RIVIERA HOLDINGS CORP, S-1/A, 1997-03-10

RIVIERA HOLDINGS CORP
S-1/A, 1997-03-10
HOTELS & MOTELS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 10, 1997

REGISTRATION NO. 333-14593

================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 1
TO

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

RIVIERA HOLDINGS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------

<TABLE>
<S> <C> <C>
NEVADA 6719 88-0296885
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
ORGANIZATION)
</TABLE>

2901 LAS VEGAS BOULEVARD SOUTH
LAS VEGAS, NEVADA 89109
(702) 734-5110
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------

WILLIAM L. WESTERMAN
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
RIVIERA HOLDINGS CORPORATION
2901 LAS VEGAS BOULEVARD SOUTH
LAS VEGAS, NEVADA 89109
(702) 734-5110
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:

<TABLE>
<S> <C>
FREDRIC J. KLINK JEFFREY M. KNETSCH
DECHERT PRICE & RHOADS BROWNSTEIN HYATT FARBER & STRICKLAND, P.C.
30 ROCKEFELLER PLAZA 410 SEVENTEENTH STREET, 22ND FLOOR
NEW YORK, NEW YORK 10112 DENVER, COLORADO 80202
</TABLE>

Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

================================================================================
<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED MARCH 10, 1997

PROSPECTUS

3,000,000 SHARES

[LOGO]

COMMON STOCK

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

Of the 3,000,000 shares of Common Stock of Riviera Holdings Corporation
(the "Company"), $.001 par value per share (the "Common Stock"), offered hereby,
1,750,000 shares are being sold by the Company and 1,250,000 shares are being
sold by certain shareholders of the Company named herein (the "Selling
Shareholders") (the "Offering"). The Company will not receive any of the
proceeds from the sale of Common Stock by the Selling Shareholders. See
"Principal and Selling Shareholders."

The Common Stock is traded on the American Stock Exchange ("AMEX") under
the symbol "RIV." On March 4, 1997, the closing sale price of the Common Stock
on the AMEX was $14.125 per share. See "Price Range of Common Stock."

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK.

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

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

NEITHER THE NEVADA GAMING COMMISSION NOR THE NEVADA STATE GAMING CONTROL BOARD
HAS PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS OR THE INVESTMENT
MERITS OF THE COMMON STOCK OFFERED HEREBY. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.

<TABLE>
<CAPTION>
================================================================================================
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) SHAREHOLDERS
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share.............. $ $ $ $
Total(3)............... $ $ $ $
================================================================================================
</TABLE>

(1) For information regarding indemnification of the Underwriters by the Company
and certain compensation payable to the Representatives of the Underwriters,
see "Underwriting."

(2) Before deducting expenses of the Offering, estimated at approximately
$600,000, all of which will be paid by the Company.

(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 450,000 shares of Common Stock, solely to cover over-allotments, if any.
If the Underwriters exercise this option in full, the total "Price to
Public," "Underwriting Discounts and Commissions," and "Proceeds to Company"
will be $ , $ and $ , respectively. See
"Underwriting."

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

The shares of Common Stock are offered by the several Underwriters when, as
and if delivered to and accepted by the Underwriters, subject to their right to
reject orders in whole or in part and to certain other conditions. It is
expected that delivery of certificates representing the shares of Common Stock
will be made on or about , 1997 at the office of Ladenburg Thalmann & Co.
Inc., New York, New York.

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

LADENBURG THALMANN & CO. INC. RAYMOND JAMES & ASSOCIATES, INC.

The date of this Prospectus is , 1997.
<PAGE> 3

[PHOTOGRAPHS AND MAPS OF THE RIVIERA AND SURROUNDING AREA AND THE PROPOSED SITE
OF THE BLACK HAWK PROJECT.]

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING MAINTAINING A MARKET IN THE COMMON STOCK ON BEHALF OF THE
UNDERWRITERS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements and the related notes
appearing elsewhere in this Prospectus. In this Prospectus, the term "Company"
refers to Riviera Holdings Corporation, a Nevada corporation, and its
subsidiaries including Riviera Operating Corporation ("ROC"). This Prospectus
contains forward-looking information that involves risks and uncertainties, and
such information is subject to the assumptions set forth in connection therewith
and the information contained or incorporated by reference herein. Investors
should carefully consider the information set forth under the heading "Risk
Factors." Unless otherwise indicated, the information in this Prospectus (i)
gives effect to the Company's stock splits in November 1994 and November 1995
and (ii) does not give effect to the exercise of the Underwriters'
over-allotment option. See "Underwriting."

THE COMPANY

Riviera Holdings Corporation owns and operates the Riviera Hotel & Casino
(the "Riviera") located on the Strip in Las Vegas, Nevada. The Riviera caters to
adults seeking traditional Las Vegas-style gaming and entertainment. The Riviera
is situated on a 26-acre site across the Strip from Circus Circus and adjacent
to the Las Vegas Hilton and the Las Vegas Convention Center. The property
features approximately 2,100 hotel rooms (including 169 suites), 105,000 square
feet of casino space, a 100,000 square-foot convention, meeting and banquet
facility (one of the largest in Las Vegas), four full-service restaurants, a
430-seat buffet, four showrooms, a 200-seat entertainment lounge, 47 food and
retail concessions and approximately 2,900 parking spaces. The casino contains
approximately 1,300 slot machines, 50 gaming tables, a keno lounge and a
200-seat race and sports book. The Riviera also offers one of the most extensive
entertainment programs in Las Vegas, including such popular shows as Splash(R),
An Evening at La Cage(R), Crazy Girls(SM) and Bottoms Up(R) and featured
comedians at the Riviera Comedy Club(SM).

Opened in 1955, the Riviera was one of the original casino/hotels on the
Las Vegas Strip catering to high stakes gamblers. Since opening, the Riviera has
been expanded several times. The most recent expansion, which occurred during
1988 through 1990, resulted in significant cost overruns and ultimately
contributed to the Company's predecessor filing for bankruptcy protection in
1991. In 1992 the current management team was assembled and successfully guided
the Company through its emergence from bankruptcy in June 1993. As a result of
the bankruptcy, all of the Common Stock and $100.0 million of First Mortgage
Notes were distributed to the secured creditors of the predecessor company.

The new management team implemented new marketing programs, which included
targeting California and the southwestern United States, and initiated a number
of strategic changes to reposition the Riviera, including a shift from
"high-rollers" to mid-level gaming customers, particularly slot players, who
seek a broader entertainment experience. Management reconfigured the casino
space to improve the flow of customer traffic, installed new slot machines and
bill acceptors, reduced the number of gaming tables and de-emphasized baccarat.
Management also decreased the volatility of gaming revenues by reducing credit
limits, outsourcing the Company's sports book and shifting to parimutuel horse
wagering. Improved hotel marketing efforts have resulted in one of the highest
room occupancy rates on the Strip. This repositioning of the Riviera, together
with other cost saving measures, improved operating results with earnings before
interest, taxes, depreciation and amortization ("EBITDA") increasing from $25.6
million in 1994 to $27.8 million in 1995 and $31.5 million in 1996, a 23.1%
increase from 1994; and net earnings increasing from $4.8 million in 1994 to
$6.3 million in 1995 and $8.4 million in 1996, a 76.2% increase from 1994.
Furthermore, non-gaming revenues as a percentage of gross revenues increased
from 50.8% in 1994 to 52.6% in 1995 and 54.6% in 1996.

3
<PAGE> 5

BUSINESS AND GROWTH STRATEGY

Management is pursuing a business and growth strategy which includes the
following:

Develop New Casino/Hotels. The Company intends to pursue a growth strategy
by developing or acquiring casino/hotel properties in Nevada and other
jurisdictions. As part of this strategy, on March 4, 1997, the Company entered
into a letter of intent with Eagle Gaming, L.P. ("Eagle") to form a joint
venture, Riviera Black Hawk, LLC ("RBL"), to develop a casino (the "Black Hawk
Project") at what management believes is the premier gaming site in the Black
Hawk/Central City, Colorado gaming market. The 71,000 square foot site, zoned
entirely for gaming, is the first gaming site encountered when traveling from
Denver and is approximately an hour drive from, and 40 miles west of, Denver.
Approximately three million people live within a 100-mile radius of Black
Hawk/Central City and casinos in the market generated gaming revenues of
approximately $291 million in 1995 and $309 million in 1996.

Current estimates for the Black Hawk Project assume a budget of
approximately $55 million, including the acquisition of land and the development
of what management believes will be the largest casino in Colorado, comprising a
62,000 square foot casino building. The Black Hawk Project is expected to
feature 1,000 slot machines, 14 table games, a 500-space covered parking garage
and entertainment and food service amenities. The Company initially will own
approximately 80% of RBL, subject to Eagle's option to increase its ownership
interest in RBL up to 49.9% at any time prior to the date on which RBL is
licensed by the Colorado gaming authorities. In addition, the Company will enter
into a management agreement with RBL that will provide for management fees based
upon gross revenues and EBITDA of the casino. It is anticipated that
construction of the casino will begin in the third quarter of 1997 and will be
completed by the middle of 1998.

The Black Hawk Project is subject to a number of conditions. These
conditions include obtaining commitments for approximately $33 million of
mortgage and equipment financing on satisfactory terms, obtaining bonded
fixed-price construction and completion contracts, obtaining regulatory
approvals for the Black Hawk Project and completing a development and operating
agreement with Eagle. There can be no assurance that these and other conditions
to the Black Hawk Project can be satisfied on terms satisfactory to the Company.

In addition to the Black Hawk Project in Colorado, the Company plans to
review and selectively acquire or develop casino/hotel properties both in Nevada
and other jurisdictions.

Manage Distressed Casino/Hotel Properties. In order to capitalize on
management's experience in repositioning and managing the Riviera through the
bankruptcy process, the Company formed Riviera Gaming Management, Inc. ("RGM")
for the primary purpose of obtaining casino management contracts with
financially distressed casino/hotels in Nevada and other jurisdictions. Since
August 1996, RGM has been managing the Four Queens Hotel/Casino ("Four Queens")
located adjacent to the Golden Nugget on Fremont Street in downtown Las Vegas.
Under the Four Queens management contract, RGM receives a guaranteed minimum
management fee plus additional compensation, based on EBITDA improvement of the
Four Queens, and warrants to purchase 20% (on a fully diluted basis) of the
equity of the Four Queens' parent.

The Company believes that there is increasing demand for the services of
skilled gaming and hospitality professionals. The Company intends to pursue
management contracts with other financially distressed gaming properties.
Management is actively reviewing and evaluating other financially troubled
gaming properties in Nevada and other jurisdictions with a view towards managing
properties with underlying sound business potential and in which the Company can
purchase an equity interest.

Continue to Improve Performance of the Riviera. The Riviera will continue
to emphasize marketing programs that appeal to slot and mid-level table game
customers with a focus on creating repeat customers and increasing walk-in
traffic. Key elements of this strategy include offering a value-oriented
experience by providing a variety of hotel rooms, restaurants and entertainment,
with some of Las Vegas' most popular shows, all at reasonable prices. The
Company is continuing an

4
<PAGE> 6

extensive capital investment program at the Riviera, including completion of the
upgrade of its slot machines in the second quarter of 1997 and the refurbishment
of all its hotel rooms, which will be completed in the fall of 1997. In
addition, the Company is focusing its marketing to take advantage of the
Riviera's location by capitalizing on the increase in walk-in traffic from the
addition of 1,000 rooms across the Strip at Circus Circus and the expansions of
the Las Vegas Hilton and the Las Vegas Convention Center.

Further Develop the Riviera. The Company has engaged architects and
designers to prepare an overall expansion plan (the "Master Plan") for the
existing 26-acre site. The Company expects that the first phase of the Master
Plan ("Phase I") will include an approximately 40,000 square foot expansion of
the convention, meeting and banquet facility as well as the redevelopment of
approximately 20,000 square feet of vacant space fronting the Strip across from
Circus Circus to attract additional walk-in customers.

Future phases of the Master Plan may include the development of a 60,000
square foot domed entertainment and shopping complex directly over the casino
that will exit down into the casino and the development of approximately nine
acres of available land with the construction of a new hotel tower, a time-share
tower (which may be developed with a third party) and/or additional parking
space.

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

THE OFFERING

Common Stock offered by:

The Company....................... 1,750,000 shares

The Selling Shareholders.......... 1,250,000 shares

Common Stock to be outstanding after
the Offering(1)..................... 6,672,503 shares

Use of Proceeds to the Company...... To fund the investment in RBL for the
development of the Black Hawk Project and, to the extent not used for such
purpose, for working capital to fund,
among other things, a portion of the
multi-phase expansion of the Riviera's
present property.

AMEX Symbol......................... RIV
- ---------------

(1) Excludes (i) 1,050,000 shares of Common Stock reserved for issuance upon the
exercise of stock options under the Company's 1993 Stock Option Plan and
Non-Qualified Stock Option Plan for Non-Employee Directors of which options
to purchase 774,000 shares have been granted as of the date hereof, (ii)
226,620 shares reserved for issuance under the Company's Employee Stock
Purchase Plan and Compensation Plan for Directors serving on the
Compensation Committee and (iii) 100,000 shares of Common Stock reserved for
issuance upon the exercise of warrants to be issued to Ladenburg Thalmann &
Co. Inc. ("Ladenburg") if Ladenburg arranges debt financing for RBL. See
"Management" and "Underwriting."

5
<PAGE> 7

SUMMARY CONSOLIDATED FINANCIAL DATA

The summary consolidated financial data set forth below has been derived
from the audited consolidated financial statements of the Company for the
respective periods presented and is qualified in its entirety by, and should be
read in conjunction with, the consolidated financial statements and notes
thereto, "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the other financial and statistical data included
elsewhere or incorporated in this Prospectus.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1994 1995 1996
---------- ---------- ----------
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE AND ADR DATA)
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Net revenues.................................................... $ 153,921 $ 151,145 $ 164,409
Income from operations.......................................... 19,919 20,980 23,281
Interest expense, net........................................... 12,254 11,304 10,413
Net income...................................................... 4,790 6,344 8,440
Net income per share............................................ $ 1.00 $ 1.26 $ 1.63
Weighted average shares outstanding............................. 4,800,000 5,040,720 5,177,809
OTHER DATA:
EBITDA(1)....................................................... $ 25,593 $ 27,791 $ 31,493
Cash flows from operating activities............................ 16,372 16,740 18,290
Cash flows used in investing activities......................... (10,439) (8,218) (13,017)
Cash flows used in financing activities......................... (2,696) (2,983) (1,488)
Average occupancy rate(2)....................................... 97.5% 97.0% 98.2%
Average daily room rate(ADR).................................... $ 47.51 $ 54.69 $ 57.09
Number of slot machines(3)...................................... 1,203 1,226 1,312
Number of gaming tables(3)...................................... 56 56 55
</TABLE>

<TABLE>
<CAPTION>
AT DECEMBER 31, 1996
---------------------------
ACTUAL AS ADJUSTED(4)
-------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................................ $ 25,747 $ 48,383
Total assets............................................................. 167,665 190,301
Long-term debt........................................................... 109,088 109,088
Shareholders' equity..................................................... 35,251 57,887
</TABLE>

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

(1) "EBITDA" consists of earnings before interest, taxes, depreciation and
amortization. EBITDA should not be construed as an alternative to operating
income (as determined in accordance with generally accepted accounting
principles ("GAAP")) as an indicator of the Company's operating performance,
or to cash flows from operating activities (as determined in accordance with
GAAP) as a measure of liquidity. The Company believes that EBITDA gives an
indication of the cash generating capacity of the Riviera and is useful as a
comparison with other industry participants.

(2) Based on available rooms.

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

(4) As adjusted to give effect to the sale by the Company of 1,750,000 shares of
Common Stock offered hereby based on the last reported sales price of
$14.125 on the AMEX on March 4, 1997 and the application of the net proceeds
therefrom. See "Use of Proceeds."

6
<PAGE> 8

RISK FACTORS

In addition to the other information and financial data set forth elsewhere
in this Prospectus, the following information should be considered carefully by
prospective investors in evaluating the Company, its businesses and an
investment in the Common Stock.

COMPETITION

Intense competition exists in the gaming industry, and many of the
Company's competitors have significantly greater resources than the Company. The
Riviera faces competition from all other casinos and hotels in the Las Vegas
area, principally competitors located on or near the Las Vegas Strip. In recent
months, several of the Company's direct competitors have opened new
casino/hotels or have commenced or completed major expansion projects, and other
casino/hotels and expansions are planned. In addition, a number of new
mega-resorts on the Strip have been announced and are expected to be completed
within the next two years. Expansions or enhancements of existing properties or
the construction of new properties by competitors could have a material adverse
effect on the Company's business.

Management believes that the most direct competition for the Riviera comes
from certain large casino/hotels located on or near the Strip which offer
amenities and marketing programs similar to those offered by the Riviera. These
facilities currently include Bally's Las Vegas, the Flamingo Hilton Hotel, The
Frontier Hotel and Gambling Hall, Harrah's Las Vegas, The Monte Carlo Resort &
Casino, the Sahara Resort & Casino, The Stardust Hotel & Casino and the
Tropicana Resort & Casino. The Riviera competes on the basis of the atmosphere
and excitement offered by the facility, the desirability of its location, the
quality and relative value of its hotel rooms and restaurants, the quality and
variety of entertainment offered, customer service, the availability of
convention facilities, its marketing strategy and special marketing and
promotional programs.

Intense competition also characterizes the Black Hawk/Central City,
Colorado market. Casinos generally compete on the basis of parking, location and
size. There are many casinos currently operating in the Black Hawk/Central City
market, including Colorado Central Station, Harveys Wagon Wheel Hotel/Casino,
Gilpin Hotel Casino, Fitzgeralds Casino Black Hawk, Bullwhackers Black Hawk and
Bullwhackers Central City. In addition, several new development projects and
expansion plans have been announced, including construction of a casino by a
joint venture between Jacobs Entertainment, Ltd. and the owner/operator of
Gilpin Hotel Casino and a project under development by Bullseye Gaming of
Colorado. A number of Colorado casinos have ceased operations and others have
filed for protection under Chapter 11 of the United States Bankruptcy Code.
Others have closed temporarily or reduced the number of their employees. The
Company believes that many Colorado casinos may not be operating profitably. In
Black Hawk, Anchor Gaming has announced that the construction of a new casino
across from its existing property has been halted, and the joint development of
a casino by Nevada Gold & Casinos Inc. and an affiliate of Caesars World Gaming
Development Corporation is also currently inactive.

The Company's Black Hawk Project may compete for customers with casinos
located on Indian reservations in southwestern Colorado. In addition, the
legalization of casino gaming in or near any metropolitan area, such as Denver,
Colorado, from which RBL is expected to draw customers, would have a material
adverse effect on RBL's business. Colorado law requires local voter approval for
any expansion of limited gaming into additional locations. State and local
public initiatives regarding limited gaming in Colorado are being actively
pursued by many persons. Several cities within Colorado have active citizens'
lobbies that were able to place gaming initiatives on recent statewide ballots.
Although these initiatives failed by substantial margins, new initiatives could
be introduced on future statewide ballots to allow expansion of gaming in
Colorado. Future initiatives, if passed, could significantly increase the
competition for gaming customers, thereby adversely affecting RBL's business in
Colorado.

7
<PAGE> 9

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

DEPENDENCE ON LAS VEGAS GAMING MARKET AND DEPENDENCE ON SINGLE PROPERTY

Unlike many of its competitors, the current business of the Company is
totally dependent on gaming in Las Vegas. The Riviera derives a substantial
percentage of its business from tourists, principally from Southern California
and the southwestern United States. Weakness in the economy of Southern
California has in the past and could in the future adversely effect the
financial results of the Company. The Company presently owns only one property,
and as such, the Company's operations are primarily dependent upon the results
achieved by the Riviera. Any significant disruption in operations at the Riviera
would have a material adverse effect on the Company.

COLORADO OPERATIONS

Completion of Black Hawk Project. Completion of the Black Hawk Project is
subject to a number of conditions. These conditions include obtaining
commitments for approximately $33 million of mortgage and equipment financing on
satisfactory terms, obtaining bonded fixed price construction and completion
contracts, obtaining regulatory approvals for the Black Hawk Project and
completing a development and operating agreement with Eagle. There can be no
assurance that these and other conditions to the Black Hawk Project can be
satisfied on terms satisfactory to the Company.

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

Environmental Considerations. The Black Hawk Project site is located in an
area that has been designated by the Environmental Protection Agency (the "EPA")
as a superfund site on the National Priorities List, known as the Central
City-Clear Creek Superfund Site (the "Site"), as a result of contamination from
historical mining activity in the area. The EPA is entitled to proceed against
owners and operators of properties located within the Site for remediation and
response costs. The Black Hawk Project site is located within the drainage basin
of North Clear Creek and is subject to potentially contaminated surface and
ground water from mining-related sources. Ground water samples on the site
indicate that several contaminants exist in concentrations exceeding drinking
water standards. In addition, the handling of contaminated soil and groundwater
within the site can increase construction costs significantly.

8
<PAGE> 10

Adverse Mining Claim. A portion of the Black Hawk Project site may be
subject to an adverse "placer mining" claim against title. A placer mining claim
is made under federal statute by mining claimants who are able to show that, at
the time of a federal patent of land for a townsite, the subject land was known
to be valuable for mineral deposits. Placer gold is a secondary deposit of gold
often found as nuggets or free gold.

In March 1994, Smith Hill Ventures, Inc. located a federal unpatented
placer mining claim (the "Placer Claim") on a portion of the Black Hawk Project
site, claiming the land to be valuable for placer gold. By a decision dated
February 7, 1997 (the "Decision") of the Colorado State Office of the Bureau of
Land Management, the Placer Claim was declared null and void. The time to appeal
the Decision has not expired and it is possible that Smith Hill Ventures, Inc.
may appeal the Decision to the Interior Board of Land Appeals. The Company
believes that the appeal process, if pursued, would be lengthy. If the Placer
Claim were upheld on appeal, the Black Hawk Project could be seriously and
adversely affected, since the mining claimant would have, subject to necessary
permitting and zoning, the right to develop its mining interest. As a condition
to the equity funding of RBL, Eagle has committed to obtain a title policy
covering losses of up to $38 million resulting from the Placer Claim, if finally
validated.

FIRST MORTGAGE NOTES

The Company has outstanding $100.0 million of 11% Mortgage Notes due
December 31, 2002 (the "First Mortgage Notes"). The First Mortgage Notes have a
lien on all of the assets of the Company and ROC except for certain furniture,
fixtures and equipment, including gaming equipment ("FF&E") acquired after June
1993. The First Mortgage Note Indenture (the "Note Indenture") contains a number
of provisions which (i) restrict the Company's ability to expand its operations,
(ii) require the Company to meet certain financial ratios, (iii) prohibit
redemption of the First Mortgage Notes at the Company's option prior to June 1,
1998 and thereafter require payment of a substantial redemption premium and (iv)
trigger an optional "put" in the event of the acquisition of a majority of the
Common Stock by a third party. See "Description of Capitalization -- First
Mortgage Notes."

The Company's ability to invest in distressed or new gaming properties may
be limited by the Note Indenture covenants. Further, commencement of future
phases of the Master Plan for the Riviera would require substantial amendments
to the Note Indenture or the early refinancing of the First Mortgage Notes. The
Company's present resources are insufficient to enable the Company to pay the
$100.0 million of principal on the First Mortgage Notes when they mature on
December 31, 2002 and the Company expects that it will have to refinance the
First Mortgage Notes at their maturity. There can be no assurance that the
Company will be able to obtain the requisite consents to waivers or amendments
of the Note Indenture covenants or refinance the First Mortgage Notes on
reasonable terms. See "Description of Capitalization -- First Mortgage Notes."

BUSINESS AND GROWTH STRATEGY; NEED FOR ADDITIONAL FINANCING

Completion of the Black Hawk Project will require significant financing.
See "-- Colorado Operations -- Completion of Black Hawk Project." Implementation
of the Master Plan for the Riviera could entail significant development and
construction risks which can give rise to delays or cost overruns and could
cause major disruptions to existing operations. In addition, completion of the
Master Plan will require significant financing from third parties. There can be
no assurance that the Company will be able to obtain the necessary financing on
satisfactory terms, if at all.

While the Company intends to expand its business by managing additional
gaming properties and acquiring and developing new gaming properties, there can
be no assurance that it will be able to do so or that projects will become
operational within the time frames and budgets contemplated by management.
Further, to the extent that the Company is successful in its expansion strategy,
it

9
<PAGE> 11

will face the inherent risks associated with the change from managing a single
property to managing multiple properties.

DEPENDENCE ON KEY PERSONNEL

The loss of the services of one or more of the Company's executive officers
could have a material adverse effect on the Company. The Company has an
employment agreement only with William L. Westerman, Chairman and Chief
Executive Officer. The success of the Company's plan to manage distressed gaming
properties and to acquire or develop new gaming properties may be limited by its
ability to attract and retain additional senior management. See "Management --
Employment Agreements."

SUSTAINABILITY OF RECENT IMPROVEMENTS IN OPERATING RESULTS

As a result of management's implementation of a new business strategy for
the Riviera, the Company has experienced substantial improvements in operating
income since emerging from bankruptcy in 1993. There can be no assurance that
this trend will continue. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

REGULATION

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

The Company's plan to manage additional gaming properties and to acquire
and develop new gaming properties, including the Black Hawk Project, will
require many permits, licenses and approvals. These could include, without
limitation, gaming approvals, state and local land-use permits, building and
zoning permits and liquor licenses. Unexpected changes or concessions required
by local, state or federal regulatory authorities could involve significant
additional costs and delay or prevent the scheduled openings of the facilities.

CERTAIN ANTI-TAKEOVER PROVISIONS

The Company's Second Restated Articles of Incorporation contain certain
provisions that are intended to discourage an unsolicited takeover of the
Company if the Board of Directors determines that such a takeover is not in the
best interests of the Company and its shareholders. These provisions could have
the effect of discouraging certain attempts to acquire the Company or remove
incumbent management even if holders of some or a majority of the Common Stock
deemed such an attempt to be in their best interests, including those attempts
that might result in a premium over the market price for the shares of Common
Stock. In addition, various corporate and gaming law provisions of the Nevada
Revised Statutes contain requirements and limitations that may have the effect
of discouraging unsolicited shareholder action or takeover bids from third
parties. See "Description of Capitalization -- Certain Anti-Takeover Effects"
and "Business -- Regulation and Licensing."

10
<PAGE> 12

THE RIVIERA HISTORY

Opened in 1955, the Riviera was one of the original casino/hotels on the
Las Vegas Strip catering to high stakes gamblers. Riviera, Inc. acquired the
assets of Hotel Riviera, Inc. ("Old Riviera"), the previous owner of the
Riviera, in 1986 as part of a bankruptcy reorganization. The bankruptcy
reorganization of Old Riviera resulted primarily from the combined effects of
increased debt service during the early 1980s and a significant decline in
revenues during the same period due to weakness in the high-stakes gaming market
on which Old Riviera was largely dependent.

During 1989 and 1990, the indebtedness and operating expenses of Riviera,
Inc. increased significantly, primarily as a result of the construction of a new
hotel tower on the property with approximately 1,000 rooms and the expansion of
the casino area. Furthermore, as a result of (i) construction budget overruns,
(ii) the closure of a portion of the casino during the expansion of the casino
floor and the disruption caused thereby, (iii) a fire at the construction site,
(iv) increased competition from new and expanded casino/hotels on the Las Vegas
Strip (including the opening in 1989 of The Mirage with 3,000 rooms and the
opening in 1990 of the Excalibur with 4,000 rooms) and (v) weakness in the
economy of the United States, the revenues of the Riviera did not increase in an
amount sufficient to offset the increase in expenses resulting in Riviera, Inc.
filing for protection under Chapter 11 of the United States Bankruptcy Code in
December 1991.

A plan of reorganization (the "Plan") became effective on June 30, 1993,
pursuant to which the Company issued 4,800,000 shares (after giving effect to
subsequent stock splits) of Common Stock and an aggregate principal amount of
$100.0 million of First Mortgage Notes to the secured creditors of Riviera, Inc.
An aggregate principal amount of $20.0 million of non-interest bearing notes was
also issued to other creditors of Riviera, Inc.

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 1,750,000 shares of
Common Stock offered by the Company hereby (at an assumed offering price of
$14.125 per share and after deducting underwriting discounts and commissions and
estimated offering expenses) are estimated to be approximately $22.6 million
($28.6 million if the Underwriters' over-allotment option is exercised in full).

The Company intends to use the net proceeds of the Offering to purchase an
approximately 80% interest in RBL, which will develop the Black Hawk Project.
The estimated total cost of the Black Hawk Project is approximately $55 million
and management estimates that, in addition to the equity financing of RBL,
approximately $33 million in mortgage and equipment financing will be required
to complete the Black Hawk Project. RBL currently does not have any commitments
for such financing. In addition, the Company has committed to provide a
completion guaranty of up to $5.0 million, against which funds are to be held in
escrow for unanticipated project cost overruns prior to the completion of the
Black Hawk Project. Eagle may elect to increase its equity contribution in RBL
up to a total ownership interest of 49.9% by acquiring such additional ownership
interest from the Company at cost at any time prior to the date on which RBL is
licensed by the Colorado gaming authorities. Any increase in Eagle's ownership
interest would correspondingly reduce the size of the Company's investment in
RBL, and increase the amount of net proceeds available to the Company for other
purposes. It is anticipated that construction of the casino will begin in the
third quarter of 1997 and will be completed by the middle of 1998.

The Company expects that any remaining net proceeds will be added to
working capital, including for use in connection with the multi-phase expansion
of the Riviera's present property under the Master Plan.

Pending such uses, the net proceeds will be invested in short-term interest
bearing investment grade securities. The Company will not receive any of the
proceeds from the sale of shares of Common Stock by the Selling Shareholders.

11
<PAGE> 13

PRICE RANGE OF COMMON STOCK

The Common Stock began trading on the American Stock Exchange (AMEX symbol:
RIV) on May 13, 1996. Prior to such time, the Common Stock was traded on the
over-the-counter market. The following table sets forth the high and low sales
price per share of the Common Stock for the periods indicated as reported on the
over-the-counter market and on the AMEX. Prior to the first quarter of 1995,
there was extremely limited trading in the Common Stock.

<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
1995
First Quarter................................................ $ 4.89 $ 4.09
Second Quarter............................................... 9.38 3.96
Third Quarter................................................ 12.15 8.72
Fourth Quarter............................................... 10.55 7.64
1996
First Quarter................................................ $ 10.55 $ 8.44
Second Quarter (through May 12, 1996)........................ 15.31 9.23
Second Quarter (beginning May 13, 1996)...................... 17.75 11.00
Third Quarter................................................ 17.13 14.00
Fourth Quarter............................................... 15.63 12.94
1997
First Quarter (through March 4, 1997)........................ $ 14.50 $ 13.50
</TABLE>

On March 4, 1997, the last reported sale price of the Common Stock was
$14.125 per share. As of March 4, 1997 there were approximately 135 holders of
record of Common Stock. Based upon information available to it, the Company
believes that there are approximately 1,319 beneficial holders of Common Stock.

DIVIDEND POLICY

The Company has not paid any cash dividends on its Common Stock. The
Company currently anticipates that it will retain future earnings to fund the
development and growth of its business and does not anticipate paying cash
dividends in the foreseeable future. Restrictions imposed by the Note Indenture
also limit the ability of the Company to pay cash dividends. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and "Description of
Capitalization -- First Mortgage Notes."

12
<PAGE> 14

CAPITALIZATION

The following table sets forth at December 31, 1996, (i) the capitalization
of the Company, and (ii) the capitalization of the Company as adjusted to give
effect to the sale by the Company of 1,750,000 shares of Common Stock offered
hereby (at an assumed offering price of $14.125 per share) after deducting
underwriting discounts and commissions and estimated offering expenses and the
application of the net proceeds therefrom. This table should be read in
conjunction with the consolidated financial statements of the Company, which are
included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
DECEMBER 31, 1996
------------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Short-term debt and current portion of long-term debt............... $ 1,550 $ 1,550
======== ========
Long-term debt, less current portion................................ $107,538 $ 107,538
-------- --------
Shareholders' equity:
Common Stock, $.001 par value, 20,000,000 shares authorized;
4,922,503 shares outstanding actual(1);
6,672,503 shares outstanding as adjusted(1).................... 5 7
Additional paid-in capital........................................ 13,919 36,553
Notes due from employees.......................................... (853) (853)
Retained earnings................................................. 22,180 22,180
-------- --------
Total shareholders' equity..................................... 35,251 57,887
-------- --------
Total capitalization...................................... $142,789 $ 165,425
======== ========
</TABLE>

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

(1) Excludes (i) 1,050,000 shares of Common Stock reserved for issuance upon the
exercise of stock options under the Company's 1993 Stock Option Plan and
Non-Qualified Stock Option Plan for Non-Employee Directors of which options
to purchase 774,000 shares have been granted as of the date hereof, (ii)
226,620 shares reserved for issuance under the Company's Employee Stock
Purchase Plan and Compensation Plan for Directors serving on the
Compensation Committee and (iii) 100,000 shares of Common Stock reserved for
issuance upon the exercise of warrants to be issued to Ladenburg if
Ladenburg arranges debt financing for RBL. See "Management" and
"Underwriting."

13
<PAGE> 15

SELECTED FINANCIAL DATA

The selected financial data as of December 31, 1992, 1993, 1994, 1995 and
1996 and for the year ended December 31, 1992, the six months ended June 30,
1993 and December 31, 1993 and the years ended December 31, 1994, 1995 and 1996
have been derived from the audited financial statements of the Company and its
predecessor and should be read in conjunction with the Financial Statements and
the related Notes thereto, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and other information included elsewhere in
this Prospectus.

<TABLE>
<CAPTION>
YEAR SIX MONTHS ENDED YEARS ENDED DECEMBER 31,
ENDED --------------------------- --------------------------------------------------
DEC. 31, JUNE 30, DEC. 31, COMBINED
1992 1993 1993 1993 1994 1995 1996
------------- ------------- ----------- -------- ----------- ----------- -----------
(PREDECESSOR) (PREDECESSOR) (SUCCESSOR)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND ADR DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Casino.................... $ 75,975 $38,073 $41,158 $79,231 $82,060 $77,337 $80,384
Rooms..................... 33,474 17,614 17,808 35,422 35,422 39,848 41,835
Food and beverage......... 22,557 11,656 11,760 23,416 22,961 21,895 22,641
Entertainment............. 19,046 8,059 8,422 16,481 16,945 14,423 20,883
Other..................... 8,369 4,116 4,230 8,346 9,390 9,515 11,293
Less promotional
allowances.............. (14,919) (6,816) (7,157) (13,973) (12,857) (11,873) (12,627)
------- ------- ------- ------- ------- ------- -------
Net revenues............ 144,502 72,702 76,221 148,923 153,921 151,145 164,409
------- ------- ------- ------- ------- ------- -------
Costs and Expenses:
Casino.................... 46,892 24,559 25,533 50,092 48,826 45,325 47,509
Rooms..................... 16,233 8,339 8,456 16,795 17,594 18,787 18,834
Food and beverage......... 15,592 7,427 7,796 15,223 15,588 15,768 15,916
Entertainment............. 15,152 7,051 7,897 14,948 13,982 10,329 15,290
Other..................... 3,256 1,737 1,839 3,576 3,516 3,527 3,913
Selling, general and
administrative.......... 25,534 12,707 13,534 26,241 28,822 29,618 31,454
Depreciation and
amortization............ 13,230 2,622 2,399 5,021 5,674 6,811 8,212
Loss on permanent
impairment of assets.... 85,221 -- -- -- -- -- --
------- ------- ------- ------- ------- ------- -------
Total costs and
expenses.............. 221,110 64,442 67,454 131,896 134,002 130,165 141,128
------- ------- ------- ------- ------- ------- -------
Income (loss) from
operations................ (76,608)(1) 8,260 8,767 17,027 19,919 20,980 23,281
Interest expense, net....... 434 (2) 2,632(2) 6,160 8,792(2) 12,254 11,304 10,413
Provision for income
taxes..................... -- -- -- -- 2,875 3,332 4,428
Net income (loss)......... (80,905)(1)(2) 5,628(2) 2,607 8,235(2) 4,790 6,344 8,440
Net income (loss) per
share..................... -- -- $ 0.54 -- $ 1.00 $ 1.26 $ 1.63
Weighted average shares
outstanding (000)......... -- -- 4,800 -- 4,800 5,041 5,178
OTHER DATA:
EBITDA(3)................... $ 21,843 $10,882 $11,166 $22,048 $25,593 $27,791 $31,493
Cash flows from operating
activities................ 13,130 8,517 766 9,283 16,372 16,740 18,290
Cash flows used in investing
activities................ (2,073) (1,478) (4,307) (5,785) (10,439) (8,218) (13,017)
Cash flows used in financing
activities................ (729) (2,311) (4,658) (6,969) (2,696) (2,983) (1,488)
Average occupancy rate(4)... 90.6% 92.4% 95.0% 93.7% 97.5% 97.0% 98.2%
Average daily room rate
(ADR)..................... $ 47.00 $ 51.63 $ 49.33 $ 50.42 $ 47.51 $ 54.69 $ 57.09
Number of slot
machines(5)............... 1,218 1,218 1,207 1,207 1,203 1,226 1,312
Number of gaming
tables(5)................. 74 70 70 70 56 56 55
</TABLE>

14
<PAGE> 16

<TABLE>
<CAPTION>
AT DECEMBER 31, AT DECEMBER 31, 1996,
------------------------------------------------- -------------------------
1992 1993 1994 1995 ACTUAL AS ADJUSTED(6)
------------- ----------- -------- -------- -------- --------------
(PREDECESSOR) (SUCCESSOR)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents......................... $ 16,659 $ 21,387 $ 16,423 $ 21,962 $ 25,747 $ 48,383
Total Assets...................................... 145,631 143,704 151,925 157,931 167,665 190,301
Long-term debt.................................... 133,255 114,540 113,154 110,571 109,088 109,088
Shareholders' Equity.............................. (114,358) 15,148 19,938 26,282 35,251 57,887
</TABLE>

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

(1) Includes a recognized loss on the permanent impairment of assets during the
bankruptcy in the amount of $85.2 million to record the fair market value of
the property and equipment.

(2) There was no accrual of interest on debt subsequent to December 18, 1991. If
accrued, interest expense on these obligations would have totaled $21.4
million and $10.4 million for the year ended December 31, 1992 and for the
six months ended June 30, 1993, respectively.

(3) "EBITDA" consists of earnings before interest, taxes, depreciation and
amortization. EBITDA should not be construed as an alternative to operating
income (as determined in accordance with GAAP) as an indicator of the
Company's operating performance, or to cash flows from operating activities
(as determined in accordance with GAAP) as a measure of liquidity. The
Company believes that EBITDA gives an indication of the cash generating
capacity of the Riviera and is useful as a comparison with other industry
participants.

(4) Based on available rooms.

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

(6) As adjusted to give effect to the sale by the Company of 1,750,000 shares of
Common Stock offered hereby based on the last reported sales price of
$14.125 on the AMEX on March 4, 1997 and the application of the net proceeds
therefrom. See "Use of Proceeds."

15
<PAGE> 17

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

RESULTS OF OPERATIONS

The following table sets forth the Company's income statement data as a
percentage of net revenues (unless otherwise noted) for the Company for the
periods indicated:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Casino............................................ 53.3% 51.2% 48.9%
Rooms............................................. 23.0 26.4 25.4
Food and beverage................................. 14.9 14.5 13.8
Entertainment..................................... 11.0 9.5 12.7
Other............................................. 6.1 6.3 6.9
Less promotional allowances....................... (8.3) (7.9) (7.7)
----- ----- -----
Net revenues................................... 100.0 100.0 100.0
----- ----- -----
Costs and Expenses:
Casino(1)......................................... 59.5 58.6 59.1
Rooms(1).......................................... 49.7 47.1 45.0
Food and beverage(1).............................. 67.9 72.0 70.3
Entertainment(1).................................. 82.5 71.6 73.2
Other(1).......................................... 37.4 37.1 34.6
Selling, general and administrative............... 18.7 19.6 19.1
Depreciation and amortization..................... 3.7 4.5 5.0
Total costs and expenses............................ 87.1 86.1 85.8
Income from operations.............................. 12.9 13.9 14.2
Interest expense, net............................... 8.0 7.5 6.3
Income before provision for taxes................... 5.0 6.4 7.8
Provision for income taxes.......................... 1.9 2.2 2.7
Net income.......................................... 3.1% 4.2% 5.1%
</TABLE>

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

1996 COMPARED TO 1995

Revenues

Net revenues increased by approximately $13.3 million, or 8.8%, from $151.1
million in 1995 to $164.4 million in 1996. Casino revenues increased by
approximately $3.0 million, or 3.9%, from $77.3 million in 1995 to $80.4 million
in 1996 due primarily to a $2.9 million, or 5.4%, increase in slot revenues as a
result of an increase in promotional activities directed at slot players. Room
revenues increased by approximately $2.0 million, or 5.0%, from $39.8 million in
1995 to $41.8 million in 1996 as a result of an increase in hotel occupancy from
97.0% to 98.2% (based on available rooms) and an increase in average room rate
of $2.40, or 4.4%. Food and beverage revenues increased approximately $700,000,
or 3.4%, from $21.9 million in 1995 to $22.6 million in 1996 due to additional
covers in the bars and restaurants. Entertainment revenues increased by
approximately $6.5 million, or 44.8%, from $14.4 million in 1995 to $20.9
million in 1996. This was principally due to the reopening of the Splash variety
show which had been closed during the first half of 1995 for show revisions and
theater remodeling. Other revenues increased by approximately $1.8 million, or
18.7%, from $9.5 million in 1995 to $11.3 million in 1996 due primarily to a
refund of $576,000 from a union health and welfare trust fund for reduced
premiums and general increases in other revenues such

16
<PAGE> 18

as telephone, gift shops and box office commissions. In addition, the Company
received management fees of approximately $400,000 for operating the Four Queens
Hotel/Casino in downtown Las Vegas beginning in August 1996. Promotional
allowances increased by approximately $700,000, or 6.4%, from $11.9 million in
1995 to $12.6 million in 1996 due to additional complimentary show tickets for
the Splash show and an increase in complimentaries associated with casino and
slot marketing programs.

Direct Costs and Expenses of Operating Departments

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

Other Operating Expenses

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

Other Income (Expense)

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

Net Income

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

17
<PAGE> 19

EBITDA

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

1995 COMPARED TO 1994

Revenues

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

Direct Costs and Expenses of Operating Departments

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

Other Operating Expenses

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

18
<PAGE> 20

debts as a result of stricter credit policies during 1995. Depreciation and
amortization increased by approximately $1.1 million, or 20.0%, from $5.7
million in 1994 to $6.8 million in 1995.

Other Income (Expense)

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

Net Income

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

EBITDA

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

LIQUIDITY AND CAPITAL RESOURCES

The Company had cash and cash equivalents of $25.7 million at December 31,
1996, which was an increase of $3.8 million from the balances at December 31,
1995. Significant debt service on the First Mortgage Notes and other debt issued
pursuant to the Plan is paid in June and December and should be considered in
evaluating cash increases in the first and third quarters.

For the year ended December 31, 1996, the Company's net cash provided by
operating activities was $18.3 million compared to $16.7 million for 1995.
EBITDA for 1996 and 1995 was $31.5 million and $27.8 million, respectively,
which was adequate to cover the Company's debt service and capital expenditures.
Management believes that sufficient cash flow will be available to cover the
Company's debt service and enable investment in budgeted capital expenditures
for the next 12 months.

Scheduled interest payments on the First Mortgage Notes and other
indebtedness are $12.1 million in 1996 declining to $11.0 million in 2002. Cash
flow from operations is not expected to be sufficient to pay 100% of the
principal of the First Mortgage Notes at maturity in 2002. Accordingly, the
ability of the Company to repay the First Mortgage Notes at maturity will be
dependent upon its ability to refinance the First Mortgage Notes. There can be
no assurance that the Company will be able to refinance the principal amount of
the First Mortgage Notes at maturity. The First Mortgage Notes are not
redeemable at the option of the Company until June 1, 1998, and thereafter are
redeemable at premiums beginning at 104.3125% and declining each subsequent year
to par in 2001.

The Note Indenture provides for mandatory redemption by the Company upon
the order of the Nevada Gaming Authorities. The Note Indenture also provides
that, in certain circumstances, the Company must offer to repurchase the First
Mortgage Notes upon the occurrence of a change of control or certain other
events. In the event of such mandatory redemption or repurchase prior to
maturity, the Company would be unable to pay the principal amount of the First
Mortgage Notes without a refinancing.

The Note Indenture imposes certain financial covenants and restrictions on
the Company and ROC, including a minimum consolidated net worth requirement and
limitations on the payment of dividends, the incurrence of debt and granting of
liens, capital expenditures and mergers and sales of assets. As a result of
these restrictions, the ability of the Company and ROC to incur additional

19
<PAGE> 21

indebtedness to fund operations or to make capital expenditures is limited. In
the event that cash flow from operations is insufficient to cover cash
requirements, the Company and ROC may not be able to obtain additional funds.
The Company and ROC would be required to curtail or defer certain of their
capital expenditure programs under these circumstances, which could have an
adverse effect on the Company's operations.

Effective September 8, 1995, the Note Indenture was amended to permit the
Company's management team to utilize its expertise in turning around troubled
gaming properties which are either in, or on the verge of, bankruptcy and
managing casinos in "new venues."

In February 1997, the Company entered into a $15.0 million, five year
reducing revolving line of credit collateralized by equipment (the "Credit
Facility"). The revolving line of credit bears interest at prime plus 0.5% or
LIBOR plus 2.9%. The Company has not utilized this line of credit.

During the reorganization proceeding of Riviera, Inc., certain capital
expenditures were deferred. Management considers it important to the competitive
position of the Riviera that expenditures be made to upgrade the property.
Capital expenditures totaled approximately $8.9 million in 1994, $7.8 million in
1995 and $14.9 million in 1996. Management has budgeted approximately $13.0
million for capital expenditures in 1997. The Company expects to finance such
capital expenditures from cash flow and the Credit Facility.

FORWARD LOOKING STATEMENTS

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

RECENTLY ADOPTED ACCOUNTING STANDARDS

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

In October 1995, the Financial Accounting Standards Board ("FASB") issued
SFAS 123 Accounting for Stock-Based Compensation which establishes financial
accounting and reporting standards for stock-based employee compensation plans
and for transactions in which an entity issues its equity instruments to acquire
goods or services from non-employees. The Company continues to account for
stock-based compensation arrangements in accordance with Accounting Principles
Board No. 25, "Accounting for Stock Issued to Employees" and therefore the
adoption of SFAS 123 had no effect on the financial position or results of
operations of the Company. The Company has provided the pro forma and other
additional disclosures about stock-based employee compensation plans in its 1996
consolidated financial statements as required by SFAS 123.

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<PAGE> 22

BUSINESS

GENERAL

Riviera Holdings Corporation owns and operates the Riviera Hotel & Casino
located on the Strip in Las Vegas, Nevada. The Riviera caters to adults seeking
traditional Las Vegas-style gaming and entertainment. The Riviera is situated on
a 26-acre site across the Strip from Circus Circus and adjacent to the Las Vegas
Hilton and the Las Vegas Convention Center. The property features approximately
2,100 hotel rooms (including 169 suites), 105,000 square feet of casino space, a
100,000 square-foot convention, meeting and banquet facility (one of the largest
in Las Vegas), four full-service restaurants, a 430-seat buffet, four showrooms,
a 200-seat entertainment lounge, 47 food and retail concessions and
approximately 2,900 parking spaces. The casino contains approximately 1,300 slot
machines, 50 gaming tables, a keno lounge and a 200-seat race and sports book.
The Riviera also offers one of the most extensive entertainment programs in Las
Vegas, including such popular shows as Splash, An Evening at La Cage, Crazy
Girls and Bottoms Up and featured comedians at the Riviera Comedy Club.

BUSINESS AND GROWTH STRATEGY

Over the past several years, management initiated a number of strategic
changes at the Riviera to reposition the property to compete in the Las Vegas
gaming market. The Company has formulated a business and growth strategy to
maintain the competitive position of the Riviera as well as grow the Company.
The key elements of the Company's business and growth strategy are discussed
below.

Develop New Casino/Hotels

The Company intends to pursue a growth strategy by developing or acquiring
casino/hotel properties in Nevada and other jurisdictions. As part of this
strategy, on March 4, 1997, the Company entered into a letter of intent with
Eagle to form RBL as a joint venture to develop the Black Hawk Project at what
management believes is the premier gaming site in the Black Hawk/Central City,
Colorado gaming market. The 71,000 square foot site, zoned entirely for gaming,
is the first gaming site encountered when traveling from Denver and is
approximately an hour drive from and 40 miles west of Denver. Approximately
three million people live within a 100-mile radius of Black Hawk/Central City
and casinos in the market generated gaming revenues of approximately $291
million in 1995 and $309 million in 1996.

21
<PAGE> 23

In addition to the Black Hawk Project , the Company also plans to review
and selectively acquire or develop casino/hotel properties both in Nevada and
other jurisdictions. These other jurisdictions may include Michigan and Mexico.
Other than the Black Hawk Project, the Company does not presently have any
agreements in principle for involvement in any new or financially troubled
projects. See "Description of Capitalization -- First Mortgage Notes" for
covenant restrictions on the Company's ability to invest in new opportunities.

Manage Distressed Casino/Hotel Properties

In order to capitalize on management's experience in repositioning and
managing the Riviera through the bankruptcy process, the Company formed RGM for
the primary purpose of obtaining casino management contracts with financially
distressed casino/hotels in Nevada and other jurisdictions. Since August 1996,
RGM has been managing the Four Queens located adjacent to the Golden Nugget on
Fremont Street in downtown Las Vegas. Under the Four Queens management contract,
RGM receives a guaranteed minimum management fee plus additional compensation,
based on EBITDA improvement of the Four Queens, and warrants to purchase 20% (on
a fully diluted basis) of the equity of the Four Queens' parent.

Continue to Improve Performance of the Riviera

The Riviera will continue to emphasize marketing programs that appeal to
slot and mid-level table game customers with a focus on creating repeat
customers and increasing walk-in traffic. Key elements of this strategy include
offering a value-oriented experience by providing a variety of hotel rooms,
restaurants and entertainment, with some of Las Vegas' most popular shows, all
at reasonable prices. The Company is continuing an extensive capital investment
program at the Riviera, including completion of the upgrade of its slot machines
in the second quarter of 1997 and the refurbishment of all its hotel rooms,
which is expected to be completed in the fall of 1997. In addition, the Company
will focus its marketing to take advantage of the Riviera's location by
capitalizing on the anticipated increase in walk-in traffic from the addition of
1,000 rooms across the Strip at Circus Circus and the expansions of the Las
Vegas Hilton and the Las Vegas Convention Center.

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

Create Repeat Customers. Generating customer loyalty is a critical
component of management's business strategy as retaining customers is less
expensive than attracting new ones. The Company generates repeat customers by
(i) providing a high level of service to its customers to ensure an enjoyable
experience while at the Riviera, (ii) responding to customer surveys and (iii)
focusing marketing efforts and promotional programs on customers with positive
gaming profiles.

Provide Extensive Entertainment Options. The Company believes
entertainment provides an attractive marketing tool to attract customers to the
Riviera. The Riviera offers one of the most

22
<PAGE> 24

extensive entertainment programs in Las Vegas, including such well received
shows as Splash (a variety show), An Evening at La Cage (a female impersonation
show), Crazy Girls (an adult revue) and Bottoms Up (a burlesque-style show) as
well as featured comedians at the Riviera Comedy Club. The Company continually
updates its shows in response to customer surveys and to keep them fresh.
Tickets for the shows are offered at reasonable prices in keeping with the
Company's emphasis on mid-level customers.

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

Focus on Convention Customers. The Riviera targets convention business
because it typically provides patrons willing to pay higher room rates and it
provides certain advance planning benefits, since conventions are usually booked
two years in advance of the event date. The Riviera has 100,000 square feet of
exhibit, meeting and banquet space (one of the largest convention facilities
provided by a casino/hotel in Las Vegas) making it attractive to large groups.
Management focuses its marketing efforts on conventions whose participants have
the most active gaming profile and higher room rate, banquet and function
spending habits. The Riviera also benefits from its proximity to the Las Vegas
Convention Center which makes it attractive to city-wide conventioneers looking
to avoid the congestion that occurs during a major convention, particularly at
the south end of the Strip.

Further Develop the Riviera

The Company has engaged architects and designers to prepare a Master Plan
for the existing 26-acre site. The Company believes that implementation of the
Master Plan will attract additional customers.

Phase I. The initial phase of the Master Plan will include a 40,000 square
foot expansion of the 100,000 square foot convention, meeting and banquet
facility at an estimated cost of approximately $6 million. The Company derives
approximately 25% of its hotel occupancy from convention customers and considers
them a critical component of its customer base. Management believes that an
expansion of the convention space is necessary to accommodate the growth in the
size and number of the groups that presently use the facility as well as new
groups. Phase I will also include the redevelopment of the approximately 20,000
square feet of vacant space fronting the Las Vegas Strip, across from Circus
Circus, to attract walk-in traffic as well as tourists throughout the city.

Future Phases. Future Phases may include development of an approximately
60,000 square foot domed shopping and entertainment complex to be constructed
directly over the casino and containing stores and entertainment that will
appeal to the Riviera's main target audience, adults aged 45 to 70. The exit
from the complex will be by an escalator which will deliver patrons to the
casino. The Company expects to find partners to finance, develop and operate the
entertainment attraction and retail stores. The Company also has approximately
nine acres available for additional development. The Company is exploring a
number of options in order to make the best use of this valuable land.

As part of the Master Plan, the Company is considering a joint venture for
the development of a time-share condominium tower. The Company expects to
contribute land to the joint venture and a third party would construct and sell
time-share units and arrange financing. Management believes

23
<PAGE> 25

that additional rooms adjacent to the Las Vegas Convention Center would be
particularly attractive to business customers and would provide a base of
additional casino customers. Other potential development projects include the
construction of a new hotel tower and additional parking facilities. The
development of a time-share tower, hotel tower or parking facility would require
additional financing, a release of restrictions under the Note Indenture and, in
the case of the time-share tower, a joint venture partner, none of which the
Company has in place at this time.

THE RIVIERA

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

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

Gaming operations at the Riviera are continually monitored and modified to
respond to both changing market conditions and customer demand in an effort to
attract new customers, retain existing customers, and encourage repeat customer
business. New and innovative slot and table games have been introduced based on
customer feedback. Management devotes substantial time and attention to the
type, location and player activity of all its slot machines. The Company is
continuing an extensive capital investment program for the upgrade of its slot
machines which is expected to be completed in the second quarter of 1997.

The current management team has made an effort to redirect its business
away from high-stakes wagerers and to focus, instead, on mid-level gaming
customers and thus has implemented stricter credit policies and a reduction of
baccarat table limits. As a result, the percentage of table game dollar volume
represented by credit play declined from approximately 24% in 1993 to 15% in
1996. Because the extension of credit is not as necessary for success with
mid-level gaming customers, management expects that providing credit, and the
risks associated with possible losses on uncollectible and discounted
receivables, will continue to be less significant to the casino. However,
because management intends to maintain a balanced marketing strategy which will
include some level of credit being extended, providing credit and the risks
associated therewith will remain. Receivables from casino operations declined
from approximately $2.9 million at December 31, 1993 to approximately $2.3
million at December 31, 1996 and the allowance for bad debts and discounts from
casino operations declined from approximately $763,000 to $432,000 during the
same period. These reductions resulted primarily from the imposition of stricter
credit standards. Management maintains strict controls over the issuance of
credit and aggressively pursues collection of its customer receivables.

Hotel. The Riviera's hotel is comprised of five hotel towers with
approximately 2,100 rooms, including 169 suites. Built in 1955 as part of the
original casino/hotel, the nine-story North Tower features 391 rooms and 11
suites. In 1967, the 12-story South Tower was built with 147 rooms and 31
suites. Another 220 rooms and 72 suites including penthouse suites were added to
the property through the construction of the 17-story Monte Carlo Tower in 1974.
In 1977, the six-story San Remo Tower added 243 rooms and six suites to the
south side of the resort. The most recent phase of hotel expansion was completed
in 1988 upon the opening of the 930 room, 49 suite, 24-story Monaco Tower. The
Company is currently refurbishing all of its rooms, with approximately 1,100
completed through the end of 1996 and the balance expected to be completed in
the fall of 1997. Management believes that the Riviera has attained room
occupancy rates that are among the

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<PAGE> 26

highest on the Strip with 97.5% for 1994, 97.0% for 1995, and 98.2% for 1996
(based on available rooms).

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

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

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

Convention Center. The Riviera features 100,000 square feet of convention,
meeting and banquet space. The convention center is one of the largest in Las
Vegas and is an important feature that attracts customers. The facility can be
reconfigured for multiple meetings of small groups or large gatherings of up to
5,000 people. The Riviera hosts approximately 150 conventions per year. As of
December 31, 1996, the Riviera had over 440,000 confirmed convention-related
room nights for 1997 and 1998. On average, approximately 25% of the rooms are
occupied for conventions. See "Business and Growth Strategy -- Further Develop
the Riviera" for a description of potential expansion of the convention center.

Entertainment and Other. The Riviera has one of the most extensive
entertainment programs in Las Vegas, offering five different regularly scheduled
shows and special appearances by headline entertainers in concert. The five
in-house productions are regularly updated and changed. In November 1994, the
award winning Splash production was closed in order to revise the show and
remodel the showroom for the new Splash, which opened on June 23, 1995. A
summary of the shows and times is outlined below:

<TABLE>
<CAPTION>
SEATING
SHOW TYPE PERFORMANCE TIMES CAPACITY
----------------------- ----------------------- -------------------------- --------
<S> <C> <C> <C>
Splash................. Variety show Twice a night, seven 950
nights per week
An Evening at La Cage.. Female impersonation Twice a night, five nights 575
per week; three times on
Wednesday
Crazy Girls............ Adult-oriented Twice a night, five nights 410
production per week; three times per
night on Saturday
Bottoms Up............. Afternoon burlesque Twice a day, five days per 410
show week
The Riviera Comedy
Club................. Stand-up comedy Twice a night, five nights 350
per week; three times a
night on Friday & Saturday
</TABLE>

25
<PAGE> 27

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

The Riviera's pool area is approximately 75,000 square feet and is
centrally located between the property's hotel towers. The pool area features an
olympic-size swimming pool. The Riviera also has tennis courts and a fitness
center and spa.

The Riviera has 41 retail concessions located throughout the property which
include gift shops, a jewelry store, men and women's apparel stores, a
children's shop and a shoe store.

MARKETING STRATEGY

In contrast to many of the new casino/hotels that cater to families, the
Company believes its customers prefer a traditional Las Vegas-style
entertainment and gaming environment. As a result, the Company focuses its
marketing efforts on adults. The operating profits of the Riviera depend upon
the level of gaming activity in the casino as well as revenues from lodging,
food and beverage, conventions, entertainment and retail operations.
Accordingly, the marketing strategy of the Riviera is to (i) target customers
age 45 to 70 who have more discretionary income and higher spending profiles,
(ii) achieve maximum occupancy and room rates and (iii) obtain the most
profitable mix of business. In developing its overall marketing programs, the
Company conducts extensive, ongoing research of its target customers'
preferences through written surveys, one-on-one interviews and focus groups.

The Company focuses on attracting its guests through a range of
entertainment opportunities. The Riviera has one of the most extensive
entertainment programs in Las Vegas with five different regularly scheduled
shows and special appearances by headline entertainers. In addition, the Riviera
offers a variety of quality dining options, a range of accommodations from
deluxe rooms to penthouse suites, numerous recreational facilities and 41 retail
outlets located throughout the property. The Company believes that it offers a
value-oriented experience by providing a variety of hotel rooms, restaurants and
entertainment, with some of Las Vegas' most popular shows, all at reasonable
prices.

The Company designs promotional offers targeted at certain mid-level gaming
patrons that are expected to provide revenues based upon their historical gaming
patterns. The Company contacts these customers through a combination of direct
mail and telemarketing by an in-house marketing staff and independent
representatives located in major cities. The Riviera uses a proprietary database
which is linked to its player tracking system to help identify customers'
requirements and preferences; this allows the Riviera to customize promotions to
attract repeat visitors. The Company offers customers personalized service,
credit availability and access to a variety of complimentary or reduced rate
room, dinner, and entertainment reservations. Management uses a specialized
multi-tiered marketing approach to attract customers in each of its major market
segments. In addition, the Company hosts an array of special events, including
slot and table tournaments, designed to attract customers for an extended stay.

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

One of the Company's most successful permanent promotions is its "$40 for
$20" slot promotion which attracts slot players to the casino. The promotion
offers $40 of slot play on certain promotional machines for $20 cash. If the
customer does not win a jackpot of at least $40, a prize with a retail value of
at least $20 is awarded. The sign-up counter and the promotion machines are

26
<PAGE> 28

located near an entrance to the casino and often draw long lines of patrons. The
Company has introduced this promotion at the Four Queens and has been approached
to license this promotion to other casinos as well, which it may do in the
future.

Another successful promotion is the "World's Loosest Corner of Slots" which
is an area of the casino that contains banks of slot machines with the
guaranteed highest payback percentages of any similar machines in Las Vegas.
Like the "$40 for $20" slot promotion, the "World's Loosest Corner of Slots" is
located near an entrance to the casino to attract walk-in traffic.

The Company targets the following segments of the Las Vegas market:

Mid-Level Gaming Customers. The Company has developed a marketing program
intended to develop a loyal following of repeat slot and mid-level table game
customers. Management believes it has been able to successfully attract these
patrons using the Riviera's restaurants, hotel accommodations and entertainment
and by focusing on customer service. Management has adopted a selective approach
to the extension of credit to these customers in order to reduce volatility of
operating results. The Company uses its research data to tailor promotional
offers to the specific tastes of targeted customers. All slot and table players
are encouraged to join the Riviera Player's Club and to fill out surveys that
provide the Riviera with personal information and preferences and tracks their
level of play. Members of the Riviera Player's Club earn bonus points based upon
their level of play, redeemable for free gifts, complimentary services or cash
rebates. Promotional offers are made to qualifying customers through direct mail
and telemarketing.

Tour and Travel. The tour and travel segment of the market consists of
customers from across the country who utilize "packages" to reduce the cost of
travel, lodging and entertainment. These packages are produced by wholesale
operators and travel agents and emphasize mid-week stays. Tour and travel
patrons often book at off-peak periods enabling the Company to maintain
occupancy rates at the highest levels throughout the year. Management has
developed specialized marketing programs and cultivated relationships with
wholesale operators, travel agents and major domestic air carriers to expand
this market. The Company's three largest tour and travel operators, including
America West Vacations, currently account for approximately 500 room bookings
per night. The Company makes an effort to convert tour and travel customers who
meet the Company's target customer profile into repeat customers.

Conventions. This market segment consists of two groups: (i) those trade
organizations and groups that hold their events in the banquet and meeting space
provided by a single hotel, and (ii) those attending city-wide events, usually
held at the Las Vegas Convention Center. The Riviera targets convention business
because it typically provides patrons willing to pay higher room rates and
provides certain advance planning benefits, since conventions are usually booked
two years in advance of the event date. The Riviera has 100,000 square feet of
exhibit, meeting and banquet space (one of the largest convention facilities
provided by a casino/hotel in Las Vegas) making it attractive to large groups.
Management focuses its marketing efforts on conventions whose participants have
the most active gaming profile and higher room rate, banquet and function
spending habits. The Riviera also benefits from its proximity to the Las Vegas
Convention Center which makes it attractive to city-wide conventioneers looking
to avoid the congestion that occurs during a major convention, particularly at
the south end of the Strip.

Free and Independent Travelers. This market segment consists of persons
who travel to Las Vegas from all areas of the world, many of whom originate from
the western United States. These customers are not affiliated with groups and
make their reservations directly with the hotel or through independent travel
agents. The Riviera benefits from high name recognition with this market
segment.

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<PAGE> 29

LAS VEGAS MARKET

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

Las Vegas is one of the largest and fastest growing entertainment markets
in the country. According to the Las Vegas Convention and Visitors Authority
(the "LVCVA"), the number of visitors traveling to Las Vegas has increased at a
steady and significant rate for the last ten years from 15.2 million in 1986 to
more than 29.0 million in 1995, a compound annual growth rate of 7.5%. Gaming
has continued to be a strong and growing business with Las Vegas Strip gaming
revenues increasing at a compound annual growth rate of 9.9% from $1.6 billion
in 1986 to $3.6 billion in 1995.

Historically, Las Vegas has had one of the strongest hotel markets in the
country. The number of hotel and motel rooms in Las Vegas has increased by over
40% from approximately 67,000 at the end of 1989 to 95,000 at the end of 1996,
giving Las Vegas the most hotel and motel rooms of any metropolitan area in the
country. Despite this significant increase in the supply of rooms, the Las Vegas
hotel occupancy rate exceeded 91% for each of 1993, 1994, 1995 and the first 11
months of 1996. Since January 1, 1996, approximately 4,700 new hotel rooms
opened and as of December 31, 1996, there were over 9,200 hotel rooms under
construction (which combined constitutes a 14.7% increase in the number of hotel
and motel rooms in Las Vegas) and the LVCVA estimated that approximately 60,000
additional hotel rooms were proposed for construction.

The Company believes that the growth in the Las Vegas market has been
enhanced as a result of a dedicated program by the LVCVA and major Las Vegas
casino/hotels to promote Las Vegas as a major convention site, the increased
capacity of McCarran Airport and the introduction of large themed destination
resorts in Las Vegas. In 1986, approximately 1.5 million people attended
conventions in Las Vegas and generated approximately $1.0 billion of non-gaming
economic impact. For the first 11 months of 1996, the number of convention
delegates had increased to 3.2 million with approximately $3.9 billion of
non-gaming economic impact. According to the LVCVA, Las Vegas was the largest
convention market in the country in 1995.

During the past five years, McCarran Airport has expanded its facilities to
accommodate the increased number of airlines and passengers which it services.
The number of passengers traveling through McCarran Airport has increased from
approximately 12.4 million in 1986 to 30.5 million in 1996, a compound annual
growth rate of 9.4%. Construction is currently underway on numerous roadway
enhancements to improve access to the airport. The airport has additional
long-term expansion plans underway which will provide additional runways, three
new satellite concourses, 60 additional gates and other facilities. See "Risk
Factors -- Dependence on Las Vegas Gaming Market and Dependence on Single
Property."

THE BLACK HAWK PROJECT

The Company recently signed a letter of intent with Eagle to form RBL, a
joint venture, to develop a casino at what management believes is the premier
development site (the "Development Site") in Black Hawk, Colorado. The
Development Site is currently the closest gaming site to Denver and is the first
site encountered when traveling from Denver to Black Hawk/Central City. The
Black Hawk/Central City market primarily serves the metropolitan Denver area and
is approximately an hour drive and 40 miles from central Denver.

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<PAGE> 30

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

The Development Site comprises 71,000 square feet, zoned for gaming. The
casino building is expected to be approximately 62,000 square feet and include
approximately 1,000 slot machines and 14 table games. In addition, the facility
will provide entertainment, food and beverage service and will incorporate an
attached covered parking facility for 500 vehicles. The Company believes that
the Black Hawk Project could be expanded beyond its currently permitted scope
based on zoning waivers granted to other casino developers.

The Company currently estimates that total costs for completion of the
Black Hawk Project will be approximately $55 million. The Company estimates
that, in addition to the equity financing of RBL, approximately $33 million of
third party mortgage and equipment financing will be required in order to
complete the Black Hawk Project. The Company currently does not have any
commitments for such financing. It is anticipated that construction on the
Development Site will begin in the third quarter of 1997, with an opening of the
casino/hotel scheduled for mid-1998.

The Black Hawk Project joint venture outlined in the March 4, 1997 letter
of intent (the "Letter of Intent") between the Company and Eagle contemplates
the development of an integrated gaming, entertainment and parking facility on
the Development Site. As part of the proposed joint venture and development of
the Black Hawk Project, the Company will purchase an approximately 80% interest
in RBL for $17.6 million and Eagle will acquire an approximately 20% interest in
RBL for $4.4 million, assuming an approximately $55 million project cost and 40%
equity capitalization. Eagle has an option to increase its ownership interest in
RBL up to 49.9% at any time prior to the date on which RBL is licensed by the
Colorado gaming authorities by acquiring such additional ownership interest from
the Company at cost. In addition, the Company has committed to provide a
completion guaranty for up to $5.0 million. The Company will also enter into a
management agreement with RBL that will provide for management fees based on
gross revenue and EBITDA of the casino.

In addition, the Black Hawk Project site may be subject to an adverse
mineral rights claim which, if validated through the appeal of the adverse
claimant, could materially and adversely affect development of the Black Hawk
Project. See "Risk Factors -- Colorado Operations." Further, certain
environmental conditions exist at the Black Hawk Project site, the remediation
or related costs of which could increase development costs of the Black Hawk
Project significantly. See "Risk Factors -- Colorado Operations."

COLORADO MARKET

In November 1990, the state of Colorado approved limited stakes gaming
($5.00 or less per wager) in two historic gold mining areas, Black Hawk/Central
City and Cripple Creek. Because of the $5.00 maximum bet, the casinos in
Colorado emphasize gaming machine play. Black Hawk and Central City are
contiguous and are located approximately 40 miles from Denver and 10 miles from
Interstate 70, the main highway connecting Denver to many of Colorado's major
ski resorts. Cripple Creek is located approximately 45 miles from Colorado
Springs and 75 miles from Pueblo. Casinos located in the Black Hawk/Central City
area serve primarily the residents of Denver and Boulder,

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<PAGE> 31

Colorado and surrounding communities. Approximately three million people live
within a 100-mile radius of the Black Hawk/Central City area.

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

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------
1993 1994 1995 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Aggregate Gaming Revenues (in millions)........... $ 186.2 $ 243.4 $ 291.0 $ 308.8
Revenue Per Slot Machine Per Day.................. $ 69.55 $ 79.88 $ 84.94 $ 93.04
Average Number of Slot Machines................... 6,922 7,705 8,636 8,446
Average Number of Casinos in Operation............ 36 34 32 33
</TABLE>

RIVIERA GAMING MANAGEMENT

In order to capitalize on management's experience in repositioning and
managing the Riviera through the bankruptcy process, the Company formed RGM, a
wholly owned subsidiary of the Company, for the primary purpose of obtaining
casino management contracts with financially distressed casino/hotels in Nevada
and other jurisdictions. Management believes there will be an increasing demand
for their services by financially distressed casino/hotels. In addition, RGM may
provide other services including assisting new venue licensee applicants in
designing and planning their gaming operations and managing the start-up of new
gaming operations. These services would include casino design, equipment
selection, employee recruitment and training, control and accounting systems and
marketing programs.

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

The term of the Management Agreement is approximately 40 months, subject to
earlier termination or extension. Either party may terminate if cumulative
EBITDA for the first two fiscal years is less than $12.8 million. The term can
be extended by an additional 24 months at RGM's option, if cumulative EBITDA for
the three fiscal years of the term is at least $19.2 million. RGM will be paid a
fee of 25% of any increase in annual EBITDA over $4.0 million, subject to a $1.0
million minimum fee, payable in equal monthly installments. RGM has received
warrants for 20% of Elsinore's fully diluted equity, exercisable during the term
or extended term of the Management Agreement at an exercise price based on the
higher of (i) the per share book value on the effective date of the Elsinore
bankruptcy plan or (ii) total shareholders' equity of $5.0 million. Either party
can terminate the Management Agreement if (i) substantially all the Four Queens'
assets are sold, (ii) the Four Queens is merged or (iii) a majority of the Four
Queens' or Elsinore's shares are sold. Upon such termination, RGM will receive a
$2.0 million termination bonus minus any amount realized or realizable upon
exercise of the warrants.

COMPETITION

Intense competition exists in the gaming industry, and many of the
Company's competitors have significantly greater resources than the Company.
Expansions or enhancements of existing properties or the construction of new
properties by competitors, both in Nevada and Colorado, could have a material
adverse effect on the Company's business. See "Risk Factors -- Competition."

Nevada. The Riviera competes with all other casinos and hotels in the Las
Vegas area, principally competitors located on or near the Las Vegas Strip. In
recent months, several of the

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<PAGE> 32

Company's direct competitors have opened new casino/hotels or have commenced or
completed major expansion projects, and other casino/hotels and expansions are
planned. In addition, a number of new mega-resorts on the Strip have been
announced and are expected to be completed within the next two years.

Colorado. Intense competition characterizes the gaming market in Colorado.
Casinos generally compete on the basis of parking, location and size. A number
of Colorado casinos have ceased operations and others have filed under Chapter
11 of the United States Bankruptcy Code. Others have closed temporarily or
reduced the number of their employees, and the Company believes that many
Colorado casinos may not be operating profitably. In addition, several new
development projects and expansion plans for existing properties have been
announced.

EMPLOYEES AND LABOR RELATIONS

As of December 31, 1996, the Riviera employed approximately 2,100 persons
and had collective bargaining contracts with seven unions covering approximately
1,300 of such employees including food and beverage employees, rooms department
employees, carpenters, engineers, stage hands, musicians, electricians, painters
and teamsters. The Company's agreements with the Southern Nevada Culinary and
Bartenders Unions, Musicians Union and Stage Hands Union, which cover the
majority of the Company's unionized employees, were renegotiated in 1994 and
will expire May 31, 1997. The Teamsters, Operating Engineers, Carpenters,
Painters and Electricians Unions' collective bargaining agreements were renewed
in 1995 and generally expire in 1998. Although unions have been active in Las
Vegas, management considers its employee relations to be satisfactory. There can
be no assurance, however, that new agreements will be reached without union
action or will be on terms satisfactory to the Company.

REGULATION AND LICENSING

Nevada

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

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

ROC is required to be licensed by the Nevada Gaming Authorities. The gaming
license held by ROC requires the periodic payment of fees and taxes and is not
transferable. ROC is also licensed as a manufacturer and distributor of gaming
devices. Such licenses also require the periodic payment of fees and are not
transferable. The Company is registered by the Nevada Commission as a publicly
traded corporation (a "Registered Corporation") and has been found suitable to
own the

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stock of ROC which is a corporate gaming licensee under the terms of the Nevada
Act. As a Registered Corporation, the Company is required periodically to submit
detailed financial and operating reports to the Nevada Commission and to furnish
any other information which the Nevada Commission may require. No person may
become a shareholder of, or receive any percentage of profits from, ROC without
first obtaining licenses and approvals from the Nevada Gaming Authorities. The
Company and ROC have obtained from the Nevada Gaming Authorities the various
registrations, approvals, permits and licenses required in order to engage in
gaming activities and manufacturing and distribution activities in Nevada.

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

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

If the Nevada Gaming Authorities were to find an officer, director or key
employee unsuitable for licensing or unsuitable to continue having a
relationship with the Company or ROC, the companies involved would have to sever
all relationships with such person. In addition, the Nevada Commission may
require the Company or ROC 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 and ROC are required to submit detailed financial and operating
reports to the Nevada Commission. Substantially all material loans, leases,
sales of securities and similar financing transactions by ROC must be reported
to or approved by the Nevada Commission.

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

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<PAGE> 34

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

The Nevada Act requires any person who acquires more than 5% of a
Registered Corporation's voting securities to report the acquisition to the
Nevada Commission. The Nevada Act requires that beneficial owners of more than
10% of a Registered Corporation's voting securities apply to the Nevada
Commission for a finding of suitability within thirty days after the Chairman of
the Nevada Board mails the written notice requiring such filing. Under certain
circumstances, an "institutional investor," as defined in the Nevada Act, which
acquires more than 10%, but not more than 15%, of a Registered Corporation's
voting securities may apply to the Nevada Commission for a waiver of such
finding of suitability if such institutional investor holds the voting
securities for investment purposes only. An institutional investor shall not be
deemed to hold voting securities for investment purposes unless the voting
securities were acquired and are held in the ordinary course of business as an
institutional investor and not for the purpose of causing, directly or
indirectly, the election of a majority of the members of the board of directors
of the Registered Corporation, any change in the corporate charter, bylaws,
management, policies or operations of the Registered Corporation, or any of its
gaming affiliates, or any other action which the Nevada Commission finds to be
inconsistent with holding the Registered Corporation's voting securities for
investment purposes only. Activities which are deemed to be consistent with
holding voting securities for investment purposes only include: (i) voting on
all matters voted on by 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 its 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 thirty days after being ordered to do so by the Nevada Commission
or the Chairman of the Nevada Board, may be found unsuitable. The same
restrictions apply to a record owner if the record owner, after request, fails
to identify the beneficial owner. Any shareholder found unsuitable and who
holds, directly or indirectly, any beneficial ownership of the common stock
beyond such period of time as may be prescribed by the Nevada Commission may be
guilty of a criminal offense. The Company is subject to disciplinary action if,
after it receives notice that a person is unsuitable to be a shareholder or to
have any other relationship with the Company or ROC, the Company (i) pays that
person any dividend or interest upon voting securities of the Company, (ii)
allows that person to exercise, directly or indirectly, any voting right
conferred through securities held by that person, (iii) pays remuneration in any
form to that person for services rendered or otherwise, or (iv) fails to pursue
all lawful efforts to require such unsuitable person to relinquish his voting
securities including, if necessary, the immediate purchase of said voting
securities for cash at fair market value. Additionally, the Clark County Board
has the authority to approve all persons owning or controlling the stock of any
corporation controlling a gaming licensee.

The Nevada Commission may, in its discretion, require the holder of any
debt security of a Registered Corporation, to file applications, be investigated
and be found suitable to own the debt security of a Registered Corporation, if
it has reason to believe that such ownership would be inconsistent with the
declared policies of the State of Nevada. If the Nevada Commission determines
that a person is unsuitable to own such security, then pursuant to the Nevada
Act, the Registered Corporation can be sanctioned, including the loss of its
approvals, if without the prior approval of the Nevada Commission, it: (i) pays
to the unsuitable person any dividend, interest, or any

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<PAGE> 35

distribution whatsoever; (ii) recognizes any voting right by such unsuitable
person in connection with such securities; (iii) pays the unsuitable person
remuneration in any form; or (iv) makes any payment to the unsuitable person by
way of principal, redemption, conversion, exchange, liquidation, or similar
transaction.

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

The Company may not make a public offering of its securities without the
prior approval of the Nevada Commission if the securities or proceeds therefrom
are intended to be used to construct, acquire or finance gaming facilities in
Nevada, or to retire or extend obligations incurred for such purposes. The
Company has received approval of this offering by the Nevada Commission.
Approval of a public offering does not constitute a finding, recommendation or
approval by the Nevada Commission or the Nevada Board as to the accuracy or
adequacy of the prospectus or the investment merits of the securities offered.
Any representation to the contrary is unlawful.

Changes in control of the Company through merger, consolidation, stock or
asset acquisitions, management or consulting agreements, or any act or conduct
by a person whereby he obtains control, may not occur without the prior approval
of the Nevada Commission. Entities seeking to acquire control of a Registered
Corporation must satisfy the Nevada Board and Nevada Commission in a variety of
stringent standards prior to assuming control of such Registered Corporation.
The Nevada Commission may also require controlling 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 part
of the approval process relating to the transaction.

The Nevada legislature has declared that some corporate acquisitions
opposed by management, repurchases of voting securities and corporate defense
tactics affecting Nevada corporate gaming Licensees, and Registered Corporations
that are affiliated with those operations, may be injurious to stable and
productive corporate gaming. The Nevada Commission has established regulations
to ameliorate the potentially adverse effects of these business practices upon
Nevada's gaming industry and to further Nevada's policy to: (i) assure the
financial stability of corporate gaming Licensees and their affiliates; (ii)
preserve the beneficial aspects of conducting business in the corporate form;
and (iii) promote a neutral environment for the orderly governance of corporate
affairs. Approvals are, in certain circumstances, required from the Nevada
Commission before the Registered Corporation can make exceptional repurchases of
voting securities above the current market price thereof and before a corporate
acquisition opposed by management can be consummated. The Nevada Act also
requires prior approval of a plan of recapitalization proposed by the Registered
Corporation's Board of Directors in response to a tender offer made directly to
the Registered Corporation's 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
County in which the ROC's operations are conducted. Depending upon the
particular fee or tax involved, these fees and taxes are payable either monthly,
quarterly or annually and are based upon either: (i) a percentage of the gross
revenues received; (ii) the number of gaming devices operated; or (iii) the
number of table games operated. A casino entertainment tax is also paid by
casino operations where entertainment is furnished in connection with the
selling of food, refreshments or merchandise. Nevada Licensees

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<PAGE> 36

that hold a license to manufacture and distribute slot machines and gaming
devices, such as ROC, also pay certain fees and taxes to the State of Nevada.

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

Other Regulation. The sale of alcoholic beverages at the Riviera is
subject to licensing, control and regulation by the Clark County Board. All
licenses are revocable and are not transferable. The Clark County Board has full
power to limit, condition, suspend or revoke any such license, and any such
disciplinary action could (and revocation would) have a material adverse affect
upon the operations of ROC.

Colorado

Colorado Gaming Regulation. On November 6, 1990, the State of Colorado
electorate approved an amendment to the Colorado Constitution (the "Colorado
Amendment") that legalized limited gaming. As a result, limited gaming became
lawful in the cities of Central City, Black Hawk and Cripple Creek on October 1,
1991. The Colorado Amendment defines limited gaming as the use of slot machines
and the card games of blackjack and poker, with a maximum single bet of five
dollars.

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

The Colorado Amendment further provides that, in addition to any other
applicable license fees, up to a maximum of 40% of the adjusted gross proceeds
of limited gaming operations may be payable by a licensee for the privilege of
conducting limited gaming.

The Colorado legislature promulgated the Limited Gaming Act of 1991 (the
"Colorado Act") to implement the provisions of the Colorado Amendment. The
Colorado Act was signed into law on June 4, 1991 and has been amended
subsequently.

Through the Colorado Act, the Colorado legislature declared that its public
policy toward limited gaming would be that: (i) the success of limited gaming is
dependent upon public confidence and trust that licensed limited gaming is
conducted honestly and competitively; that the rights of the creditors of
licensees are protected; and that gaming is free from criminal and corruptive
elements; (ii) public confidence and trust can be maintained only by strict
regulation of all persons, locations, practices, associations and activities
related to the operation of licensed gaming establishments and the manufacture
or distribution of gaming devices and equipment; (iii) all establishments where

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<PAGE> 37

limited gaming is conducted and where gambling devices are operated and all
manufacturers, sellers and distributors of certain gambling devices and
equipment must therefore be licensed, controlled and assisted to protect the
public health, safety, good order and the general welfare of the inhabitants of
the state to foster the stability and success of limited gaming and to preserve
the economy and policies of free competition in the state of Colorado; and (iv)
no applicant for a license or other affirmative commission approval has any
right to a license or to the granting of the approval sought. Any license issued
or other commission approval granted pursuant to the provisions of the Colorado
Act is a revocable privilege, and no holder acquires any vested right therein or
thereunder.

Pursuant to the Colorado Act, the ownership and operation of limited gaming
facilities in Colorado are subject to extensive regulation. Among other
prohibitions, the Colorado Act prohibits persons under the age of 21 from
participating in limited gaming or lingering in gaming areas of a casino. No
limited gaming may be conducted in Colorado unless all appropriate licenses are
approved by and obtained from the Colorado Limited Gaming Control Commission
(the "Colorado Commission"). Further, the Colorado Commission has full and
exclusive authority to promulgate, and has promulgated, rules and regulations
related to limited gaming (the "Colorado Regulations"). Such authority does not
require any approval by or delegation of authority from the Colorado Department
of Revenue (the "Colorado Revenue Department"). In addition, the Colorado Act
created the Division of Gaming within the Colorado Revenue Department to
license, implement, regulate and supervise the conduct of limited gaming. The
Director of the Division (the "Division Director"), under the general
supervision of the Colorado Commission, has broad powers to ensure compliance
with the Colorado Act and the regulations promulgated by the Colorado
Commission.

The Colorado Commission may issue the following five types of licenses: (i)
slot machine manufacturer or distributor; (ii) operator; (iii) retail gaming;
(iv) support; and key employee. The first three licenses are issued for a
one-year period and require annual renewal. However, support licenses and key
employee licenses are issued for two year periods and are renewable. The
Colorado Commission has broad discretion to condition, suspend, revoke, limit or
restrict a license at any time and also has the authority to impose fines.

An applicant for any type of Colorado license must provide the following
information: (i) personal background information; (ii) financial information;
(iii) participation in legal or illegal activities in Colorado or other
jurisdictions, including foreign countries; (iv) criminal record information;
(v) information concerning all pecuniary and equity interests in the applicant;
and (vi) other information as required. Prior to licensure, applicants must
satisfy the Colorado Commission that they are suitable for licensing and are of
good moral character. The Colorado legislature has defined unsuitability or
unsuitable in relation to a person as the inability to be licensed by the
Colorado Commission because of prior acts, associations or financial conditions,
and, in relation to acts or practices, those which violate or would violate the
statutes or rules or are or would be contrary to the declared legislative
purposes of the Colorado Act. Applicants have the burden of proving their
qualifications to the Colorado Commission and must submit to and pay the full
cost of any background investigations as may be ordered by the Colorado
Commission. There is no limit on the cost of such background investigations and
no guaranty that any applicant will receive licensing from the Colorado
Commission.

All natural persons employed in the field of limited gaming must hold
either a support or key employee license. Every retail gaming licensee must have
a key employee licensee in charge of all limited gaming activities available at
all times when limited gaming is being conducted.The Colorado Commission may
determine that any employee of a licensee is a key employee and, therefore,
require that such person apply for licensing as a key employee.

A retail gaming license is required for all persons permitting or
conducting limited gaming on their premises and such license may be granted only
to a retailer. In addition, an operator license is required for all persons who
permit slot machines on their premises or who engage in the business of placing
and operating slot machines on the premises of a retailer. No person may have an

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<PAGE> 38

ownership interest in more than three retail licenses. A slot machine
manufacturer or distributor license is required for all persons who manufacture,
import or distribute slot machines in Colorado, or who otherwise act as slot
machine manufacturers or distributors.

The current practice of the Division of Gaming and the Colorado Commission
is to require every officer and director, or equivalent office holders for
non-corporate applicants, and 5% or greater beneficial shareholders or owners of
an applicant or licensee to complete background investigation forms, provide
comprehensive information and submit to a full background investigation
conducted by the Division of Gaming and the Colorado Commission. The purpose of
the investigation is to determine each such person's or entity's qualifications
and suitability for licensure. In addition, all persons loaning monies, goods or
real or personal property to a licensee or applicant, or having any interest in
a licensee or applicant, or entering into any agreement with a licensee or
applicant, must provide any information requested by the Division of Gaming or
the Colorado Commission; and, in the discretion of the Division of Gaming or the
Colorado Commission, these persons must supply all information relevant to a
determination of any such person's suitability for licensure and must submit to
a full background investigation if ordered by the Colorado Commission.

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

The Colorado Act and the Colorado Regulations require licensees to maintain
detailed books and records that accurately account for all monies and business
transactions. Books and records must be furnished upon demand to the Colorado
Commission, the Division of Gaming and other law enforcement authorities. The
Colorado Regulations also establish detailed and extensive playing procedures,
standards, requirements and rules of play for poker, blackjack and slot
machines. Retail gaming licensees must, in addition, adopt comprehensive
internal control procedures governing their limited gaming operations. Such
procedures must be approved in advance by the Division of Gaming and include the
areas of accounting, surveillance, security, cashier operations, key control and
fill and drop procedures, among others.

Licensees have a continuing duty to report to the Colorado Commission
information concerning persons with a financial or equity interest in the
licensee, or who have the ability to control or exercise a significant influence
over the licensee, or who loan money to the licensee. Licensees are prohibited
from engaging in fraudulent acts, which include, among other things,
misrepresenting the probabilities of pay out, improperly canceling a bet and
conducting limited gaming without a valid license. Finally, licensees must
report to the Division of Gaming all licenses, and all applications for
licenses, in foreign jurisdictions.

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

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

All slot machines, cards, chips or tokens used in limited gaming must be
approved by the Division Director or the Colorado Commission. All such items
must meet standards established by the Division of Gaming and the Colorado
Commission.

Upon request, an applicant or licensee must submit to the Colorado
Commission or Director of Gaming written copies or summaries of all written or
oral gaming contracts to which it is or will be a party. A gaming contract
includes any agreement in which a person does business with a licensee. The
Colorado Commission or the Division Director may require changes in gaming
contracts or may

37
<PAGE> 39

require termination of a gaming contract. Parties to gaming contracts may be
required to provide all information relevant to a determination of their
suitability for licensing.

Colorado has enacted an annual tax on the adjusted gross proceeds ("AGP")
from limited gaming. AGP is generally defined as the total amounts wagered less
all payments to players. With respect to games of poker, AGP means those sums
wagered in a hand retained by the licensee as compensation, which must be
consistent with the minimum and maximum amounts established by the Colorado
Commission. Currently, the gaming tax on AGP is: 2% on the first $2 million of
AGP; 4% on AGP from $2 million to $4 million; 14% on AGP from $4 million to $5
million; 18% on AGP from $5 million to $10 million; and 20% on AGP over $10
million. The gaming tax is paid monthly, with licensees required to file returns
by the 15th of the following month. Effective October 1 of each year, the
Colorado Commission establishes the gaming tax for the following 12 months.
Under the Colorado Amendment, the Colorado Commission may increase the gaming
tax rate to as much as 40% of AGP.

The Colorado Commission requires all gaming licensees to pay an annual
device fee for each slot machine, blackjack table and poker table. The current
state device fee, established October 1, 1996, is $100. The municipalities of
Central City, Black Hawk and Cripple Creek also assess and collect their own
device fees. The current annual device fee in Black Hawk is $750 per device.
There is no statutory limit on state or city device fees, which may be increased
at the discretion of the state or city. The state device fee is not prorated; a
device used at any time during the year is assessed the full state fee. Local
device fees may be prorated according to device usage; the City of Black Hawk
currently prorates device fees such that any device used at any time during a
calendar quarter is subject to the device fee for such calendar quarter. In
addition, a business improvement fee of $100 per device and a transportation
impact fee of $77 per device also may apply depending upon the location of the
licensed premises.

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

Violations of the Colorado Act, or any of the Colorado Regulations, is a
criminal offense. Persons violating the Colorado Act or the Colorado Regulations
may, in addition to any gaming license suspension or revocation, be subject to
criminal prosecution resulting in incarceration, fines or both.

The sale of alcoholic beverages in gaming establishments is subject to
strict licensing, control, and regulation by state and local authorities.
Alcoholic beverage licenses are revocable and non-transferable. State and local
licensing authorities have full power to limit, condition, suspend or revoke any
such licenses. Violation of the state alcoholic beverage laws may constitute a
criminal offense, and violators may be subject to criminal prosecution,
incarceration and fines. A gaming establishment that sells or provides alcoholic
beverages is required to have a retail gaming tavern license.

There are various classes of alcoholic beverage licenses under the Colorado
Liquor Code. However, only a retail gaming tavern license may be issued to
persons who are licensed pursuant to the Colorado Act. A retail gaming tavern
licensee may sell malt, vinous or spirituous liquors only by individual drinks
for consumption on the premises and must also make available sandwiches or light
snacks or contract with concessionaires to provide food services within the same
building as the licensed premises. In no event may any person hold more than or
have an interest in more than three retail gaming tavern licenses. An
application for an alcoholic beverage license in Colorado requires notice,
posting and a public hearing before the local liquor licensing authority. The
Department's Liquor Enforcement Division also must approve the application.

In addition to the other requirements of the gaming laws, the Colorado
Commission has enacted a special rule, Rule 4.5, which imposes additional
requirements on publicly traded corporations holding gaming licenses in Colorado
and on gaming licensees in Colorado owned directly or

38
<PAGE> 40

indirectly, five percent or more, by publicly traded corporations. The term
"publicly traded corporation" is a specially defined term and may include
limited liability companies, trusts, partnerships and other business
organizations, and may even include entities exempted from the registration
requirements of the securities laws under certain circumstances.

Under Rule 4.5, gaming licensees, affiliated companies and controlling
persons thereof must notify the Colorado Commission within 10 days of the
initial filing of a registration statement with the Securities and Exchange
Commission. Licensed publicly traded corporations are also required to send
proxy statements to the Division of Gaming within 5 days after distribution of
such statement, and to follow a variety of other reporting requirements.
Licensees to whom Rule 4.5 applies must include in their articles of
organization or similar charter documents certain specified provisions that:
restrict the rights of the licensee to issue voting interests or securities
except in accordance with the Colorado gaming laws; limit the rights of persons
to transfer voting interests or securities of a licensee except in accordance
with the Colorado gaming laws; and provide that holders of voting interests or
securities of a licensee found unsuitable by the Colorado Commission may be
required to sell their interests or securities back to the issuer at the lesser
of, in general terms, the holder's investment or the market price as of the date
of the finding of unsuitability. Alternatively, and with authorization by the
Colorado Commission, the holder may in limited circumstances transfer the voting
interests or securities to a suitable person (as determined by the Colorado
Commission). Until the voting interests or securities are held by suitable
persons, the issuer may not pay dividends or interest on them, the interests or
securities may not be voted, or entitled to any vote, and they may not be
included in the voting or securities of the issuer, and the issuer may not pay
any remuneration in any form to the holder of the securities or interests.

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

A qualifying person who is an institutional investor under Rule 4.5 and
whose interests equal 15% or more must apply to the Colorado Commission for a
finding of suitability within 45 days after acquiring such interests. A
qualifying person who is an institutional investor and whose interests equal 10%
or more, but less than 15%, may not be required to apply for suitability,
provided such person fulfills certain reporting requirements.

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

RBL currently holds no gaming or liquor licenses and will therefore have to
make applications for both types of licenses in connection with the Black Hawk
Project. The failure or inability to obtain such licensing could materially and
adversely affect the Black Hawk Project.

39
<PAGE> 41

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

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

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
William L. Westerman................. 65 Chairman of the Board and Chief Executive Officer
of the Company and ROC and President of the
Company
Duane R. Krohn....................... 51 Treasurer of the Company and Vice President of
Finance and Treasurer of ROC
John A. Wishon....................... 52 Vice President and General Counsel of ROC,
Secretary of the Company and ROC
Michael L. Falba..................... 54 Vice President of Casino Operations of ROC
Jerome P. Grippe..................... 54 Vice President of Operations of ROC
Martin R. Gross...................... 40 Vice President of Hotel Marketing of ROC
Ronald P. Johnson.................... 48 Vice President of Gaming Operations of ROC
Robert E. Nickels, Sr................ 67 Vice President of Administration of ROC
Robert A. Vannucci................... 49 Vice President of Marketing and Entertainment of
ROC
Robert R. Barengo.................... 55 Director of the Company and ROC
William Friedman..................... 54 Director of the Company and ROC
Philip P. Hannifin................... 62 Director of the Company and ROC
</TABLE>

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

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

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

40
<PAGE> 42

member of the Nevada and California Bars, has practiced law with emphasis on
real estate and contract law and has been employed in law enforcement.

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

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

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

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

Robert E. Nickels, Sr. was elected Vice President of Administration of ROC
on April 26, 1994. Mr. Nickels became Director of Administration of ROC on June
30, 1993. From March 1992 until June 30, 1993 Mr. Nickels was Vice
President-Administration of Riviera, Inc. From November 1991 to February 1992
Mr. Nickels was a self-employed business consultant. From March 1979 to April
1986, Mr. Nickels was Director of Internal Audit for MGM-Reno. From April 1986
to November 1991, Mr. Nickels served as Vice President of Administration at
Bally's Reno and Las Vegas.

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

Robert R. Barengo has been a Director of the Company and ROC since
February, 1993. Mr. Barengo was a consultant to Riviera, Inc. from January 1993
until June 30, 1993. Since 1972, Mr. Barengo has been engaged in the private
practice of law in Reno, Nevada. From 1978 to 1983, Mr. Barengo was Speaker Pro
Tempore and Speaker of the Nevada Assembly. Mr. Barengo has been a director of
Leroy's House and Sports Place, now called American Wagering, Inc., since
February 1992. Since 1993, Mr. Barengo is President and the sole shareholder of
Silver State Disseminators Company, a company licensed by Nevada gaming
authorities to disseminate racing information in the State of Nevada and
Chairman of the Nevada Dairy Commission.

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

41
<PAGE> 43

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

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

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

COMPENSATION OF EXECUTIVE OFFICERS

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

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
NAME AND OTHER ANNUAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION COMPENSATION(1)
- ---------------------------------- ---- -------- ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
William L. Westerman.............. 1996 $400,000 $1,213,969(2) $441,375(3) $ 1,566
Chairman of the Board and Chief 1995 375,000 855,961 431,315(3) 1,630
Executive Officer of the Company 1994 350,000 592,379 389,040(3) 1,630
and ROC

Ronald P. Johnson................. 1996 170,961 100,000 6,875 791
Vice President of Gaming 1995 155,840 70,000 8,529 772
Operations of ROC 1994 131,813 50,000 5,446 497

Martin R. Gross................... 1996 148,653 100,000 6,875 536
Vice President of Hotel Marketing 1995 140,049 70,000 8,079 541
of ROC 1994 125,302 50,000 5,316 442

Robert Vannucci................... 1996 145,961 100,000 6,875 536
Vice President of Marketing and 1995 130,569 70,000 6,879 541
Entertainment of ROC 1994 110,852 50,000 2,717 365

Jerome P. Grippe.................. 1996 118,653 100,000 6,873 408
Vice President of Operations of 1995 108,950 70,000 7,115 442
ROC 1994 103,654 50,000 4,646 398
</TABLE>

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

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

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

EMPLOYMENT AGREEMENTS

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

Mr. Westerman's employment agreement with the Company was amended on
November 21, 1996 subject to stockholder approval at the annual meeting of
stockholders scheduled to be held on May 8, 1997. If the Company's stockholders
do not ratify the "Amended Agreement" (the terms of which are summarized below),
the "Old Agreement" will remain in full force and effect. The term of

42
<PAGE> 44

Mr. Westerman's employment will expire on December 31, 1998 under the Amended
Agreement (December 31, 1997 under the Old Agreement) and Mr. Westerman's
employment is automatically renewed under both the Old and Amended Agreements
for successive one-year terms unless the Company gives Mr. Westerman 90 days
written notice or Mr. Westerman gives the Company 180 days notice.

Mr. Westerman's base compensation was $325,000 during 1993, $350,000 during
1994, $375,000 during 1995 and $400,000 in 1996. Mr. Westerman's base
compensation would be increased to $600,000 under, and for the duration of, the
Amended Agreement.

Under the Old Agreement, Mr. Westerman currently earns an Incentive Bonus
of 8.75% of adjusted operating earnings of the Company over $20 million. Mr.
Westerman's Incentive Bonus amounted to $233,000 in 1993, $592,000 in 1994,
$856,000 in 1995 and $1,214,000 in 1996. Under the Amended Agreement in lieu of
such Incentive Bonus, Mr. Westerman will be entitled to participate in the
Company's Senior Management Compensation Plan or such other executive bonus plan
as shall be established by the Company's Board of Directors (collectively the
"Plan"). If at least 80% of targeted net income, as defined by the Plan, is met,
Mr. Westerman shall be entitled to receive a bonus under the Plan expressed as a
percentage of his $600,000 base salary depending on the percentage of targeted
net income realized by the Company in a particular year, with a maximum bonus of
$900,000.

If stockholders do not ratify the Amended Agreement, Mr. Westerman's base
salary will be $425,000 for 1997 and his Incentive Bonus will be equal to 8.75%
of the Company's adjusted operated earnings over $20 million in each year of the
term of his employment.

Both the Old Agreement and the Amended Agreement provide that the Company
fund a retirement account for Mr. Westerman. Pursuant to the Old Agreement, an
aggregate of $2,749,000 (under the New Agreement $2,924,000) had been credited
to the retirement account from its inception through January 1, 1997, including
$614,000 of Mr. Westerman's 1996 Incentive Bonus which was credited to the
retirement account at the request of the Company for corporate tax reasons.

Under both the Old and New Agreements, each year that Mr. Westerman
continues to be employed, an amount equal to Mr. Westerman's base salary for
that year will be credited to the account on January 1 of that year and in the
event that Mr. Westerman is no longer employed by the Company (except for
termination for cause, in which case Mr. Westerman would forfeit all rights to
monies in the retirement account), Mr. Westerman will be entitled to receive the
amount in the retirement account as of the date he ceases to be employed by the
Company in 20 quarterly installments. Under the Amended Agreement the retirement
account shall be credited with additional amounts on April 1, 1997 and on the
first day of each succeeding calendar quarter equal to the product of (i) the
Company's average borrowing cost for the immediately preceding fiscal year, as
determined by the Company's chief financial officer and (ii) the average
outstanding balance in the retirement account during the preceding calendar
quarter. In the event of Mr. Westerman's death, an amount equal to the
applicable federal estate tax (now 60%) on the retirement account will be pre-
paid prior to the date or dates such taxes are due.

The Company and ROC are also required to make contributions on behalf of
Mr. Westerman to the Profit Sharing and 401(k) Plan described below. The Company
did not make any contribution to the plans on Mr. Westerman's behalf in 1993.
The Company made contributions to the plan of approximately $14,000 for 1994,
$31,000 for 1995 and $14,000 for 1996.

Both the Old and the New Agreements provide that Mr. Westerman will receive
the same life, health and disability benefits offered to other key executives of
the Company and ROC, will be reimbursed for all business expenses and will be
entitled to four weeks vacation per year.

43
<PAGE> 45

EMPLOYEE STOCK OPTION PLAN

The options discussed in the following paragraphs were granted pursuant to
the Company's 1993 Employee Stock Option Plan (the "Stock Option Plan"). The
number of shares reflects the adjustments made for a ten-for-one stock split on
November 26, 1994, and a four-for-one stock split on November 16, 1995.

The following table presents at December 31, 1996 the value of unexercised
in-the-money options held by the Chief Executive Officer of the Company and ROC
and to the Company's four most highly compensated executive officers. No options
have ever been exercised.

<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED OPTIONS VALUE OF UNEXERCISED,
------------------------ IN-THE-MONEY OPTIONS
NOT -------------------------
NAME VESTED VESTED VESTED NOT VESTED
- ---- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
William L. Westerman.................... 230,000 270,000 $1,862,501 $502,500
Ronald P. Johnson....................... 16,750 8,250 182,344 38,531
Martin R. Gross......................... 16,750 8,250 182,344 38,531
Robert Vannucci......................... 16,750 8,250 182,344 38,531
Jerome P. Grippe........................ 16,750 8,250 182,344 38,531
</TABLE>

The Stock Option Plan is administered by a Committee of the Board of
Directors (the "Compensation Committee"), which consists of two members of the
Board of Directors who must be Disinterested Persons (as defined in Rule
16b-3(d)(3) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")). The Compensation Committee currently consists of Robert R. Barengo and
William Friedman, neither of whom are eligible to receive options.

The number of shares available for purchase under the Stock Option Plan is
480,000 (as adjusted pursuant to antidilution provisions). The Board of
Directors has approved an increase of the number of shares available for
purchase under the Stock Option Plan to 1,000,000, subject to stockholder
approval at the annual meeting of stockholders scheduled to be held on May 8,
1997. Options for an aggregate of 470,000 shares have been granted under the
Stock Option Plan, and options for an additional 300,000 shares have been
granted to Mr. Westerman, subject to stockholder approval at the annual meeting
of stockholders referred to above.

Persons eligible to receive options are any officer or other key employee
of the Company or any of its subsidiaries or affiliates, including a director
who is such an employee, as the Compensation Committee, in its sole discretion,
may select. All optionees who have been granted options have entered into option
agreements with the Company. Each option agreement specifies when an option may
be exercisable and the terms and conditions applicable thereto, including any
vesting requirements. Options vest 25% one year after the date of grant and 25%
each subsequent year. The term of an option can in no event be exercisable more
than ten years (five years in the case of an incentive option granted to a
shareholder owning more than 10% of the Common Stock), or such shorter period,
if any, as may be necessary to comply with the requirements of state securities
laws, from the date such option is granted.

The price at which Common Stock may be purchased upon exercise of an option
is determined by the Compensation Committee, but shall be not less than the Fair
Market Value (as defined in the Stock Option Plan) of such shares on the date of
grant.

The Stock Option Plan provides for adjustment in the number of shares of
Common Stock subject to each outstanding Option or the Option prices or both, in
the event of any changes in the outstanding Common Stock by reason of stock
dividends, stock splits, recapitalizations, reorganizations, mergers,
consolidations, sales or exchanges of assets, combinations, or exchanges of
shares or offerings of subscription rights. In the event of the complete
liquidation or dissolution of the Company due to a merger, reorganization or
other adjustment as described above, any Options, granted and remaining
unexercised shall be deemed canceled.

44
<PAGE> 46

The Company has registered the issuance of all options and all shares
issuable upon exercise of the options on Form S-8 under the Securities Act.

The Stock Option Plan became effective as of July 1, 1993, and will
terminate on July 1, 2003. However, with approval from the shareholders of the
Company, if required by law or the applicable provisions of any securities
exchange upon which the Common Stock is listed, the Board of Directors or the
Compensation Committee may at any time prior to such date terminate or amend the
Stock Option Plan and the terms and conditions thereof as to stock which is not
then the subject matter of options granted or issued pursuant to the terms of
the Stock Option Plan. The Board of Directors or the Compensation Committee,
with the written consent of the affected holders of any options granted pursuant
to the Stock Option Plan, may terminate or amend the Stock Option Plan as it
regards any such options held by any such consenting holders.

EMPLOYEE STOCK PURCHASE PLAN

On May 31, 1996, approximately 560 union and non-union employees
participated in the 1996 employee stock purchase plan. Under the plan, 137,000
shares of Common Stock were issued to employees at $11.26 (85% of market price
at May 10, 1996) in exchange for notes receivable of $1,383,272 which are
payable over two years via payroll deduction. During 1996, 17,600 shares were
returned to the plan as a result of refunds to the employees. There are 180,600
shares remaining to be issued under the plan.

The Company has registered the issuance of all the shares issuable under
this plan on Form S-8 under the Securities Act.

PROFIT SHARING AND 401(K) PLANS

On June 30, 1993, the Company and ROC assumed, pursuant to an Adoption
Agreement, the combined profit sharing and 401(k) plan of Riviera, Inc. (the
"Profit Sharing and 401(k) Plans") and the Company and ROC have continued the
Profit Sharing and 401(k) Plans after June 30, 1993. The Company and ROC have
amended the Adoption Agreement to provide that all current employees of the
Riviera who were employed by the Riviera on April 1, 1992, who are at least 21
years of age and who are not covered by a collective bargaining agreement are
immediately eligible to participate in the Profit Sharing and 401(k) Plans. The
amendment provides further that all current employees who were employed by the
Riviera after April 1, 1992, who are at least 21 years of age and who are not
covered by a collective bargaining agreement are eligible to participate after
one year of service at the Riviera.

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

TERMINATION FEE AGREEMENTS

ROC is a party to termination fee agreements with certain significant
employees pursuant to which each such employee is entitled to receive one year's
salary and benefits if his or her employment with ROC is terminated within one
year of a change of control of the Company or ROC, or the involuntary
termination of Mr. Westerman's employment. The estimated total amount that

45
<PAGE> 47

would be payable under all such agreements is approximately $1.3 million in
salaries and $400,000 in benefits.

STAY BONUS AGREEMENTS

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

COMPENSATION OF DIRECTORS

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

BOARD OF DIRECTORS AND COMMITTEE MEETINGS

The Company established an Audit Committee at the beginning of 1994. The
Audit Committee is composed of Messrs. Barengo, Friedman, and Hannifin. The
Audit Committee recommends to the Board of Directors the selection of an
auditor, reviews the plan and scope of an audit, reviews the auditors' critique
of management and internal controls and management's response to such critique
and reviews the results of the audit.

The Company and ROC each has a Compensation Committee composed of Messrs.
Barengo and Friedman. The Compensation Committee is responsible for recommending
executive compensation programs to the Board of Directors and for approving all
compensation decisions with respect to the Chief Executive Officer and his
recommendations for the other executive officers of the Company. Robert R.
Barengo is a principal in American Wagering, Inc. See "Certain Relationships and
Related Transactions."

46
<PAGE> 48

PRINCIPAL AND SELLING SHAREHOLDERS

The Common Stock is traded on the American Stock Exchange. The following
table sets forth certain information regarding the beneficial ownership of the
Common Stock as of December 31, 1996 and as adjusted to reflect the Offering,
assuming the Underwriters' over-allotment option is not exercised, by (i) each
person who, to the knowledge of the Company, beneficially owns more than 5% of
the outstanding Common Stock, (ii) the directors and certain officers of the
Company and (iii) all directors and officers of the Company and ROC as a group.
Except as indicated, each person listed below has sole voting and investment
power with respect to the shares set forth opposite such person's name.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED OWNED
PRIOR TO THE OFFERING SHARES TO BE AFTER THE OFFERING
---------------------- SOLD IN THE ----------------------
NAME NUMBER PERCENTAGE OFFERING NUMBER PERCENTAGE
- ---- ---------- ---------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
William L. Westerman(1)(7).................. 329,200 6.7% 0 329,200 4.9%
Ronald P. Johnson(1)(7)..................... 30,250 * 0 30,250 *
Martin R. Gross(1)(7)....................... 19,250 * 0 19,250 *
Robert Vannucci(1)(7)....................... 18,850 * 0 18,850 *
Jerome P. Grippe(1)(7)...................... 19,250 * 0 19,250 *
Robert R. Barengo(1)(7)..................... 4,103 * 0 4,103 *
William M. Friedman(1)(7)................... 0 * 0 0 *
Philip P. Hannifin(1)(7).................... 33,000 * 0 33,000 *
Keyport Life Insurance Co.(2)............... 857,160 17.4 750,000 107,160 1.6
Sun America Life Insurance 761,920 15.5 500,000 261,920 3.9
Company(3)................................
Morgens Entities:(4)........................
Betje Partners............................ 29,360 * 0 29,360 *
Morgens Waterfall Income Partners......... 43,920 * 0 43,920 *
MWV Employee Retirement Plan Group Trust.. 7,760 * 0 7,760 *
Phoenix Partners.......................... 79,440 1.6 0 79,440 1.2
Restart Partners, L.P..................... 282,000 5.7 0 282,000 4.2
Restart Partners II, L.P.................. 440,600 9.0 0 440,600 6.6
Restart Partners III, L.P................. 298,600 6.1 0 298,600 4.5
The Common Fund........................... 90,880 1.8 0 90,880 1.4
--------- ---- ------- --------- -------
Total Morgens Entities............. 1,272,560 25.9 0 1,272,560 19.1
Restructuring Capital Associates, L.P.(5)... 398,240 8.1 0 398,240 6.0
Stephen S. Taylor(6)........................ 323,860 6.6 0 323,860 4.9
All executive officers and directors as a 516,303 10.5 0 516,303 7.7
group (12 persons)(1)(7)..................
</TABLE>

- ---------------
* Less than 1%.

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

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

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

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

47
<PAGE> 49

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

(5) The address for Restructuring Capital Associates, L.P. ("Restructuring
Capital") is 450 Park Avenue, New York, New York 10022.

(6) The address for Mr. Taylor is 714 South Dearborn Street, Chicago, Illinois
60605. Includes 148,660 shares of Common Stock owned by Bidwell Partners of
which Mr. Taylor is a general partner.

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

The Company is a party to two registration rights agreements with, among
others, Morgens, Keyport, Sun Life and affiliates of Restructuring Capital, each
of which owns more than 5% of the Common Stock. Pursuant to the Equity
Registration Rights Agreement dated June 30, 1993, among the Company and the
Holders of Registrable Shares referred to therein, each of the three largest
holders of Common Stock is entitled to cause the Company to file a registration
statement, and holders of 51% or more of the shares of Common Stock then subject
to the Equity Registration Rights Agreement are entitled to cause the Company to
file two registration statements registering under the Securities Act of 1933,
as amended, the offer and sale of Common Stock owned by such persons. All other
Holders of Registrable Shares will be entitled to have shares of Common Stock
owned by them included in any such registrations. In addition, the agreement
grants to each party the right to have included, subject to certain limitations,
all shares of Common Stock owned by such party in any registration statement
filed by the Company under the Securities Act, including those filed on behalf
of the Company or security holders not party to the Equity Registration Rights
Agreement. The Selling Shareholders are registering their shares of Common Stock
hereunder pursuant to their piggy-back registration rights under the Equity
Registration Rights Agreement. Pursuant to the agreement, the Company will pay
all costs and expenses, other than underwriting discounts and commissions, in
connection with the registration and sale of Common Stock under the agreement.
The Debt Registration Rights Agreement dated June 30, 1993, among the Company
and the Holders of Registrable Securities referred to therein provides the same
rights described above to the holders of First Mortgage Notes, except that
holders of 50% (rather than 51%) or more of the principal amount of First
Mortgage Notes then subject to such agreement will be entitled to require the
Company to file two registration statements. In connection with the preparation
and filing by the Company of the Registration Statement declared effective by
the Commission on September 3, 1993, each of Morgens, Keyport and Sun Life
waived its right to demand one future registration of First Mortgage Notes. The
Company has registered the First Mortgage Notes on behalf of certain Noteholders
pursuant to their rights under the Debt Registration Rights Agreement.

The Company's officers and directors and the Selling Shareholders have
agreed with the underwriters not to publicly sell any shares of the Common Stock
for 90 days after the date of this Prospectus.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Robert R. Barengo, a director of the Company, is a principal in American
Wagering, Inc., the successor in name to Leroy's Horse & Sports Place ("AWI"),
which leases approximately 12,000 square feet of the Riviera casino floor. AWI
is the operator of the Riviera's sports book operations. This lease was assumed
by the Company from Riviera, Inc. and is still in effect. The lease provides for
rental payments based upon the monthly and annual revenues derived by AWI from
the location. From January 1, 1995, through December 31, 1995, AWI paid
aggregate rent to ROC of approximately $92,000. The Company believes that the
terms of the lease with AWI are at least as favorable to the Company and ROC as
could have been obtained from unaffiliated third parties and are at least as
favorable as terms obtained by other casino/hotels in Las Vegas. AWI also owns
Howard Johnson Hotel & Casino located at the intersection of Tropicana Avenue
and Interstate 15 in Las

48
<PAGE> 50

Vegas, Nevada. The hotel's operations include an International House of Pancakes
restaurant, on-site food and beverage sales, 150 guest rooms (no suites) and
approximately 53 gaming machines. The Company believes that this casino/hotel's
operations are not competitive with the Riviera.

The Morgens Entities will own 19.1% of the Company's Common Stock upon
completion of the Offering and will own over 90% of the Common Stock of Elsinore
upon the effective date of Elsinore's bankruptcy plan. The Company believes that
the terms of the Four Queens Management Agreement are no less favorable to the
Company than if the Company had negotiated with an independent third party. See
"Business-Riviera Gaming Management -- Four Queens Management Agreement."

DESCRIPTION OF CAPITALIZATION

COMMON STOCK

The Company is authorized to issue up to 20,000,000 shares of Common Stock,
par value $.001 per share. Upon the closing of the Offering, there will be
6,672,503 shares of Common Stock issued and outstanding (7,122,503 if the
Underwriters' over-allotment option is exercised in full).

Each holder of Common Stock is entitled to one vote for each share held of
record on each matter submitted to a vote of shareholders. Holders of Common
Stock do not have the right of cumulative voting for the election of directors.
Each holder of Common Stock is entitled to receive ratably such dividends as may
be declared by the Board of Directors out of funds legally available therefor,
as well as any distributions to the shareholders and, in the event of a
liquidation, dissolution or winding up of the Company, is entitled to share
ratably in all assets of the Company remaining after payment of liabilities.
Holders of Common Stock have no conversion, redemption or preemptive rights or
other rights to subscribe for additional shares. Shares of Common Stock will not
be subject to redemption except as required to comply with any laws, rules or
regulations governing the conduct of the gaming business. The outstanding shares
of Common Stock are, and the shares to be sold by the Company in the Offering
will be, when issued and delivered, validly issued, fully paid and
nonassessable. Certificates for shares of Common Stock may bear legends required
by the Nevada gaming authorities.

CERTAIN ANTI-TAKEOVER EFFECTS

The Company's Second Restated Articles of Incorporation (the "Articles")
contain certain provisions that are intended to enhance the likelihood of
continuity and stability in the composition of the Company's Board of Directors
and in the policies formulated by the Board of Directors and to discourage an
unsolicited takeover of the Company if the Board of Directors determines that
such a takeover is not in the best interests of the Company and its
shareholders. However, these provisions could have the effect of discouraging
certain attempts to acquire the Company or remove incumbent management even if
some or a majority of the Company's shareholders deemed such an attempt to be in
their best interests, including those attempts that might result in a premium
over the market price for the shares of Common Stock held by shareholders.

Restricted Voting Rights. The Articles provide that if any person or group
has acquired within any consecutive three year period beneficial ownership,
directly or indirectly, of more than 10% of the outstanding Common Stock, then
such shareholder will be entitled to cast only one-hundredth ( 1/100) of one
vote per share for each share in excess of 10% of the issued and outstanding
shares of Common Stock. Unless waived by the Board of Directors, the voting
restriction will apply until such time as such shareholder shall have
consummated a tender offer for all the outstanding shares of Common Stock at a
price specified in the Articles.

Nevada Legislation. On October 1, 1991, Nevada's "Combination with
Interested Shareholders Statute" and certain amendments to Nevada's "Control
Share Acquisition Statute" became effec-

49
<PAGE> 51

tive. Both statutes may have the effect of delaying or making it more difficult
to effect a change in control of the Company.

The Combination with Interested Shareholders Statute (Nev. Rev. Stat.
sec.sec. 78.411-.444 (1995)) prevents an "interested shareholder" and an
applicable Nevada corporation from entering into a "combination," unless certain
conditions are met. A "combination" means any merger or consolidation with an
"interested shareholder," or any sale, lease, exchange, mortgage, pledge,
transfer or other disposition, in one transaction or a series of transactions
with an "interested shareholder": (i) having an aggregate market value equal to
5% or more of the aggregate market value of the assets of the corporation; (ii)
having an aggregate market value equal to 5% or more of the aggregate market
value of all of the outstanding shares of the corporation; or (iii) representing
10% or more of the earning power or net income of the corporation. An
"interested shareholder" means the beneficial owner of 10% or more of the voting
shares of a corporation, or an affiliate or associate thereof. A corporation may
not engage in a "combination" within five years after the interested shareholder
acquired his shares unless the combination or the purchase of shares made by the
interested shareholder is approved by the board of directors before the
interested shareholder acquired such shares. If this approval is not obtained,
then after the expiration of the five-year period, the business combination may
be consummated with the approval of the board of directors or a majority of the
voting power held by disinterested shareholders, or if the consideration to be
paid by the interested shareholder is at least equal to the highest of: (i) the
highest price per share paid by the interested shareholder within the five years
immediately preceding the date of the announcement of the combination or in the
transaction in which he became an interested shareholder, whichever is higher;
(ii) the market value per Common Share on the date of the announcement of the
combination or the date the interested shareholder acquired the shares,
whichever is higher; or (iii) for the holders of preferred stock, the highest
liquidation value of the preferred stock, if it is higher.

Nevada's Control Share Acquisition Statute (Nev. Rev. Stat. sec.sec.
78.378-.3793 (1995) ) prohibits an acquiror, under certain circumstances, from
voting shares of a target corporation's stock after crossing certain threshold
ownership percentages, unless the acquiror obtains the approval of the target
corporation's disinterested shareholders. The Control Share Acquisition Statute
specifies three thresholds: one-fifth or more but less than one-third, one-third
but less than a majority, and a majority or more, of the outstanding voting
power. Once an acquiror crosses one of the above thresholds, those shares in an
offer or acquisition and acquired within 90 days become Control Shares (as
defined in such statute) and such Control Shares are deprived of the right to
vote until disinterested shareholders restore the right. The Control Share
Acquisition Statute also provides that in the event Control Shares are accorded
full voting rights and the acquiring person has acquired a majority or more of
all voting power, all other shareholders who do not vote in favor of authorizing
voting rights to the Control Shares are entitled to demand payment for the fair
value of their shares. The Board of Directors is required to notify shareholders
as soon as practicable after such an event has occurred that they have the right
to receive the fair value of their shares in accordance with statutory
procedures established generally for dissenter's rights.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is the American Stock
Transfer & Trust Company.

FIRST MORTGAGE NOTES

The following is a summary of the terms of the Note Indenture (as amended
by the First Supplemental Indenture and the First Amendment to First
Supplemental Indenture) governing the First Mortgage Notes and is qualified in
its entirety by reference to such documents, copies of which have been filed as
exhibits to the Registration Statement of which this Prospectus is a part.

50
<PAGE> 52

There is $100.0 million aggregate principal amount of the First Mortgage
Notes outstanding. The First Mortgage Notes have an interest rate of 11% per
annum which is payable semi-annually. The First Mortgage Notes are secured by a
first lien on substantially all of the Company's assets, including property
located at, or related to, the Riviera, including land, buildings, certain FF&E
and intangible assets. The First Mortgage Notes are not redeemable at the
Company's option until June 1, 1998 and thereafter are redeemable at premiums
beginning at 104.3125% and declining each subsequent year to par in 2001. The
Note Indenture prohibits the payment of dividends on the Common Stock. The
Company may, beginning June 1, 1997, defease the First Mortgage Notes whereby
the collateral under the Note Indenture will be released and the Company would
no longer be subject to the restrictive covenants. The Company is required to
make an offer to purchase all the First Mortgage Notes upon (a) a major event of
loss to the Riviera, or (b) a "Change of Control" (generally, the acquisition of
a majority of the Common Stock by a third party).

Certain covenants restrict the Company's activities or require the Company
to meet certain financial tests, including the following:

(i) No additional debt can be incurred by the Company or any of its
restricted subsidiaries except that if certain fixed charge coverage ratios
are met, debt secured by FF&E acquired after June 23, 1993 and subordinated
debt which matures after the First Mortgage Notes can be incurred. (The
Company has entered into a FF&E secured loan of up to $15.0 million which
would be permitted by this restriction. See "-- Credit Facility.")

(ii) Capital expenditures are limited to $6.0 million per year plus
80% of cumulative available cash flow from June 30, 1993, minus prior
capital expenditures in excess of $6.0 million per year in 1994, 1995 or
1996. (The Company does not believe this restriction will affect its
ability to complete Phase I but a waiver will be required to complete any
future phases of the Master Plan.)

(iii) If the Company's consolidated net worth is less than $2.5
million for two successive quarters, the Company is required to offer to
buy back 10% of the First Mortgage Notes in each quarter thereafter until
consolidated net worth is equal to or greater than $2.5 million. (The
Company's consolidated net worth at December 31, 1996 was approximately
$35.3 million.)

(iv) Contributions to joint ventures and investments ("Restricted
Investments") are restricted by (i) consolidated cash flow, (ii) percentage
of consolidated net worth tests and (iii) a limit of $5.0 million for each
such investment if the Company does not have a management contract and a
participation in profits at the time of the investment. The preceding
restrictions will not apply to the proceeds of any subordinated debt or
equity raised for a specific Restricted Investment ("Project Investment").
(Except for Project Investment, the Company believes that the foregoing
restrictions may limit the Company's ability to invest in financially
troubled casinos and casinos in other jurisdictions. After giving effect to
the Offering, the Company estimates it can invest up to $14.5 million in
any one Restricted Investment and $29.0 million in all Restricted
Investments.)

(v) The Company and its subsidiaries' ability to sell assets is
limited and generally any proceeds must be received in cash and used to
repurchase First Mortgage Notes. (The Company believes that this covenant
may restrict the Company's ability to effect one or more aspects of future
phases of the Master Plan).

(vi) The Company may not consolidate or merge with or into, or sell,
lease, convey or otherwise dispose of all or substantially all of its
properties or assets to any person unless (i) immediately after giving
effect to the transaction, the consolidated net worth of the continuing
entity is at least equal to the actual consolidated net worth of the
Company as of the last day of the prior fiscal quarter and (ii) immediately
after giving effect to the transaction, the Company, or the continuing
corporation (if other than the Company), has a pro forma fixed charge
coverage ratio at least equal to 2.0 to 1.0. (The Company believes such
covenant may

51
<PAGE> 53

restrict its ability to expand by acquisition of other companies,
particularly financially distressed companies.)

CREDIT FACILITY

The Credit Facility was established as of February 28, 1997 on behalf of
the Company and ROC pursuant to agreements among the Company, ROC and U.S. Bank
of Nevada, as lender ("USBN"). The Credit Facility provides for borrowings of up
to $15,000,000, which available amount is reduced by $937,500 (and the
outstanding principal amount in excess of maximum loan amount, if any, must be
repaid) on a quarterly basis, commencing April 1998. The Credit Facility matures
on January 1, 2002, unless accelerated earlier by USBN upon an event of default.
Interest on outstanding principal under the Credit Facility accrues at either
the prime rate plus .50% per annum or LIBOR plus 2.90% per annum, at the
Company's option. The Credit Facility is secured by all FF&E acquired by the
Company or ROC after June 30, 1993. Any amount owing to USBN and not repaid from
collateral proceeds is subordinate to the prior payment in full of the First
Mortgage Notes. The Company does not intend to draw down the funds under the
Credit Facility immediately, but desires to have funds available to acquire
gaming and other equipment.

52
<PAGE> 54

UNDERWRITING

Subject to the terms and conditions set forth in the Underwriting
Agreement, a copy of which has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part, the Underwriters named below (the
"Underwriters") have severally, and not jointly, agreed, through Ladenburg
Thalmann & Co. Inc. and Raymond James & Associates, Inc., the Representatives of
the Underwriters (the "Representatives"), to purchase from the Company and the
Selling Shareholders, and the Company and the Selling Shareholders have agreed
to sell to the Underwriters named below, the aggregate number of shares of
Common Stock set forth opposite their respective names below:

<TABLE>
<CAPTION>
NUMBER
NAME OF UNDERWRITER OF SHARES
------------------- ----------
<S> <C>
Ladenburg Thalmann & Co. Inc.............................................
Raymond James & Associates, Inc..........................................

---------
Total.................................................................... 3,000,000
=========
</TABLE>

The Underwriters are committed to take and pay for all the shares of Common
Stock offered hereby, if any are purchased.

The Underwriters have advised the Company that they propose to offer all or
part of the Common Stock offered hereby directly to the public initially at the
price to the public set forth on the cover page of this Prospectus, that they
may offer shares to certain dealers at a price that represents a concession of
not more than $ per share and that the Underwriters may allow, and such
dealers may reallow, a concession of not more than $ per share to
certain other dealers. After the commencement of the Offering, the price to the
public and the concessions may be changed.

The Company has granted to the Underwriters an option, exercisable for 30
days from the date of this Prospectus, to purchase up to 450,000 additional
shares of Common Stock at the same price per share as the initial 3,000,000
shares to be purchased by the Underwriters. The Underwriters may exercise this
option solely for the purpose of covering over-allotments, if any, made in
connection with the sale of the shares offered hereby. To the extent the
Underwriters exercise such option, each of the Underwriters will be committed,
subject to certain conditions, to purchase the same percentage thereof as the
shares to be purchased by that Underwriter.

The Company has agreed to indemnify the Underwriters and certain related
persons against certain liabilities, including certain liabilities under the
Securities Act, and to contribute to payments the Underwriters may be required
to make in respect thereof.

The Company, its directors, executive officers and the Selling Shareholders
have agreed that they will not, directly or indirectly, offer, sell or otherwise
dispose of any equity securities of the Company or any securities convertible
into or exchangeable for, or any rights to purchase or acquire, equity
securities of the Company for a period of 90 days after the date of this
Prospectus, without the prior written consent of Ladenburg on behalf of the
Representatives.

Ladenburg is acting as financial advisor to Eagle in connection with the
Black Hawk Project. In addition, the Company has agreed to issue to Ladenburg,
if Ladenburg arranges financing for RBL, five year warrants to purchase 100,000
shares of Common Stock (the "Warrants") at an exercise price equal to 120% of
the price to public set forth on the cover page hereof. The Warrants will be

53
<PAGE> 55

issued upon the closing of such financing, and will not be exercisable for a
period of one year from the date of this Prospectus.

In connection with the Offering, the Underwriters may over-allot or effect
transactions which stabilize or maintain the market price of the Common Stock at
a level above that which might otherwise prevail in the open market. Such
transactions may be effected on the American Stock Exchange or otherwise. Such
stabilizing, if commenced, may be discontinued at any time.

LEGAL MATTERS

Certain matters with respect to the validity of the Common Stock offered
hereby will be passed upon for the Company by Dechert Price & Rhoads, New York,
New York. Certain legal matters will be passed upon for the Underwriters by
Brownstein Hyatt Farber & Strickland, P.C., Denver, Colorado.

EXPERTS

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

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

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files periodic reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, NW, Washington, D.C. 20549, and at
the Commission's Regional Offices at 7 World Trade Center, New York, New York
10048 and Northwestern Atrium Center, 500 Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can be obtained upon written request
addressed to the Commission, Public Reference Section, 450 Fifth Street, NW,
Washington, D.C. 20549, at prescribed rates.

Additional information regarding the Company is contained in the
Registration Statement on Form S-1 and the exhibits, (the "Registration
Statement") filed with the Commission under the Securities Act of 1933, as
amended (the "Securities Act"). This Prospectus does not contain all the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information, reference is made to the Registration Statement which may
be inspected without charge at, and copies thereof may be obtained at prescribed
rates from the Commission at 450 Fifth Street, NW, Judiciary Plaza, Washington,
D.C. 20549. The Registration Statement, including the exhibits and schedules
thereto, can also be accessed through the EDGAR terminals in the Commissions's
Public Reference Rooms in Washington, Chicago and New York or through the World
Wide Web at http://www.sec.gov.

54
<PAGE> 56

RIVIERA HOLDINGS CORPORATION

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report........................................................ F-2
Consolidated Balance Sheets as of December 31, 1995 and 1996........................ F-3
Consolidated Statements of Income for the Years Ended December 31, 1994, 1995 and
1996............................................................................. F-4
Consolidated Statements of Shareholders' Equity for the Years Ended December 31,
1994, 1995 and 1996.............................................................. F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 1994, 1995
and 1996......................................................................... F-6
Notes to Consolidated Financial Statements.......................................... F-7
</TABLE>

F-1
<PAGE> 57

INDEPENDENT AUDITORS' REPORT

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

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

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

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

DELOITTE & TOUCHE LL

Las Vegas, Nevada
February 28, 1997

F-2
<PAGE> 58

RIVIERA HOLDINGS CORPORATION

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents (Note 1)................................. $ 21,962 $ 25,747
Accounts receivable, net (Notes 1 and 2)........................... 4,334 5,113
Inventories (Note 1)............................................... 2,186 3,039
Prepaid expenses and other assets.................................. 2,602 2,692
-------- --------
Total current assets............................................ 31,084 36,591
Property and Equipment, Net (Notes 1, 3, 5 and 7).................... 121,049 127,760
Other Assets......................................................... 4,759 2,853
Restricted Cash For Periodic Slot Payments (Notes 1 and 5)........... 1,039 461
-------- --------
Total Assets............................................... $157,931 $167,665
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt (Note 5)......................... $ 2,322 $ 1,550
Accounts payable (Notes 1 and 4)................................... 8,364 8,530
Current income taxes payable (Note 6).............................. 51 413
Accrued expenses (Notes 1 and 4)................................... 9,640 9,757
-------- --------
Total current liabilities....................................... 20,377 20,250
-------- --------
Deferred Income Taxes Payable (Note 6)............................... 3,023 4,626
-------- --------
Long-Term Debt, Net of Current Portion (Notes 1 and 5)............... 108,249 107,538
-------- --------
Commitments and Contingencies (Notes 5, 7, 8, 9, 10 and 12)

Shareholders' Equity: (Notes 1 and 11)
Common stock ($.001 par value; 20,000,000 shares authorized;
4,800,000 shares at December 31, 1995 and 4,922,503 shares at
December 31, 1996 issued and outstanding)....................... 5 5
Additional paid-in capital......................................... 12,537 13,919
Notes receivable from employee shareholders........................ -- (853)
Retained earnings.................................................. 13,740 22,180
-------- --------
Total shareholders' equity...................................... 26,282 35,251
-------- --------
Total Liabilities and Shareholders' Equity................. $157,931 $167,665
======== ========
</TABLE>

See notes to consolidated financial statements.

F-3
<PAGE> 59

RIVIERA HOLDINGS CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------
1994 1995 1996
---------- ---------- ----------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
Revenues: (Note 1)
Casino........................................... $ 82,060 $ 77,337 $ 80,384
Rooms............................................ 35,422 39,848 41,835
Food and beverage................................ 22,961 21,895 22,641
Entertainment.................................... 16,945 14,423 20,883
Other (Notes 7 and 9)............................ 9,390 9,515 11,293
---------- ---------- ----------
166,778 163,018 177,036
Less promotional allowances (Note 1)............. 12,857 11,873 12,627
---------- ---------- ----------
Net revenues............................. 153,921 151,145 164,409
---------- ---------- ----------
Costs and expenses: (Notes 1, 7 and 10)
Direct costs and expenses of operating
departments:
Casino........................................ 48,826 45,325 47,509
Rooms......................................... 17,594 18,787 18,834
Food and beverage............................. 15,588 15,768 15,916
Entertainment................................. 13,982 10,329 15,290
Other......................................... 3,516 3,527 3,913
Other operating expenses:
Selling, general and administrative........... 28,822 29,618 31,454
Depreciation and amortization................. 5,674 6,811 8,212
---------- ---------- ----------
Total costs and expenses................. 134,002 130,165 141,128
---------- ---------- ----------
Income from operations............................. 19,919 20,980 23,281
---------- ---------- ----------
Other income (expense):
Interest expense (Notes 5 and 7)................. (12,764) (12,453) (12,085)
Interest income.................................. 510 1,149 1,167
Other, net (Note 5).............................. -- -- 505
---------- ---------- ----------
Total other income (expense)............. (12,254) (11,304) (10,413)
---------- ---------- ----------
Income before provision for income taxes........... 7,665 9,676 12,868
Provision for income taxes (Notes 1 and 6)......... 2,875 3,332 4,428
---------- ---------- ----------
Net income......................................... $ 4,790 $ 6,344 $ 8,440
========== ========== ==========
Weighted average common and common equivalent
shares outstanding (Notes 1 and 11).............. 4,800,000 5,040,720 5,177,809
========== ========== ==========
Net income per common and common equivalent shares
(Notes 1 and 11)................................. $ 1.00 $ 1.26 $ 1.63
========== ========== ==========
</TABLE>

See notes to consolidated financial statements.

F-4
<PAGE> 60

RIVIERA HOLDINGS CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
NOTES
RECEIVABLE
ADDITIONAL FROM
SHARES COMMON PAID-IN RETAINED EMPLOYEE
OUTSTANDING STOCK CAPITAL EARNINGS SHAREHOLDERS TOTAL
----------- ------ ---------- --------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Balances, January 1, 1994....... 4,800,000 $ 5 $ 12,537 $ 2,606 -- $15,148
Net income...................... -- -- -- 4,790 -- 4,790
--------- --- ------- ------- -------
Balances, December 31, 1994..... 4,800,000 5 12,537 7,396 -- 19,938
Net income...................... -- -- -- 6,344 -- 6,344
--------- --- ------- ------- -------
Balances, December 31, 1995..... 4,800,000 5 12,537 13,740 -- 26,282
Stock issued under Employee
Stock Purchase Plan........... 137,000 -- 1,543 -- $ (1,383) 160
Collections of shareholders'
receivables................... -- -- -- -- 332 332
Refunds on employee stock
purchases..................... (17,600) -- (198) -- 198 --
Director Compensation
Plan.......................... 3,103 -- 37 -- -- 37
Net income...................... -- -- -- 8,440 -- 8,440
--------- --- ------- ------- ------- -------
Balances, December 31, 1996..... 4,922,503 $ 5 $ 13,919 $ 22,180 $ (853) $35,251
========= === ======= ======= ======= =======
</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE> 61

RIVIERA HOLDINGS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------
1994 1995 1996
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income.................................................... $ 4,790 $ 6,344 $ 8,440
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization.............................. 5,674 6,811 8,212
Provision for bad debts.................................... 991 478 524
Provision for gaming discounts............................. 133 143 232
Other, net................................................. -- -- (505)
Interest expense........................................... 12,764 12,453 12,085
Interest paid.............................................. (13,052) (12,489) (12,072)
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable............... (1,116) 126 (1,535)
Decrease (increase) in inventories....................... (508) 86 (853)
Increase in prepaid expenses and other assets............ (310) (212) (90)
Decrease in restricted cash for periodic slot payments... 591 318 578
Increase in accounts payable............................. 1,064 1,033 166
Increase in accrued expenses............................. 2,393 758 104
Increase (decrease) in current income taxes payable...... 573 (522) 362
Increase in deferred income taxes payable................ 2,010 1,013 1,603
Increase in non-qualified pension plan obligation to CEO
upon retirement....................................... 375 400 1,039
------- ------- -------
Net cash provided by operating activities............. 16,372 16,740 18,290
------- ------- -------
Cash flows from investing activities:
Capital expenditures for property and equipment............... (8,933) (7,836) (14,923)
Decrease (increase) in other assets........................... (1,506) (382) 1,906
------- ------- -------
Net cash used in investing activities................. (10,439) (8,218) (13,017)
------- ------- -------
Cash flows from financing activities:
Proceeds from long-term borrowings............................ 675 176 209
Payments on long-term borrowings.............................. (3,371) (3,159) (2,226)
Proceeds from issuance of stock to employees and directors.... -- -- 197
Collections of notes receivable from employees................ -- -- 332
------- ------- -------
Net cash used in financing activities................. (2,696) (2,983) (1,488)
------- ------- -------
Increase in cash and cash equivalents........................... 3,237 5,539 3,785
Cash and cash equivalents, beginning of period.................. 13,186 16,423 21,962
------- ------- -------
Cash and cash equivalents, end of period........................ $16,423 $21,962 $25,747
======= ======= =======
Supplemental disclosure of cash flow information -- Income taxes
paid.......................................................... $ 292 $ 2,852 $ 2,463
======= ======= =======
Supplemental disclosure of non-cash financing activities:
Stock issued to employees for notes receivable................ $ 1,383
=======
Non-cash reductions of long-term debt......................... $ 845
=======
</TABLE>

See notes to consolidated financial statements.

F-6
<PAGE> 62

RIVIERA HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

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

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

Nature of Operations

The primary line of business of the Company is the operation of the Riviera
Hotel & Casino on the "Strip" in Las Vegas, Nevada. The Company is engaged in a
single industry segment, the operation of a hotel/casino with restaurants and
related facilities. The Company also manages the Four Queens Hotel/Casino in
downtown Las Vegas (see Note 9).

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

Principles of Consolidation

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

Cash and Cash Equivalents

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

The Company's investment securities, along with certain cash and cash
equivalents that are not deemed securities under SFAS 115, are carried on the
consolidated balance sheets in the cash and cash equivalents category. SFAS 115
addresses the accounting and reporting for investments in equity securities that
have readily determinable fair values and for all investments in debt
securities, and requires such securities to be classified as either
held-to-maturity, trading or available-for-sale. Management determines the
appropriate classification of its investment securities at the time of purchase
and re-evaluates such determination at each balance sheet date. Pursuant to the
criteria that are prescribed by SFAS 115, the Company has classified its
investment securities in inventory as of December 31, 1994, and acquired during
fiscal 1995 as held to maturity. Held to maturity securities are required to be
carried at amortized cost. At December 31, 1996, securities classified as held
to maturity were comprised of debt securities issued by the U.S. Treasury and
other U.S. government corporations and agencies and repurchase agreements with
an amortized cost of $19,756,000 maturing in three months or less.

F-7
<PAGE> 63

RIVIERA HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Inventories

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

Property and Equipment

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

Restricted Cash for Periodic Slot Payments

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

Fair Value Disclosure as of December 31, 1996

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

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

Casino Revenue

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

Promotional Allowances

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

F-8
<PAGE> 64

RIVIERA HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

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

Federal Income Taxes

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

Net Income Per Share

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

On November 16, 1995, the shareholders of the Company approved an amendment
to the Company's Amended and Restated Articles of Incorporation to increase the
authorized shares of common stock from 5,000,000 to 20,000,000 and a four for
one stock split. Accordingly, per share information, average number of shares
outstanding and number of shares outstanding in the accompanying consolidated
financial statements have been adjusted for the stock split as of the earliest
date presented (December 31, 1994).

Estimates and Assumptions

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

Reclassifications

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

Recently Adopted Accounting Standards

During 1996 the Company adopted the provisions of Statement No. 121 ("SFAS
121"), Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of.

F-9
<PAGE> 65

RIVIERA HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

SFAS 121 requires that long-lived assets and certain identifiable intangibles be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. The adoption of
SFAS 121 had no impact on the financial position or results of operations of the
Company.

In October 1995, the Financial Accounting Standards Board ("FASB") issued
Statement No. 123 ("SFAS 123"), Accounting for Stock-Based Compensation, which
establishes financial accounting and reporting standards for stock-based
employee compensation plans and for transactions in which an entity issues its
equity instruments to acquire goods or services from nonemployees. The Company
continues to account for stock-based compensation arrangements in accordance
with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, and therefore the adoption of SFAS 123 had no effect on the financial
position or results of operations of the Company. The Company has included
additional disclosures about stock-based employee compensation plans as required
by SFAS 123 (see Note 11).

2. ACCOUNTS RECEIVABLE

Accounts receivable consist of the following at December 31:

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

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

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

F-10
<PAGE> 66

RIVIERA HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31:

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

4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable consist of the following at December 31:

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

Accrued expenses consist of the following at December 31:

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

F-11
<PAGE> 67

RIVIERA HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. LONG-TERM DEBT

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

<TABLE>
<CAPTION>
1995 1996
-------- ---------
(IN THOUSANDS)
<S> <C> <C>
First Mortgage Notes maturing on December 31, 2002, bearing interest
at the rate of 11% per annum, payable semi-annually on June 30 and
December 31, redeemable beginning June 1, 1998, at 104.3125%; 1999
at 102.8750%; 2000 at 101.4375%; and 2001 and thereafter at 100%.
These notes are collateralized by the physical structures
comprising the Riviera Hotel and Casino............................ $100,000 $100,000
Unsecured, non-interest bearing notes to settle Class 4, 5 and 12
claims, discounted at 16.8%, paid in 1996.......................... 2,056 --
Unsecured, non-interest bearing promissory note in an original
principal amount of $8,000,000 (the "Class 13/14 Note") to settle
the claims of the former sole shareholder, and his affiliates,
payable to a bank in semi-annual installments of $500,000 to
$750,000 discounted at 12%......................................... 4,159 4,707
Capitalized lease obligations (see Note 7)........................... 1,341 986
Unsecured promissory notes in the original principal amount of
$441,262, bearing interest at the rate of 8.5% per annum, payable
monthly and maturing on December 31, 1998.......................... 266 185
Periodic slot payments due customers through 2000, prefunded by
restricted cash (see Note 1)....................................... 1,039 461
Non-qualified pension plan obligation to the CEO of the Company,
payable in 20 quarterly installments upon expiration of his
employment contract................................................ 1,710 2,749
-------- --------
Total long-term debt............................................ 110,571 109,088
Less current maturities by terms of debt............................. 2,322 1,550
-------- --------
Total........................................................... $108,249 107,538
======== ========
</TABLE>

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

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1997.............................................. $ 1,550
1998.............................................. 1,884
1999.............................................. 1,817
2000.............................................. 2,043
2001.............................................. 1,244
Thereafter........................................ 100,550
--------
Total........................................ $109,088
========
</TABLE>

The Indenture for the First Mortgage Notes imposes certain financial
covenants and restrictions on the Company, including but not limited to the
maintenance of a minimum consolidated net worth, which should not be less than
$2,542,000 for any two consecutive fiscal quarters, and limitations on (i)
dividends on common stock, (ii) liquidation of assets, (iii) incurrence of
indebtedness, (iv) creation of subsidiaries and joint ventures and (v) capital
purchases. Capital purchases are

F-12
<PAGE> 68

RIVIERA HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

limited to annual cash expenditures of $6,000,000 plus 80% of cumulative
available cash flow from the Company's inception at July 1, 1993, to the extent
that this cash flow has not been utilized in any prior year. Management believes
the Company is in compliance with the covenants of the Indenture.

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

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

In February, 1997, the Company entered into a $15.0 million five year
reducing revolving line of credit collateralized by equipment. The revolving
line of credit bears interest at prime plus 0.5% or LIBOR plus 2.9%. The Company
has not utilized this line of credit.

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

6. FEDERAL INCOME TAXES

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

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

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

F-13
<PAGE> 69

RIVIERA HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

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

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

7. LEASING ACTIVITIES

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

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

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

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

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

F-14
<PAGE> 70

RIVIERA HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1997............................................... $1,159
1998............................................... 946
1999............................................... 748
2000............................................... 494
2001............................................... 351
Thereafter......................................... 993
------
Total......................................... $4,691
======
</TABLE>

8. COMMITMENTS AND CONTINGENCIES

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

9. MANAGEMENT AGREEMENTS

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

The term of the Management Agreement is approximately 40 months, subject to
earlier termination or extension. Either party may terminate the Management
Agreement if cumulative earnings before interest, taxes, depreciation and
amortization ("EBITDA") for the first two fiscal years is less than $12.8
million. The term of the Management Agreement can be extended by an additional
24 months at RGM's option, if cumulative EBITDA for the three fiscal years of
the term is at least $19.2 million. RGM will be paid a fee of 25% of any
increase in annual EBITDA over $4.0 million, subject to a $1.0 million minimum
fee, payable in equal monthly installments. RGM has received warrants for 20% of
Elsinore's fully diluted equity, exercisable during the term or extended term of
the Management Agreement at an exercise price based on the higher of (i) the per
share book value on the effective date of the Elsinore bankruptcy plan or (ii)
total shareholders' equity of $5.0 million. Either party can terminate the
Management Agreement if (i) substantially all the Four Queens' assets are sold,
(ii) the Four Queens is merged or (iii) a majority of the Four Queens' or
Elsinore's shares are sold. Upon such termination RGM will receive a $2.0
million termination bonus minus any amount realized or realizable upon exercise
of the warrants.

10. EMPLOYMENT AGREEMENTS AND EMPLOYEE BENEFIT PLANS

The Company has an employment agreement with Mr. Westerman, Chairman of the
Board and Chief Executive Officer of the Company. This agreement includes an
annual base salary, an incentive bonus based upon the extent of adjusted
operating earnings, contributions to a Non-Qualified Pension Plan and
contributions to a Profit Sharing and 401(k) Plan. In addition, the Company has
termination fee agreements with each of the Directors, Executive Officers and

F-15
<PAGE> 71

RIVIERA HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Significant Employees pursuant to which each of such employees will be entitled
to receive one year's salary and health insurance benefits if their employment
with the Company is terminated within one year of a change of control of the
Company and without cause, or the involuntary termination of Mr. Westerman. On
November 21, 1996, the Company amended Mr. Westerman's employment agreement
subject to stockholder approval at their annual meeting scheduled for May 8,
1997. If the Company's stockholders do not ratify the amended agreement the
agreement described above will remain in full force.

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

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

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

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

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

ROC is a party to termination fee agreements with certain significant
employees pursuant to which each such employee is entitled to receive one year's
salary and benefits if his or her

F-16
<PAGE> 72

RIVIERA HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

employment with ROC is terminated within one year of a change of control of the
Company or ROC, or the involuntary termination of Mr. Westerman's employment.
The estimated total amount that would be payable under all such agreements is
approximately $1.3 million in salaries and $400,000 in benefits.

11. STOCK OPTION PLANS

At a meeting held on July 27, 1993, the Company's Board of Directors
adopted a stock option plan (the "Stock Option Plan") providing for the issuance
of both non-qualified and incentive stock options (as defined in the Internal
Revenue Code). This stock option plan was ratified by the Company's shareholders
at the April 26, 1994 annual meeting. The number of shares available for
purchase under the Stock Option Plan as adopted was 120,000 (as adjusted
pursuant to antidilution provisions). On November 16, 1995, the stockholders
approved a four-for-one stock split, increasing the number of shares of Common
Stock available for purchase under the Stock Option Plan to 480,000. Options
were granted for 228,000 shares for 1993, 132,000 shares for 1994, none for
1995, and 110,000 for 1996, leaving a balance available for future grants of
10,000 shares. No options were exercised or cancelled in 1994, 1995 or 1996. On
November 21, 1996 the Company amended the Stock Option Plan to increase the
number of shares available under the Stock Option Plan from 480,000 shares to
1,000,000 shares and granted options to purchase 300,000 additional shares to
Mr. Westerman, each subject to stockholder approval at the annual meeting of
stockholders scheduled in May 1997. Options vest 25% one year after the date of
grant and 25% each subsequent year. The term of an option can in no event be
exercisable more than ten years (five years in the case of an incentive option
granted to a shareholder owning more than 10% of the Common Stock), or such
shorter period, if any, as may be necessary to comply with the requirements of
state securities laws, from the date such option is granted.

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

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

F-17
<PAGE> 73

RIVIERA HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

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

12. SUBSEQUENT EVENT (UNAUDITED)

On March 4, 1997, the Company entered into a letter of intent with Eagle
Gaming, L.P. ("Eagle") to form a joint venture, Riviera Black Hawk, LLC ("RBL"),
to develop a casino (the "Project") in the Black Hawk/Central City, Colorado
gaming market for approximately $55 million, subject to satisfaction of a number
of conditions. The Company will manage the Project for a management fee based
upon the gross revenue and EBITDA of the Project. The Company will initially
have an approximately 80% equity interest and Eagle an approximately 20% equity
interest in the joint venture. Eagle has the option, prior to the Company being
licensed by the Colorado gaming authorities, to acquire up to 29.9% of
additional equity interest in the Project from the Company at the Company's
cost. If Project costs exceed the approximately $55 million preliminary
estimate, the Company and Eagle will be required to bear their respective
pro-rata share of increased costs or their respective equity interests will be
adjusted. In addition, the Company has committed to provide a completion
guaranty for up to $5.0 million.

F-18
<PAGE> 74

[PHOTOGRAPHS OF THE RIVIERA SHOWS]
<PAGE> 75

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

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

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 7
The Riviera History................... 11
Use of Proceeds....................... 11
Price Range of Common Stock........... 12
Dividend Policy....................... 12
Capitalization........................ 13
Selected Financial Data............... 14
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 16
Business.............................. 21
Management............................ 40
Principal and Selling Shareholders.... 47
Certain Relationships and Related
Transactions........................ 48
Description of Capitalization......... 49
Underwriting.......................... 53
Legal Matters......................... 54
Experts............................... 54
Available Information................. 54
Index to Financial Statements......... F-1
</TABLE>

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

3,000,000 SHARES

LOGO
COMMON STOCK

----------------
PROSPECTUS
----------------

LADENBURG THALMANN & CO. INC.

RAYMOND JAMES & ASSOCIATES, INC.

, 1997

======================================================
<PAGE> 76

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth an itemized statement of all fees and
expenses in connection with the distribution of the securities being registered
pursuant to this Registration Statement, all of which fees and expenses will be
paid by the Registrant:

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee................... $ 17,845.00
National Association of Securities Dealers, Inc. fee.................. 5,675.00
American Stock Exchange listing fee................................... 17,500.00
Printing.............................................................. 75,000.00*
Accountants' fees and expenses........................................ 75,000.00*
Legal fees and expenses............................................... 375,000.00*
Miscellaneous......................................................... 33,980.00*
-----------
Total....................................................... $600,000.00*
============
</TABLE>

- ---------------
* Estimates.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Nevada law provides that Nevada corporations may include within their
articles of incorporation provisions eliminating or limiting the personal
liability of their directors and officers in shareholder actions brought to
obtain damages for alleged breaches of fiduciary duties, as long as the alleged
acts or omissions did not involve intentional misconduct, fraud, a knowing
violation of law or payment of dividends in violation of the Nevada statutes.
Nevada law also allows Nevada corporations to include in their articles of
incorporation or bylaws provisions to the effect that expenses of officers and
directors incurred in defending a civil or criminal action must be paid by the
corporation as they are incurred, subject to an undertaking on behalf of the
director or officer that he or she will repay such expenses if it is ultimately
determined by a court of competent jurisdiction that such officer or director is
not entitled to be indemnified by the corporation because such officer or
director did not act in good faith and in a manner reasonably believed to be in
or not opposed to the best interests of the corporation.

Nevada law provides that Nevada corporations may eliminate or limit the
personal liability of its directors and officers. This means that the articles
of incorporation could state a dollar maximum for which directors would be
liable, either individually or collectively, rather than eliminating liability
to the full extent permitted by the law.

The Articles of the Registrant provide that a director or officer of the
Registrant shall not be personally liable to the Registrant or its shareholders
for damages for any breach of fiduciary duty as a director or officer, except
for liability for (i) acts or omissions which involve intentional misconduct,
fraud or a knowing violation of law, or (ii) the payment of distributions in
violation of NRS 78.300. In addition, NRS 78.751 and Article VII of the Bylaws
of the Registrant, under certain circumstances, provide for the indemnification
of the officers and directors of the Registrant against liabilities which they
may incur in such capacities. A summary of the circumstances in which such
indemnification is provided for is set forth in the following paragraph, but
such summary is qualified in its entirety by reference to Article VII of the
Bylaws of the Registrant.

In general, any director or officer of the Registrant (an "Indemnitee") who
was or is a party to, or is threatened to be made a party to, or is otherwise
involved in any threatened, pending or completed action or suit (including
without limitation an action, suit or proceeding by or in the right of the
Registrant), whether civil, criminal, administrative or investigative (a
"Proceeding") by reason of the fact that the Indemnitee is or was a director or
officer of the Registrant or is or was serving in any capacity at the request of
the Registrant as a director, officer, employee, agent,

II-1
<PAGE> 77

partner or fiduciary of, or in any other capacity for, another corporation or
any partnership, joint venture, trust or other enterprise shall be indemnified
and held harmless by the Registrant for actions taken by the Indemnitee and for
all omissions to the full extent permitted by Nevada law against all expense,
liability and loss (including without limitation attorneys' fees, judgments,
fines, taxes, penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by the Indemnitee in connection with any Proceeding. The
rights to indemnification specifically include the right to reimbursement from
the Registrant for all reasonable costs and expenses incurred in connection with
the Proceeding and indemnification continues as to an Indemnitee who has ceased
to be a director or officer. The Board of Directors may include employees and
other persons as though they were Indemnitees. The rights to indemnification are
not exclusive of any other rights that any person may have by law, agreement or
otherwise.

The Bylaws also provide that the Registrant may purchase and maintain
insurance or make other financial arrangements on behalf of any person who
otherwise qualifies as an Indemnitee under the foregoing provisions. Other
financial arrangements to assist the Indemnitee are also permitted, such as the
creation of a trust fund, the establishment of a program of self-insurance, the
securing of the Registrant's obligation of indemnification by granting a
security interest or other lien on any assets (including cash) of the Registrant
and the establishment of a letter of credit, guarantee or surety.

The Registrant and ROC have entered into agreements with each of their
respective directors, executive officers and significant employees providing for
indemnification by the Registrant and ROC of each of them to the extent
permitted by the Articles of Incorporation and the Bylaws.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

On the Effective Date, the Registrant issued an aggregate of 120,000 shares
of Common Stock to the holders of Riviera Notes and an aggregate of $100,000,000
principal amount of First Mortgage Notes to the holders of Riviera Notes. The
distribution of the Common Stock and the First Mortgage Notes was pursuant to
the Plan and was exempt from the registration requirements of the Securities Act
and state laws pursuant to Section 1145 of the Bankruptcy Code.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

The following exhibits are filed herewith:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
1.1** Underwriting Agreement
2.1* Second Amended Joint Plan of Reorganization dated January 8, 1993 (see Exhibit 2.1
to Form 10, Commission File No. 0-21430)
2.2* Order Confirming Second Amended Joint Plan of Reorganization, entered March 25,
1993 (see Exhibit T3E-1 to Form T-3, Commission File No. 22-24540)
2.3* Modified and Restated Second Amended Joint Plan of Reorganization, dated June 2,
1993 (see Exhibit 2.3 to Form 10, Commission File No. 0-21430)
2.4* Order Confirming Modified and Restated Second Amended Joint Plan of
Reorganization, entered June 4, 1993 (see Exhibit 2.4 to Form 10, Commission File
No. 0-21430)
3.1* Second Amended and Restated Articles of Incorporation of the Registrant filed May
10, 1996 (see Exhibit 4.1 to the Registration Statement on Form S-8 filed with the
Commission May 13, 1996)
</TABLE>

II-2
<PAGE> 78

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
3.2* Bylaws of the Registrant (see Exhibit 3.2 to the Registration Statement on Form
S-1 filed with the Commission on August 11, 1993)
4.1* Equity Registration Rights Agreement, dated June 30, 1993, among the Registrant
and the Holders of Registrable Shares (see Exhibit 10.9 to the Registration
Statement filed with the Commission on August 11, 1993)
5** Opinion of Dechert Price & Rhoads regarding validity of the Common Stock
10.1* Lease Agreement between Riviera, Inc. and Mardi Gras Food Court, Inc. dated April
1, 1990 (see Exhibit 10.1 to the Registration Statement on Form 10, Commission
File No. 0-21430)
10.2* Amendment to Lease Agreement between Riviera, Inc. and Mardi Gras Food Court, Inc.
dated April 1, 1990 (see Exhibit 10.2 to the Registration Statement on Form S-1
filed with the Commission on August 11, 1993)
10.3* Amendment dated February 19, 1995 to Lease Agreement between Riviera, Inc. and
Mardi Gras Food Court, Inc. (see Exhibit 10.28 to Form 10-K filed with the
Commission on March 23, 1995)
10.4* Lease Agreement between Riviera, Inc. and Leroy's Horse and Sports Place (see
Exhibit 10.3 to the Registration Statement on Form 10, Commission File No.
0-21430)
10.5* Indemnity Agreement, dated June 30, 1993, from Riviera, Inc. and Meshulam Riklis
in favor of the Registrant and Riviera Operating Corporation (see Exhibit 10.7 to
the Registration Statement filed with the Commission on August 11, 1993)
10.6* Indemnity Agreement, dated June 30, 1993, from the Registrant in favor of IBJ
Schroder Bank & Trust Company (see Exhibit 10.8 to the Registration Statement
filed with the Commission on August 11, 1993)
10.7* The Registrant's Class 12 Non-Negotiable Unsecured Promissory Note (see Exhibit
10.13 to the Registration Statement filed with the Commission on August 11, 1993)
10.8* The Registrant's Class 13/14 Unsecured Promissory Note (see Exhibit 10.14 to the
Registration Statement filed with the Commission on August 11, 1993)
10.9* Operating Agreement, dated June 30, 1993, between the Registrant and Riviera
Operating Corporation (see Exhibit 10.15 to the Registration Statement filed with
the Commission on August 11, 1993)
10.10* Adoption Agreement regarding Profit Sharing and 401(k) Plans of the Registrant
(see Exhibit 10.16 to this Registration Statement filed with the Commission on
August 11, 1993)
10.11* Howard Johnson & Company Regional Defined Contribution Plan, dated March 16, 1990
(adopted by the Registrant pursuant to the Adoption Agreement filed as Exhibit
10.17 to this Registration Statement filed with the Commission on August 11, 1993)
10.12* Form of Termination Fee Agreement (see Exhibit 10.20 to the Registration Statement
on Form 10, Commission File No. 0-21430)
10.13* Restricted Account Agreement, dated June 30, 1993, among Riviera Operating
Corporation, IBJ Schroder Bank & Trust Company and Bank of America Nevada (see
Exhibit 10.22 to this Registration Statement filed with the Commission on August
11, 1993)
10.14* Disbursement Agreement, dated June 30, 1993, between the Registrant and IBJ
Schroder Bank & Trust Company (see Exhibit 10.23 to this Registration Statement
filed with the Commission on August 11, 1993)
</TABLE>

II-3
<PAGE> 79

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
10.15* Tax Sharing Agreement between the Registrant and Riviera Operating Corporation
dated June 30, 1993 (see Exhibit 10.24 to Amendment No. 1 to this Registration
Statement filed with the Commission on August 19, 1993)
10.16* The Registrant's 1993 Stock Option Plan (see Exhibit 10.25 to Amendment No. 1 to
this Registration Statement filed with the Commission on August 19, 1993)
10.17* The Registrant's Stock Purchase Plan (see Exhibit 4.5 to the Registration
Statement on Form S-8 filed with the Commission on May 13, 1996)
10.18* The Registrant's Nonqualified Stock Option Plan for Non-Employee Directors (see
Exhibit 4.6 to the Registration Statement on Form S-8 filed with the Commission on
May 13, 1996)
10.19* The Registrant's Stock Compensation Plan for Directors Serving on the Compensation
Committee (see Exhibit 4.7 to the Registration Statement on Form S-8 filed with
the Commission on May 13, 1996)
10.20* Form of Stay Bonus Agreement (see Exhibit 10.27 to Form 10-Q filed with the
Commission on November 9, 1994)
10.21* Amendment dated September 30, 1994, to Employment Agreement between Riviera, Inc.
and William L. Westerman. (see Exhibit 10.29 to Form 10-K filed with the
Commission on March 23, 1995)
10.22* Management Agreement by and between Elsinore Corporation, Four Queens, Inc. and
Riviera Gaming Management Corp. -- Elsinore. (see Exhibit 10.30 to Form 10-K filed
with the Commission on March 10, 1997)
10.23* Indenture, dated June 30, 1993, among the Registrant, Riviera Operating
Corporation and IBJ Schroder Bank & Trust Company (see Exhibit 4.1 to the
Registration Statement on Form S-1 filed with the Commission on August 11, 1993)
10.24* First Supplemental Indenture, dated June 30, 1993, among the Registrant, Riviera
Operating Corporation and IBJ Schroder Bank & Trust Company (see Exhibit 4.2 to
the Registration Statement on Form S-1 filed with the Commission on August 11,
1993)
10.25* First Amendment to First Supplemental Indenture entered into by the Registrant,
Riviera Operating Corporation and IBJ Schroder Bank & Trust Company dated as of
September 8, 1995 (See Exhibit 4.11 to Post-effective Amendment No. 3 to the
Registration Statement on Form S-1 filed with the Commission on July 3, 1996)
10.26* Employment Agreement dated as of November 21, 1996 by and between the Registrant,
Riviera Operating Corporation and William L. Westerman (see Exhibit 10.31 to Form
10-K filed with the Commission on March 10, 1997)
10.27* Revolving Line of Credit Loan Agreement dated February 28, 1997 by and between the
Registrant, Riviera Operating Corporation and U.S. Bank of Nevada (see Exhibit
10.32 to Form 10-K filed with the Commission on March 10, 1997)
10.28* Letter of Intent dated March 4, 1997 between the Registrant and Eagle Gaming, L.P.
(see Exhibit 10.33 to Form 10-K filed with the Commission on March 10, 1997)
21** Subsidiaries of the Registrant
23.1 Consent of Deloitte & Touche LLP
</TABLE>

- ---------------
* Previously filed with the Commission with the Company's Registration
Statement on Form S-1 or as otherwise indicated.

** To be filed by amendment.

II-4
<PAGE> 80

(b) Financial Statement Schedules

No financial statement schedules have been filed herewith since they are
either not required, are not applicable, or the required information is shown in
the consolidated financial statements or related notes.

ITEM 17. UNDERTAKINGS

a. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

b. The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be part of this registration statement as of the
time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at the
time shall be deemed to be the initial bona fide offering thereof.

II-5
<PAGE> 81

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Las Vegas,
State of Nevada, on , 1997.

RIVIERA HOLDINGS CORPORATION

By: /s/ WILLIAM L. WESTERMAN

-----------------------------------
William L. Westerman
Chief Executive Officer and
President
(principal executive officer)

Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the date indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------ --------------
<C> <S> <C>

/s/ WILLIAM L. WESTERMAN Chairman of the Board, Chief March 10, 1997
- --------------------------------------------- Executive Officer and
William L. Westerman President

/s/ DUANE R. KROHN Treasurer (principal financial March 10, 1997
- --------------------------------------------- and accounting officer)
Duane R. Krohn

* Director March 10, 1997
- ---------------------------------------------
Robert R. Barengo

* Director March 10, 1997
- ---------------------------------------------
William Friedman

* Director March 10, 1997
- ---------------------------------------------
Philip P. Hannifin
</TABLE>

* By: /s/ DUANE R. KROHN
--------------------------------

Duane R. Krohn
Attorney-in-Fact

II-6
<PAGE> 82

EXHIBITS INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------- ----------- ----
<S> <C> <C>
1.1** Underwriting Agreement
2.1* Second Amended Joint Plan of Reorganization dated January 8, 1993 (see
Exhibit 2.1 to Form 10, Commission File No. 0-21430)
2.2* Order Confirming Second Amended Joint Plan of Reorganization, entered
March 25, 1993 (see Exhibit T3E-1 to Form T-3, Commission File No.
22-24540)
2.3* Modified and Restated Second Amended Joint Plan of Reorganization,
dated June 2, 1993 (see Exhibit 2.3 to Form 10, Commission File No.
0-21430)
2.4* Order Confirming Modified and Restated Second Amended Joint Plan of
Reorganization, entered June 4, 1993 (see Exhibit 2.4 to Form 10,
Commission File No. 0-21430)
3.1* Second Amended and Restated Articles of Incorporation of the Registrant
filed May 10, 1996 (see Exhibit 4.1 to the Registration Statement on
Form S-8 filed with the Commission May 13, 1996)
3.2* Bylaws of the Registrant (see Exhibit 3.2 to the Registration Statement
on Form S-1 filed with the Commission on August 11, 1993)
4.1* Equity Registration Rights Agreement, dated June 30, 1993, among the
Registrant and the Holders of Registrable Shares (see Exhibit 10.9 to
the Registration Statement filed with the Commission on August 11,
1993)
5** Opinion of Dechert Price & Rhoads regarding validity of the Common
Stock
10.1* Lease Agreement between Riviera, Inc. and Mardi Gras Food Court, Inc.
dated April 1, 1990 (see Exhibit 10.1 to the Registration Statement on
Form 10, Commission File No. 0-21430)
10.2* Amendment to Lease Agreement between Riviera, Inc. and Mardi Gras Food
Court, Inc. dated April 1, 1990 (see Exhibit 10.2 to the Registration
Statement on Form S-1 filed with the Commission on August 11, 1993)
10.3* Amendment dated February 19, 1995 to Lease Agreement between Riviera,
Inc. and Mardi Gras Food Court, Inc. (see Exhibit 10.28 to Form 10-K
filed with the Commission on March 23, 1995)
10.4* Lease Agreement between Riviera, Inc. and Leroy's Horse and Sports
Place (see Exhibit 10.3 to the Registration Statement on Form 10,
Commission File No. 0-21430)
10.5* Indemnity Agreement, dated June 30, 1993, from Riviera, Inc. and
Meshulam Riklis in favor of the Registrant and Riviera Operating
Corporation (see Exhibit 10.7 to the Registration Statement filed with
the Commission on August 11, 1993)
10.6* Indemnity Agreement, dated June 30, 1993, from the Registrant in favor
of IBJ Schroder Bank & Trust Company (see Exhibit 10.8 to the
Registration Statement filed with the Commission on August 11, 1993)
10.7* The Registrant's Class 12 Non-Negotiable Unsecured Promissory Note (see
Exhibit 10.13 to the Registration Statement filed with the Commission
on August 11, 1993)
</TABLE>

<PAGE> 83

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------- ----------- ----
<S> <C> <C>
10.8* The Registrant's Class 13/14 Unsecured Promissory Note (see Exhibit
10.14 to the Registration Statement filed with the Commission on August
11, 1993)
10.9* Operating Agreement, dated June 30, 1993, between the Registrant and
Riviera Operating Corporation (see Exhibit 10.15 to the Registration
Statement filed with the Commission on August 11, 1993)
10.10* Adoption Agreement regarding Profit Sharing and 401(k) Plans of the
Registrant (see Exhibit 10.16 to this Registration Statement filed with
the Commission on August 11, 1993)
10.11* Howard Johnson & Company Regional Defined Contribution Plan, dated
March 16, 1990 (adopted by the Registrant pursuant to the Adoption
Agreement filed as Exhibit 10.17 to this Registration Statement filed
with the Commission on August 11, 1993)
10.12* Form of Termination Fee Agreement (see Exhibit 10.20 to the
Registration Statement on Form 10, Commission File No. 0-21430)
10.13* Restricted Account Agreement, dated June 30, 1993, among Riviera
Operating Corporation, IBJ Schroder Bank & Trust Company and Bank of
America Nevada (see Exhibit 10.22 to this Registration Statement filed
with the Commission on August 11, 1993)
10.14* Disbursement Agreement, dated June 30, 1993, between the Registrant and
IBJ Schroder Bank & Trust Company (see Exhibit 10.23 to this
Registration Statement filed with the Commission on August 11, 1993)
10.15* Tax Sharing Agreement between the Registrant and Riviera Operating
Corporation dated June 30, 1993 (see Exhibit 10.24 to Amendment No. 1
to this Registration Statement filed with the Commission on August 19,
1993)
10.16* The Registrant's 1993 Stock Option Plan (see Exhibit 10.25 to Amendment
No. 1 to this Registration Statement filed with the Commission on
August 19, 1993)
10.17* The Registrant's Stock Purchase Plan (see Exhibit 4.5 to the
Registration Statement on Form S-8 filed with the Commission on May 13,
1996)
10.18* The Registrant's Nonqualified Stock Option Plan for Non-Employee
Directors (see Exhibit 4.6 to the Registration Statement on Form S-8
filed with the Commission on May 13, 1996)
10.19* The Registrant's Stock Compensation Plan for Directors Serving on the
Compensation Committee (see Exhibit 4.7 to the Registration Statement
on Form S-8 filed with the Commission on May 13, 1996)
10.20* Form of Stay Bonus Agreement (see Exhibit 10.27 to Form 10-Q filed with
the Commission on November 9, 1994)
10.21* Amendment dated September 30, 1994, to Employment Agreement between
Riviera, Inc. and William L. Westerman. (see Exhibit 10.29 to Form 10-K
filed with the Commission on March 23, 1995)
10.22** Form of Management Agreement for the Four Queens Hotel & Casino
10.23* Indenture, dated June 30, 1993, among the Registrant, Riviera Operating
Corporation and IBJ Schroder Bank & Trust Company (see Exhibit 4.1 to
the Registration Statement on Form S-1 filed with the Commission on
August 11, 1993)
</TABLE>

<PAGE> 84

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------- ----------- ----
<S> <C> <C>
10.24* First Supplemental Indenture, dated June 30, 1993, among the
Registrant, Riviera Operating Corporation and IBJ Schroder Bank & Trust
Company (see Exhibit 4.2 to the Registration Statement on Form S-1
filed with the Commission on August 11, 1993)
10.25* First Amendment to First Supplemental Indenture entered into by the
Registrant, Riviera Operating Corporation and IBJ Schroder Bank & Trust
Company dated as of September 8, 1995 (See Exhibit 4.11 to
Post-effective Amendment No. 3 to the Registration Statement on Form
S-1 filed with the Commission on July 3, 1996)
10.26** Amended and Restated Employment Agreement between Riviera, Inc. and
William L. Westerman
10.27** Revolving Line of Credit Loan Agreement by and between the Registrant,
Riviera Operating Corporation and U.S. Bank of Nevada
10.28** Letter of Intent between the Registrant and Eagle Gaming, L.P.
21** Subsidiaries of the Registrant
23.1 Consent of Deloitte & Touche LLP
</TABLE>

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

* Previously filed with the Commission with the Company's Registration
Statement on Form S-1 or as otherwise indicated.

** To be filed by amendment.

<PAGE> 1

EXHIBIT 23.1

INDEPENDENT AUDITORS' CONSENT

RIVIERA HOLDINGS CORPORATION
LAS VEGAS, NEVADA

We consent to the use in the Registration Statement No. 333-14593 relating to
3,000,000 shares of Common Stock of Riviera Holdings Corporation (the "Company")
on Form S-1 of our report dated February 28, 1997 appearing in the Prospectus
which is a part of this Registration Statement, and to the references to us
under the heading "Experts" in such Prospectus.

DELOITTE & TOUCHE LLP

Las Vegas, Nevada

March 10, 1997