Back in November, riverboat casino operator Argosy Gaming (NYSE:AGY) agreed to be acquired by racetrack and casino operator Penn National Gaming (NASDAQ:PENN) in a $2.2 billion deal, including $805 million in debt. Penn's attraction to Argosy is the latter's stable of solidly performing riverboat casino operations, which Penn has more or less lacked.

Argosy posted solid fourth-quarter results this morning, showing net revenue growth of 10.3% to $255.7 million. Meanwhile, EBITDA (earnings before interest, taxes, depreciation, and amortization) climbed 8.5% to $62.5 million as net income jumped 31.6% to $17.9 million or $0.60 per share. That figure beat the analyst earnings estimate of $0.56 per share.

As was the case in the third quarter, the performance gains came primarily from the company's recently enhanced operations in Kansas City and Sioux City, Iowa. Thanks to a new single-level barge opened in December 2003, net revenue at the Argosy Riverside in the Kansas City market jumped 45% to $34.8 million, pumping EBITDA up 180% to $11.1 million. The Sioux City property benefited from an increase in gaming capacity, as its previous riverboat was replaced by the riverboat formerly used at Argosy Riverside. As a result, net revenues in Sioux City grew 30% to $13.5 million, leading to a 55% gain in EBITDA to $4.8 million.

Argosy's flagship operation just outside of Cincinnati, which accounts for about 40% of the company's revenues and more than half of EBITDA, reported mostly flat results.

Following the pending merger -- expected during the second half of 2005 -- the combined Penn National will be the third-largest casino operator in the country, behind the soon-to-be-merged Vegas Strip giants MGM Mirage (NYSE:MGG) and Mandalay Resort Group (NYSE:MBG), as well as the combinedHarrah's Entertainment (NYSE:HET) and Caesars Entertainment (NYSE:CZR) operations. And as the part of the company expected to make real money on the riverboat side of the business, Argosy did its part in the fourth quarter.

Fool contributor Jeff Hwang owns none of the companies mentioned above.