Gateway Casinos Income Fund

Gateway Casinos Income Fund

October 17, 2006 15:12 ET

Gateway Casinos Income Fund Announces September Distribution; Provides Update on Palace Casino Strike

BURNABY, BRITISH COLUMBIA--(CCNMatthews - Oct. 17, 2006) - Gateway Casinos Income Fund (the "Fund") (TSX:GCI.UN) is pleased to announce a cash distribution of $0.1195 per unit for the month of September 2006. The distribution will be paid to unitholders of record at the close of business on October 26, 2006 and will be payable on October 31, 2006.

Update on Palace Casino

As disclosed in the Fund's press release of September 11, 2006, the employees of the Palace Casino, who are represented by the United Food and Commercial Workers, Local 401 (the "UFCW"), have been on strike since September 9, 2006. Since that time, the casino has continued to operate on a reduced basis using management staff and those unionized employees who have chosen to cross the picket line. During peak periods on Friday and Saturday, the casino is operating 15 table games, two poker tables, and approximately 626 slot machines and electronic games on both floors of the facility and providing full operation of the Booker's Steakhouse restaurant. During non-peak periods, the casino operates on the main floor only and provides 411 slot machines and electronic games, up to 15 table games and two poker tables. The casino continues to offer live entertainment on weekends.

Since the beginning of the strike, total revenue at the Palace Casino is down approximately 45% from the same period of last year. Labour expenses decreased approximately 25% in the same period and the Fund expects to see further reductions in labour expenses as casino management continues to improve the efficiency of the reduced operations. Although the term of the strike and the financial impact to the Fund cannot be estimated with any certainty at this time, as the Palace Casino represents only 13% of consolidated revenue and 11% of consolidated EBITDA, management believes that its contingency plan will largely mitigate any potential impact to the Fund's EBITDA and net earnings, and does not anticipate any changes to its monthly distributions.

"While it is unfortunate that we have not yet been able to settle with the UFCW," said Dave Gadhia, CEO of Gateway Casinos G.P. Inc., "we are pleased with how the casino has performed to date and thank our core customer base for supporting us during the strike. We are continuing to work towards a conclusion so that our operations can return to normal. We believe that we have put a fair offer to our employees on the table that allows them to continue to be among the highest paid casino employees in the Edmonton market, yet at the same time reflects current market realities, including the impact to the Palace's revenue from the recent smoking ban and the expected impact from the opening of the River Cree Casino later this month."

Management has had regular discussions with the UFCW since the strike began, however no formal negotiations have taken place and none are planned at this time.

About the Fund

The Fund is an unincorporated open-ended limited purpose trust established under the laws of British Columbia, which operates the Burnaby Casino and Cascades Casino in Greater Vancouver, B.C., the Palace Casino in Edmonton, Alberta and the Lake City Casinos in Kamloops, Kelowna, Penticton and Vernon, B.C. Headquartered in Burnaby, B.C., the Fund is one of the largest casino operators in Western Canada.

To find out more about Gateway Casinos Income Fund (TSX: GCI.UN), visit our website at

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