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Case Status:    SETTLED
On or around 06/28/2007 (Date of order of final judgment)

Filing Date: June 15, 2004

Alliance Gaming Corporation is a diversified, worldwide gaming company that designs, manufactures and distributes gaming machines and computerized monitoring systems for gaming machines.

The original Complaint charges Alliance Gaming and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The Complaint alleges that during the Class Period, Defendants caused Alliance Gaming's shares to trade at artificially inflated levels through the issuance of false and misleading statements regarding the Company's business prospects, which allowed the Company to consummate stock-for-stock acquisitions with inflated stock valued at $16 million; allowed certain Defendants to sell $3.6 million worth of their own shares at artificially inflated prices; and permitted Alliance Gaming to grow and benefit economically from the wrongful course of conduct. As a result, the Company's shares traded at inflated prices, topping $34 during the Class Period.

The Complaint further alleges that On June 8, 2004, the Company issued a press release updating the Company's guidance for fiscal year 2004 to "the range of $0.96 to $1.00 per share, compared to the prior guidance of $1.04," and for fiscal year 2005 to "a range of $1.20 to $1.30" compared to prior guidance of $1.40. On this news, the Company's shares plunged $5.24 to close at $16.15 per share. According to the Complaint, the Defendants actively concealed from the public that: (i) the Company was experiencing massive problems/delays associated with the Company's Wide Area Progressive games in Nevada due to regulatory hold-ups; (ii) the Company was experiencing massive delays in its approval and deployment of New York VLT game revisions; (iii) the Company's margins were being slashed by increased costs associated with the Company's central and traditional determination products; (iv) the Company's acquisition of Sierra Design Group was suffering from massive integrative problems; (v) the Company was losing its competitive position and experiencing problems in its game unit (video product); and (vi) as a result of the above, Defendants' forecasts for fiscal year 2004 of $1.04 and fiscal year 2005 of $1.40 per share were grossly inflated.

On March 15, 2005, the Court entered the Order granting the motion to appoint District #9, I.A. of M & W Pension Trust as lead Plaintiff and granting the motion to appoint lead Counsel. That day, the actions were also consolidated and 04-CV-821 was designated as the Master File. On May 16, 2005, a Consolidated Class Action Complaint was filed, and the Defendants responded by filing a motion to dismiss.

On April 7, 2006, the Court entered the Order granting the Defendants’ April 4th Stipulation and [Proposed] Order Staying the Case Pending Mediation. According to the Order, the proceedings shall be stayed pending the agreed upon mediation until either party provides written notice to the other party that the mediation will not be successfully completed, or such other date as may be stipulated to by the parties or ordered by this Court. In the event that either party provides written notification that the mediation will not successfully lead to settlement, lead Plaintiff shall have 10 days from the date of sending or receiving the notice within which to file and serve the proposed Amended Consolidated Complaint.

In a press release dated February 27, 2007, Bally has reached agreements, subject to court approval, to settle the consolidated federal securities class action lawsuits filed in 2004 against the Company and certain current and former officers, as well as the shareholder derivative litigation filed in 2006. Both actions are currently pending in the United States District Court, District of Nevada. The cost of the settlement to the Company will be $1.25 million. Such costs have been accrued in the Company's financial statements for the quarter ended September 30, 2005. In addition to certain governance actions the Company has agreed to undertake, the Company's directors and officers insurer will also contribute approximately $14.75 million for a total of $16.0 million in cash, plus certain interest, to settle the securities class action and derivative litigation.

According to a press release dated August 21, 2007, the Company announced that the United States District Court of Nevada has approved the previously disclosed settlement agreements reached with the Plaintiffs in the consolidated federal securities class action lawsuits filed in 2004 against the Company and certain current and former officers, as well as the shareholder derivative litigation filed in 2006, and in connection therewith, the Court dismissed the cases.

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