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Dover Downs Gaming & Entertainment, Inc. Reports Results for the Third Quarter Ended September 30, 2012

  Dover Downs Gaming & Entertainment, Inc. Reports Results for the Third
  Quarter Ended September 30, 2012

Business Wire

DOVER, Del. -- October 25, 2012

Dover Downs Gaming & Entertainment, Inc. (NYSE-DDE) today reported results for
the three months ended September 30, 2012.

Gaming revenues of $49,001,000 were down 10.8 % compared to the third quarter
of 2011. The revenue decline was primarily attributable to increased
competition in the region.

Other operating revenues of $5,913,000 were up 14.4% compared to the third
quarter of 2011. The improvement was from increased food and beverage revenue
related to catering services for the NASCAR weekend in Dover which was held in
the third quarter of this year compared to the fourth quarter of last year.
Rooms revenue also improved as occupancy levels in the Dover Downs Hotel were
approximately 94% for the third quarter.

General and administrative costs of $1,464,000 for the third quarter were
almost identical to last year.

Interest expense decreased $241,000 during the quarter as a result of lower
average outstanding borrowings and lower interest rates.

Net earnings were $1,147,000, or $.04 per diluted share compared with
$2,039,000 or $.06 per diluted share for the third quarter of 2011.

Denis McGlynn, the Company's President and Chief Executive Officer, stated:
"Gaming expansion in Maryland is having a significant impact on us – but it is
simply part of a new reality that we need to address head on. Earlier in the
year, we worked with the Administration and the Legislature to pass the only
comprehensive internet gaming legislation on the East Coast. Our goal is to
stay one step ahead of the competition and to continue offering our patrons
the region’s finest amenities and richest gaming experiences. We look forward
to continued cooperation with the State as we roll out our internet gaming
offerings early next year and make our case for a review of revenue
distribution when the legislature reconvenes in January.”

The Company announced yesterday that its Board of Directors declared a reduced
regular quarterly dividend of $.02 per share. The dividend is payable on
December 10, 2012 to shareholders of record at the close of business on
November 10, 2012.

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.

Owned by Dover Downs Gaming & Entertainment, Inc. (NYSE: DDE), Dover Downs
Hotel & Casino^® is a premier gaming and entertainment resort destination in
the Mid-Atlantic region. Gaming operations consist of approximately 2,500
slots and a full complement of table games including poker. The AAA-rated Four
Diamond hotel is Delaware’s largest with 500 luxurious rooms/suites and
amenities including a full-service spa/salon, concert hall and 41,500 sq. ft.
of multi-use event space. Live, world-class harness racing is featured
November through April, and horse racing is simulcast year-round. Professional
football parlay betting is accepted during the season. Additional property
amenities include multiple restaurants from fine dining to casual fare,
bars/lounges and retail shops. For more information, please visit
www.doverdowns.com.

DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
In Thousands, Except Per Share Amounts
(Unaudited)
                                                               
                                                                     
                                   Three Months Ended    Nine Months Ended
                                   September 30,         September 30,
                                   2012       2011       2012        2011
Revenues:
Gaming ^(1)                        $ 49,001   $ 54,935   $ 159,806   $ 162,396
Other operating ^ (2)               5,913     5,167     17,547     15,927
                                    54,914    60,102    177,353    178,323
Expenses:
Gaming                               44,508     48,218     141,951     144,924
Other operating                      4,111      3,676      12,350      11,725
General and administrative           1,464      1,461      4,528       4,854
Depreciation                        2,523     2,823     7,769      8,868
                                    52,606    56,178    166,598    170,371
                                                                     
Operating earnings                   2,308      3,924      10,755      7,952
                                                                     
Loss on extinguishment of debt       -          -          -           45
Interest expense                    405       646       1,417      2,247
                                                                     
Earnings before income taxes         1,903      3,278      9,338       5,660
                                                                     
Income taxes                        756       1,239     4,003      2,421
                                                                     
Net earnings                       $ 1,147    $ 2,039    $ 5,335     $ 3,239
                                                                     
Net earnings per common share:
- Basic                            $ 0.04     $ 0.06     $ 0.16      $ 0.10
- Diluted                          $ 0.04     $ 0.06     $ 0.16      $ 0.10
                                                                     
Weighted average shares
outstanding:
- Basic                              31,745     31,646     31,744      31,645
- Diluted                            31,745     31,646     31,744      31,645
                                                                     

_________________________
         Gaming revenues from the Company’s slot machine and table game
         operations include the total win from such operations. The Delaware
^(1)    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.
         
         Other operating revenues do not include the retail amount of
^(2)     promotional allowances which are provided to customers on a
         complimentary basis.
         

DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEETS
In Thousands
(Unaudited)
                                                           
                                                               
                                               September 30,   December 31,
                                                 2012          2011    
ASSETS
                                                               
Current assets:
Cash                                           $  15,828       $  18,634
Accounts receivable                               3,133           3,982
Due from State of Delaware                        11,134          9,440
Inventories                                       2,084           1,860
Prepaid expenses and other                        4,612           3,659
Deferred income taxes                            1,319         1,317   
Total current assets                              38,110          38,892
                                                               
Property and equipment, net                       170,804         176,415
Other assets                                     785           877     
Total assets                                   $  209,699     $  216,184 
                                                               
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                                               
Current liabilities:
Accounts payable                               $  2,536        $  4,035
Purses due horsemen                               11,140          9,004
Accrued liabilities                               10,129          11,912
Payable to Dover Motorsports, Inc.                -               11
Income taxes payable                              445             444
Deferred revenue                                 331           254     
Total current liabilities                         24,581          25,660
                                                               
Revolving line of credit                          61,500          69,000
Liability for pension benefits                    5,152           5,570
Other liabilities                                 -               147
Deferred income taxes                            2,937         3,301   
Total liabilities                                94,170        103,678 
                                                               
Stockholders’ equity:
Common stock                                      1,590           1,576
Class A common stock                              1,660           1,660
Additional paid-in capital                        3,943           3,464
Retained earnings                                 110,500         108,090
Accumulated other comprehensive loss             (2,164   )     (2,284  )
Total stockholders’ equity                       115,529       112,506 
Total liabilities and stockholders’ equity     $  209,699     $  216,184 
                                                               

DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
(Unaudited)
                                                              
                                                    Nine Months Ended
                                                    September 30,
                                                     2012        2011     
                                                                  
Operating activities:
Net earnings                                        $ 5,335       $ 3,239
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation                                          7,769         8,868
Amortization of credit facility origination fees      74            67
Stock-based compensation                              600           745
Deferred income taxes                                 (126    )     320
Loss on extinguishment of debt                        -             45
Changes in assets and liabilities:
Accounts receivable                                   849           1,114
Due from State of Delaware                            (1,694  )     (423     )
Inventories                                           (224    )     (215     )
Prepaid expenses and other                            (917    )     (1,865   )
Accounts payable                                      (1,499  )     1,083
Purses due horsemen                                   2,136         431
Accrued liabilities                                   (1,783  )     (3,976   )
Payable to/receivable from Dover Motorsports,         (11     )     14
Inc.
Income taxes payable/receivable                       (327    )     146
Deferred revenue                                      77            (42      )
Other liabilities                                    (375    )    (412     )
Net cash provided by operating activities            9,884       9,139    
                                                                  
Investing activities:
Capital expenditures                                  (2,158  )     (1,438   )
Proceeds from sale of available-for-sale              -             127
securities
Purchase of available-for-sale securities            -           (202     )
Net cash used in investing activities                (2,158  )    (1,513   )
                                                                  
Financing activities:
Borrowings from revolving line of credit              12,910        168,943
Repayments of revolving line of credit                (20,410 )     (176,028 )
Dividends paid                                        (2,925  )     (2,916   )
Repurchase of common stock                            (107    )     (150     )
Credit facility fees                                 -           (268     )
Net cash used in financing activities                (10,532 )    (10,419  )
                                                                  
Net decrease in cash                                  (2,806  )     (2,793   )
Cash, beginning of period                            18,634      18,819   
Cash, end of period                                 $ 15,828     $ 16,026   

Contact:

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