Overview
We develop, own and operate casinos and related hotel, food and beverage, entertainment and other facilities, with eight properties in operation in Missouri, Indiana, Iowa, Mississippi, Colorado and Nevada. Our portfolio of casinos consists of: Ameristar Casino Resort Spa St. Charles (serving the St. Louis, Missouri metropolitan area); Ameristar Casino Hotel East Chicago (serving the Chicagoland area); Ameristar Casino Hotel Kansas City (serving the Kansas City metropolitan area); Ameristar Casino Hotel Council Bluffs (serving Omaha, Nebraska and southwestern Iowa); Ameristar Casino Hotel Vicksburg (serving Jackson, Mississippi and Monroe, Louisiana); Ameristar Casino Resort Spa Black Hawk (serving the Denver metropolitan area); and Cactus Petes Resort Casino and The Horseshu Hotel and Casino in Jackpot, Nevada (serving Idaho and the Pacific Northwest).
Our financial results are dependent upon the number of patrons that we attract to our properties and the amounts those patrons spend per visit. Additionally, our operating results may be affected by, among other things, overall economic conditions affecting the disposable income of our patrons and weather conditions affecting our properties, achieving and maintaining cost efficiencies, competitive factors, gaming tax increases and other regulatory changes, the commencement of new gaming operations, charges associated with debt refinancing or property acquisition and disposition transactions, construction at existing facilities and general public sentiment regarding travel. We may experience significant fluctuations in our quarterly operating results due to seasonality and other factors. Consequently, our operating results for any quarter or year are not necessarily comparable and may not be indicative of future periods' results.
The following significant factors and trends should be considered in analyzing our operating performance:
• General Economic Conditions. The weak economic conditions continue to adversely impact the gaming industry and our Company. We believe our guests have reduced their discretionary spending as a result of uncertainty and instability relating to employment and the credit, investment and housing markets.

• Cost Efficiencies. In July 2008, we began to implement a strategic plan to improve efficiencies and reduce our cost structure as weak economic conditions continued to adversely impact business volumes. As part of this plan, we reduced our workforce costs through position eliminations, adjusting staffing practices and attrition. We also restructured the organization of our property and corporate management teams to be more efficient and streamlined. As a result of the actions taken to date, operating income margins at six of our seven gaming locations increased in the first nine months of 2009 compared to the same period in 2008. Additionally, corporate expense decreased 12.6% for the nine months ended September 30, 2009 compared to 2008 due mostly to the realized cost efficiencies.

• Missouri Properties. In late 2008, positive regulatory reform was implemented at our Kansas City and St. Charles properties. The regulatory reform eliminated the $500 buy-in limit and the requirement for all casino guests to use player identification and tracking cards. Additionally, the Missouri gaming reform raised taxes on gross gaming receipts from 20% to 21% and placed a moratorium on the issuance of new gaming licenses. During the first nine months of 2009, operating income at our Kansas City and St. Charles properties increased 26.2% and 23.5%, respectively, over the first nine months of 2008. The improvement in operating income at both properties was mostly attributable to the aforementioned cost savings initiatives and regulatory reform.

• Ameristar Black Hawk. On July 2, 2009, we implemented positive regulatory changes at our Black Hawk property that extended casino operating hours from 18 hours daily to 24 hours daily, increased the maximum bet limits from $5 to up to $100 and allowed for additional table games, including roulette and craps. As a result of these regulatory changes, third quarter year-over-year net revenues and operating

income increased by 24.2% and 34.3%, respectively. Also, on September 29, 2009, we opened a 536-room luxury hotel and spa featuring upscale furnishings and amenities. The hotel includes a versatile meeting and ballroom center and also has Black Hawk's only full-service spa and an enclosed rooftop swimming pool with indoor/outdoor whirlpool facilities. Ameristar Black Hawk offers destination resort amenities and services that are unequaled in the Denver gaming market. We believe the regulatory changes, coupled with the new hotel, will allow us to drive further revenue growth.

• Ameristar Vicksburg. In October 2008, a new competitor opened a $100 million casino-hotel in Vicksburg. The additional competition has adversely affected the financial performance of Ameristar Vicksburg and the other facilities operating in the market, and our property's net revenues and operating income decreased 20.0% and 30.2%, respectively, from the prior-year third quarter. In May 2008, we substantially completed a casino expansion and a new 1,000-space parking garage at our Vicksburg property. We believe the expansion has helped to partially offset the impact of the increased competition.

• Debt and Interest Expense. On March 13, 2009, we amended our senior credit facility to provide us significant relief under our leverage ratio and senior leverage ratio covenants for the foreseeable future (thereby improving our borrowing flexibility related to currently available funds under our revolving loan facility). The amendment also increased the interest rate add-on for term loan and revolving loan borrowings under the senior credit facility by 125 basis points. At September 30, 2009, our leverage and senior leverage ratios (each as defined in the senior credit facility) were required to be no more than 6.00:1 and 5.75:1, respectively. As of that date, our leverage ratio and senior leverage ratio were each 4.91:1. Additional financial flexibility was created by provisions in the amendment that expand our ability to incur unsecured debt and allow us to request lenders to extend the maturity of their respective portions of the revolving loan facility from November 10, 2010 to August 10, 2012. We are in the process of seeking extensions from the lenders, which we expect will be consummated in the near future. The extensions will require us to pay upfront fees and to pay higher interest rate add-ons for the extended portion of the revolving loans.

On May 27, 2009, we issued $650.0 million aggregate principal amount of 91/4% Senior Notes due 2014 (the "Notes"). We used the net proceeds from the sale of the Notes (approximately $620.0 million, after deducting discounts and expenses) to repay a portion of the revolving loan indebtedness outstanding under our senior credit facility.

Our interest expense has increased significantly as a result of the senior credit facility amendment and Notes issuance. For the third quarter of 2009, consolidated net interest expense increased by $11.1 million over the third quarter of 2008 primarily due to these debt restructuring transactions.

Results of Operations
   The following table sets forth certain information concerning our
consolidated cash flows and the results of operations of our operating
properties:
                    AMERISTAR CASINOS, INC. AND SUBSIDIARIES
                      SUMMARY CONSOLIDATED FINANCIAL DATA
                             (Dollars in Thousands)
                                  (Unaudited)

                                                      Three Months                         Nine Months
                                                   Ended September 30,                 Ended September 30,
                                                  2009             2008               2009              2008
Consolidated Cash Flow Information:
Net cash provided by operating activities      $   86,040        $  64,041         $  212,244        $  206,447

Net cash used in investing activities          $  (40,165 )      $ (62,329 )       $ (136,569 )      $ (195,501 )

Net cash used in financing activities          $   (7,781 )      $ (12,665 )       $  (17,277 )      $  (41,196 )


Net Revenues:
Ameristar St. Charles                          $   72,065        $  73,070         $  222,548        $  220,085
Ameristar East Chicago                             59,967           69,961            196,088           219,783
Ameristar Kansas City                              57,528           59,795            176,354           183,657
Ameristar Council Bluffs                           38,451           44,113            120,689           134,346
Ameristar Vicksburg                                27,918           34,879             92,063           101,985
Ameristar Black Hawk                               26,246           21,125             67,292            61,804
Jackpot Properties                                 17,255           18,458             49,135            52,606

Consolidated net revenues                      $  299,430        $ 321,401         $  924,169        $  974,266


Operating Income (Loss):
Ameristar St. Charles                          $   17,952        $  14,816         $   56,432        $   45,694
Ameristar East Chicago                              6,330            6,029             29,897          (104,752 )
Ameristar Kansas City                              15,087           12,224             47,635            37,731
Ameristar Council Bluffs                           12,375           13,701             36,436            38,481
Ameristar Vicksburg                                 6,139            8,796             25,429            29,559
Ameristar Black Hawk                                4,567            3,401             10,437             8,999
Jackpot Properties                                  4,171            3,908             11,471             9,624
Corporate and other                               (15,663 )        (16,632 )          (42,065 )         (48,144 )

Consolidated operating income                  $   50,958        $  46,243         $  175,672        $   17,192


Operating Income (Loss) Margins(1):
Ameristar St. Charles                                24.9 %           20.3 %             25.4 %            20.8 %
Ameristar East Chicago                               10.6 %            8.6 %             15.2 %           (47.7 %)
Ameristar Kansas City                                26.2 %           20.4 %             27.0 %            20.5 %
Ameristar Council Bluffs                             32.2 %           31.1 %             30.2 %            28.6 %
Ameristar Vicksburg                                  22.0 %           25.2 %             27.6 %            29.0 %
Ameristar Black Hawk                                 17.4 %           16.1 %             15.5 %            14.6 %
Jackpot Properties                                   24.2 %           21.2 %             23.3 %            18.3 %
Consolidated operating income margin                 17.0 %           14.4 %             19.0 %             1.8 %

(1) Operating income
(loss) margin is operating income
(loss) as a percentage of net revenues.

The following table presents detail of our net revenues:

                                        Three Months                      Nine Months
                                    Ended September 30,               Ended September 30,
                                   2009            2008               2009           2008
                                                 (In Thousands, Unaudited)
 Casino Revenues:
 Slots                          $  274,358     $     293,991       $  838,606     $   879,960
 Table games                        33,299            32,375          100,046         108,490
 Other                               3,486             3,475           10,895          12,064

 Casino revenues                   311,143           329,841          949,547       1,000,514


 Non-Casino Revenues:
 Food and beverage                  31,198            39,636          103,970         120,521
 Rooms                              16,598            15,868           47,084          42,197
 Other                               8,197            10,120           25,012          29,806

 Non-casino revenues                55,993            65,624          176,066         192,524


 Less: Promotional Allowances      (67,706 )         (74,064 )       (201,444 )      (218,772 )

 Total Net Revenues             $  299,430     $     321,401       $  924,169     $   974,266

Net Revenues
Consolidated net revenues for the quarter ended September 30, 2009 decreased $22.0 million, or 6.8%, from the third quarter of 2008. The decrease in consolidated net revenues was primarily attributable to the weak economy and increased competition that opened in the second half of 2008 in our East Chicago and Vicksburg markets. Third quarter 2009 net revenues declined on a year-over-year basis at six of our seven gaming locations while Ameristar Black Hawk's net revenues increased by $5.1 million, or 24.2%, when compared to third quarter 2008. Ameristar Black Hawk's net revenue increase is due to the implementation of the beneficial regulatory reform on July 2, 2009.
During the three months ended September 30, 2009, consolidated promotional allowances decreased $6.4 million (8.6%) from the corresponding 2008 period. The decrease in promotional allowances was primarily the result of the aggressive marketing program during the first half of the third quarter of 2008. We curtailed our promotional spending later in the third quarter of 2008 due to ineffectiveness of the prior-year marketing program to generate profitable incremental revenue.
For the nine months ended September 30, 2009, consolidated net revenues decreased $50.1 million, or 5.1%, from the corresponding 2008 period. During the first nine months of 2009, net revenues declined from the corresponding 2008 period by 10.8% at Ameristar East Chicago, 10.2% at Ameristar Council Bluffs, 9.7% at Ameristar Vicksburg, 6.6% at our Jackpot Properties and 4.0% at Ameristar Kansas City. We believe the weak economic conditions and the increased competition in our East Chicago and Vicksburg markets adversely impacted financial results throughout the first three quarters of 2009. Ameristar Black Hawk's net revenues increased by $5.5 million, or 8.9%, for the first nine months of 2009 when compared to the corresponding 2008 period. The increase is primarily attributable to the implementation of the beneficial regulatory reform on July 2, 2009. Ameristar St. Charles' net revenue increased 1.1% over the first three quarters. We believe that the regulatory reform in Missouri had a beneficial impact on the net revenues of Ameristar St. Charles and Ameristar Kansas City.

For the nine months ended September 30, 2009, consolidated promotional allowances decreased 7.9% from the same 2008 period as a result of the factors mentioned above.
Operating Income (Loss)
In the third quarter of 2009, consolidated operating income increased $4.7 million, or 10.2%, from the third quarter of 2008, primarily as a result of the previously mentioned implementation of operational and marketing efficiencies at all our properties. Operating income margins improved year-over-year at six of our seven gaming locations. Vicksburg's operating income decreased by $2.7 million, or 30.2%, when compared to third quarter 2008. This is mainly the result of a new competitor entering the Vicksburg market in October 2008 as described above.
For the three months ended September 30, 2009, corporate expense declined $1.0 million, due mostly to the realized cost efficiencies mentioned above.
For the nine months ended September 30, 2009, our operating income was $175.7 million, compared to $17.2 million for the corresponding 2008 period. The increase is primarily attributable to the $129.0 million non-cash impairment charge recorded in the first quarter of 2008 relating to East Chicago's intangible assets. Excluding the impairment charge, consolidated operating income improved $29.5 million, or 20.2%, when compared to the first three quarters of 2008. This increase is primarily due to the implemented operational efficiencies and the favorable regulatory reform in Missouri and Colorado.
Interest Expense
The following table summarizes information related to interest on our long-term debt:

                                                    Three Months Ended                    Nine Months Ended
                                                      September 30,                         September 30,
                                                 2009               2008               2009               2008
                                                               (Dollars in Thousands, Unaudited)
Interest cost                                 $    34,280        $    20,661        $    81,386        $    68,923
Less: Capitalized interest                         (4,180 )           (1,627 )           (8,769 )          (12,074 )

Interest expense, net                         $    30,100        $    19,034        $    72,617        $    56,849


Cash paid for interest, net of amounts
capitalized                                   $    10,298        $    19,437        $    48,005        $    49,156

Weighted-average total debt outstanding       $ 1,680,143        $ 1,646,039        $ 1,664,010        $ 1,633,931

Weighted-average interest rate                        7.8 %              4.9 %              6.0 %              5.5 %

For the quarter ended September 30, 2009, consolidated interest expense, net of amounts capitalized, increased $11.1 million (58.1%) from the 2008 third quarter. The increase is due primarily to higher interest rate add-ons resulting from the credit facility amendment and increased interest expense from the issuance of the Notes. Year to date, consolidated interest expense, net of amounts capitalized, increased $15.8 million (27.7%) from the first nine months of 2008 due to the increased interest from the credit facility amendment and Notes issuance. Additionally, since we have opened the Black

Hawk hotel we will no longer capitalize the interest on the associated debt, which will cause our net interest expense to rise relative to prior periods.
Income Taxes
Our effective income tax rate was 33.2% for the quarter ended September 30, 2009, compared to 44.7% for the corresponding 2008 period. The year-over-year decrease is primarily due to the permanent reversal of certain contingent tax liabilities and the absence in 2009 of costs we incurred in 2008 associated with the Missouri and Colorado ballot initiatives, which are considered lobbying costs and are not deductible for income tax purposes. For the nine months ended September 30, 2009 and 2008, our effective income tax rates were 41.2% and 28.6%, respectively. Excluding the impact of the intangible asset impairment at Ameristar East Chicago, the effective tax rate for the nine months ended September 30, 2008 would have been 46.5%, which is 5.3 percentage points higher than that for the nine months ended September 30, 2009. This difference is mostly due to the Missouri and Colorado ballot initiative costs incurred in 2008 as described above.
Net Income (Loss)
For the three months ended September 30, 2009, consolidated net income increased $0.1 million, or 0.9%, from the third quarter of 2008. Diluted earnings per share were $0.25 in each of the quarters ended September 30, 2009 and 2008. For the nine months ended September 30, 2009 and 2008, we reported net income of $58.6 million and a net loss of $29.6 million, respectively. Diluted earnings per share were $1.01 for the first nine months of 2009, compared to a diluted loss per share of $0.52 in the corresponding 2008 period. The impairment charge at Ameristar East Chicago adversely affected diluted earnings per share by $1.34 for the nine months ended September 30, 2008.