fact that they do not relate strictly to historical or current facts.  The Company has based these forward-looking statements on its current expectations about future events.  These forward-looking statements include

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statements with respect to the Company'sCompany’s beliefs, plans, objectives, goals, expectations, anticipations, intentions, financial condition, results of operations, future performance and business, including, current and future operations and statements that include the words "may"“may”, "could"“could”, "should"“should”, "would"“would”, "believe"“believe”, "expect"“expect”, "anticipate"“anticipate”, "estimate"“estimate”, "intend"“intend”, "plan"“plan” or similar expressions.  Such statements include information relating to capital spending, financing sources and the effects of regulation (including gaming and tax regulation) and competition.  Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by or on behalf of the Company.  These risks and uncertainties include, but are not limited to dependence on existing management, leverage and debt service (including sensitivity to fluctuations in interest rates), domestic or global economic conditions, changes in Federal or state tax laws or the administration of such laws, changes in gaming laws or regulations (including the legalization of gaming in certain jurisdictions), expansion of gaming on Native American lands (including such lands in California), risks and uncertainties relating to any development and construction activities and applications for licenses and approvals under applicable laws and regulations (including gaming laws and regulations) and any further terrorist attacks similar to those that occurred September 11, 2001.  Additional information concerning potential factors that we think could cause our actual results to differ materially from expected and historical results is included under the caption "Factors“Factors that May Affect the Company'sCompany’s Future Results"Results” in Item 1 of our annual report on Form 10-K for the year ended December 31, 2001.2002.  This statement is provided as permitted by the Private Securities Litigation Reform Act of 1995.

Item 3.  Quantitative and Qualitative Disclosures About Market Risks
Risk

The Company is exposed to market risk in the form of fluctuations in interest rates and their potential impact upon its variable rate debt.  The Company evaluates its exposure to this market risk by monitoring interest rates in the marketplace and, effective August 15, 2002, it entered into an interest rate swap agreement to help manage this risk.marketplace.  We do not utilize derivative financial instruments for trading purposes.  Other than changes in the amount of variable rate debt from time to time outstanding, and the aforementioned interest rate swap agreement, there were no material quantitative changes in the Company'sCompany’s market risk exposure, or how risks were managed during 2001 or during the ninethree months ended September 30, 2002.

        Interest differentials resulting from our interest rate swap agreement are recorded on an accrual basis as an adjustment to interest expense. The interest rate swap was matched with our specific fixed-rate debt obligations.

        On August 15, 2002, the Company and Bank of America N.A., entered into a fixed-to-floating swap agreement with a $50.0 million notional amount. Pursuant to this swap agreement, which had an original expiration date of February 15, 2005, we received interest at a fixed rate of 3.85% per annum and we paid interest based on a floating rate index that was computed on a 6-month LIBOR, in arrears. The amounts due under the swap agreement were payable on February 15 and August 15 of each year, beginning February 15,March 31, 2003.

 Effective October 9, 2002, the Company and Bank of America, N.A. entered into an agreement to terminate the swap agreement. In consideration of the early termination, Bank of America, N.A. paid the Company $903,070.

The indebtedness outstanding under the New Credit Facility as of September 30, 2002,March 31, 2003, representing all of the Company'sCompany’s then outstanding variable rate debt, totaled $6.0$8.5 million.  As of September 30, 2002,March 31, 2003, the interest rate on the New Credit Facility was LIBOR plus 2.5%.  Under the terms of our New Credit Facility, we may borrow up to $40$38.4 million, subject to our compliance with applicable covenants.  To the extent we increase the amount of our indebtedness under the New Credit Facility, we will increase our exposure to market risk in the form of fluctuations in interest rates.  For

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