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LADY LUCK GAMING CORP. LETTER TO SHAREHOLDERS

 Lady Luck Gaming Corp. Announces
 Second Quarter Results and Revised Development Plan
 LAS VEGAS, Aug. 8 /PRNewswire/ -- The following is a letter to shareholders from the Lady Luck Gaming Corp. (Nasdaq-NNM: LUCK):
 Dear Shareholders:
 As we close the second quarter of 1994, I have a great deal to tell you about our company. While we continue on our aggressive growth strategy, we are experiencing some growing pains due to the rapid expansion of the gaming industry in Mississippi and the failure in Missouri to approve games of chance in April of this year.
 Our management is focused on two goals for the remainder of 1994. The company intends to utilize capital from our debt offering to finance planned facilities and will continue to pursue projects for joint venture partnerships for low-risk, low-cost opportunities.
 We will outline company conditions and explain upcoming issues so that you may effectively evaluate Lady Luck's potential.
 Second Quarter 1994
 Net revenues for the second quarter ended June 30, 1994, were $21.7 million, income from operations was $20,000, net loss was $10.9 million. Results from the second quarter of 1993 showed net revenues of $16.3 million, income from operations totaled $7.4 million and net income was $3.7 million.
 The company posted a loss per share of $0.43 in the second quarter 1994. Excluding pre-opening expense for Lady Luck Rhythm & Blues and costs resulting from the decision to abandon the Mhoon Landing site in Tunica equal to a loss of $0.29 per share, the company's loss per share was $0.14.
 Consolidated revenues for the first six months of 1994 were $50.9 million, compared to $20.9 million for the first six months of 1993. The company experienced a net loss of $11 million for the first half of 1994, versus net income of $4.2 million for the first half of 1993. The second quarter and first half periods of 1994 are not comparable to the 1993 results because only one casino, Lady Luck Natchez, which opened Feb. 28, 1993, was operating through the entire second quarter 1993. Lady Luck Central City in Colorado opened May 28, 1993.
 Operating Properties
 On June 27, 1994, the company opened Lady Luck Rhythm & Blues in Coahoma County, Miss. The opening events drew approximately 6,000 visitors in the first six hours. This facility, estimated to cost $46 million, including $20 million of assets transferred from Lady Luck Tunica, exceeded our expectations. An adjoining hotel complex with an initial phase of 180 rooms is scheduled to open this month. The company negotiated a lease agreement for approximately 1,000 acres surrounding the Helena Bridge, connecting Mississippi to Arkansas.
 Lady Luck Natchez maintained a solid operating profit in the first half 1994. However, the opening of an Indian gaming facility in neighboring Louisiana, as well as two competing companies which have announced plans to develop casinos in the Natchez area, could negatively effect our market share and operating results.
 Lady Luck Biloxi has posted modest positive cash flow in the first half 1994 before corporate allocation. In light of an increase in competition in Biloxi, the company is adjusting marketing efforts to include the property's latest attraction, which is an outdoor entertainment feature to add to the dramatic Asian theme. Every night a mechanical, 39-foot, fire-breathing dragon appears from the depths of the waters surrounding the casino. Music, special lighting and sound effects, balls of fire and fountains accentuate the display of animatronics.
 Lady Luck Central City in Colorado experienced a profit from operations in the first half 1994 as well.
 Lastly, the company decided to take an $8.1 million charge in the second quarter 1994 related to an abandonment of the asset value of the property which we leased at Mhoon Landing, Miss. The site was the former home of Lady Luck Tunica. In addition, the company wrote-off approximately $1.2 million of the casino barge due to a complete renovation of these facilities for use in Coahoma County.
 Projects Under Development
 We have entered into an agreement in Bettendorf, Iowa, to develop and operate a casino and land-based facility with the Bettendorf Riverfront Development Co., a local joint venture partner. Barring any regulatory delays, the company could begin operation as early as November. Since Iowa has lifted gaming limitations, we believe that it has the potential to become a solid gaming market. Preliminary results from other operators in the area have been very strong and the proximity of major metropolitan areas has reinforced Bettendorf's promise as a desirable gaming market.
 The company decided to indefinitely delay the opening of the North Tunica casino, Lady Luck Olympia, which was scheduled to open fall 1994. The market has not matured as quickly as originally anticipated and we believe that postponing this facility will allow us to better position the casino. We have completed a 240-room hotel to accompany the planned casino and will open the hotel to service the market immediately as there is presently a shortage of overnight accommodations. The company believes that North Tunica is still a viable market that simply needs time to establish its identity.
 There are delays in our Vicksburg project as well. The discovery of an unmarked graveyard has forced us to redesign the facility. The newly designed Lady Luck Vicksburg will include a larger hotel and more gaming space than previously planned. The development, now estimated at $60 million, is located directly off Interstate 20, and is currently under construction with a planned opening in the second quarter 1995. We believe this is the most competitive location in the Vicksburg market.
 Pending a November Missouri vote, Lady Luck is well positioned in the market to take advantage of changes in gaming legislation. Both Scott City, which is halfway between Memphis and St. Louis, and Kimmswick, just south of St. Louis, have chosen Lady Luck to operate casinos in these areas. Presently, games of skill are legal in the state of Missouri, and the issue on the November ballot is licensing casinos for games of chance. Regardless of the referendum outcome, we intend to move forward on these projects, although the outcome will impact many design issues.
 Indian Gaming Opportunities
 On July 7, 1994, the company announced a letter of intent to develop and operate a casino and hotel with the Santa Ana Pueblo on its Pueblo Tribal Lands, located 20 miles south of Albuquerque, N.M. The $25 million proposed development, to be named the Santa Ana Star Resort & Gaming Center, includes 50,000 square feet of gaming with an adjacent 200-room hotel and entertainment center and is next to an existing 27-hole championship golf course. Presently, only class II gaming is permitted on tribal lands, however, a November referendum could enable class III gaming on these lands.
 Today, the company is announcing a letter of intent with the Chemehuevi Indian Tribe to develop and manage a gaming and resort facility on their tribal lands at Lake Havasu. Located on the border of Southern California and Arizona, Lake Havasu is a very popular southwest resort destination, attracting millions of people each year.
 We have identified a number of other joint ventures on tribal lands, and are actively pursuing such opportunities.
 International 0pportunities
 Lady Luck is also announcing today the filing of two gaming applications in Greece. The Greek Government is in the process of granting 10 exclusive licenses to conduct gaming throughout the country for a 12-year period. The cities for which the company has filed are Loutraki and Patras.
 Loutraki is a resort destination west of Athens with approximately 500,000 residents within 25 miles of the city. Lady Luck has been granted the endorsement of the city and has entered into a joint venture partnership with Loutraki. The Company is working on plans to create a multi-themed casino that would appeal to visitors from every continent.
 Patras is the second largest city in Greece with 550,000 residents in the metropolitan area. The resort area is attracting 800,000 national visitors and as many as 650,000 international tourists annually. The company has entered into an agreement with a local partner who currently owns a hotel and related property where the proposed casino site is located. Plans for the resort include pools, theatres, restaurants, clubs, childcare and arcades.
 These sites provide a tremendous opportunity to conduct a gaming operation in a monopolistic situation.
 We are exploring many gaming opportunities throughout the United States and internationally to maximize shareholder value. We are facing many challenges and opportunities in the near future and we look forward to communicating important events as they become finalized.
 Andrew H. Tompkins
 Chairman of the Board and Chief Executive Officer
 Lady Luck Gaming Corp.
 Las Vegas
 LADY LUCK GAMING CORP.
 Condensed Consolidated Statements of Operations
 (Dollars in thousands, except share data)
 Three Months Ended Six Months Ended
 June 30, June 30,
 1994 1993 1994 1993
 Net revenues $21,657 $16,303 $50,915 $20,901
 Operating expenses 21,637 8,857 46,529 11,121
 Operating income 20 7,446 4,386 9,780
 Pre-opening expense 2,083 441 2,083 2,156
 EBITDA (2,063) 7,005 2,303 7,624
 Interest expense, net 4,008 1,117 6,591 1,119
 Depreciation and
 amortization expense 1,182 629 2,713 737
 Abandonment loss 9,344 --- 9,344 ---
 Income (loss) before
 income taxes (16,597) 5,259 (16,345) 5,768
 Income tax (benefit)
 provision (6,023) 1,371 (5,995) 1,371
 Net income (loss) (10,574) 3,888 (10,350) 4,397
 Preferred stock
 dividends 346 207 682 207
 Income (loss) applicable to
 common stockholders (10,920) 3,681 (11,032) 4,190
 Pro forma income tax
 provision --- --- --- 189
 Pro forma net income
 (loss) ($10,920) $3,681 ($11,032) $4,001
 Average shares 25,117,775 24,285,672 25,117,775 24,285,672
 Earnings per share ($0.43) $0.15 ($0.44) $0.16
 Loss per share
 attributable to:
 Pre-opening expense $0.05 $0.01 $0.05 $0.06
 Abandonment loss $0.24 $0.00 $0.24 $0.00
 Earnings per share,
 excluding pre-opening expense
 and abandonment loss ($0.14) $0.16 ($0.15) $0.22
 -0- 8/4/94
 /CONTACT: Michael Hlavsa, CFO, 702-477-3000, or Robert Stillwell, public relations director, 702-496-7564, both of Lady Luck Gaming/
 (LUCK)


CO: Lady Luck Gaming Corp. ST: Nevada IN: CNO SU: ERN

TW-BB-JB -- SD007 -- 4301 08/08/94 09:18 EDT
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