Dover Downs Gaming & Entertainment, Inc. Reports Results for the Third Quarter Ended September 30, 2009

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DOVER, Del.--(Business Wire)--
Dover Downs Gaming & Entertainment, Inc. (NYSE:DDE) today reported results for
the three months ended September 30, 2009.

The Company`s revenues fell 6.4% to $59,814,000 compared with $63,929,000 for
the third quarter of 2008. Gaming revenues were down 5.8% while other operating
revenues were down 13.3%.

Gaming expenses were higher from significantly increased gaming taxes and fees
that became effective at the end of May of 2009. The impact of these tax
increases was approximately $3.6 million or $.07 per diluted share for the third
quarter of 2009.

Occupancy levels in the 500 room Dover Downs Hotel were approximately 95% for
the third quarter of 2009, but cash room sales were lower than the comparable
quarter last year. Margins for all other revenues improved during the quarter.

The Company had previously completed architectural and engineering work related
to a Phase 7 casino expansion that would have included, among other things, a
new sports book facility and a parking garage. Given the recent US Court of
Appeals for the Third Circuit decision to limit the extent of sports wagering in
Delaware and the higher gaming tax rates that were recently legislated, the
Company has decided not to proceed with this project. As a result, $2,177,000 of
previously capitalized costs related to this project were written off during the
quarter.

Interest expense decreased $406,000 during the quarter, primarily from lower
average borrowings and lower interest rates.

Excluding the impact of the non-cash impairment charge, net earnings were
$2,523,000, or $.08 per diluted share, compared with $4,996,000, or $.16 per
diluted share for the third quarter of 2008.

Including the impairment charge, net earnings were $1,231,000, or $.04 per
diluted share.

Denis McGlynn, President and CEO of Dover Downs Gaming & Entertainment, Inc.
stated, "Thanks to the high quality amenities we`ve assembled in recent years,
our revenues held up fairly well considering the current operating environment.
Our task will now be to continue to strive for growth and margin improvements".

The Company announced yesterday that its Board of Directors declared a regular
quarterly dividend of $.05 per share. The dividend is payable on December 10,
2009 to shareholders of record at the close of business on November 10, 2009.

This release contains or may contain forward-looking statements based on
management`s beliefs and assumptions. Such statements are subject to various
risks and uncertainties that could cause results to vary materially. Please
refer to the Company`s SEC filings for a discussion of such factors.

Dover Downs Gaming & Entertainment, Inc. is a diversified gaming and
entertainment company whose operations consist of Dover Downs Slots - a
165,000-square foot video lottery casino complex featuring the latest in slot
machine offerings, multi-player electronic table games and a new Race and Sports
Book; the Dover Downs Hotel and Conference Center - a 500 room AAA Four Diamond
hotel with conference, banquet, fine dining, ballroom and concert hall
facilities; and Dover Downs Raceway - a harness racing track with pari-mutuel
wagering on live and simulcast horse races.

DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
In Thousands, Except Per Share Amounts
(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Revenues:
Gaming (1) $ 55,172 $ 58,576 $ 163,385 $ 169,219
Other operating (2) 4,642 5,353 14,039 14,470
59,814 63,929 177,424 183,689
Expenses:
Gaming 46,815 45,733 132,431 129,587
Other operating 3,613 4,281 10,864 11,762
General and administrative 1,679 1,572 5,187 4,932
Impairment charge 2,177 - 2,177 -
Depreciation 2,898 2,885 8,919 7,745
57,182 54,471 159,578 154,026

Operating earnings 2,632 9,458 17,846 29,663

Interest expense 569 975 1,834 2,541

Earnings before income taxes 2,063 8,483 16,012 27,122

Income taxes 832 3,487 6,550 11,107

Net earnings $ 1,231 $ 4,996 $ 9,462 $ 16,015

Net earnings per common share:
- Basic $ 0.04 $ 0.16 $ 0.30 $ 0.50
- Diluted $ 0.04 $ 0.16 $ 0.30 $ 0.50

Weighted average shares outstanding:
- Basic 31,496 31,443 31,491 31,434
- Diluted 31,496 31,516 31,491 31,556

_________________________
(1) Gaming revenues from the Company`s video lottery (slot) machine operations include the total win from such operations. The Delaware State Lottery Office collects the win and remits a portion thereof to the Company as its commission for acting as a Licensed Agent. The difference between total win and the amount remitted to the Company is reflected in gaming expenses.

(2) Other operating revenues do not include the retail amount of promotional allowances which are provided to customers on a complimentary basis.

DOVER DOWNS GAMING & ENTERTAINMENT, INC.
RECONCILIATION OF GAAP EARNINGS TO ADJUSTED EARNINGS
In Thousands, Except Per Share Amounts
(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008

GAAP earnings before income tax expense $ 2,063 $ 8,483 $ 16,012 $ 27,122

Non-cash impairment charges (1) 2,177 - 2,177 -

Adjusted earnings before income tax expense $ 4,240 $ 8,483 $ 18,189 $ 27,122

GAAP net earnings $ 1,231 $ 4,996 $ 9,462 $ 16,015

Non-cash impairment charges, net of income taxes (1) 1,292 - 1,292 -

Adjusted net earnings $ 2,523 $ 4,996 $ 10,754 $ 16,015

GAAP net earnings per common share - diluted $ 0.04 $ 0.16 $ 0.30 $ 0.50

Non-cash impairment charges, net of income taxes (1) 0.04 - 0.04 -

Adjusted net earnings per common share - diluted $ 0.08 $ 0.16 $ 0.34 $ 0.50

_________________________
(1) We had previously completed architectural and engineering work related to a Phase 7 casino expansion that would have included, among other things, a new sports book facility and a parking garage. Given the recent court decision to limit the extent of sports wagering and the higher gaming tax rates that were recently legislated, we decided not to proceed with this project. As a result, $2,177,000 of previously capitalized costs were written off during the quarter.

DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEETS
In Thousands
(Unaudited)

September 30, December 31,
2009 2008
ASSETS

Current assets:
Cash $ 17,526 $ 17,889
Accounts receivable 2,682 2,661
Due from State of Delaware 12,479 10,870
Inventories 2,258 2,025
Prepaid expenses and other 2,918 2,029
Receivable from Dover Motorsports, Inc. 35 -
Prepaid income taxes 807 -
Deferred income taxes 1,217 1,317
Total current assets 39,922 36,791

Property and equipment, net 195,445 203,522
Other assets 893 1,019
Total assets $ 236,260 $ 241,332

LIABILITIES AND STOCKHOLDERS` EQUITY

Current liabilities:
Accounts payable $ 3,623 $ 4,679
Purses due horsemen 11,283 9,395
Accrued liabilities 6,392 7,419
Payable to Dover Motorsports, Inc. - 11
Income taxes payable - 619
Deferred revenue 376 212
Total current liabilities 21,674 22,335

Revolving line of credit 98,075 108,325
Liability for pension benefits 6,322 6,099
Other liabilities 200 -
Deferred income taxes 3,730 3,488
Total liabilities 130,001 140,247

Stockholders` equity:
Common stock 1,546 1,521
Class A common stock 1,660 1,660
Additional paid-in capital 1,426 933
Retained earnings 103,914 99,263
Accumulated other comprehensive loss (2,287 ) (2,292 )
Total stockholders` equity 106,259 101,085
Total liabilities and stockholders` equity $ 236,260 $ 241,332

DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
(Unaudited)

Nine Months Ended
September 30,
2009 2008

Operating activities:
Net earnings $ 9,462 $ 16,015
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation 8,919 7,745
Amortization of credit facility origination fees 28 30
Stock-based compensation 714 762
Deferred income taxes 70 (156 )
Impairment charge 2,177 -
Changes in assets and liabilities:
Accounts receivable (21 ) 1,393
Due from State of Delaware (1,609 ) (2,026 )
Inventories (233 ) (284 )
Prepaid expenses and other (746 ) (1,446 )
Receivable from/payable to Dover Motorsports, Inc. (46 ) (11 )
Prepaid income taxes/income taxes payable (1,294 ) (291 )
Accounts payable 48 464
Purses due horsemen 1,888 1,737
Accrued liabilities (1,027 ) (1,756 )
Deferred revenue 164 282
Other liabilities 388 71
Net cash provided by operating activities 18,882 22,529

Investing activities:
Capital expenditures (4,123 ) (36,377 )
Proceeds from the sale of available-for-sale securities 102 -
Purchase of available-for-sale securities (104 ) (100 )
Net cash used in investing activities (4,125 ) (36,477 )

Financing activities:
Borrowings from revolving line of credit 120,675 145,900
Repayments of revolving line of credit (130,925 ) (130,250 )
Dividends paid (4,811 ) (4,769 )
Repurchase of common stock (59 ) (1,040 )
Proceeds from stock options exercised - 366
Excess tax benefit on stock awards - 25
Net cash (used in) provided by financing activities (15,120 ) 10,232

Net decrease in cash (363 ) (3,716 )
Cash, beginning of period 17,889 22,456
Cash, end of period $ 17,526 $ 18,740

Dover Downs Gaming & Entertainment, Inc.
Timothy R. Horne - Sr. Vice President-Finance
(302) 857-3292

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