Gateway Casinos Income Fund Reports 2006 Financial Results

BURNABY, BRITISH COLUMBIA–(March 15, 2007) – Gateway Casinos Income Fund (the “Fund” or “Gateway”) (TSX:GCI.UN), one of the largest casino operators in Western Canada, today reported its financial results for the fourth quarter and fiscal year ended December 31, 2006.

2006 Highlights

– Completed acquisition of Cascades Langley Casino and Hotel (“Cascades”)

– Total revenue increased 30.9% to $133.3 million, from $101.9 million in 2005

– EBITDA(i) increased 19.7% to $50.8 million, compared with $42.5 million in 2005

– The Fund generated distributable cash of $45.6 million, or $1.557 per unit, and declared distributions totaling $42.7 million, or $1.458 per unit

Q4 2006 Highlights

– Total revenue increased 38.1% to $35.5 million, from $25.7 million in Q4 2005

– EBITDA increased 14.2% to $11.2 million, compared with $9.9 million in Q4 2005

– Net earnings of $8.4 million, or $.291 per unit, for the fourth quarter”Overall, fiscal 2006 was another very strong year for the Fund,” said Dave Gadhia, CEO of Gateway Casinos G.P. Inc. “The year was highlighted by record yearly results from our Burnaby and Lake City Casinos, based largely on continued growth in slot machine revenue. These gains helped offset the revenue decline at our Palace Casino caused by the employee strike. Results from Cascades were ahead of our initial projections, and we are excited about the growth potential from this facility as it matures and we see the positive impact of recent enhancements, including the new parking facility.”

Mr. Gadhia added the Fund’s flagship Burnaby Casino redevelopment is proceeding on schedule. “We achieved several important development milestones in 2006, including completion of a fixed-price construction contract and an agreement with Delta Hotels to manage the Hotel, Convention Centre and Restaurant. In 2007, we expect to see major progress with this project and the redevelopments of our Lake City properties as we aim to capitalize on strong demand in the fast-growing Thompson-Okanagan region.”

Financial Results

Full-Year Results

Consolidated revenue for 2006 increased 30.9% to $133.3 million, compared with $101.9 million in 2005. The majority of the increase reflects the impact of Cascades, which contributed $26.4 million in revenue for the period from May 19, 2006 to December 31, 2006. Excluding Cascades, revenue was $106.9 million, a 4.9% increase over 2005. Slot machine revenue growth at both the Burnaby and Lake City properties continued strongly and offset the revenue decline at the Palace location caused by the strike that began on September 9, 2006. Total revenue from slot machines and other electronic games increased 28.7% over the prior year to $85.4 million, and table games revenue rose 18.3% over 2005 to $33.9 million.

For 2006, the Fund generated EBITDA of $50.8 million, or 38.1% of revenue, compared with $42.5 million, or 41.7% of revenue, in 2005. The reduction in the consolidated EBITDA for the year is mainly due to the increase in the BCLC joint marketing fee at the Burnaby Casino and the inclusion of the results of Cascades, which operates at a lower margin than the Burnaby Casino.

After amortization and net interest expense, the Fund generated net earnings of $40 million, or $1.36 per basic unit in 2006. This compares with $35.8 million or $1.35 per basic unit, in 2005.

In 2006, the Fund generated distributable cash of $45.7 million, or $1.557 per unit, and paid distributions of $42.8 million or $1.458 per unit, representing 93.7% of cash available for distributions.

Q4 2006 Results

Revenue for the fourth quarter of 2006 increased 38.1% to $35.5 million, compared with $25.7 million in the fourth quarter of 2005. The increase in revenue resulted primarily from the inclusion of results from Cascades, which accounted for $10.9 million of revenue in the quarter, as well as the continued strong performance of the slot machines at Burnaby and Lake City Casinos.

For the three months ended December 31, 2006, the Fund generated EBITDA of $11.2 million, compared with $9.9 million in the fourth quarter 2005, representing an increase of 13.1%. Net earnings for the quarter were $8.4 million, or $.27 per unit, compared to $8.7 million or $0.33 per unit, in the fourth quarter of 2005.

(i) EBITDA is not a defined term under Canadian generally accepted accounting principles . Management has determined EBITDA is a useful supplemental measure in evaluating the Fund’s performance as it provides investors with an indication of cash available for debt service, working capital needs and capital expenditures. This non-GAAP measure is intended to provide additional information on the Fund’s performance and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Please refer to the discussion under “EBITDA” and Net Earnings in the 2006 Management’s Discussion & Analysis.

Notice of Conference Call

Management of Gateway Casinos Income Fund will host a conference call on March 16, 2007 at 8 am Pacific Time (11:00 a.m. Eastern Time) to discuss its financial results for fiscal 2006. The call can be accessed by dialing 1.800-769-8320 or 416-695-9719. A replay will be available until March 23, 2007 at: 1-888-509-0081 or 416-695-5275 (access code: 641271).

The call will also be webcast and will be accessible by going to www.gatewaycasinosincomefund.com.

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 Langley Casino and Hotel in Greater Vancouver, BC, the Palace Casino in Edmonton, Alberta and the Lake City Casinos in Kamloops, Kelowna, Penticton and Vernon, BC. Headquartered in Burnaby, BC, the Fund is one of the largest casino operators in Western Canada.

GATEWAY CASINOS INCOME FUND

MANAGEMENT’S DISCUSSION & ANALYSIS

FOR THE YEAR ENDED DECEMBER 31, 2006

Management’s Discussion and Analysis

This Management’s Discussion and Analysis (“MD&A”) of our operating results and financial position is dated as of March 15, 2007, and should be read in conjunction with the audited consolidated financial statements of the Gateway Casinos Income Fund (the “Fund”) for the year ended December 31, 2006, as well as the accompanying notes, (the “Audited Financial Statements”) which are reported in Canadian dollars and have been prepared in accordance with Canadian Generally Accepted Accounting Principles (“GAAP”).

Forward-looking statements

This management’s discussion and analysis may contain forward-looking statements, which reflect management’s expectations regarding the future growth, results of operations, performance and business prospects and opportunities of the Fund and its subsidiaries. Forward-looking statements typically contain words such as “anticipates”, “believes”, “continue”, “could”, “expects”, “indicates”, “plans” or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management’s current beliefs and are based on information currently available to management. Forward-looking statements involve significant risks and uncertainties. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including the effects, as well as changes in: national and local business and economic conditions; competition within the gaming business; consumer preferences, spending patterns and demographic trends; legislation and governmental regulation. Although the forward-looking statements contained in this management’s discussion and analysis are based upon what management believes to be reasonable assumptions, the Fund cannot assure readers that actual results will be consistent with these forward-looking statements.

Additional information about these factors can be found under Risk Factors in our 2006 Annual Information Form.

We caution that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements to make decisions with respect to the Fund, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. We do not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by us or on our behalf.

Structure of the Fund

The Fund was launched on November 28, 2002, when it completed its initial public offering and indirectly acquired the operating assets of the Burnaby Casino in Greater Vancouver, British Columbia, the four Lake City Casinos in the Thompson/Okanagan region of British Columbia and the Palace Casino in Edmonton, Alberta, from wholly owned subsidiaries of Gateway Casinos Inc. (“GCI”).

The casinos are operated by the Gateway Casinos Limited Partnership (“Gateway” or “the Partnership”), through operating agreements and licenses with the British Columbia Lottery Corporation (“BCLC”) and the Alberta Gaming and Liquor Commission (“AGLC”). The Fund is, indirectly, a limited partner in Gateway, and holds all of the voting rights with respect to its operations. The Fund makes monthly cash distributions to its unitholders based on Gateway’s operating results.

On May 19, 2006 the Fund acquired the Cascades Langley Casino and Hotel (“Cascades”) in Langley, British Columbia, which is discussed in more detail below.

The following chart outlines the structure of the fund as at December 31, 2006 and as at the date of this MD&A.

To view the chart please click on the following link: http://www.ccnmatthews.com/docs/gci0315a.pdf

Fund Units

The Fund had 31,110,362, units outstanding as at December 31, 2006, and as at the date of this management’s discussion and analysis.

On April 25, 2006, the Fund issued $35 million of extendible convertible debentures, which are discussed further in the Capital Resources section below. The debentures are convertible into units of the Fund at the option of the holders at a price of $19.10 per unit, representing 52.3560 units per $1,000 principal amount.

As discussed below, the acquisition of Cascades provides for an adjustment to the purchase price of up to $10.6 million based on the actual distributable cash generated by Cascades during 2006. Should the purchase price be adjusted upwards, the Fund will issue additional units at a price equal to the 10-day volume weighted average price of the units on the date of issue.

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