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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

Commission file number 333-11811

ELDORADO RESORTS LLC
ELDORADO CAPITAL CORP.
(Exact names of registrants as specified in their charters)

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

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

        Indicate by check mark whether the registrants are accelerated filers (as defined in Exchange Act Rule 12b-2) Yes o    No ý

        Aggregate market value of the Registrants' voting stock held by non-affiliates of the Registrants as of the last business day of the Resistrants' most recently completed second fiscal quarter: None

        Number of shares of common stock of Eldorado Capital Corp. outstanding at March 24, 2004: 2,500 Shares.

PART I

Item 1.    Business.

Introduction

        Eldorado Resorts LLC, a Nevada limited liability company ("Resorts"), was formed to be the successor to Eldorado Hotel Associates Limited Partnership (the "Predecessor Partnership") pursuant to an exchange of all of the then outstanding partnership interests in the Predecessor Partnership for membership interests in Resorts (the "Reorganization"). The Reorganization was effective on July 1, 1996. Insofar as they relate to periods prior to the effective date of the Reorganization, references to Resorts are to the Predecessor Partnership except to the extent the context requires otherwise. Eldorado Capital Corp., a Nevada corporation wholly-owned by Resorts ("Capital"), was incorporated with the sole purpose of serving as co-issuer of $100,000,000 principal amount of 10¹/2% Senior Subordinated Notes due 2006 issued by Resorts and Capital on July 31, 1996. Capital holds no significant assets and conducts no business activity. Resorts and Capital, together with Eldorado Limited Liability Company, a Nevada limited liability company which is 96% owned by Resorts ("ELLC"), are collectively referred to as the "Company."

        The Company owns and operates the Eldorado Hotel & Casino (the "Eldorado"), a premier hotel/casino and entertainment facility in Reno, Nevada. The Company has established the Eldorado as a luxury destination resort by creating a sophisticated, elegant atmosphere and providing an extraordinary level of personal service and unsurpassed cuisine, a dynamic gaming environment and a wide variety of amenities attractive to multiple market segments. The Eldorado is centrally located in downtown Reno and is easily accessible both to vehicular traffic from Interstate 80, the principal highway linking Reno to its primary visitor markets in northern California, and to pedestrian traffic from nearby casinos. In addition to owning the Eldorado, ELLC owns a 50% interest in a 50/50 joint venture (the "Silver Legacy Joint Venture") which owns the Silver Legacy Resort Casino (the "Silver Legacy"), a major themed hotel/casino located adjacent to the Eldorado. The other partner in the Silver Legacy Joint Venture is a wholly-owned subsidiary of Mandalay Resort Group ("Mandalay").

        In 2000, Resorts acquired a 21.25% interest in Tamarack Junction, a small casino then being constructed in south Reno, which commenced operations September 4, 2001. Tamarack is situated on approximately 22,000 square feet with 5,800 square feet of gaming space which had 244 slot machines at December 31, 2003. Resorts also owns an 18% interest in MindPlay LLC, which was formed to develop, own and market a sophisticated system for the tracking and surveillance of pit gaming operations. For additional information concerning our interest in these entities and related transactions, including the sale by MindPlay of substantially all of its assets to an unrelated third party, see "Compensation Committee Interlocks and Insider Participation" in Item 11 of this report.

Business Strategy

        The Company has an experienced management team that includes, among others, Donald Carano and several members of his immediate family. Donald Carano, the Chief Executive Officer and a member of the Board of Managers of Resorts, co-founded the Eldorado in 1973 and has been the driving force behind its development. In addition to Donald Carano, each of the Company's other seven senior executives has in excess of fifteen years of operating experience in the gaming industry. Management believes that its family-oriented, hands-on approach has enabled the Company to operate the Eldorado successfully for over thirty years. In addition to their roles in management of the Company, members of the Carano family beneficially own 63% of Resorts.

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        The Company's business strategy draws upon its extensive gaming management experience gained from successfully operating the Eldorado. Key elements of the Company's strategy include the following:

        Personal Service and High Quality Amenities.    One of the cornerstones of the Company's business strategy is to provide its customers with an extraordinary level of personal service. The Company's senior management is actively involved in the daily operations of the Eldorado, frequently interacting with hotel, restaurant and gaming patrons to ensure that they are receiving the highest level of personal attention. Management believes that personal service is an integral part of fostering customer loyalty and generating repeat business. Management regularly conducts feedback sessions and focus groups with customers to elicit comments and suggestions on ways it can improve each customer's experience at the Eldorado. Additionally, management personally responds to suggestions made on comment cards placed in each of the Eldorado's hotel rooms. Furthermore, management continually strives to instill in each employee a dedication to superior service designed to exceed guests' expectations.

        In addition to personalized service, the Eldorado has earned a reputation for high quality amenities and an excellent price-to-value relationship. Locals and visitors alike are attracted to the Eldorado's selection of dining venues and exceptional food quality, for which the Eldorado has received national recognition. Management believes that the Eldorado's excellent cuisine adds to the overall atmosphere and prestige of the hotel and therefore emphasizes outstanding food and ambiance and a wide variety of dining choices.

        The Eldorado continually monitors its casino operations to react to changing market conditions and customer demands. The Company targets premium-play customers as well as the value-conscious gaming patron with its state-of-the-art casino featuring the latest in game technology, electronic displays and customer-convenient features.

        Marketing to Target Gaming Patrons.    The Company primarily targets its marketing programs to four segments of the gaming market: the free and independent traveler, preferred casino customers, local patrons and the wholesale/specialty groups.

        The free and independent traveler segment consists of those travelers not affiliated with groups who make their reservations directly with the Eldorado or through independent travel agents. To attract the independent traveler, the Company uses print media, radio, television and direct mail to advertise in northern California, the Pacific Northwest and other regional travel markets.

        Preferred casino customers are those patrons who maintain the necessary level of gaming activity to become established casino guests. The Company uses a special events agenda and a guest development program, including providing casino credit, to attract and retain preferred casino customers. In addition, the Company utilizes its quality hotel rooms, excellent restaurant venues and other amenities to offer complimentaries to a broad spectrum of established casino guests, from the frequent players who place relatively modest wagers to the true premium players who consistently wager high amounts. The Company believes that the ability to reward the more modest gaming patrons fosters intense loyalty and repeat business.

        Wholesale/specialty groups consist of those customers participating in travel packages offered by air tour operators, groups of up to 100 people with strong gaming profiles and visitors attending tournaments at the National Bowling Stadium. The Eldorado sales force targets this segment by attending trade shows in order to establish relationships with airlines, travel agents, meeting planners and wholesalers. The Eldorado has developed special marketing programs and tools to cultivate relationships with these air tour operators and specialty groups, including offering familiarization tours of the Eldorado. The Eldorado attempts to utilize this market segment as a means of creating a consistent utilization of its rooms during the calendar year.

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        We seek to attract and retain local customers through frequent promotions that highlight our quality gaming and dining experience, as well as being an active supporter of numerous Reno market events and organizations.

        The Eldorado has a state-of-the-art, real-time customer tracking system which comprehensively tracks its gaming customers throughout the casino. Customers are given an electronically readable card to insert into slot machines and to provide to floor supervisors at table games. The slot machines automatically transmit gaming data to a central computer and floor supervisors manually enter certain data relating to gaming customers which is then computerized. In 2002, the Eldorado enhanced its customer tracking program with the purchase of several computerized gaming tables from MindPlay LLC. This technologically advanced product, along with our slot tracking system, provides data relating to gaming customers' gaming habits, maximum and minimum wagers, the total amount wagered and length of play and assists us in better providing our customers with prompt recognition and complimentaries based on their levels of gaming. In 2002, the Eldorado enhanced the way its customers can redeem earned complimentaries available for redemption throughout the property. This innovation is enhanced by a friendly, knowledgeable staff and a conveniently located promotion center. In addition, "Club Eldorado," the casino's full-service slot club, offers an array of special events and exciting tournaments and convenient ways of earning complimentaries.

        The cost incurred by the Company for advertising in 2003 was $3,457,000 compared with $4,035,000 in 2002.

        Strategic Expansion and Improvements.    Since opening the Eldorado in 1973, the Company has employed a strategy of periodic expansion and improvement in order to maintain and enhance its position as a leader in the Reno market. Continuing this strategy, in December 2000, two retail outlets across from The Brew Brothers were removed and additional slot machines were added. In the first quarter of 2002, the Eldorado began a room renovation project, to be completed in various phases, which is currently expected to be completed in the first half of 2006. In December 2003, the Eldorado moved and remodeled its exclusive high-limit slot area on the casino floor, adding a luxurious bar and restrooms. Also completed in December 2003 was a new casino cabaret which features live music and shows various sporting events on its state-of-the-art big screen plasma televisions.

        The Company owns a 31,000 square foot piece of property across the street from and west of the Eldorado which could be used for further expansion of the Eldorado, although there are no current plans for the development of this site.

Eldorado Hotel & Casino

        The Eldorado is centrally positioned in the heart of Reno's prime gaming area and room base. Easily accessible to both foot and vehicular traffic, the Eldorado is strategically located directly off Interstate 80, the principal highway linking the Reno market with San Francisco, Sacramento and other cities in its primary visitor market of northern California. With three towers, including a 26-story tower that lights up with over 2,000 feet of neon at night, the Eldorado is visible from Interstate 80, attracting visitors to the downtown area and generating interest in the property. Management believes the Eldorado serves as a downtown landmark, situated to attract foot traffic from other casinos as well as from the local populace. In addition, the Eldorado is easily accessible to visitors competing in and attending the various bowling tournaments that are held in the National Bowling Stadium, which is located just one block away.

        As of December 31, 2003, the Eldorado offered approximately 84,000 square feet of gaming space, with approximately 1,587 slot machines, 63 table games consisting of blackjack, craps, roulette, Pai Gow Poker, Let It Ride®, Caribbean stud poker, mini-baccarat, two keno games and a poker room. The Eldorado's casino includes a mix of slot machines and table games which management believes makes it attractive to both middle-income and premium-play customers. Slot machines, which are offered in

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denominations from 1 cent to $100, generated approximately 65% of the Eldorado's total gaming revenues in 2003. A diverse selection of table games and a variety of table limits encourage play from a wide range of gaming customers, which management believes makes the Eldorado one of the premier table games casinos in the Reno market.

        The interior of the hotel is designed to create a European ambiance and offers 816 finely-appointed rooms and suites, including 18 specialty suites, 93 "Eldorado Player's Spa Suites" with bedside spas and 26 one- or two-bedroom penthouse suites. Hotel guests enjoy panoramic views of Reno's skyline and the majestic Sierra Nevada mountain range. Management believes that attention to detail, decor and architecture have created an identifiable and innovative presence in the Reno market for the Eldorado. In 2003 and 2002, the Eldorado achieved average hotel occupancy rate of 88.7% and 89.0%, respectively, and an Average Daily Rate ("ADR") of approximately $57 and $56, respectively.

        The Eldorado is nationally recognized for its cuisine. Management believes that the Eldorado's superior cuisine and wide-ranging selection of dining opportunities are crucial factors in attracting and retaining customers. All of the Eldorado's dining venues, which range from buffet to gourmet, offer high quality food at reasonable prices. The following chart details the Eldorado's dining venues, their respective seating capacities and their attributes, including awards each has received.

ELDORADO RESTAURANTS

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        The Eldorado's selection of high-quality food and beverages reflects the Carano family's emphasis on the dining experience. Eldorado chefs utilize homemade pasta, carefully chosen imported ingredients, fresh seafood and top quality USDA choice cuts of beef. Throughout the property, beverage offerings include The Brew Brothers microbrewed beers and wines from the Ferrari Carano Winery.

        The Eldorado features a 566-seat showroom and the BuBinga Lounge, which is an intimate nightclub. It also offers a cabaret on the casino floor and a VIP lounge. Other amenities offered by the Eldorado include two retail shops, a versatile 12,400 square foot convention center and an outdoor

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plaza located diagonal to the Eldorado which hosts a variety of special events. The Eldorado has parking facilities for over 1,100 vehicles including a 656-space self-park garage and a 369-space valet parking facility.

Silver Legacy Resort Casino

        The Silver Legacy opened in July 1995 as the first major newly-constructed hotel/casino in the Reno market since 1978 and its first themed mega-resort. Plans for the Silver Legacy were originally formulated in 1993 by the Company and Mandalay, who jointly recognized the potential synergies of constructing a new hotel/casino between the Eldorado and Mandalay's property, Circus Circus-Reno.

        The Silver Legacy's design is inspired by Nevada's rich mining heritage and the legend of Sam Fairchild, a fictitious silver baron who "struck it rich" on the site of the casino. Silver Legacy's hotel, the tallest building in northern Nevada, is a "Y"-shaped structure with three wings, consisting of 37-, 34- and 31-floor tiers. Silver Legacy's opulent interior showcases a casino built around Sam Fairchild's 120-foot tall mining rig, which appears to mine for silver. The rig is situated beneath a 180-foot diameter dome, which is a distinctive landmark on the Reno skyline. The interior surface of the dome features dynamic sound and laser light shows, providing visitors with a unique experience when they are in the casino. The Company's management believes that the Silver Legacy is a "must see" attraction for visitors to the Reno market.

        The Silver Legacy is situated on two city blocks, encompassing 240,000 square feet in downtown Reno. The hotel currently offers 1,710 guest rooms, including 141 player spa suites, eight penthouse suites and seven hospitality suites. Many of the Silver Legacy's guest rooms feature views of Reno's skyline and the Sierra Nevada mountain range. The Silver Legacy's 10-story parking facility can accommodate approximately 1,800 vehicles. At December 31, 2003, the Silver Legacy's casino featured approximately 87,300 square feet of gaming space and contained 1,910 slot machines and 77 table games, including blackjack, craps, roulette, Pai Gow Poker, Let It Ride®, Caribbean stud poker, Baccarat and Pai Gow, a keno lounge and a race and sports book. "Club Legacy," the Silver Legacy's slot club, offers customers exciting special events and tournaments and convenient ways of earning complimentaries.

        The Silver Legacy's dining options are offered in six venues:

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Sterling's Seafood Steakhouse, which has a seating capacity of approximately 170, offering the finest in steaks and seafood along with an extensive wine list, featured in Wine Spectator magazine, tableside desserts and an extravagant Sunday Brunch;



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the Victorian Buffet, which has a seating capacity of approximately 500;



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Fairchild's Oyster Bar, which has a seating capacity of approximately 55, offering a comfortable drink and a quick bite;



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Sweetwater Cafe, which has a seating capacity of approximately 330, offering an extensive menu that includes American classics and Chinese cuisine 24-hours a day;



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Fresh Express Food Court, which has a seating capacity of approximately 110, offering a range of options including a deli and grill, authentic Asian cuisine and American classics; and



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Sips Coffee House, situated in the hotel lobby, offers gourmet coffee and teas.

        In addition, the hotel sponsors entertainment events which are held in the hotel's convention area. The Silver Legacy's other amenities include retail shops, exercise facilities, a beauty salon and an outdoor swimming pool and sundeck, as well as a video arcade.

        The Eldorado, Silver Legacy, and Circus Circus-Reno properties are connected in a "seamless" manner by 200-foot wide skyway corridors. These enclosed corridors serve as entertainment bridgeways

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between the three properties and house several restaurants and retail shops. The Eldorado, Silver Legacy and Circus Circus-Reno comprise the heart of the Reno market's prime gaming area and room base, providing the most extensive and the broadest variety of gaming, entertainment, lodging and dining amenities in the Reno area, with an aggregate of 4,098 rooms, 20 restaurants and enough parking to accommodate over 6,000 vehicles, and as of December 31, 2003, approximately 4,960 slot machines and 200 table games. The Company's management believes that the centralized location and critical mass of these three properties, together with the ease of access between the facilities, provide the Eldorado with significant advantages over other freestanding hotel/casinos in the Reno market.

Silver Legacy Joint Venture

        Background.    The Silver Legacy was developed by the Silver Legacy Joint Venture, which was formed pursuant to the Agreement of Joint Venture of Circus and Eldorado Joint Venture dated as of March 1, 1994 (the "Original Joint Venture Agreement"), between ELLC and Galleon, Inc. ("Mandalay Sub"). Under the terms of the Original Joint Venture Agreement, ELLC and Mandalay Sub (each a "Partner" and, together, the "Partners") each acquired a 50% interest in the Silver Legacy Joint Venture (each Partner's "Percentage Interest"). Each of the Partners was obligated to contribute cash or property to the Silver Legacy Joint Venture with a value approximating 15% of the total budgeted cost for developing and constructing the Silver Legacy. To satisfy their respective contribution obligations, ELLC contributed the land on which Silver Legacy was constructed, at an agreed value of $25 million, and $26.9 million in cash, and Mandalay Sub contributed $51.9 million in cash. In addition, pursuant to the Original Joint Venture Agreement, Mandalay Sub's parent corporation, Mandalay Resort Group, provided certain loans to the Silver Legacy Joint Venture relating to the development and construction of the Silver Legacy (the remaining balance of which was repaid in 1997) and also provided credit support for a $230 million credit agreement originally entered into by the Silver Legacy Joint Venture on May 30, 1995 (the "Original Silver Legacy Credit Agreement") to fund the balance of the Silver Legacy's development and construction costs. In return, Mandalay Resort Group received from the Silver Legacy Joint Venture an annual fee equal to 1.5% of the average outstanding principal balance of such financing until March 5, 2002.

        On March 5, 2002, the Partners executed a new amendment and restatement of the Original Joint Venture Agreement (as further amended in April 2002, the "New Joint Venture Agreement"), the terms of which are summarized below, and the Silver Legacy Joint Venture and its wholly-owned finance subsidiary, Silver Legacy Capital Corp., issued $160 million principal amount of 10¹/8% mortgage notes due 2012 (the "Silver Legacy Notes"). Concurrently with the issuance of the Silver Legacy Notes, the Silver Legacy Joint Venture (i) repaid the entire outstanding balance of the Original Silver Legacy Credit Agreement, (ii) entered into a new senior secured credit facility comprised of a $20.0 million term loan facility that will amortize over a period of five years and a $20.0 million revolving facility with a five year maturity (the "New Silver Legacy Credit Agreement"), and (iii) made distributions of $10.0 million to ELLC and $20.0 million to Mandalay Sub, utilizing the balance of the net proceeds of the Silver Legacy Notes and $26.0 million of borrowings under the New Silver Legacy Credit Agreement. The New Silver Legacy Credit Agreement is secured by a first priority security interest in substantially all of the existing and future assets (other than certain licenses which may not be pledged under applicable law) of the Silver Legacy Joint Venture and a first priority pledge of and security interest in all of the Partnership interests in the Silver Legacy Joint Venture. The Silver Legacy Notes are secured by a security interest in the same assets and pledges of and security interest in the same Partnership interests which are junior to the security interests and pledges securing the New Silver Legacy Credit Agreement.

        Silver Legacy Joint Venture Agreement.    The following is a summary of the New Joint Venture Agreement. The summary is qualified in its entirety by reference to the New Joint Venture Agreement, a copy of which is incorporated by reference as Exhibit 10.1.3 to this report.

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        Additional Capital Contributions.    The New Joint Venture Agreement provides that the Partners shall not be permitted or required to contribute additional capital to the Silver Legacy Joint Venture without the consent of the Partners, which consent may be given or withheld in each Partner's sole and absolute discretion.

        Partnership Distributions.    Subject to any contractual restrictions to which the Silver Legacy Joint Venture is subject, including the indenture relating to the Silver Legacy Notes, and prior to the occurrence of a "Liquidating Event," the Silver Legacy Joint Venture will be required by the New Joint Venture Agreement to make distributions to its Partners as follows:

(a)

An amount equal to the estimated taxable income of the Silver Legacy Joint Venture allocable to each Partner multiplied by the greater of the maximum marginal federal income tax rate applicable to individuals for such period or the maximum marginal federal income tax rate applicable to corporations for such period (as of the date hereof both rates are 35%); provided, however, that if the State of Nevada enacts an income tax (including any franchise tax based on income), the applicable tax rate for any tax distributions subsequent to the effective date of such income tax shall be increased by the higher of the maximum marginal individual tax rate or corporate income tax rate imposed by such tax (after reduction for the federal tax benefit for the deduction of state taxes, using the maximum marginal federal, individual or corporate rate, respectively).



(b)

Annual distributions of remaining "Net Cash From Operations" in proportion to the Percentage Interests of the Partners.



(c)

Distributions of "Net Cash From Operations" in amounts or at times that differ from those described in (a) and (b) above, provided in each case that both Partners agree in writing to the distribution in advance thereof.

        As defined in the New Joint Venture Agreement, the term "Net Cash From Operations" means the gross cash proceeds received by the Silver Legacy Joint Venture, less the following amounts: (i) cash operating expenses and payments of other expenses and obligations of the Silver Legacy Joint Venture, including interest and scheduled principal payments on Silver Legacy Joint Venture indebtedness, including indebtedness owed to the Partners, if any, (ii) all capital expenditures made by the Silver Legacy Joint Venture, and (iii) such reasonable reserves as the Partners deem necessary in good faith and in the best interests of the Silver Legacy Joint Venture to meet anticipated future obligations and liabilities of the Silver Legacy Joint Venture (less any release of reserves previously established, as similarly determined).

        The Managing Partner.    The New Joint Venture Agreement designates Mandalay Sub as the Silver Legacy Joint Venture's managing partner with responsibility and authority for the day-to-day management of the business affairs of the Silver Legacy Joint Venture, including overseeing the day-to-day operations of Silver Legacy and other Silver Legacy Joint Venture business, preparation of the Silver Legacy Joint Venture's budgets and implementation of the decisions made by the Partners. The managing partner is also responsible for the preparation and submission of the Silver Legacy Joint Venture's annual business plan for review and approval by the Silver Legacy Joint Venture's executive committee, utilizing the special voting procedures and the procedure for resolving deadlocks described below.

        The New Joint Venture Agreement provides that the managing partner shall appoint the general manager, subject to approval of the appointment by the executive committee, utilizing the special voting procedures and the procedure for resolving deadlocks described below. Under the terms of the New Joint Venture Agreement, the general manager may be removed by ELLC or Mandalay Sub upon 30 days written notice. The New Joint Venture Agreement also provides that the managing partner shall appoint the other principal senior management of the Silver Legacy Joint Venture and Silver Legacy, who shall perform such functions, duties, and responsibilities as the managing partner may assign, and shall serve at the direction and pleasure of the managing partner.

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        The New Joint Venture Agreement provides that the unanimous approval of both Partners is required for certain actions, including the admission of an additional partner, the purchase of additional real property, encumbrances on Silver Legacy, sales or other dispositions of all or substantially all of the assets of the Silver Legacy Joint Venture, refinancing or incurrence of indebtedness involving in excess of $250,000 other than in the ordinary course of business, capital improvements involving more than $250,000 that are not included in an approved annual business plan, and any obligation, contract, agreement, or commitment with a partner or an affiliate of a partner which is not specifically permitted by the New Joint Venture Agreement.

        Replacement of the Managing Partner.    If the actual net operating results of the business of the Silver Legacy Joint Venture for any four consecutive quarters are less than 80% of the projected amount as set forth in the Silver Legacy Joint Venture's annual business plan, after appropriate adjustments for factors affecting similar business in the vicinity of the Silver Legacy, ELLC may require Mandalay Sub to resign from its position as managing partner.

        In addition, in the event Mandalay Sub resigns as managing partner, ELLC will have the right and option to become the managing partner of the Silver Legacy Joint Venture and assume all the obligations of the managing partner under the New Joint Venture Agreement, or the Partners are required to attempt to appoint a third party to manage the day-to-day business affairs of the Silver Legacy Joint Venture. In such event, if the Partners are unable to agree on a manager, then the Silver Legacy Joint Venture shall be dissolved and liquidated in accordance with the provisions of the New Joint Venture Agreement.

        The Executive Committee.    An executive committee of the Silver Legacy Joint Venture is authorized to review, monitor and oversee the performance of the management of the Silver Legacy. The executive committee of the Silver Legacy Joint Venture shall consist of five members, with three members appointed by the managing partner and two members appointed by the other Partner. In the event that neither of the Partners is the managing partner, then the executive committee shall consist of five members, with two members appointed by each Partner and a fifth member appointed by a third party manager selected by the Partners. Each Partner may, at any time, appoint alternate members to the executive committee and the alternates will have all the powers of a regular committee member in the event of the absence or inability of a regular committee member to serve. With the exception of the special voting procedures described below, each member of the executive committee is entitled to one vote on each matter decided by the executive committee and each action of the executive committee must be approved by a majority of all of the members of the executive committee, who may be present or voting by proxy. The current members of the executive committee are Stephen J. Greathouse, Frank R. Baldwin and Yvette E. Landau, each of whom was appointed by Mandalay Sub, and Robert M. Jones and Gene Carano, each of whom was appointed by ELLC.

        Subject to the requirement of unanimous approval of the Partners for certain actions, the duties of the executive committee include, but are not limited to, (i) reviewing, adjusting, approving, developing, and supervising the Silver Legacy Joint Venture's annual business plan, (ii) reviewing and approving the terms of any loans made to the Silver Legacy Joint Venture, (iii) approving all material purchases, sales, leases or other dispositions of Silver Legacy Joint Venture property, other than in the ordinary course of business, and (iv) approving the appointment of the General Manager, who is the Silver Legacy Joint Venture's Chief Executive Officer, and the Controller, who is the Silver Legacy Joint Venture's Chief Financial Officer and Accounting Officer, and determining the compensation of the General Manager and the Controller.

        The New Joint Venture Agreement provides special voting procedures for the executive committee's approval of the annual business plan, the appointment of the general manager and the determination of the general manager's compensation. In voting on these matters, the members of the executive committee appointed by the managing partner shall have a total of two votes and the

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members of the executive committee appointed by the other Partner shall have a total of two votes. The managing partner shall designate which two of the three members of the executive committee appointed by the managing partner are to exercise the two votes. If the executive committee is deadlocked in deciding any matter which is subject to the special voting procedures, then the meeting may be adjourned to another meeting date. If the executive committee remains deadlocked with respect to its approval of an annual business plan until the end of the second month of the fiscal year described in the annual business plan, then either Partner may by written notice cause the approval of the annual business plan to be submitted to a nationally recognized accounting firm mutually agreeable to the Partners (the "Accountant") for resolution. The Accountant shall consider the positions of the members of the executive committee and the Partners, and shall decide whether to approve the annual business plan, or to modify the annual business plan and approve it with such modifications. The decision of the Accountant on these matters shall have the same effect as the approval of the annual business plan by the executive committee. If the executive committee remains deadlocked with respect to its approval of the appointment of a general manager for a period of one month following the effective date of the resignation or removal of the previous general manager, then the executive committee shall assume the duties of the general manager until such time as the executive committee can reach a decision on the appointment and compensation of a new general manager. In exercising the duties of the general manager, the executive committee shall act and vote in accordance with the special voting procedures described above. If the executive committee remains deadlocked on the determination of the compensation of the general manager for a period of one month following the first meeting on the proposed compensation, then either Partner may by written notice cause the determination of such compensation to be submitted to the Accountant for resolution. In that event, the Accountant shall consider the positions of the executive committee, and shall adopt a compensation arrangement consistent with the position advocated by at least one member of the executive committee. The decision of the Accountant on any matter which is subject to the special voting procedures shall be final and binding on the executive committee and the Partners.

        Transfer of Partnership Interests.    Except as expressly permitted by the New Joint Venture Agreement, neither Partner may transfer all or any portion of its interest in the Silver Legacy Joint Venture or any rights therein without the unanimous consent of both Partners. The New Joint Venture Agreement provides that a Partner may transfer or convey all or any portion of its interest in the Silver Legacy Joint Venture to an affiliate of such Partner (subject to certain limitations), members of the Partner's family (which includes the Partner's spouse, natural or adoptive lineal descendants, and trusts for their benefit), another Partner, a personal representative of the Partner or any person or entity approved by the unanimous consent of the Partners.

        Unless otherwise agreed by Mandalay Sub, Donald L. Carano or a member of his immediate family acceptable to Mandalay Sub, which acceptance may not be unreasonably withheld, or an affiliate controlled by Donald L. Carano or a member of his immediate family acceptable to Mandalay Sub, which acceptance may not be unreasonably withheld, is required to be the manager of and control ELLC (or, if applicable, any entity that is a permitted transferee and to which ELLC has transferred its interest in the Silver Legacy Joint Venture). Unless otherwise agreed by ELLC, which may not be unreasonably withheld, Mandalay Sub (or, if applicable, any entity that is a permitted transferee and to which Mandalay Sub has transferred its interest in the Silver Legacy Joint Venture) is required to be controlled by Mandalay Resort Group. In the event the limitation in this paragraph with respect to either Partner is breached, the other Partner will have the right (but not be required) to exercise the buy-sell provisions described below.

        Limitation on Partners' Actions.    The New Joint Venture Agreement includes each Partner's covenant and agreement not to (i) take any action to require partition or to compel any sale with respect to its Silver Legacy Joint Venture interest, (ii) take any action to file a certificate of dissolution or its equivalent with respect to itself, (iii) take any action that would cause a bankruptcy of such

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Partner, (iv) withdraw or attempt to withdraw from the Silver Legacy Joint Venture, (v) exercise any power under the Nevada Uniform Silver Legacy Joint Venture Act to dissolve the Silver Legacy Joint Venture, (vi) transfer all or any portion of its interest in the Silver Legacy Joint Venture (other than as permitted hereunder), (vii) petition for judicial dissolution of the Silver Legacy Joint Venture, or (viii) demand a return of such Partner's contributions or profits (or a bond or other security for the return of such contributions or profits) without the unanimous consent of the Partners. The New Joint Venture Agreement also provides that if a Partner attempts to (A) cause a partition or (B) withdraw from the Silver Legacy Joint Venture or dissolve the Silver Legacy Joint Venture, or otherwise take any action in breach of its aforementioned agreements, the Silver Legacy Joint Venture shall continue and (1) the breaching Partner shall immediately cease to have the authority to act as a Partner, (2) the other Partner shall have the right (but shall not be obligated unless it was so obligated prior to such breach) to manage the affairs of the Silver Legacy Joint Venture, (3) the breaching Partner shall be liable in damages, without requirement of a prior accounting, to the Silver Legacy Joint Venture for all costs and liabilities that the Silver Legacy Joint Venture or any Partner may incur as a result of such breach, (4) distributions to the breaching Partner shall be reduced to 75% of the distributions otherwise payable to the breaching Partner and (5) the breaching Partner shall continue to be liable to the Silver Legacy Joint Venture for any obligations of the Silver Legacy Joint Venture pursuant to the New Joint Venture Agreement, and to be jointly and severally liable with the other Partners for any debts and liabilities (whether actual or contingent, known or unknown) of the Silver Legacy Joint Venture existing at the time the breaching Partner withdraws or dissolves.

        Buy-Sell Provision.    At any time on or after July 1, 2005 either Partner (provided such Partner is not in default of any of the provisions of the New Joint Venture Agreement) may make an offer to purchase ("Offer") the interest of the other Partner, which will constitute an irrevocable offer by the Partner giving the Offer either to (i) purchase all, but not less than all, of the interest of the Silver Legacy Joint Venture of the other Partner free of liens and encumbrances for the amount specified in the Offer (the "Sales Price"), or (ii) sell all, but not less than all, of its interest in the Silver Legacy Joint Venture free of liens and encumbrances to the other Partner for the amount specified in the Offer (the "Purchase Price"). The Partner receiving an Offer will have a period of two months to accept the Offer to sell at the Sales Price or, in the alternative, to require that the offering Partner sell its interest to the other Partner at the Purchase Price. The closing of the transaction for the sale or purchase of the Silver Legacy Joint Venture interest shall occur not later than six months after the notice of election or at such other time as may be required by the Nevada Gaming Authorities. Subject to any agreements to which the Silver Legacy Joint Venture is a party, the Partner purchasing the Silver Legacy Joint Venture interest (the "Purchasing Partner") shall be entitled to encumber the Silver Legacy Joint Venture property in order to finance the purchase, provided that the other Partner (the "Selling Partner") will have no liability, contingent or otherwise, under such financing. The Purchasing Partner may assign all or part of its right to purchase the Silver Legacy Joint Venture interest of the Selling Partner to an affiliate of the Purchasing Partner, provided that no such assignment relieves the Purchasing Partner of its obligations in the event of a default by the affiliate.

        Dissolution, Winding Up and Liquidation.    The New Joint Venture Agreement provides that the Silver Legacy Joint Venture shall dissolve and commence winding up and liquidating upon the first to occur of any of (i) January 1, 2053, (ii) the sale of all or substantially all of the Silver Legacy Joint Venture property, (iii) the unanimous vote of the Partners to dissolve, wind up, and liquidate the Silver Legacy Joint Venture, (iv) the happening of any other event that makes it unlawful or impossible to carry on the business of the Silver Legacy Joint Venture, (v) the occurrence of an Event of Bankruptcy (as defined the New Joint Venture Agreement) of a Partner, or (vi) the Partners are unable to agree upon a replacement managing partner as provided in the New Joint Venture Agreement (each, a "Liquidating Event").

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        The New Joint Venture Agreement also includes the Partners' agreement that the Silver Legacy Joint Venture shall not dissolve prior to the occurrence of a Liquidating Event, notwithstanding any provision of the Nevada Uniform Silver Legacy Joint Venture Act to the contrary. If it is determined by a court of competent jurisdiction that the Silver Legacy Joint Venture has dissolved prior to the occurrence of a Liquidating Event, the Partners have agreed to continue the business of the Silver Legacy Joint Venture without a winding up or liquidation.

        Upon the occurrence of a Liquidating Event, the Silver Legacy Joint Venture will continue solely for the purpose of winding up its affairs in an orderly manner, liquidating its assets, and satisfying the claims of its creditors and Partners. The managing partner will be responsible for overseeing the winding up and liquidation of the Silver Legacy Joint Venture, taking full account of the Silver Legacy Joint Venture's liabilities and assets, causing the assets to be liquidated as promptly as is consistent with obtaining the fair market value thereof, and causing the proceeds therefrom, to the extent sufficient therefor, to be applied and distributed (i) first, to the payment and discharge of all of the Silver Legacy Joint Venture's debts and liabilities to creditors other than Partners, (ii) second, to the payment and discharge of all of the Silver Legacy Joint Venture's debts and liabilities to Partners, and (iii) the balance, if any, to the Partners in the amount of their respective capital accounts, after giving effect to all contributions, distributions, and allocations for all periods or portions thereof.

Reno Market

        Reno is the second largest metropolitan area in Nevada, with a population of approximately 357,000 according to the most recently available U.S. census data, and is located at the base of the Sierra Nevada Mountains along Interstate 80, approximately 135 miles east of Sacramento, California and 225 miles east of San Francisco, California. Reno is a destination resort market that primarily attracts "drive-in" visitors by offering gaming as well as numerous other summer and winter recreational activities. In addition to gaming, the Reno area features national forests, mountains and lakes (including Lake Tahoe) and offers year-round opportunities for outdoor activities of all types. Management believes that approximately two-thirds of visitors to the Reno market arrive by some form of ground transportation. The Reno area enjoys relatively mild weather, with abundant sunshine throughout the year and low humidity. Reno's annual snowfall is modest, although heavier snowfall in the mountain passes around Reno can obstruct traffic to Reno. Special annual events in the Reno area include Hot August Nights, the National Championship Air Races, the Reno Balloon Races, Street Vibrations, the Reno/Tahoe Open PGA golf tournament and the Reno Rodeo. According to the Reno-Sparks Convention and Visitors Authority (the "Visitors Authority") and the Nevada Commission on Tourism, the greater Reno area attracted an estimated 4.7 million visitors for the twelve months ended June 30, 2003 compared to 4.9 million for the same period in 2002.

        Approvals have been obtained for two public works projects in the downtown area of Reno. The first project will lower the train tracks which run between Reno's downtown district and separate the Eldorado and the two adjoining properties from the rest of the downtown gaming facilities. Construction on this project, which commenced in early 2003, is expected to be completed in 2006. The second project involves the construction of a downtown special events center next to the National Bowling Stadium. Construction of this project commenced in Janaury 2004 and expected to be completed in December 2004. While we believe the construction of these projects has had a minimal impact on our operations, we cannot determine their impact during their remaining periods of construction or after their completion.

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        The following table sets forth certain statistical information for the Reno market for the years 1999 through 2003 as reported by the Visitors Authority, the Nevada Commission on Tourism and the Nevada State Gaming Control Board.

(1)

For the twelve months ended December 31 for each period shown.

(2)

As of December 31 for each period shown.

(3)

Calculated from information provided by the Nevada State Gaming Control Board.

(4)

For the twelve months ended June 30 for each period shown.

        The National Bowling Stadium, located approximately one block from the Eldorado and Silver Legacy, opened in February 1995 at a reported cost of approximately $48 million. The state-of-the-art facility, which features 80 bowling lanes, has been selected to host tournaments for the American Bowling Congress (the "ABC") and the Women's International Bowling Congress (the "WIBC") two of every three years through 2009 and is expected to host tournaments for other bowling organizations. The National Bowling Stadium was the site of the WIBC's National Championship Bowling Tournament in 1997, 2000 and 2003 and has been selected as the site of that tournament in 2006 and 2009. The National Bowling Stadium was the site of the ABC's National Championship Bowling Tournament in 1998 and 2001 and has been selected as the site of that tournament in 2004, 2007, 2010, 2013 and 2016. According to the Visitors Authority, bowling tournaments held at the National Bowling Stadium attract visitors from markets that do not normally contribute substantially to Reno's visitor profile. The National Bowling Stadium also features a large-screen movie theater, nightclub and retail space and can be configured to host special events and conventions.

        At December 31, 2003, nine scheduled airlines and a number of other charter airlines were providing daily departures on 89 flights from Reno to approximately 17 other North American cities, providing outbound available seats for over 10,000 people daily. The primary user of the airport is Southwest Airlines, with approximately 41 daily outbound flights as of December 31, 2003. The Eldorado and the Silver Legacy are within a 10-minute drive of the airport, making them easily accessible to visitors traveling to Reno by air.

Competition

        The gaming industry includes land-based casinos, dockside casinos, riverboat casinos, casinos located on Native American reservations and other forms of legalized gaming. There is intense competition among companies in the gaming industry, many of which have significantly greater resources than we do. Certain states have legalized casino gaming and other states may legalize gaming in the future. Legalized casino gaming in these states and on Native American reservations near our markets or changes to gaming laws in states surrounding Nevada could increase competition and could adversely affect our operations. The Company also competes to a lesser extent, with gaming facilities in other jurisdictions with dockside gaming facilities, state-sponsored lotteries, on-and-off track pari-mutuel wagering, Internet gaming, card clubs, riverboat casinos and other forms of legalized gambling.

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        The Company competes for customers primarily on the basis of location, range and pricing of amenities and overall atmosphere. Of the 35 casinos currently operating in the Reno market, the Company competes principally with the eight other hotel-casinos that, like the Eldorado, each generate at least $36 million in annual gaming revenues, including the Silver Legacy. Although no hotel-casino projects are currently under construction in the Reno area, we cannot predict the extent to which new projects will be undertaken or the extent to which current hotel and/or casino space may be expanded in the near future. The Company expects that any additional rooms added in the Reno market will increase competition for visitor revenue. There can be no assurance that any growth in Reno's current room base or gaming capacity will not adversely affect our financial condition or results of operations. The Company also competes with hotel-casinos located in the nearby Lake Tahoe region as well as those in Las Vegas, Nevada. A substantial number of customers travel to both Reno and the Lake Tahoe area during their visits. Consequently, the Company believes that the Eldorado's success is influenced to some degree by the success of the Lake Tahoe market. While the Company does not anticipate a decline in the popularity of either Reno or Lake Tahoe as tourist destination areas in the foreseeable future, any such decline could adversely affect our operations.

        Land-based, riverboat, or dockside casino gaming (other than that conducted on Native American-owned land) is currently legal in 11 states and casino gaming on Native American-owned land is legal in a number of states, including California, Washington, and Oregon. Management believes the Reno market draws over 50% of its visitors from California. In addition to gaming on Native American-owned land, California allows other non-casino style gaming, including pari-mutuel wagering, a state-sponsored lottery, card clubs, bingo, and off-track betting.

        On March 7, 2000, California voters approved Proposition 1A which amended the California constitution and legalized "Nevada-style" gaming on Native American reservations. The passage of this amendment has allowed the expansion of existing Native American gaming operations, as well as the opening of new Native American gaming facilities. Additionally, numerous tribes have announced that they intend to open gaming facilities in California. There are approximately 107 federally recognized Native American tribes in California. A total of 61 Native American tribes entered into compacts with the State of California during 1999 and 2000 that are currently in effect. Each of these Native American tribes may operate up to two gaming facilities. Nine of these Native American tribes are presently not operating a casino. Two Native American tribes entered into compacts with the State of California in 2003 that are currently in effect. Each of these Native American tribes may operate one gaming facility; however, neither is presently operating a casino. Under action taken by the National Indian Gaming Commission, gaming devices similar in appearance to slot machines, but which are deemed to be technological enhancements to bingo style gaming, are not subject to such limits and may be used by tribes without state permission. Currently there are 53 Native American casinos in operation in the State of California. These Native American tribes are currently allowed to operate a maximum of 2,000 slot machines, as well as other games. Certain compacts are currently being renegotiated with the state. While the outcome of the negotiations is yet to be determined, the possibility exists that the current facilities operating in California will be allowed to expand the scope and size of their operations, including an increase in the number of slot machines.

        Many existing Native American gaming facilities in northern California are modest compared to Reno market casinos. However, there are several more significant Native American casinos which currently compete with the Reno market, including: (1) the Cache Creek Indian Bingo & Casino in Brooks, California, approximately 58 miles northwest of Sacramento (2) the Jackson Rancheria Casino, Hotel and Conference Center in Jackson, California, approximately 59 miles southeast of Sacramento and (3) the Thunder Valley Casino in Auburn, California, approximately 21 miles northeast of Sacramento. Thunder Valley Casino opened on June 9, 2003 and offers approximately 1,906 slot machines and 111 table games, dining and entertainment amenities and parking for 4,500 vehicles. This project has been open approximately eight months, and during the third and fourth quarter of 2003, we

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believe it had a significant impact on our operating results. Based on its size, proximity, and potential expansion capabilities, we believe Thunder Valley Casino could further impact our operations in the future. While we cannot predict the extent of the future impact, it could be significant. Management believes the greatest impact from Thunder Valley Casino to the Eldorado's customer base is to its day-trippers, those patrons whose visit is for one day and does not include an overnight stay. These customers are typically not tracked players, as they tend not to be as loyal a customer as those who visit for more than one day at a time. Day-trippers primarily visit Reno in the second and third quarters when the weather is more favorable.

        In addition to the existing gaming facilities, numerous Native American tribes have announced that they are in the process of developing or are considering establishing large-scale hotel and gaming facilities in northern California. Other tribes are at various stages of planning new or expanded facilities in northern California, including facilities within a one-hour drive of San Francisco or Sacramento.

        The competitive impact on Nevada gaming establishments, in general, and our operations, in particular, from the continued growth of gaming outside Nevada cannot be determined at this time. However, the Company believes that the expansion of casino gaming on Native American lands in California, and to a lesser extent in Washington and Oregon, could have a material adverse affect on future operations, depending on the nature, location, and scope of those operations.

Nevada Regulation and Licensing

        The ownership and operation of casino gaming facilities in Nevada are subject to the Nevada Gaming Control Act (the "Nevada Act") and regulations promulgated thereunder as well as various local regulations. The Company's gaming operations are subject to the licensing and regulatory control of the Nevada Gaming Commission (the "Nevada Commission"), the Nevada State Gaming Control Board (the "Nevada Board") and various local and governmental authorities (collectively with the Nevada Commission and the Nevada Board, the "Nevada Gaming Authorities"). The laws, regulations and supervisory procedures of the Nevada Gaming Authorities are based upon declarations of public policy which seek to, among other things, (i) prevent unsavory or unsuitable persons from having any direct or indirect involvement with gaming at any time or in any capacity, (ii) establish and maintain responsible accounting practices and procedures, (iii) maintain effective control over the financial practices of licensees, including establishing minimum procedures for internal fiscal affairs and the safeguarding of assets and revenues, providing reliable recordkeeping and requiring the filing of periodic reports with the Nevada Gaming Authorities, (iv) prevent cheating and fraudulent practices and (v) provide a source of state and local revenues through taxation and licensing fees. Changes in such laws, regulations and procedures could have an adverse effect on the Company's gaming operations.

        Resorts, which operates the Eldorado, is licensed by the Nevada Gaming Authorities and is a corporate licensee (a "Corporate Licensee") under the terms of the Nevada Act. The gaming license requires the periodic payment of fees and taxes and is not transferable. Resorts and Capital each are registered by the Nevada Commission as a publicly traded corporation (a "Registered Corporation"). Registered Corporations are required periodically to submit detailed financial and operating reports to the Nevada Commission and furnish any other information that the Nevada Commission may request. No person may become a member of, or receive any percentage of the profits from, the Company without first obtaining licenses and approvals from the Nevada Gaming Authorities. All of the members of Resorts have obtained the licenses and approvals necessary to own their respective interests in the Company. The Company has obtained from the Nevada Gaming Authorities the various registrations, approvals, permits and licenses required in order to engage in gaming activities at the Eldorado.

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        The Nevada Gaming Authorities may investigate any individual who has a material relationship to, or material involvement with, the Company in order to determine whether such individual is suitable or should be licensed as a business associate of the Company. Officers, directors and certain key employees of the Company must file applications with the Nevada Gaming Authorities and 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. Changes in licensed positions must be reported to the Nevada Gaming Authorities and, in addition to their authority to deny an application for a finding of suitability or licensure, the Nevada Gaming Authorities have jurisdiction to disapprove a change in a corporate position.

        If the Nevada Gaming Authorities were to find an officer, director or key employee of the Company unsuitable for licensing or unsuitable to continue having a relationship with the Company, the Company would have to sever all relationships with such person. In addition, the Nevada Commission may require the Company 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 is 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 the Company must be reported to, or approved by, the Nevada Commission.

        If it were determined that the Nevada Act was violated by the Company, the gaming licenses it holds could be limited, conditioned, suspended or revoked, subject to compliance with certain statutory and regulatory procedures. In addition, the Company 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 Company's gaming properties and, under certain circumstances, earnings generated during the supervisor's appointment (except for the reasonable rental value of the Company's gaming properties) could be forfeited to the State of Nevada. Limitation, conditioning or suspension of any gaming license or the appointment of a supervisor could (and revocation of any gaming license would) materially adversely affect the Company's gaming operations.

        The Nevada Commission may, in its discretion, require the holder of any debt security of the Company, including the 10¹/2% Senior Subordinated Notes due 2006 of Resorts and Capital, to file applications, be investigated and be found suitable to own such debt security. If the Nevada Commission determines that a person is unsuitable to own such security, then pursuant to the Nevada Act, the Company can be sanctioned, including the loss of its licenses, 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.

        Any beneficial holder of a Registered Corporation'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 a Registered Corporation'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.

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        The Nevada Act requires any person who acquires beneficial ownership of more than 5% of a Registered Corporation's voting securities to report the acquisition to the Nevada Commission. The Nevada Act requires that beneficial owners of more than 10% of a Registered Corporation's voting securities apply to the Nevada Commission for a finding of suitability within 30 days after the Chairman of the Nevada Gaming 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 will 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 a Registered Corporation, any change in a Registered Corporation's corporate charter, bylaws, management, policies or operations or any of its gaming affiliates or any other action which the Nevada Commission finds to be inconsistent with holding the Registered Corporation's voting securities for investment purposes only. Activities which are not deemed to be inconsistent with holding voting securities for investment purposes only include: (i) voting on all matters voted on by shareholders, (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 management, policies or 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 30 days after being ordered to do so by the Nevada Commission or the Chairman of the Nevada Board may be found unsuitable. The same restrictions apply to a record owner of the Company's securities if the record owner, after request, fails to identify the beneficial owner of such securities. Any shareholder found unsuitable and who holds, directly or indirectly, any beneficial ownership of the voting securities of a Registered Corporation beyond such period of time as may be prescribed by the Nevada Commission may be guilty of a criminal offense. A Registered Corporation is subject to disciplinary action if, after it receives notice that a person is unsuitable to be a member of or to have any other relationship with such corporation, the Registered Corporation (i) pays that person any dividend or interest upon voting securities of such corporation, (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 such voting securities for cash at fair market value.

        A Registered Corporation 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. A Registered Corporation is also required to render maximum assistance in determining the identity of the beneficial owner. The Nevada Commission has the power to require the stock certificates of a Registered Corporation to bear a legend indicating that the securities are subject to the Nevada Act.

        Neither the Company nor a Registered Corporation may 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. Such approval, if given, does not constitute a finding,

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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. Any representation to the contrary is unlawful.

        Changes in control of a Registered Corporation 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 with respect to a variety of stringent standards prior to assuming control of such Registered Corporation. The Nevada Commission may also require controlling shareholders, officers, directors and other persons having a material relationship or involvement with the entity proposing to acquire control to be investigated and licensed as a 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 Registered Corporations may be injurious to stable and productive corporate gaming. The Nevada Commission has established a regulatory scheme to ameliorate the potentially adverse effects of these business practices upon Nevada's gaming industry and to further Nevada's policy to: (i) assure the financial stability of corporate gaming operators 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 required in certain circumstances from the Nevada Commission before a Registered Corporation may make exceptional repurchases of voting securities above the current market price thereof and before a corporate acquisition opposed by management may be consummated. The Nevada Act also requires prior approval of a plan of recapitalization proposed by a Registered Corporation's Board of Directors in response to a tender offer made directly to the Registered Corporation's shareholders for the purposes of acquiring control of the Registered Corporation.

        License fees and taxes, computed in various ways depending on the type of gaming or activity involved, are payable to the State of Nevada and to the counties and cities in which the Nevada licensee's respective operations are conducted. Depending upon the particular fee or tax involved, these fees and taxes are payable 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 certain types of entertainment are furnished in connection with the selling of food or refreshments.

        Any person who is licensed, required to be licensed, registered, required to be registered or is under common control with such person (collectively, "Licensees"), and who proposes to become involved in a gaming venture outside of Nevada, is required to deposit with the Nevada Gaming 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 at the discretion of the Nevada Commission. Thereafter, Licensees are required to comply with certain reporting requirements imposed by the Nevada Act. Licensees are also subject to disciplinary action by the Nevada Commission if they knowingly violate any laws of the foreign jurisdiction pertaining to the foreign gaming operation, fail to conduct the foreign gaming operation in accordance with the standards of honesty and integrity required of Nevada gaming operations, engage in activities 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 for the reason of personal unsuitability.

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Internal Revenue Service Regulations

        The Internal Revenue Service requires operators of casinos located in the United States to file information returns for U.S. citizens, including names and addresses of winners, for keno, bingo and slot machine winnings in excess of stipulated amounts. The Internal Revenue Service also requires operators to withhold taxes on some keno, bingo and slot machine winnings of nonresident aliens. We are unable to predict the extent, to which these requirements, if extended, might impede or otherwise adversely affect operations of, and/or income from, the other games.

        Regulations adopted by the Financial Crimes Enforcement Network of the Treasury Department and the Nevada gaming regulatory authorities require the reporting of currency transactions in excess of $10,000 occurring within a gaming day, including identification of the patron by name and social security number. This reporting obligation began in May 1985 and may have resulted in the loss of gaming revenues to jurisdictions outside the United States which are exempt from the ambit of these regulations.

Other Laws and Regulations

        The sale of alcoholic beverages at the Eldorado and the Silver Legacy are subject to licensing, control and regulation by applicable local regulatory agencies. All licenses are revocable and are not transferable. The agencies involved have full power to limit, condition, suspend or revoke any license, and any disciplinary action could, and revocation would, have a material adverse effect upon our operations.

        The Eldorado and the Silver Legacy are subject to extensive state and local regulations and, on a periodic basis, must obtain various licenses and permits, including those required to sell alcoholic beverages. The Company believes that it has obtained all required licenses and permits and that our business is conducted in substantial compliance with applicable laws.

Environmental Matters

        As is the case with any owner or operator of real property, the Company is subject to a variety of federal, state and local governmental regulations relating to the use, storage, discharge, emission and disposal of hazardous materials. Federal, state and local environmental laws and regulations also impose liability on potentially responsible parties, including the owners or operators of real property, to clean up, or contribute to the cost of cleaning up, sites at which hazardous wastes or materials were disposed of or released. The Company does not have environmental liability insurance to cover such events.

        Certain of the Company's properties and former properties, including the Silver Legacy property, had or have varying degrees of petroleum contamination in the soil and/or groundwater. In each instance where such petroleum contamination has been identified, investigation or remediation activities have been undertaken or are ongoing. The possibility exists that additional contamination, as yet unknown, may exist at these or other of the Company's properties. In addition, under the terms of an Environmental Indemnity, dated May 30, 1995 (the "Environmental Indemnity"), the Company agreed jointly and severally with Mandalay to indemnify, defend and hold harmless the agents and lenders under a bank credit facility of the Silver Legacy Joint Venture which was paid in full on March 5, 2002 from and against any and all Environmental Losses (as defined in the Environmental Indemnity) suffered or incurred on the premises of the Silver Legacy or arising through the ownership, use, occupancy or operation thereof. Generally, liability under the Environmental Indemnity covers the period prior to the date the lenders foreclose on and take possession of the real property securing their loans to the Silver Legacy Joint Venture. The agents and lenders are not required to seek payments from the Silver Legacy Joint Venture before pursuing payments from the Company and Mandalay for Environmental Losses. In all cases, the Company believes that the contamination arose from activities

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of prior owners or occupants, or from offsite sources and not as a result of any actions or operations conducted by the Company.

        In 1998 the Silver Legacy received reimbursement and indemnification from Chevron Company USA of $750,000 for petroleum contamination identified on the Silver Legacy property. The possibility exists that other responsible parties may be identified for this or other sites, and the Company will determine whether to seek contribution or reimbursement from such parties. In addition, reimbursement for some of the expenditures has been, and further reimbursement may be, obtained from the State of Nevada Petroleum Fund which has been established to reimburse parties for costs incurred in clean-up of underground storage tank related contamination.

        Groundwater in the vicinity of the Eldorado property is also contaminated by a chlorinated solvent known as perchloroethylene or "PCE." This contaminant is widespread in the Reno/Sparks area. The Central Truckee Meadows Remediation District, encompassing much of the cities of Reno and Sparks, was established pursuant to state legislation to address this contamination. The Central Truckee Meadows Remediation District is managed by Washoe County under the direction of the Nevada Division of Environmental Protection, and is currently conducting investigations and developing a remediation plan. Funding for the Central Truckee Meadows Remediation District is provided through assessments to water customers which are calculated on the basis of water use. The annual assessment to the Company is currently $178, plus an additional sum based on the amount of water used, which in our most recent annual assessment amounted to approximately $18,000. It is possible that additional assessments may be made against properties that receive special benefits from the Central Truckee Meadows Remediation District, such as clean-up of contamination affecting a specific parcel. The legislation implementing this program exempts property owners who did not cause or contribute to the contamination from civil and criminal liability for the cost of remediation and any related damages, except to the extent of unpaid assessments. We do not believe that we have contributed to this solvent contamination, however, we expect that we will be required to allow the Central Truckee Meadows Remediation District access to our property for continued investigation, including access to monitoring wells.

        Asbestos has been determined to be present in the sheetrock of approximately 400 of the Eldorado's older hotel rooms. Removal of the asbestos will be required only in the event of the demolition of the affected rooms or if the asbestos is otherwise disturbed. Management currently has no plans to renovate or demolish the affected rooms in a manner that would require removal of the asbestos at this time.

        The possibility exists that additional contamination, as yet unknown, may exist at the Eldorado or Silver Legacy. In all cases, however, the Company believes that any such contamination would have arisen from activities of prior owners or occupants, or from offsite sources and not as a result of any of our actions or operations. The Company does not believe that our expenditures for environmental investigations or remediation will have a material adverse effect on our financial condition or results of operations.

        The Company has expended approximately $743,000 in connection with environmental matters from January 1, 1993 through December 31, 2003, of which approximately $2,830 was expended during 2003 and approximately $1,990 was expended in 2002.

Employees

        As of December 31, 2003, the Company had 1,914 employees, the substantial majority of whom are nonmanagement personnel. The number of people employed at any time is subject to seasonal fluctuation. None of the Company's employees are covered by a collective bargaining agreement. The Company believes that employee relations are excellent.

20

Factors that May Affect the Company's Future Results

(Cautionary Statements Under the Private Securities Litigation Reform Act of 1995)

        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 other written statements made or to be made by the Company) contains or may contain forward-looking statements 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 statements with respect to the Company'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," "could," "should," "would," "believe," "expect," "anticipate," "estimate," "intend," "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. From time to time, oral or written forward-looking statements are also included in the Company's periodic reports on Forms 10-Q and 8-K, press releases and other materials released to the public.

        Any or all of the forward-looking statements in this report and in any other public statements the Company makes may turn out to be wrong. This can occur as a result of inaccurate assumptions or as a consequence of known or unknown risks and uncertainties. Many factors discussed in this report, such as government regulation and the competitive environment, will be important in determining the Company's future performance. Consequently, actual results may differ materially from those that might be anticipated from forward-looking statements.

        The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in the Company's subsequent reports on Forms 10-K, 10-Q and 8-K should be consulted. The following discussion of risks, uncertainties and possible inaccurate assumptions relevant to the Company's business includes factors the Company believes could cause its actual results to differ materially from expected and historical results. Other factors beyond those listed below could also adversely affect the Company. This discussion is provided as permitted by the Private Securities Litigation Reform Act of 1995.

•

As described under "Competition," in this Item 1, the Eldorado and Silver Legacy operate in a very competitive environment. The growth in the number of hotel rooms and/or casino capacity in Reno or the spread of legalized gaming in other jurisdictions, including the growth of Native American gaming in northern California and the northwestern United States, could negatively affect future operating results.



•

As discussed under "Nevada Regulation and Licensing" in this Item 1, the Eldorado's and the Silver Legacy's gaming operations are highly regulated by governmental authorities in Nevada, and our future operations may be significantly impacted by this regulation.



•

Changes in applicable gaming, tax or other laws or regulations could have a significant effect on the operations of the Eldorado and Silver Legacy.



•

The Eldorado's and Silver Legacy's operations are affected by changes in general economic and market conditions nationally as well as such conditions in the Reno area where the Eldorado's

21

and Silver Legacy's operations are conducted and in those areas where their customers live, including California.

•

Any future security alerts and/or terrorist attacks similar to those that occurred on September 11, 2001 could adversely affect the operations of the Eldorado and Silver Legacy.



•

United States military action in Iraq, or increased security concerns or terrorist activity resulting therefrom could adversely affect our operations.



•

The highway between Reno and northern California, where a large number of the Eldorado's and Silver Legacy's customers reside, experience winter weather conditions from time to time that limit the number of customers who visit Reno during such periods.



•

Because all of the operations of the Eldorado and Silver Legacy are in Reno, the Company is subject to greater risk than a gaming company that is geographically diversified. Any economic, weather or other conditions which adversely impact gaming operations in the Reno area will impact all of the operations of the Eldorado and Silver Legacy.



•

Construction relating to two recently approved public works projects in the downtown Reno area to lower the train tracks and build a downtown special events center could disrupt the downtown area during construction and impact the operations of the Eldorado and Silver Legacy.



•

The gaming industry represents a significant source of tax revenues to the state, county and local jurisdictions in which gaming is conducted and, in 2003, Nevada increased the state taxes we pay. From time to time, various state and federal legislators and officials have proposed a variety of changes in tax laws, or in the administration of the laws, affecting the gaming industry, including a federal gaming tax.



•

The Company believes that its recorded tax balances are adequate. However, it is not possible to determine with certainty the likelihood of possible changes in the tax laws or their administration. These changes, if adopted, could have a material negative effect on the Eldorado's operating results and the operating results of the Silver Legacy.



•

The interest rate on a portion of the Company's debt is subject to fluctuation based on changes in short-term interest rates. Interest expense could increase as a result of this factor.



•

Claims have been brought against the Company in various legal proceedings, and additional legal and tax claims arise from time to time. It is possible that the Company's cash flows and results of operations could be affected from time to time by the resolution of one or more of these contingencies. The Company believes that the ultimate disposition of current matters will not have a material impact on its financial condition or results of operations.



•

There is intense competition to attract and retain management and key employees in the gaming industry. The Eldorado's business or the business of the Silver Legacy could be adversely affected in the event of the inability to recruit or retain key personnel.

Item 2.    Properties.

        The Company's executive offices are located inside the Eldorado, which is situated on an approximately 159,000 square foot parcel at 345 North Virginia Street, Reno, Nevada. Resorts owns the entire parcel, except for approximately 30,000 square feet which is leased from C, S and Y Associates, a general partnership of which Donald Carano is a general partner. See "Compensation Committee Interlocks and Insider Participation" in Item 11 of this report. The lease expires on June 30, 2027. Annual rent is equal to the greater of (i) $400,000 and (ii) an amount based on a decreasing percentage of the Eldorado's gross gaming revenues ranging from 3.0% of the first $6.5 million of gross gaming revenues to 0.1% of gross gaming revenues in excess of $75.0 million. Rent in 2003 totaled

22

approximately $629,000. Substantially, all of the Company's real property, including the Eldorado, is subject to encumbrances securing the repayment of the Company's revolving credit facility (the "New Credit Facility"). The New Credit Facility provides a revolving credit facility of $30.0 million and, by its terms, the facility reduces by $1.0 million on December 31, 2004 and the end of each subsequent quarter until March 31, 2006, when the facility terminates and any balance then outstanding becomes due and payable. At December 31, 2003, the indebtedness outstanding under the New Credit Facility was $13.0 million. The New Credit Facility is secured by a first deed of trust and security interest in all real property interests and fixtures underlying the Eldorado, certain parking facilities, a second deed of trust on the 31,000 square foot property referred to below, all related personal property, substantially all other assets of the Company and a pledge of the Company's interest in ELLC. In addition, Capital has guaranteed Resorts' obligations under the New Credit Facility.

        The Company owns a 31,000 square foot parcel of property across the street from and west of the Eldorado, which could be used for expansion of the Eldorado. As of December 31, 2003, this property was subject to an encumbrance securing the repayment of indebtedness of $981,500 in addition to the aforementioned second deed of trust securing the Company's indebtedness under the New Credit Facility.

        The Company and Mandalay each owns a one-half interest in a 63,000 square foot parcel of land across the street from the Silver Legacy. As of December 31, 2003, this property was not subject to any encumbrance securing the repayment of indebtedness.

        The Company's 96% owned subsidiary, ELLC, owns a 50% joint venture interest in the Silver Legacy, a major themed hotel/casino located adjacent to the Eldorado. Reference is made to the information appearing under the headings "Silver Legacy Resort Casino" and "Silver Legacy Joint Venture-Background" in Item 1 of this report, which information is incorporated in this Item 2 by this reference. At December 31, 2003, the Silver Legacy was subject to encumbrances securing repayment of indebtedness in the aggregate principal amount of $160.0 million.

Item 3.    Legal Proceedings.

        The Company from time to time is involved in litigation arising in the ordinary course of its business. The Company does not believe that such litigation to which the Company or any subsidiary of the Company is a party or of which any of their property is the subject will, individually or in the aggregate, have a material adverse effect on the Company's financial position or the results of its operations.

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

        Not applicable.

23

PART II

Item 5.    Market for Registrants' Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities.

        There is no established public trading market for (i) Resorts' outstanding membership interests, which were owned of record by three entities, two individuals and various trusts for the benefit of members of the Carano family as of December 31, 2003, or (ii) the common stock of Capital, which is a wholly-owned subsidiary of Resorts. See Item 12 of this report for additional information concerning the ownership of Resorts' membership interests. As a limited liability company, Resorts is not subject to Federal income tax liability. Because the holders of membership interests in Resorts are required to include their respective shares of Resorts' taxable income in their individual income tax returns, Resorts has made distributions to its members to cover such tax liabilities. Distributions for 2003 were, and distributions for subsequent years will be, limited in accordance with the provisions of the Operating Agreement of Eldorado Resorts LLC dated as of June 28, 1996 (the "Operating Agreement"). The Operating Agreement provides that the Board of Managers will distribute each year to each member an amount equal to such member's allocable share of taxable income multiplied by the highest marginal combined Federal, state, and local income tax rate applicable to individuals for that year; provided that such distributions will not be made after any event that causes Resorts to thereafter be taxed under the Internal Revenue Code of 1986, as amended, as a corporation. Resorts has made distributions to its members aggregating $2.5 million and $4.6 million in 2003 and 2002, respectively, all of which was for income taxes. We do not anticipate making any additional distributions for income earned through December 31, 2003.

        During the fiscal quarter ended December 31, 2003, neither Resorts nor Capital issued any equity securities and, during such period, neither Resorts nor Capital, nor any "affiliated purchaser" (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934) purchased any of the equity securities of Resorts or Capital.

        Reference is made to the information appearing under the caption "Equity Compensation Plans" in Item 12 of this report, which is incorporated in this Item 5 by this reference.

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Item 6.    Selected Financial Data.

SELECTED CONSOLIDATED FINANCIAL DATA
(dollars in thousands)

See footnotes to Selected Consolidated Financial Data which appear on the next page.

25

Footnotes to Selected Consolidated Financial Data

(1)

Equity in income of unconsolidated affiliates represents ELLC's 50% joint venture interest in the Silver Legacy Joint Venture and for the years ended December 31, 2003, 2002 and 2001, Resorts' 21.25% interest in Tamarack.

(2)

Resorts pays management fees to Recreational Enterprises, Inc. and Hotel Casino Management, Inc., the owners of 55% and 29% of Resorts' equity interests, respectively. The management fees paid to Recreational Enterprises, Inc. and Hotel Casino Management, Inc. are included in selling, general and administrative expenses and totaled $295,000, $48,000 and $1.2 million for the years ended December 31, 2003, 2002 and 2001, respectively. Historically, the salaries of senior executive officers and certain other key employees of the Predecessor Partnership were not directly incurred by the Predecessor Partnership but were paid from a portion of the management fees paid to Recreational Enterprises, Inc. As of July 1, 1996, the aggregate annual salaries of such senior executive officers and other key employees became payroll obligations of Resorts. Resorts then entered into a Management Agreement with Recreational Enterprises, Inc. and Hotel Casino Management, Inc. providing that future management fees paid to Recreation Enterprises, Inc. and Hotel Casino Management, Inc. will not exceed 1.5% of Resorts' annual net revenues. As a result of the Management Agreement and Resorts' assumption of responsibility for the salaries of senior executive officers and other key employees previously paid by Recreational Enterprises, Inc. from its management fee, Resorts incurred such salaries and management fees for the years ended December 31, 2003, 2002 and 2001 of $1.9 million, $1.7 million and $3.0 million, respectively.

(3)

Equity in loss of unconsolidated affiliate represents Resorts' 18% interest in MindPlay.

(4)

Minority interest represents the minority partners' share of ELLC's 50% joint venture interest in the Silver Legacy Joint Venture. The minority interest in ELLC is owned by certain Resorts' equityholders and is approximately 4%.

(5)

As a limited liability company, Resorts is not subject to Federal income tax liability. Because holders of membership interests in Resorts are required to include their respective shares of Resorts' taxable income in their individual income tax returns, Resorts has made distributions to its members to cover such liabilities.

(6)

The ratio of earnings to fixed charges has been computed as earnings divided by fixed charges. Earnings represent net income plus fixed charges. Fixed charges represent interest expense, whether expensed or capitalized, the interest component of rent expense and amortization of debt issuance costs.

(7)

Excludes the operating data of the Silver Legacy and Tamarack.

(8)

As of the end of each period presented.

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

General

        Eldorado Resorts LLC ("Resorts") was formed in June 1996 to be the successor to Eldorado Hotel Associates Limited Partnership (the "Predecessor Partnership") pursuant to an exchange of all the outstanding partnership interests in the Predecessor Partnership for membership interests in Resorts (the "Reorganization"). The Reorganization was effective on July 1, 1996. Resorts owns and operates the Eldorado Hotel & Casino (the "Eldorado"), a premier hotel/casino and entertainment facility in Reno, Nevada. In addition to owning the Eldorado, Resorts' 96% owned subsidiary, Eldorado Limited Liability Company, a Nevada limited liability company ("ELLC"), owns a 50% interest in a joint venture (the "Silver Legacy Joint Venture") which owns the Silver Legacy Resort Casino (the "Silver Legacy"), a major, themed hotel/casino located adjacent to the Eldorado. Resorts, ELLC and Eldorado Capital Corp. ("Capital"), a wholly-owned subsidiary of Resorts, which holds no significant assets and conducts no business activity, are collectively referred to as the "Company."

        The Company accounts for its investment in the Silver Legacy Joint Venture, Tamarack and MindPlay utilizing the equity method of accounting. The Company's consolidated net income includes its proportional share of Silver Legacy Joint Venture's, Tamarack's, and MindPlay's net income (loss) before taxes.

Critical Accounting Policies

        Our discussion and analysis of our results of operations and financial condition that follows are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires that we apply significant judgment in defining the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. Our judgments are based on our historical experience, terms of existing contracts, our observance of trends in the industry, information provided by our customers and information available from other outside sources, as appropriate. Because of the uncertainty inherent in these matters, there is no assurance that actual results will not differ from our estimates used in applying the following critical accounting policies.

Property and Equipment and Other Long-Lived Assets

        Property and equipment is recorded at cost and is depreciated over its estimated useful life. Judgments are made in determining estimated useful lives and salvage values of these assets. The accuracy of these estimates affects the amount of depreciation expense recognized in our financial results and whether we have a gain or loss on the disposal of assets. We review depreciation estimates and methods as new events occur, more experience is acquired, and additional information is obtained that would possibly change our current estimates. In accordance with Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An estimate of undiscounted future cash flows produced by the asset is compared to its carrying value to determine whether an impairment exists. If it is determined that the asset is impaired based on expected future cash flows, a loss, measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset, would be recognized. At December 31, 2003, no events or changes in circumstances indicated that the carrying values of our long-lived assets may not be recoverable.

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Reserve for Uncollectible Accounts Receivable

        We reserve an estimated amount for receivables that may not be collected. Methodologies for estimating bad debt reserves range from specific reserves to various percentages applied to aged receivables. Historical collection rates are considered, as are customer relationships, in determining specific reserves. As with many estimates, management must make judgments about potential actions by third parties in establishing and evaluating our reserves for bad debts.

Self Insurance Reserves

        The Eldorado is self insured for our group health and workmens' compensation programs. We utilize historical claims information provided by our third party administrators to make estimates for known pending claims as well as claims that have been incurred, but not reported as of the balance sheet date. In order to mitigate our potential exposure, we have an individual claim stop loss policy on our group health claims and an aggregate stop loss policy on our workmens' compensation claims. If we become aware of significant claims or material changes affecting our estimates, we would increase our reserves in the period in which we made such a determination and record the additional expense.

Factors Impacting Operating Trends

        A significant portion of the Company's revenues and operating income are generated from patrons who are residents of northern California, and as such, our operations have been adversely impacted by the growth in Native American gaming in northern California. The United Auburn Indian Community ("UAIC") has entered into a development and management agreement with an established gaming operator, Station Casinos, Inc., to develop and manage Thunder Valley Casino, an approximately $215 million, 200,000 square foot gaming and entertainment facility on a 49-acre site approximately 21 miles northeast of Sacramento. Thunder Valley Casino opened on June 9, 2003 and offers approximately 1,906 slot machines and 111 table games, dining and entertainment amenities and parking for 4,500 vehicles. This project has been open approximately eight months, and during the third and fourth quarter of 2003, we believe it had a significant impact on our operating results. Based on its size, proximity, and potential expansion capabilities, we believe Thunder Valley Casino could further impact our operations in the future. While we cannot predict the extent of the future impact, it could be significant. In addition to existing gaming facilities, numerous Native American tribes have announced that they are in the process of developing or are considering establishing large-scale gaming facilities in northern California. Management believes the greatest impact from Thunder Valley Casino to the Eldorado's customer base is to its day-trippers, those patrons whose visit is for one day and does not include an overnight stay. These customers are typically not tracked players, as they tend not to be as loyal a customer as those who visit for more than one day at a time. Day-trippers primarily visit Reno in the second and third quarters when the weather is more favorable.

        Approvals have been obtained for two public works projects in the downtown area of Reno. The first project will lower the train tracks which run between Reno's downtown district and separate the Eldorado and the two adjoining properties from the rest of the downtown gaming facilities. Construction on this project, which commenced in early 2003, is expected to be completed in 2006. The second project involves the construction of a downtown special events center next to the National Bowling Stadium. Construction of this project commenced in January 2004 and is expected to be completed by December 2004. While we believe the construction of these projects has had a minimal impact on our operations, we cannot determine their impact during their remaining periods of construction or after their completion.

        On July 22, 2003, the Governor of Nevada signed into law a new tax bill that provides for increases in the taxes applicable to our operations. Based on our evaluation of the new Nevada tax law,

28

we believe the annual incremental impact on our current level of operations will be approximately $0.75 million.

        Our operating results are highly dependent on the volume of customers visiting and staying at our resort. Key volume indicators include table games drop and slot handle, which refer to amounts wagered by our customers. The amount of volume we retain, which is not fully controllable by us, is recognized as casino revenues and is refered to as our win or hold. In addition, hotel occupancy and price per room designated by average daily rate ("ADR") are key indicators for our hotel business.

        The following discussion of the Company's operations relates to the Eldorado except as otherwise indicated.

Year Ended December 31, 2003 Compared to
Year Ended December 31, 2002

Net Revenues

        Net revenues decreased by approximately $9.9 million, or 6.9%, to $133.0 million for the year ended December 31, 2003 compared to $142.9 million for the year ended December 31, 2002. The decrease in net revenues resulted from decreases in casino, food and entertainment revenues. The Company's management believes that revenues have been negatively impacted due to increased competition from Native American casinos in northern California, particularly due to the opening of Thunder Valley Casino on June 9, 2003, and a weak California economy continued to pose a challenge in 2003. Management also feels that with its new slot product on the remodeled casino floor, along with our enhanced complimentary program and remodeled hotel rooms, revenues will stabilize, particularly in the casino, as we continue to maintain our loyal customer base while we aggressively target and attract local customers.

        Casino revenues decreased by 7.8% to $87.0 million for the year ended December 31, 2003, compared to $94.4 million for the year ended December 31, 2002. The decrease in casino revenues was due to decreases in table games drop and slot handle, primarily in untracked play in the second half of 2003, and a lower table games hold percentage for the year ended December 31, 2003 as compared to 2002. This decrease in hold percentage, as compared to 2002, accounted for 31.8% of the decrease in casino revenues.

        Food, beverage and entertainment revenues decreased by approximately $2.4 million, or 5.4%, to $42.2 million for the year ended December 31, 2003 compared to $44.6 million in 2002. The decrease was primarily due to lower showroom occupancy and lower restaurant customer counts in the 2003 period.

        Hotel revenues increased to $16.5 million for the year ended December 31, 2003 from $16.4 million for the year ended December 31, 2002, an increase of approximately 0.8%. This increase is primarily a result of an increase in the Company's average daily rate ("ADR") to approximately $57 for the year ended December 31, 2003 compared to approximately $56 for the same period in 2002. The hotel occupancy was comparable at approximately 89% for the years ended December 31, 2003 and 2002. In both the 2003 and 2002 periods, hotel occupancy was impacted by a reduction in available room nights (3,400 in 2003 and 3,300 in 2002) due to our hotel remodeling in the first half of 2003 and an energy retrofit in the first half of 2002. Had some of these room nights been available on select weekends, the hotel would have been at capacity on these weekends.

        Other revenues increased slightly to $5.5 million for the year ended December 31, 2003 as compared to $5.4 million in 2002.

        Promotional allowances, expressed as a percentage of casino revenues, were 21.0% in 2003 compared to 18.9% in 2002. This increase is primarily related to increased redemption of

29

complimentaries as a result of our customers utilizing the enhanced "Club Eldorado" program. The Company enhanced its "Club Eldorado" program on July 1, 2002, allowing customers to view and redeem earned complimentaries throughout the property and offering discounts at the showroom and food outlets. Management feels the enhanced program has contributed to increased customer loyalty and has added to its customer base.

Operating Expenses

        The Company's operating expenses decreased by 4.5% to $122.8 million for the year ended December 31, 2003 from $128.5 million for the year ended December 31, 2002. This decrease is mainly attributable to decreased casino, food, beverage, entertainment, selling, general and administrative expenses. The decrease in operating expenses reflects efficiencies in operations as management is continually monitoring departmental expenses.

        Casino expenses decreased by 3.3% to $47.4 million for the year ended December 31, 2003 from $49.0 million for the year ended December 31, 2002. The decrease is due to reductions in our charter bus program and payroll expenditures, primarily in our slot department, where we are benefiting from utilizing new labor efficient ticket-in ticket-out slot machines. The ticket-in ticket-out machines were first introduced in early 2003 and as of December 31, 2003, we had approximately 512 of these machines, or approximately 32% of the total machines in use at the Eldorado.

        Food, beverage and entertainment expenses decreased by approximately $2.3 million, or 7.5%, to $28.8 million for the year ended December 31, 2003 from $31.1 million for the year ended December 31, 2002. The decrease is mainly due to lower payroll expenditures and decreased food costs, primarily due to lower restaurant customer counts, lower showroom professional services and advertising expenses.

        Hotel expenses for the year ended December 31, 2003 and 2002 remained flat at $6.8 million.

        Selling, general and administrative expenses and management fees decreased by 2.4% to $27.1 million for the year ended December 31, 2003 from $27.7 million during 2002. The decrease was primarily due to decreases in payroll expenditures and advertising expenses and not recording an initial players club liability in the 2003 period, partially offset by an increase in management fees and general liability insurance.

Depreciation

        Depreciation decreased to $11.2 million for the year ended December 31, 2003 compared to $11.8 million in 2002, a decrease of $0.6 million, or 4.9%, due to some assets becoming fully depreciated.

Equity in Income of Unconsolidated Affiliates

        Earnings from the Company's unconsolidated affiliates, the Silver Legacy Joint Venture and Tamarack, for the year ended December 31, 2003 were $5.6 million as compared to $9.0 million for 2002, a decrease of approximately $3.4 million, or 37.4%. Equity in income of the Silver Legacy Joint Venture decreased approximately $3.6 million for year ended December 31, 2003 compared to 2002. The reasons for this reduction, similar to the Eldorado, are related to increased competition from Native American gaming in northern California and a weak economy. Equity in income in Tamarack increased approximately $0.3 million for the year ended December 31, 2003 compared to 2002.

Other Income (Expense)

        Other income (expense) is comprised of interest expense, equity in loss of unconsolidated affiliate, gain (loss) on repurchase of bonds, investment loss, gain on land sale and interest rate swap income

30

(loss). Interest expense is net of capitalized interest and interest income. For the year ended December 31, 2003, interest expense decreased by approximately $1.5 million, or 15.1%, to $8.7 million for the year ended December 31, 2003 compared to $10.3 million in 2002, primarily due to decreases in the average outstanding borrowings and a lower average interest rate in 2003. The decreases in average outstanding borrowings and lower average interest rate is primarily due to the following purchases and redemption of 10¹/2% Notes:

The Company recognized a cumulative $578,000 loss in 2003 and a cumulative $50,000 gain in 2002 as a result of its purchases and redemption of 10¹/2% Notes, in each case net of unamortized bond fees relating to the debt issue. The Company recognized a $0.2 million loss in 2003 and a $1.1 million gain in 2002 from interest rate swap agreements. Equity in loss of our unconsolidated affiliate was $0.5 million for the year ended December 31, 2003 compared to a loss of $0.4 million in 2002. The Company did not capitalize any interest for the year ended December 31, 2003 while it capitized interest of approximately $103,000 in 2002. In June 2003, the Company sold its approximately 85 acres of land in Verdi, Nevada, resulting in a gain of $906,000.

Net Income

        As a result of the factors described above, net income for the year ended December 31, 2003 decreased by 51.2% to $6.6 million compared to $13.5 million in 2002.

Year Ended December 31, 2002 Compared to
Year Ended December 31, 2001

Net Revenues

        Net revenues decreased by approximately $6.5 million, or 4.3%, to $142.9 million for the year ended December 31, 2002 compared to $149.3 million for the year ended December 31, 2001. The decrease in net revenues resulted from decreases in casino revenues, food, beverage and entertainment revenues and hotel revenues. The Company's management believes 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 2001, also negatively impacted our mid-week business levels as compared to the prior year. The Company enhanced its "Club Eldorado" program on July 1, 2002, allowing customers to view earned complimentaries at kiosks throughout the property and offer discounts at the showroom and food outlets. Management feels the enhanced program has provided additional customer loyalty and has added to its customer base.

        Casino revenues decreased by 3.4% to $94.4 million for the year ended December 31, 2002, compared to $97.7 million for the year ended December 31, 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 year ended December 31, 2002 as compared to 2001.

        Food, beverage and entertainment revenues decreased by approximately $1.8 million, or 3.9%, to $44.6 million for the year ended December 31, 2002 compared to $46.4 million in 2001. The decrease

31

was primarily due to lower showroom occupancy and lower restaurant customer counts in the 2002 period.

        Hotel revenues decreased to $16.4 million for the year ended December 31, 2002 from $17.4 million for the year ended December 31, 2001, a decrease of approximately 6.1%. This decrease was attributable to the Eldorado's average daily rate ("ADR") and hotel occupancy decreasing to approximately $56 and 89%, respectively, in the 2002 period as compared to approximately $59 and 90%, respectively, in 2001. The hotel occupancy decrease was partly due to 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. Had some of these room nights been available on select weekends, the hotel would have been at capacity on these weekends. Also contributing to the decrease in the Company's hotel occupancy and average daily rate was the absence in 2002 of the American Bowling Congress National Championship Bowling Tournament that was held in 2001 beginning in February and ending in June.

        Other revenues increased slightly to $5.4 million for the year ended December 31, 2002 as compared to $5.3 million in 2001.

        Promotional allowances, expressed as a percentage of casino revenues, were 18.9% in 2002 compared to 18.0% in 2001.

Operating Expenses

        The Company's operating expenses decreased by 3.8% to $128.5 million for the year ended December 31, 2002 from $133.6 million for the year ended December 31, 2001. This decrease was mainly attributable to decreased casino, food, beverage, entertainment, hotel and selling, general and administrative expenses. Payroll expenditures were lower for the year ended December 31, 2002, reflecting staff reductions implemented in September 2001 as a result of reduced business levels following the September 11 terrorist attacks.

        Casino expenses decreased by 2.3% to $49.0 million for the year ended December 31, 2002 from $50.2 million for the year ended December 31, 2001. The decrease was due to reductions in our charter bus program and payroll expenditures partially offset by an increase in promotional expenses in part related to enhancing the "Club Eldorado" program.

        Food, beverage and entertainment expenses decreased by approximately $1.0 million, or 3.0%, to $31.1 million for the year ended December 31, 2002 from $32.0 million for the year ended December 31, 2001. The decrease was primarily a result of a decrease in payroll expenditures, entertainment professional services and lower food cost of sales.

        Hotel expenses decreased by 8.4%, or $0.6 million, to $6.8 million for the year ended December 31, 2002 from $7.5 million for the year ended December 31, 2001 due to decreases in payroll expenditures and overall hotel operating expenses.

        Selling, general and administrative expenses and management fees decreased by 4.7% to $27.7 million for the year ended December 31, 2002 from $29.1 million during the same period in 2001. The decrease was primarily due to decreases in payroll expenditures and management fees in the 2002 period.

Depreciation

        Depreciation decreased to $11.8 million for the year ended December 31, 2002 compared to $13.0 million in 2001, a decrease of $1.2 million, or 8.9%, due to some assets becoming fully depreciated.

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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 year ended December 31, 2002 were $9.0 million as compared to $10.4 million for the same period in 2001, a decrease of approximately $1.4 million, or 13.9%. Equity in income of the Silver Legacy Joint Venture decreased approximately $2.2 million for year ended December 31, 2002 compared to 2001. Equity in income in Tamarack increased approximately $0.7 million for the year ended December 31, 2002 compared to 2001. The 2001 earnings reflect a $103,000 loss from Tamarack due to the write-off of pre-opening expenses.

Other Income (Expense)

        Other income (expense) is comprised of interest expense, loss on investments, equity in loss of unconsolidated affiliate, and interest rate swap income. Interest expense is net of capitalized interest, interest income, and the gain on repurchase of bonds, net of unamortized bond fees. For the year ended December 31, 2002, interest expense decreased by approximately $1.6 million, or 13.6%, to $10.2 million compared to $11.8 million for the same period in 2001 primarily due to a decrease in the average outstanding borrowings and a lower average interest rate in 2002 as compared to 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 recognized interest rate swap income of $1.1 million and equity in loss of its unconsolidated affiliate of $0.4 million for the year ended December 31, 2002. The Company capitalized interest of approximately $103,000 for the year ended December 31, 2002 compared to approximately $132,000 in 2001.

Net Income

        As a result of the factors described above, net income for the year ended December 31, 2002 increased by 0.3% to $13.5 million compared to $13.4 million in 2001.

Management Fees

        The Company pays management fees to Recreational Enterprises, Inc. and Hotel Casino Management, Inc., the owners of 55% and 29% of the Company's equity interests, respectively. The management fees paid to Recreational Enterprises, Inc. and Hotel Casino Management, Inc. totaled $295,000, $48,000 and $1.2 million for the years ended December 31, 2003, 2002 and 2001, respectively. Historically, the salaries of senior executive officers and certain other key employees were not directly incurred but were paid from a portion of the management fees paid to Recreational Enterprises, Inc. As of July 1, 1996, the aggregate annual salaries of such senior executive officers and other key employees became payroll obligations of the Company and the Company entered into a Management Agreement with Recreational Enterprises, Inc. and Hotel Casino Management, Inc. providing that future management fees paid to Recreational Enterprises, Inc. and Hotel Casino Management, Inc. will not exceed 1.5% of the Company's annual net revenues. As a result of the Management Agreement and the Company's assumption of responsibility for the salaries of senior executive officers and other key employees previously paid by Recreational Enterprises, Inc. from its management fee, the Company incurred such salaries and management fees for the years ended December 31, 2003, 2002 and 2001 of $1.9 million, $1.7 million and $3.0 million, respectively.

Seasonality

        Hotel/casino operations in the Reno market are subject to seasonal variation, with the strongest operating results generally occurring in the third quarter of each year and the weakest results generally

33

occurring during the period from November through February. Variations occur when weather conditions make travel to Reno by visitors from northern California and the Pacific Northwest difficult. The following table shows the Company's percentage of gross revenues by quarter for each of 2003, 2002 and 2001.

Liquidity and Capital Resources

        The Company'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 the 10¹/2% 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. Net cash provided by operating activities was $13.6 million for the year ended December 31, 2003 compared to $17.6 million for the prior year.

        At December 31, 2003, the Company had $7.4 million of cash and cash equivalents and, after giving effect to then outstanding borrowings, it had approximately $17.0 million of borrowing capacity available pursuant to its New Credit Facility (as defined below) all of which could be utilized under the most restrictive of our loan covenants. The net proceeds of the offering by the Company and its wholly-owned subsidiary, Eldorado Capital Corp., of the 10¹/2% Notes (the "Offering") were used to repay a portion of the indebtedness under the Loan Agreement dated as of March 25, 1994, between the Company, the banks named therein and Bank of America NT&SA, as administrative agent (the "Former Credit Facility"). The Former Credit Facility was amended concurrently with the closing of the Offering to provide the Company with a senior secured revolving credit facility in the original amount of $50 million (as amended, the "Credit Facility"). On July 17, 2001, the Company's credit facility was amended and restated (the "New Credit Facility"). The New Credit Facility, which was further amended September 10, 2003, provides for a senior secured revolving credit facility of $30 million. The amount of credit available pursuant to the New Credit Facility reduces by $1.0 million on December 31, 2004 and 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'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" or (b) the Federal Funds Rate plus .50% ("Base 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 December 31, 2003 was 3.54% per annum. The New Credit Facility is secured by substantially all of the Company'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 December 31, 2003 the Company was in compliance with all provisions of the New Credit Facility.

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        As of December 31, 2003, the Company had outstanding (i) $64.2 million in aggregate principal amount of the 10¹/2% Notes, (ii) $13.0 million of borrowings under the New Credit Facility and (iii) $0.6 million of other long-term debt (net of current portion).

        During the year ended December 31, 2003, we generated cash flows from operating activities of $13.6 million compared to $17.6 million in the prior year. The $4.0 million decrease in cash provided by operations was primarily due to the $6.9 million decline in net income. As of December 31, 2003, cash and cash equivalents were $7.4 million, sufficient for normal operating requirements.

        Cash used in investing activities for the year ended December 31, 2003 was $4.7 million compared to cash provided by investing activities of $13.3 million for the year ended December 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 $14.2 million to $2.5 million for the year ended December 31, 2003 compared to $16.7 million in 2002 principally due to a special distribution of $10.0 million to ELLC 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. In June 2003, the Company sold its 85 acres of land in Verdi, Nevada for approximately $2.5 million. On November 6, 2002, the Company received $2.4 million from the sale of property at 444 North Center Street, Reno, Nevada, on which the Company's human resources offices had been located. Capital spending for the year ended December 31, 2003 increased $5.1 million to $9.9 million compared to $4.9 million for the year ended December 31, 2002. This increase is primarily related to our hotel remodel and to our purchase of new ticket-in, ticket-out slot machines of which, as of December 31, 2003, the Company had approximately 512 on its casino floor.

        Cash used in financing activities was $9.7 million for the year ended December 31, 2003, compared to $32.7 million for the year ended December 31, 2002. For the year ended December 31, 2003, the Company purchased and redeemed $7.9 million, $1.75 million and $8.8 million principal amount of its 10¹/2% Notes facilitated by borrowing $18.5 million under its credit facility. In 2002, the Company reduced the outstanding portion of the New Credit Facility by $20.8 million primarily utilizing the aforementioned distributions to ELLC from the Silver Legacy Joint Venture in the aggregate amount of $12.6 million in 2003.

        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 members' 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 year ended December 31, 2003, Resorts made distributions of $2.5 million to its members as compared with distributions of $4.6 million during 2002, all of which was for income taxes.

        The Company'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's anticipated uses of cash in 2004 will be for new slot machines ($2.0 million), hotel remodeling ($1.0 million), recurring capital expenditures (estimated at approximately $2.0 million) and debt service. The total amount budgeted for the hotel remodeling is $11.0 million of which $6.2 million had been incurred as of December 31, 2003. We believe our capital resources are adequate to meet our obligations including the funding of our debt service and recurring capital expenditures.

        In July 2003, the Company renewed its property and general and liability insurance policies which included a change to its previous earthquake coverage. Under the new policy, the Eldorado and the Silver Legacy, have combined flood and earthquake coverage of $500 million. In the event that an earthquake or flood causes damage to only the Eldorado or the Silver Legacy property, that property is eligible to receive up to $500 million in coverage depending on the replacement cost. However, in the event that both properties are damaged, the Eldorado is entitled to receive, to the extent of any replacement cost incurred, up to $223.5 million of the coverage amount and up to the portion of the

35

other $276.5 million, if any, remaining after satisfaction of the Silver Legacy's claim. In addition, our new insurance policy includes terrorism coverage up to $150 million. In the event that an act of terrorism causes damage to only the Eldorado or the Silver Legacy property, that property is eligible to receive up to $150 million in coverage depending on the replacement cost. In the event both properties are damaged, the Eldorado is entitled to receive, to the extent of any replacement cost incurred, up to $67.0 million of the coverage amount and up to the portion of the other $83.0 million, if any, remaining after satisfaction of the Silver Legacy's claim.

Contractual Commitments

        The following table summarizes our material obligations and commitments to make future payments under certain contracts, including long-term debt obligations, capitalized leases and operating leases, as of December 31, 2003.

        The repayment of our long-term debt, which consists of our indebtedness under the New Credit Facility and the indebtedness evidenced by the 10¹/2% Notes, is subject to acceleration upon the occurrence of an event of default under the New Credit Facility or the indenture relating to the 10¹/2% Notes.

        We routinely enter into operational contracts in the ordinary course of our business, including construction contracts for minor projects that are not material to our business or financial condition as a whole. Our commitments relating to these contracts are recognized as liabilities in our consolidated balance sheets when services are provided with respect to such contracts. We expect to spend approximately $2.0 million on new slot machines in 2004.

        The Company made cash interest payments of $9.1 million, $11.2 million and $12.2 million during the years ended December 31, 2003, 2002 and 2001, respectively. The Company anticipates making lower cash interest payments in 2004 than 2003 due to anticipated lower average borrowings and lower average interest rates.

Off Balance Sheet Arrangements

        The Company previously guaranteed 54.28% of a $1.25 million working capital line for MindPlay LLC. Upon the sale of substantially all of the assets of MindPlay on February 19, 2004, this line was paid in full by the purchaser and terminated.

Recently Issued Accounting Pronouncements

        In August 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." This statement requires one accounting model be used for long-lived assets to be disposed of by sale, whether previously held and used or newly acquired and broadens the presentation of discontinued operations to include additional disposal transactions. This statement is effective for fiscal years and interim periods beginning after December 15, 2001. The Company therefore adopted SFAS No. 144 in January 2002. The Company periodically evaluates its long-lived assets for impairment. Adoption of SFAS No. 144 did not have a material impact on the Company's financial condition or results of operations.

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        In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." SFAS No. 145 rescinds SFAS No. 4, "Reporting Gains and Losses from Extinguishment of Debt." Under SFAS No. 4, all gains and losses from extinguishment of debt were required to be aggregated, if material, and classified as an extraordinary item, net of related income tax effect, on the statement of income. SFAS No. 145 requires all gains and losses from extinguishment of debt to be classified as extraordinary only if they meet the criteria of Accounting Principles Board ("APB") Opinion 30. Any gain or loss on extinguishment of debt that was classified as an extraordinary item in prior periods presented that does not meet the criteria in APB Opinion 30 is required to be reclassified. In May 2002, the Company adopted this statement. Accordingly, the Company's gain (loss) on bond repurchases is classified as component of other income (expense) for all years presented.

        In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." This statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies EITF No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." This statement requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. A fundamental conclusion reached by the FASB in SFAS No. 146 is that an entity's commitment to a plan, by itself, does not create a present obligation to others that meets the definition of a liability. This statement also establishes that fair value is the objective for initial measurement of the liability. The Company adopted SFAS No. 146 effective January 1, 2003. The adoption of this statement did not have a material impact on its financial condition or results of operations.

        In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45"). FIN 45 expands the disclosures required by guarantors for obligations under certain types of guarantees. It also requires initial recognition at fair value of a liability for such guarantees. The initial recognition and measurement provisions of this Interpretation are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. The disclosure requirements of this Interpretation are effective for financial statements of interim or annual periods ending after December 15, 2002. Adoption of FIN 45 did not have a material impact on the Company's financial condition or results of operations.

        In April 2003, the FASB issued SFAS 149, "Amendments of Statement 133 on Derivative Instruments and Hedging Activities." This statement amends SFAS 133, "Accounting for Derivative Instruments and Hedging Activities", and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and hedging activities under SFAS 133. This statement is effective for contracts entered into or modified after June 30, 2003, except as stated below and for hedging relationships designated after June 30, 2003. The provisions of this statement that relate to Statement 133 Implementation Issues that have been effective for fiscal quarters that began prior to June 15, 2003, should continue to be applied in accordance with their respective effective dates. The adoption of this statement did not have a material impact on the Company's results of operations or financial position.

        In May 2003, the FASB issued SFAS 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." This statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. Financial instruments that are within the scope of the statement, which previously were often classified as equity, must now be classified as liabilities. This statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is generally effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of this statement did not have a material effect on the Company's results of operations or financial position.

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Item 7A.    Quantitative and Qualitative Disclosures About Market Risk.

        Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. We are exposed to market risk in the form of fluctuations in interest rates and their potential impact on our variable rate debt outstanding. At December 31, 2003, the interest rate on $13.0 million of the Company's debt was subject to fluctuation based on changes in short-term interest rates. Interest expense could increase as a result of this factor. The Company evaluates its exposure to market risk by monitoring interest rates in the marketplace and it has, on occasion, utilized derivative financial instruments to help manage this risk. The Company does not utilize derivative financial instruments for trading purposes. There were no material quantitative changes in our market risk exposure, or how such risks are managed, during the years ended December 31, 2003 and 2002 other than as discussed below.

        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, 2003. Effective October 9, 2002, the Company and Bank of America, N.A. entered into an agreement to terminate this swap agreement. In consideration of the early termination, Bank of America, N.A. paid the Company $903,070.

        On November 12, 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 August 15, 2006, we received interest at a fixed rate of 3.44% 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, 2003. Effective February 12, 2003, the Company and Bank of America, N.A. entered into an agreement to terminate this swap agreement. In consideration of the early termination, Bank of America, N.A. paid the Company $10,000.

        The following table provides information as of December 31, 2003 about our debt obligations, including debt that is sensitive to changes in interest rates, and presents principal payments and related weighted-average interest rates by expected maturity dates. Weighted-average variable rates are based on implied forward rates in the yield curve. Implied forward rates should not be considered a predictor of actual future interest rates.

Item 8.    Financial Statements and Supplementary Data.

        Reference is made to the reports of Deloitte & Touche LLP and Arthur Andersen LLP, dated March 22, 2004 and March 5, 2002, respectively, and the consolidated financial statements of Eldorado Resorts LLC appearing on pages 62 through 83 of this report and the reports of Deloitte & Touche LLP and Arthur Andersen LLP, dated March 22, 2004 and February 8, 2002, respectively, and the consolidated financial statements of Circus and Eldorado Joint Venture appearing on pages 84 through 103, which are incorporated in this Item 8 by such reference.

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

        Not applicable.

Item 9A.    Controls and Procedures.

        An evaluation was performed by management, with the participation of our Chief Executive Officer and our Chief Financial Officers, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, the Chief Executive Officer and Chief Financial Officers have concluded that, as of December 31, 2003, our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms of the Securities and Exchange Commission.

        There have been no changes in our internal controls over financial reporting that occurred during the fourth fiscal quarter of the year ended December 31, 2003, that have materially affected, or are reasonably likely to materially affect, these internal controls over financial reporting.

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PART III

Item 10. Directors and Executive Officers of the Registrants.

        Resorts is overseen by its Board of Managers, which currently consists of four Board Members. The initial Board Members designated in the Operating Agreement are Donald Carano, Recreational Enterprises, Inc. and Hotel Casino Management, Inc. In September 1996, the Members elected Leslie Stone Heisz as an additional Board Member. Each corporation that serves as a Board Member must select a corporate officer as its representative. Recreational Enterprises, Inc. has selected Gary Carano as its representative and Hotel Casino Management, Inc. has selected Raymond J. Poncia, Jr. as its representative and each has served in such capacity since 1996. A corporation which is a Board Member may change its representative at any time by providing notice to Resorts. The Operating Agreement provides that the Board of Managers will consist of at least three, but not more than seven, Board Members, as determined by a majority of the Board of Managers.

        Board Members are elected at annual meetings of the Resorts' members for one-year terms. Any Board Member may be removed from office with a vote of 60% of the membership interests, but no Board Member may be removed where there would be enough votes to elect that Board Member at an election. In an election, each Member is entitled to as many votes as equals the number of percentage points of such Member's interest multiplied by the number of Board Members to be elected. Members can cast all of their votes for a single Board Member or distribute them among the candidates for Board Members as they see fit. The Board of Managers generally has control over the management and affairs of Resorts. Board Members are required to devote enough time to Resorts to reasonably perform their duties. Resorts' Chief Executive Officer, Donald L. Carano, supervises the day-to-day operations of Resorts. Members have no right to participate directly in management or control of Resorts, except for votes required for certain extraordinary transactions described in the Operating Agreement.

        Resorts' Board of Managers, which does not have a separate audit committee, has determined that Leslie Stone Heisz, who is a member of the Board of Managers, is an "audit committee financial expert" in that she has the following attributes:

•

an understanding of generally accepted accounting principles and financial statements;



•

the ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves;



•

experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Company's financial statements or experience actively supervising one or more persons engaged in such activities;



•

an understanding of internal control over financial reporting; and



•

an understanding of audit committee functions.

The Board of Managers has also determined that Ms. Heisz is "independent" as that term is defined under current rules of the New York Stock Exchange (the "NYSE"). None of Resorts' or Capital's securities are listed on the NYSE or any other national securities exchange or any national securities association, nor is there any current intention to so list any securities of Resorts or Capital in the future.

        Capital's Board of Directors, which does not have a separate audit committee, has determined that it does not have an "audit committee financial expert" as that term is defined under current rules of

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the NYSE. The Board of Directors does not believe Capital requires an audit committee financial expert since it has no operations and is consolidated for financial reporting purposes with Resorts.

        Resorts' Board of Managers and Capital's Board of Directors have adopted a code of ethics that applies to their principal executive officer, principal financial officer, principal accounting officer, or persons performing similar functions. The code of ethics is a written standard designed to deter wrongdoing and to promote

•

honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;



•

full, fair, accurate, timely and understandable disclosure in reports and documents that the Company file with, or submit to, the SEC and in other public communications made by the Company;



•

compliance with applicable governmental laws, rules and regulations;



•

the prompt internal reporting of violations of the code to an appropriate person identified in the code; and



•

accountability for adherence to the code.

        We undertake to provide to any person without charge, upon request, a copy of the code of ethics. A request should be directed to Eldorado Resorts LLC, 345 N. Virginia St., Reno, Nevada 89501 Attention: Chief Financial Officer.

        The Operating Agreement provides that no Board Member or Officer will be liable to Resorts, its Members or holders of its membership interests for acts or omissions of such Board Member or Officer in connection with the business or affairs of Resorts, including for breach of fiduciary duty or mistake of judgment, except for acts involving intentional misconduct, fraud or knowing violations of the law. The Operating Agreement also provides that Resorts will indemnify, defend and hold harmless every Board Member and Officer for any losses arising out of Resorts or its business or affairs, unless such losses are based on acts or omissions involving intentional misconduct, fraud or a knowing violation of the law.

        The following tables set forth certain information with respect to the individuals who are members of the Board of Managers (each a "Board Member"), executive officers of Resorts or the Eldorado and other significant employees. Also set forth are the respective positions with Capital held by each individual who is a director or officer of Capital.

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Board Members and Executive Officers

        Donald L. Carano.    Mr. Carano has served as Chief Executive Officer of, and has owned a controlling interest in, Resorts or its predecessor since 1973 and has served as President and a director of Capital since its incorporation in 1996. Previously, he was an attorney with the firm of McDonald Carano Wilson LLP, with which he maintains an "of counsel" relationship. Mr. Carano has been involved in the gaming industry and has been a licensed casino operator since 1969. Mr. Carano's commitment to the development and promotion of tourism in Reno has earned him several awards, including the Nevada Food and Beverage Directors Association Man-of-the-Year Award, the American Lung Association 1993 Distinguished Community Service Award and the 1992 Hotelier of the Year Award. Also, since 1984, Mr. Carano has been the Chief Executive Officer of the Ferrari Carano Winery. He is the father of Gary, Gene, Glenn and Gregg Carano and is married to Rhonda Carano.

        Robert M. Jones.    Mr. Jones has served as Chief Financial Officer of Resorts or its predecessor since 1989. Prior to joining the Predecessor Partnership in 1984, Mr. Jones spent fourteen years in public accounting, ten of which were as an audit principal with the international accounting firm of Arthur Young & Company. Mr. Jones is a former Certified Public Accountant, was an honors graduate of the University of Arizona with a major in Accounting and has a Master of Business Administration degree in Taxation from Golden Gate University in San Francisco.

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        Gene R. Carano.    Mr. Carano has served as Assistant General Manager of the Eldorado since July 2002. From 1998 to June 2002, he served as General Manager of the Eldorado and served as Vice President of Resorts or its predecessor since 1993 and has been Secretary of Resorts since June 1996. Mr. Carano has served as Treasurer of Capital since its incorporation in 1996. From 1993 until 1998 he served as a Co-General Manager of the Eldorado. From 1986 to 1993, Mr. Carano served as the Eldorado's Director of Gaming. Prior to joining the Eldorado, Mr. Carano held various positions at another major casino in northern Nevada, including slot floor supervisor and pit boss. Mr. Carano studied Business Management and Hotel Administration at Utah State University and the University of Nevada, Las Vegas.

        Gregg R. Carano.    Mr. Carano has served as General Manager of the Eldorado since July 2002. He also has served as Vice President of Resorts or its predecessor since 1994 and has served as Vice President of the Eldorado since July 1998. Mr. Carano has served as a director of Capital since its incorporation in 1996. From 1993 until July 1998, he served as a Co-General Manager of the Eldorado. He served as General Manager of Circus Circus-Reno from 1993 to 1994. From 1985 to 1993, Mr. Carano served as Director of Food and Beverage at the Eldorado. Mr. Carano holds a Bachelor of Science Degree in Hotel/Restaurant Management from Florida International University and an Associates Degree in Occupational Studies in Culinary Arts from the Culinary Institute of America.

        Gary L. Carano.    Mr. Carano has served as General Manager of the Silver Legacy since 1995. Previously, he served as Assistant General Manager, General Manager and Chief Operating Officer of the Eldorado from 1980 to 1994. Mr. Carano holds a Bachelors Degree in Business Administration from the University of Nevada, Reno.

        Raymond J. Poncia, Jr.    Mr. Poncia has had an ownership interest in the Eldorado since 1973 and has been involved in the gaming industry since 1968. He has been involved with the Eldorado in the areas of development, architectural and interior design, construction financing and business planning. Mr. Poncia received his architectural degree from Case-Reserve University and has been a licensed architect in private practice since 1960. Mr. Poncia has served as a director of Capital since its incorporation in 1996.

        Leslie Stone Heisz.    Ms. Heisz has been a Board Member since 1996. Ms. Heisz has been a Senior Advisor at Lazard Freres & Co. LLC since March 2003. From December 1996 to December 2002, she was a Managing Director of Dresdner Kleinwort Wasserstein, where she had been a Director since 1995. Prior thereto, Ms. Heisz was a Vice President at Salomon Brothers Inc. where she provided capital raising and financial advisory services to a wide variety of companies. Ms. Heisz received a M.B.A. and a B.S. from U.C.L.A.

        Robert B. MacKay.    Mr. MacKay has been the Director of Administration of the Eldorado since 1989. From 1985 to 1989, Mr. MacKay served as the Eldorado's Treasurer. He also has held the positions of Director of Finance and Controller of the Eldorado. Mr. MacKay is a Certified Public Accountant and is a graduate of the University of Nevada, Reno with a degree in Accounting.

        Robert B. Mouchou.    Mr. Mouchou has been the Vice President of Operations of the Eldorado since 1997. Mr. Mouchou joined the Eldorado in 1979 and has held a variety of positions, including Director of Gaming, Games Manager, Assistant Slot Manager, Casino Analyst, Assistant Controller and Audit Supervisor.

        Rick W. Murdock.    Mr. Murdock has been Vice President of Sales and Casino Marketing of the Eldorado since 1999, previously serving as Director of Casino Marketing of the Eldorado from 1995 until he assumed his current position. He began his career at the Eldorado in 1981 and has since held various positions, including Director of Sales, National Sales Manager and Assistant Hotel Manager.

        Rhonda B. Carano.    Mrs. Carano has been the Vice President of Advertising and Public Relations of the Eldorado since 1999, previously serving as Director of Advertising and Public Relations of the Eldorado from 1978 until 1999. Mrs. Carano is the Vice President of the Ferrari Carano Winery. She received a Bachelor of Science degree from the University of Nevada, Reno.

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Item 11.    Executive Compensation.

Summary Compensation Tables

        The following table sets forth all compensation paid by Resorts for the period from January 1, 2001 through December 31, 2003, to the Resort's officers named below (the "Named Officers").

(1)

Salary shown for each year for each Named Officer includes any amount of such salary he or she elected to defer the receipt of pursuant to the Company's Deferred Compensation Plan.

(2)

Includes contributions to the Company's 401(k) Plan (as defined herein) of $1,500, payment of term life insurance premiums of $90 and payment of health insurance premiums of $780.

(3)

Includes contributions to the Company's 401(k) Plan of $1,750, payment of term life insurance premiums of $90 and payment of health insurance premiums of $1,846.

(4)

Includes payment of term life insurance premiums of $90 and payment of health insurance premiums of $1,846.

(5)

Includes contributions to the Company's 401(k) Plan of $1,500, payment of term life insurance premiums of $90 and payment of health insurance premiums of $1,846.

(6)

Includes contributions to the Company's 401(k) Plan of $1,500 and payment of term life insurance premiums of $90.

1995 Performance and Appreciation Rights Plan

        Until June 1, 2000, the Eldorado Hotel Associates Limited Partnership 1995 Performance and Appreciation Rights Plan (the "Rights Plan"), which was adopted effective January 1, 1995, permitted the grant to certain executives and other key employees of the Company who had substantial responsibility for its management and growth with incentives and rewards in the form of performance rights and appreciation rights. No performance rights were granted under the Rights Plan, which is administered by a Committee comprised of Donald Carano and two other individuals selected by the members of the Company (the "Rights Committee"). An employee's performance rights terminate upon such employee's exercise of any appreciation rights or the termination of such employee's employment with the Company. Upon the termination of an employee's employment with the Company, the employee will be entitled to exercise appreciation rights only to the extent that such rights have vested to such date.

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        An appreciation right allows an employee upon exercise to receive compensation based on the difference between the value of the membership interests of the Company at the date the right was granted and the date of exercise. One appreciation right is intended to represent the economic equivalent of ownership of .00001% of one membership interest in the Company. Appreciation rights do not, however, entitle holders thereof to any rights in or to own or control any membership interests in the Company.

        Appreciation rights may not be transferred other than by will or the laws of descent and distribution or to a family trust created solely for the benefit of an employee or such employee's spouse and descendants. Appreciation rights may be exercised only by the employee holding such rights (or a legal guardian, legal representative, trustee of a family trust or executor of the estate of a deceased employee). The Rights Committee, however, may in its discretion allow certain other transfers of appreciation rights, such as transfers during the lifetime of an employee to the spouse and children of the employee.

        The Company has not granted any appreciation rights to the Named Officers since 1996. Nor did any of the Named Officers exercise any appreciation rights during 2003. The following table provides certain information with respect to the appreciation rights held by the Named Officers as of December 31, 2003.

Deferred Compensation Plan

        Effective January 1, 1990, the Eldorado Hotel Casino Deferred Compensation Plan (the "Deferred Compensation Plan") was established for the benefit of a select group of management and highly compensated employees. As of December 31, 2003, three employees and one former employee of the Company were eligible to participate. Under the Deferred Compensation Plan, as presently administered, an eligible employee may elect each year to defer the receipt of a portion of his or her compensation from the Company. A participating employee is 100% vested with respect to any amount deferred pursuant to his or her deferral election. Amounts deferred in years prior to 1991, which were determined in the sole discretion of Resorts' Chief Executive Officer, Donald Carano, vest 20% per year so that they become vested over a five-year period. A participating employee becomes 100% vested in all amounts credited to such employee's account upon retirement, death, permanent disability or termination of employment with the Company for any reason other than fraud, or upon a sale of substantially all of the Company's assets or if the Carano family ceases to have majority ownership or control of the Company. Participating employees are entitled to receive annual distributions commencing upon the earliest of the second month after death, permanent disability, retirement or, if employment is terminated for reasons other than death or disability prior to attainment of age 60, attainment of age 60. However, Resorts' Chief Executive Officer may in his sole discretion elect to make a distribution to a terminated employee prior to such terminated employee attaining age 60. In addition, Resorts' Chief Executive Officer may in his sole discretion elect to distribute an employee's benefits in the form of a lump sum distribution and may elect to distribute benefits to an employee over a shorter period of time than that provided for in the Deferred Compensation Plan. In 2002, the Chief Executive Officer elected to distribute lump sum distributions in the aggregate amount of

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$396,000 to two participating employees, including Rob Mouchou, thus eliminating their participation in the plan. The Chief Executive Officer elected to distribute lump sum distributions totaling an additional $469,000 to three participating employees, including Robert Jones, representing 50% of their available balance under the plan as of December 31, 2002. One participating employee is receiving distributions over a period of time. Amounts the Company is obligated to distribute to remaining participants, including the Named Officers, pursuant to the Deferred Compensation Plan represent an unfunded obligation of the Company which, as of December 31, 2003, totaled $638,000. The only Named Officer currently participating in the Deferred Compensation Plan is Mr. Jones, who had approximately $218,000 available in the plan as of December 31, 2003.

401(k) Retirement Savings Plan

        The Company maintains a savings plan (the "401(k) Plan") qualified under Sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as amended. Generally, all employees of the Company in the United States who are 21 years of age or older, who have completed six months and 1,000 hours of service and who are not covered by collective bargaining agreements are eligible to participate in the 401(k) Plan. Employees who elect to participate in the 401(k) Plan may defer up to 15% but not less than 1% of their annual compensation, subject to statutory and certain other limits. The Company makes matching contributions of 25% of the employees' contributions, up to a maximum of 0.75% of the employees' annual compensation and subject to certain other limitations.

Compensation Committee Interlocks and Insider Participation

        The Company has historically paid a management fee to each of Recreational Enterprises, Inc. and Hotel Casino Management, Inc. A portion of these fees represented compensation for services provided to the Company by certain members of the Carano family. Effective July 1, 1996, the Company entered into a new Management Agreement (the "Management Agreement") with Recreational Enterprises, Inc. and Hotel Casino Management, Inc. which provides that Recreational Enterprises, Inc. and Hotel Casino Management, Inc. (collectively, the "Managers") will, among other things, (a) develop strategic plans for the Company's business, including preparing annual budgets and capital expenditure plans, (b) provide advice and oversight with respect to financial matters of the Company, (c) establish and oversee the operation of financial accounting systems and controls and regularly review the Company's financial reports, (d) provide planning, design and architectural services to the Company and (e) furnish advice and recommendations with respect to certain other aspects of the Company's operations. In consideration for such services, the Company pays to the Managers a management fee not to exceed 1.5% of the Company's annual net revenues. There is no minimum payment required to be paid to the Managers pursuant the Management Agreement. The current term of the Management Agreement continues in effect until July 1, 2005 and will be automatically renewed for additional three-year terms until terminated by one of the parties. Due to a downturn in economic conditions, Recreational Enterprises, Inc. and Hotel Casino Management, Inc. relinquished most of their management fees for 2002. For 2003, the Company paid management fees to Recreational Enterprises, Inc. and Hotel Casino Management, Inc. of $274,997 and $20,174, respectively, compared with $13,400 and $34,100, respectively for 2002. There are no current plans to increase the management fees in 2004 beyond the levels paid in 2003. There can be no assurance that the terms of the Management Agreement are at least as favorable to the Company as could be obtained from unaffiliated third parties.

        Resorts owns the entire parcel on which the Eldorado is located, except for approximately 30,000 square feet which is leased from C, S and Y Associates, a general partnership of which Donald Carano is a general partner (the "C, S and Y Lease"). The C, S and Y Lease expires on June 30, 2027. Annual rent is payable in an amount equal to the greater of (i) $400,000 or (ii) an amount based on a decreasing percentage of the Eldorado's gross gaming revenues for the year ranging from 3% of the

46

first $6.5 million of gross gaming revenues to 0.1% of gross gaming revenues in excess of $75 million. In 2003, the rent paid pursuant to the C, S and Y Lease, totaled approximately $629,000. In the opinion of the Company's management, the terms of the C, S and Y Lease are at least as favorable to the Company as could have been obtained from unaffiliated third parties.

        Donald Carano has been an attorney with the firm of McDonald Carano Wilson LLP ("McDonald Carano") since 1961. Mr. Carano maintains an "of counsel" relationship with McDonald Carano, but is not involved in the active practice of law or in the representation of the Company or any of its affiliates as an attorney. Donald Carano receives no compensation from McDonald Carano. The Company currently retains McDonald Carano in connection with a variety of legal matters. In the opinion of the Company's management, the fees paid to McDonald Carano are at least as favorable to the Company as could be obtained from any other law firm for comparable services.

        Effective December 13, 2000, Resorts entered into an agreement to form Tamarack Crossings, LLC and Tamarack Partners, LLC, each a Nevada limited liability company (collectively the "Tamarack Entities"), to develop, own and operate Tamarack Junction ("Tamarack"), a small casino then being constructed in south Reno, Nevada. In May 2001, the Tamarack Entities consummated a plan of merger with Tamarack Crossings, LLC being the surviving entity in which Resorts owns a 21.25% interest. Resorts has a nontransferable option to purchase from Donald Carano, at a purchase price equal to his cost plus any undistributed income attributable thereto, an additional 21.25% interest in Tamarack Crossings, LLC, which is exercisable until June 30, 2010. At December 31, 2003, Tamarack, which opened September 4, 2001, had approximately 244 slot machines, a keno game, a sports book and a themed restaurant. In February 2004, Tamarack began construction of a planned $14.0 million expansion, financed by bank loans, which will increase the size of the current building from approximately 22,000 square feet to approximately 60,000 square feet. The expansion plans call for 200 additional slot machines and an expanded sports book and lounge. Construction is scheduled for completion in November 2004. Four members of Tamarack Crossings, LLC, including Resorts and three unaffiliated third parties, manage the business and affairs of the Tamarack. At December 31, 2003, Resorts' financial investment in Tamarack Crossings, LLC was $4.0 million. Resorts' capital contribution to Tamarack Crossings, LLC represents its proportionate share of the total capital contributions of the members. Additional capital contributions of the members, including Resorts, may be required for certain purposes, including the payment of operating costs and capital expenditures or the repayment of loans, to the extent such costs are not funded by prior capital contributions and earnings. The Company's investment in Tamarack is accounted for using the equity method of accounting. Equity in income related to Tamarack for the year ended December 31, 2003, of $866,000 is included as a component of operating income. The Tamarack purchased products prior to its opening and has continued purchasing various products, such as meat and bakery items, from or through the Eldorado which totaled $98,000 in 2003. The Tamarack purchased these products at the Company's cost.

        Effective July 1, 2000, Resorts and Avereon Research LTD. ("ARL") entered into an agreement to form MindPlay, LLC (the "MindPlay Entity"), for the purpose of developing, owning and marketing a sophisticated system which will permit the tracking and surveillance of pit gaming operations ("MindPlay"). Resorts owns an 18% interest in the MindPlay Entity. Resorts also has an option to acquire from ARL an additional 2.3% interest in the MindPlay Entity. The purchase price is equal to $211,000 per 1% and is exercisable until June 30, 2004. The MindPlay Entity is managed by a Board of Managers, which consists of three Managers designated by ARL and two Managers designated by Resorts. Other investors in the MindPlay Entity include Robert Jones, Don Carano, Gene Carano, Gary Carano, Glenn Carano, Gregg Carano, Rhonda Carano, Rob Mouchou, Rick Murdock and Robert B. MacKay, each an affiliate or executive of Resorts, who own collectively a 14.1% interest. These individuals acquired their interests in the MindPlay Entity under the same terms and conditions as those of Resorts. At December 31, 2003, Resorts' financial investment in the MindPlay Entity was $0.6 million. The Company's investment in the MindPlay Entity is accounted for using the equity

47

method of accounting. Equity in loss related to the MindPlay Entity for the year ended December 31, 2003 of $511,000 is included as a component of non-operating income.

        In January 2002, the Company guaranteed 54.28% of a working capital line for MindPlay LLC in the amount of $1.0 million. On September 9, 2002, the line was increased to $1.25 million. Each draw on the line of credit required the approval of the president of the MindPlay Entity and Robert Jones, Chief Financial Officer of Resorts. Upon the sale of the assets of the MindPlay Entity described below, the working capital line was paid in full by the purchaser and terminated.

        In 2002, the Company purchased from the MindPlay Entity nine computerized gaming tables for $210,000 which are being used on the casino floor and are enhancing player tracking and casino surveillance. In 2003, the Company paid the MindPlay Entity approximately $4,800 for services relating to the MindPlay tables purchased in 2002. In the opinion of the Company's management, the payments are at least as favorable to the Company as could have been obtained from an unaffiliated third party.

        On February 19, 2004, Alliance Gaming Corp., a New York Stock Exchange listed company ("Alliance"), purchased substantially all of the assets of the MindPlay Entity, consisting primarily of intellectual property, and assumed certain liabilities in the aggregate amount of $2,000,000. The principal amount of liabilities assumed included a $1,250,000 working capital line, 54.28% of which had been guaranteed by Resorts. The consideration received by the MindPlay Entity included $9.0 million in cash, the assumption of $2.0 million of liabilities and promissory notes issued by Alliance in the aggregate principal amount of $4,000,000 which are payable in equal installments after two and four years, respectively, with interest at the rate of 6% per annum. In addition, the MindPlay Entity received options to purchase 100,000 shares of Alliance, common stock, which are exercisable at an exercise price of $24.69 per share. The options, which expire on February 19, 2011, become exercisable as to 50,000 of the shares on February 19, 2006 and as to the balance on February 19, 2008. For a thirteen year period subsequent to the closing date, Alliance will pay the MindPlay Entity royalties, which will be based upon a percentage of gross profit for the first seven years and a percentage of revenue for the remaining six years, from the sale of MindPlay products. Royalty payments totalling at least $1,000,000 over the first two years are guaranteed. The MindPlay Entity has given certain indemnifications to Alliance related to the intellectual property which could ultimately affect the amount of notes collected due to certain offsets and impact the amount of royalties collected. The amount of royalties to be received is subject to a number of future events, the impact of which cannot be determined at this time, including development of manufacturing, sales and marketing programs by Alliance and the level of acceptance of the relatively new MindPlay product by the gaming industry. On March 8, 2004, the Company received a cash distribution of $1,191,150 from the MindPlay Entity. It is anticipated that the Company will receive an additional cash distribution of approximately $105,000 by the end of March 2004. Resorts is entitled to receive $600,000 in 2006 from the note and royalty proceeds as consideration for termination of a services agreement between Resorts and the MindPlay Entity.

        The Company from time to time leases aircrafts owned by Recreational Enterprises, Inc., for use in operating the Company's business. In 2003, lease payments for the aircrafts totaled $695,000. In the opinion of the Company's management, the payments are at least as favorable to the Company as could have been obtained from an unaffiliated third party.

        The Company occasionally purchases wine and firewood directly from the Ferrari Carano Winery, which is owned by Recreational Enterprises, Inc. and Donald Carano. The firewood is used in the Eldorado in its various wood burning ovens while wine purchases are sent directly to customers in appreciation of their patronage. In 2003 and 2002, the Company spent approximately $68,000 and $61,000, respectively, for these products. In the opinion of the Company's management, the payments are as least as favorable as could have been obtained from an unaffiliated third party.

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        In 2003, the Silver Legacy made payments pursuant to the New Joint Venture Agreement, representing tax distributions, to the Company in the amount of $2,025,000. For the year ended December 31, 2003, Resorts made distributions of $2.5 million, utilizing all of the $2,025,000 from the Silver Legacy, to it members for income taxes. We do not anticipate any material distributions to be made or received in regard to income earned in 2003.

        Recreational Enterprises, Inc. is beneficially owned by members of the Carano family and Hotel Casino Management, Inc. is beneficially owned by members of the Poncia family. See Item 12 of this report.

        The Company does not have a compensation committee or other committee of the Board of Managers performing equivalent functions. The compensation paid in 2003 to each of the Company's Board Members and executive officers was determined by the Chief Executive Officer, and it is anticipated that such compensation will be so determined in the future.

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

        The following chart illustrates the ownership of Resorts, Capital and the Silver Legacy Joint Venture. Recreational Enterprises, Inc. is beneficially owned by members of the Carano family and Hotel Casino Management, Inc. is beneficially owned by members of the Poncia family. Capital is a wholly-owned subsidiary of Resorts.

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        The following table sets forth certain information regarding the beneficial ownership of the Resorts' outstanding membership interests by (i) each person known by Resorts to be a beneficial owner of 5% or more of the outstanding membership interests, (ii) each Board Member, (iii) each of the Named Officers and (iv) all Board Members and executive officers of Resorts as a group.

(1)

Includes 3.0% owned by Mr. Carano individually, 55.0% owned by Recreational Enterprises, Inc., which is owned by members of the Carano family.

(2)

The address of Donald L. Carano, Gene R. Carano, Gregg R. Carano and Cindy L. Carano is c/o Eldorado Resorts LLC, P.O. Box 3399, Reno, Nevada 89505. The address of Gary L. Carano and Glenn T. Carano is c/o Silver Legacy Resort Casino, 407 N. Virginia Street, Reno, Nevada 89501.

(3)

Recreational Enterprises, Inc. is beneficially owned by the following members of the Carano family in the following percentages: Donald L. Carano—49.5%; Gene R. Carano—10.1%; Gregg R. Carano—10.1%; Gary L. Carano—10.1%; Cindy L. Carano—10.1% and Glenn T. Carano—10.1%. Gary holds 7.185% of his interest in Recreational Enterprises, Inc. through various trusts. Gene, Gregg, Cindy and Glenn each hold all of their respective interests in Recreational Enterprises, Inc. through various trusts. The address of Recreational Enterprises, Inc. is P.O. Box 2540, Reno, Nevada 89505.

(4)

Includes 29.0% owned by Hotel Casino Management, Inc., which is owned by members of the Poncia family.

(5)

The address of Raymond J. Poncia, Jr. and Hotel Casino Management, Inc. is P.O. Box 429, Verdi, Nevada 89439.

(6)

Hotel Casino Management, Inc. is beneficially owned by the following members of the Poncia family in the following percentages: Raymond J. Poncia, Jr.—49.712%; Cathy L. Poncia-Vigen—12.572%; Linda R. Poncia Ybarra—12.572%; Michelle L. Poncia Staunton—12.572% and Tammy R. Poncia—12.572%. Cathy, Linda, Michelle and Tammy each hold all of their respective interests in Hotel Casino Management, Inc. through various trusts.

(7)

Hotel Casino Realty Investments, Inc. is beneficially owned by the following members of the Carano and Poncia family in the following percentages: Gary Carano—10%; Glenn Carano—10%; Gene Carano—10%; Gregg Carano-10%; Cindy Carano—10%; Cathy Poncia Vigen—12.5%; Linda Poncia Ybarra—12.5%; Michelle Poncia Staunton—12.5% and Tammy Poncia—12.5%. All family

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members hold all of their respective interests in Hotel Casino Realty Investment, Inc. through various trusts. The address of Hotel Casino Realty Investments, Inc. is P.O. Box 429, Verdi, Nevada 89439.

(8)

Membership interest is beneficially owned through such individual's 10.1% ownership of Recreational Enterprises, Inc., 10% ownership of Hotel Casino Realty Investments, Inc. and 0.4% ownership of Resorts held in trust.

(9)

The address of Ludwig J. Corrao is P.O. Box 12907, Reno, Nevada 89510.

Equity Compensation Plans

        The following tables set forth certain information relating to equity compensation plans as of December 31, 2003 for Resorts and Capital, respectively.

Equity Compensation Plan Information—Resorts

Equity Compensation Plan Information—Capital

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Item 13.    Certain Relationships and Related Transactions.

        Reference is made to the information which appears under the heading "Compensation Committee Interlocks and Insider Participation" in Item 11 of this report, which information is incorporated herein by this reference.

Item 14.    Principal Accountant Fees and Services.

        The following table presents fees billed for professional services rendered by Deloitte & Touche LLP for fiscal years ended December 31, 2003 and 2002.

(a)

Audit fees consist of fees billed for professional services rendered for the audit of the Company's annual consolidated financial statements for the fiscal year and reviews of the consolidated financial statements included in the Company's quarterly reports on Form 10-Q for the fiscal year.

(b)

Audit-related fees consist of fees billed for the audit of the Company's 401(k) Plan financial statements. These fees primarily relate to 401(k) audits.

(c)

Tax fees include professional services for tax compliance, tax advice, and tax planning.

(d)

Other fees consist of fees for services other than the services reported under the other named categories.

(e)

Does not include fees paid to Arthur Andersen LLP, our prior auditors, in the amount of $3,500 for the review of the financial statements in the Company's first quarter 2002 Form 10-Q.

(f)

Does not include fees paid to Arthur Andersen LLP, our prior auditors, in the amount of $1,000 for professional tax services in 2002.

(g)

Does not include fees paid to Arthur Andersen LLP, our prior auditors, in the amount of $1,750 for general matters in 2002.

(h)

References made to notes (e), (f) and (g).

        All of the services provided by our auditors for 2003 and 2002 were approved in advance by our Board of Managers.

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PART IV

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

53

54

55

56

57

*

Constitutes a management contract or compensatory plan or arrangement.

(b)

Reports on Form 8-K

During the fourth quarter of 2003, the Company filed no report on Form 8-K.

(c)

The exhibits required by Item 601 of Regulation S-K filed as part of this report or incorporated herein by reference are listed in Item 14 (a)(3) above, and the exhibits filed herewith are listed on the Index to Exhibits which accompanies this report

(d)

See Item 15 (a)(2) of this report.

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SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized.

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

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