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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended: December 31, 2007



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission
File Number: 1-9481

ARCHON CORPORATION

(Exact name of registrant as specified in its charter)



|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Nevada                                                         |  | 88-0304348                             
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)

4336 Losee Road, Suite 5, North Las Vegas, Nevada 89030

(Address of principal executive office and zip code)

(702) 732-9120

(Registrants telephone number, including area code)





(Former name, former address and former fiscal year, if changed since last report)

Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes   x    No    ̈

Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2
of the Exchange Act.

Large accelerated filer   ̈                    Accelerated filer   ̈                    Non-accelerated filer  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  x

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    Yes   ̈    No   ̈

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.

6,348,781 as of February 13, 2008









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##### Table of Contents

ARCHON CORPORATION

INDEX



|        |  |                                                                                                                                    |  |     
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------- |  | ----
|        |  |                                                                                                                                    |  | Page
|PART I  |  | FINANCIAL INFORMATION                                                                                                              |  |     
|        |  |                                                                                                                                   
|Item 1  |  | Unaudited Condensed Consolidated Financial Statements:                                                                             |  |     
|        |  |                                                                                                                                   
|        |  | Condensed Consolidated Balance Sheets as of December 31, 2007 (Unaudited) and September 30, 2007                                   |  | 1   
|        |  | Condensed Consolidated Statements of Operations for the Three Months Ended December 31, 2007 and 2006 (Unaudited)                  |  | 3   
|        |  | Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended December 31, 2007 and 2006 (Unaudited) |  | 5   
|        |  | Condensed Consolidated Statement of Stockholders Equity for the Three Months Ended December 31, 2007 (Unaudited)                  |  | 6   
|        |  | Condensed Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2007 and 2006 (Unaudited)                  |  | 7   
|        |  | Notes to Condensed Consolidated Financial Statements                                                                               |  | 8   
|        |  |                                                                                                                                   
|Item 2  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                              |  | 14  
|        |  |                                                                                                                                   
|Item 3  |  | Quantitative and Qualitative Disclosures About Market Risk                                                                         |  | 21  
|        |  |                                                                                                                                   
|Item 4  |  | Controls and Procedures                                                                                                            |  | 22  
|        |  |                                                                                                                                   
|PART II |  | OTHER INFORMATION                                                                                                                  |  |     
|        |  |                                                                                                                                   
|Item 1  |  | Legal Proceedings                                                                                                                  |  | 22  
|        |  |                                                                                                                                   
|Item 2  |  | Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities                                                   |  | 23  
|        |  |                                                                                                                                   
|Item 3  |  | Defaults Upon Senior Securities                                                                                                    |  | 23  
|        |  |                                                                                                                                   
|Item 4  |  | Submission of Matters to a Vote of Security Holders                                                                                |  | 23  
|        |  |                                                                                                                                   
|Item 5  |  | Other Information                                                                                                                  |  | 23  
|        |  |                                                                                                                                   
|Item 6  |  | Exhibits                                                                                                                           |  | 24  



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##### Table of Contents

PART I  FINANCIAL INFORMATION



|Item 1. | Unaudited Condensed Consolidated Financial Statements
|------- | -----------------------------------------------------

Archon Corporation and Subsidiaries

Condensed Consolidated Balance Sheets



|                                         |  |                  |             |   |                   |   |             |  
|---------------------------------------- |  | ---------------- | ----------- | - | ----------------- | - | ----------- | -
|                                         |  | December 31,2007 |             |   | September 30,2007 |  
|                                         |  | (Unaudited)      |             |   |                   |  
|ASSETS                                   |  |                  |             |   |                   |   |             |  
|Current assets:                          |  |                  |             |   |                   |   |             |  
|Cash and cash equivalents                |  | $                | 35,796,529  |   |                   | $ | 27,484,222  |  
|Investment in marketable securities      |  |                  | 7,575,504   |   |                   |   | 10,997,088  |  
|Accounts receivable, net                 |  |                  | 165,473     |   |                   |   | 1,054,493   |  
|Inventories                              |  |                  | 355,611     |   |                   |   | 405,378     |  
|Prepaid expenses and other               |  |                  | 1,252,761   |   |                   |   | 1,148,669   |  
|                                         |  |                  |             |   |                   |   |             |  
|Total current assets                     |  |                  | 45,145,878  |   |                   |   | 41,089,850  |  
|                                         |  |                  |             |   |                   |   |             |  
|Property held for sale                   |  |                  | 21,504,400  |   |                   |   | 21,504,400  |  
|                                         |  |                 
|Property and equipment:                  |  |                  |             |   |                   |   |             |  
|Rental property held for investment, net |  |                  | 124,304,523 |   |                   |   | 124,954,638 |  
|Land used in operations                  |  |                  | 7,925,589   |   |                   |   | 7,925,589   |  
|Buildings and improvements               |  |                  | 34,413,872  |   |                   |   | 34,413,872  |  
|Machinery and equipment                  |  |                  | 8,744,194   |   |                   |   | 8,646,190   |  
|Accumulated depreciation                 |  |                  | (26,567,092 | ) |                   |   | (26,160,177 | )
|                                         |  |                  |             |   |                   |   |             |  
|Property and equipment, net              |  |                  | 148,821,086 |   |                   |   | 149,780,112 |  
|                                         |  |                  |             |   |                   |   |             |  
|Other assets                             |  |                  | 7,586,369   |   |                   |   | 7,607,362   |  
|                                         |  |                  |             |   |                   |   |             |  
|Total assets                             |  | $                | 223,057,733 |   |                   | $ | 219,981,724 |  
|                                         |  |                  |             |   |                   |   |             |  

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.



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Archon Corporation and Subsidiaries

Condensed Consolidated Balance Sheets (continued)



|                                                                                                                                              |  |                  |             |   |                   |   |             |  
|--------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | ----------- | - | ----------------- | - | ----------- | -
|                                                                                                                                              |  | December 31,2007 |             |   | September 30,2007 |  
|                                                                                                                                              |  | (Unaudited)      |             |   |                   |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                          |  |                  |             |   |                   |   |             |  
|Current liabilities:                                                                                                                          |  |                  |             |   |                   |   |             |  
|Accounts payable                                                                                                                              |  | $                | 4,078,624   |   |                   | $ | 4,008,754   |  
|Interest payable                                                                                                                              |  |                  | 442,400     |   |                   |   | 1,361,092   |  
|Accrued expenses                                                                                                                              |  |                  | 3,772,937   |   |                   |   | 3,711,881   |  
|Exchangeable redeemable preferred stock - unredeemed                                                                                          |  |                  | 315,715     |   |                   |   | 428,768     |  
|Current portion of debt                                                                                                                       |  |                  | 10,824,225  |   |                   |   | 10,940,905  |  
|Current portion of non-recourse debt                                                                                                          |  |                  | 2,569,814   |   |                   |   | 2,490,198   |  
|                                                                                                                                              |  |                  |             |   |                   |   |             |  
|Total current liabilities                                                                                                                     |  |                  | 22,003,715  |   |                   |   | 22,941,598  |  
|                                                                                                                                              |  |                  |             |   |                   |   |             |  
|Debt  less current portion                                                                                                                   |  |                  | 17,041      |   |                   |   | 52,408      |  
|Non-recourse debt  less current portion                                                                                                      |  |                  | 73,652,768  |   |                   |   | 74,328,402  |  
|Deferred income taxes                                                                                                                         |  |                  | 28,066,799  |   |                   |   | 28,753,889  |  
|Deferred rent income and accrued expensed                                                                                                     |  |                  | 41,339,754  |   |                   |   | 42,082,116  |  
|Deferred income from sale and extensions of land purchase option                                                                              |  |                  | 56,739,168  |   |                   |   | 49,751,667  |  
|                                                                                                                                              |  |                 
|Stockholders equity:                                                                                                                         |  |                  |             |   |                   |   |             |  
|Common stock , $.01 par value; authorized-100,000,000 shares; issued and outstanding  6,235,931, and 6,235,931 shares                        |  |                  | 62,809      |   |                   |   | 62,809      |  
|Preferred stock, exchangeable, redeemable 16.0% cumulative $2.14 liquidation value, authorized-10,000,000 shares; none issued and outstanding |  |                  | 0           |   |                   |   | 0           |  
|Additional paid-in capital                                                                                                                    |  |                  | 61,482,194  |   |                   |   | 61,482,194  |  
|Accumulated deficit                                                                                                                           |  |                  | (61,857,707 | ) |                   |   | (63,507,905 | )
|Accumulated other comprehensive income                                                                                                        |  |                  | 1,638,966   |   |                   |   | 4,122,320   |  
|                                                                                                                                              |  |                  |             |   |                   |   |             |  
|Sub-total                                                                                                                                     |  |                  | 1,326,262   |   |                   |   | 2,159,418   |  
|Less treasury common stock  4,875 shares, at cost                                                                                            |  |                  | (87,774     | ) |                   |   | (87,774     | )
|                                                                                                                                              |  |                  |             |   |                   |   |             |  
|Total stockholders equity                                                                                                                    |  |                  | 1,238,488   |   |                   |   | 2,071,644   |  
|                                                                                                                                              |  |                  |             |   |                   |   |             |  
|Total liabilities and stockholders equity                                                                                                    |  | $                | 223,057,733 |   |                   | $ | 219,981,724 |  
|                                                                                                                                              |  |                  |             |   |                   |   |             |  

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.



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Archon Corporation and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)



|                                                                          |  |                                |            |   |      |   |            |  
|------------------------------------------------------------------------- |  | ------------------------------ | ---------- | - | ---- | - | ---------- | -
|                                                                          |  | Three Months EndedDecember 31, |           
|                                                                          |  | 2007                           |            |   | 2006 |  
|Revenues:                                                                 |  |                                |            |   |      |   |            |  
|Casino                                                                    |  | $                              | 5,387,065  |   |      | $ | 6,015,396  |  
|Hotel                                                                     |  |                                | 538,336    |   |      |   | 634,629    |  
|Food and beverage                                                         |  |                                | 1,736,311  |   |      |   | 1,807,796  |  
|Investment properties                                                     |  |                                | 3,100,562  |   |      |   | 3,100,562  |  
|Other                                                                     |  |                                | 2,092,849  |   |      |   | 1,086,144  |  
|                                                                          |  |                                |            |   |      |   |            |  
|Gross revenues                                                            |  |                                | 12,855,123 |   |      |   | 12,644,527 |  
|Less casino promotional allowances                                        |  |                                | (1,416,946 | ) |      |   | (1,562,242 | )
|                                                                          |  |                                |            |   |      |   |            |  
|Net operating revenues                                                    |  |                                | 11,438,177 |   |      |   | 11,082,285 |  
|                                                                          |  |                                |            |   |      |   |            |  
|Operating expenses:                                                       |  |                                |            |   |      |   |            |  
|Casino                                                                    |  |                                | 3,267,384  |   |      |   | 3,559,824  |  
|Hotel                                                                     |  |                                | 259,838    |   |      |   | 276,641    |  
|Food and beverage                                                         |  |                                | 1,081,680  |   |      |   | 946,640    |  
|Other                                                                     |  |                                | 336,221    |   |      |   | 477,313    |  
|Selling, general and administrative:                                      |  |                                |            |   |      |   |            |  
|Corporate                                                                 |  |                                | 1,367,535  |   |      |   | 912,832    |  
|Other                                                                     |  |                                | 914,768    |   |      |   | 965,896    |  
|Utilities and property expenses                                           |  |                                | 1,282,812  |   |      |   | 1,175,455  |  
|Depreciation and amortization                                             |  |                                | 1,070,387  |   |      |   | 1,368,766  |  
|Gain on disposal of assets                                                |  |                                | (6,187     | ) |      |   | (22,817    | )
|                                                                          |  |                                |            |   |      |   |            |  
|Total operating expenses                                                  |  |                                | 9,574,438  |   |      |   | 9,660,550  |  
|                                                                          |  |                                |            |   |      |   |            |  
|Operating income                                                          |  |                                | 1,863,739  |   |      |   | 1,421,735  |  
|Interest expense                                                          |  |                                | (2,080,133 | ) |      |   | (2,143,898 | )
|Interest and other income                                                 |  |                                | 2,716,695  |   |      |   | 102,662    |  
|                                                                          |  |                                |            |   |      |   |            |  
|Income (loss) from continuing operations before income tax (benefit)      |  |                                | 2,500,301  |   |      |   | (619,501   | )
|Federal income tax (benefit)                                              |  |                                | 850,103    |   |      |   | (225,219   | )
|                                                                          |  |                                |            |   |      |   |            |  
|Income (loss) from continuing operations                                  |  |                                | 1,650,198  |   |      |   | (394,282   | )
|Discontinued operations  disposal gain, net of tax provision of $510,596 |  |                                | 0          |   |      |   | 948,250    |  
|                                                                          |  |                                |            |   |      |   |            |  
|Net income                                                                |  |                                | 1,650,198  |   |      |   | 553,968    |  
|Dividends earned on preferred shares                                      |  |                                | 0          |   |      |   | (377,819   | )
|                                                                          |  |                                |            |   |      |   |            |  
|Net income applicable to common shares                                    |  | $                              | 1,650,198  |   |      | $ | 176,149    |  
|                                                                          |  |                                |            |   |      |   |            |  
|Average common shares outstanding                                         |  |                                | 6,386,473  |   |      |   | 6,672,281  |  
|                                                                          |  |                                |            |   |      |   |            |  
|Average common and common equivalent shares outstanding                   |  |                                | 7,091,333  |   |      |   | 7,051,912  |  
|                                                                          |  |                                |            |   |      |   |            |  
|Basic income (loss) per common share:                                     |  |                                |            |   |      |   |            |  
|From continuing operations                                                |  | $                              | 0.26       |   |      | $ | (0.12      | )
|From discontinued operations                                              |  |                                | 0.00       |   |      |   | 0.14       |  
|                                                                          |  |                                |            |   |      |   |            |  
|Net basic income per common share                                         |  | $                              | 0.26       |   |      | $ | 0.02       |  
|                                                                          |  |                                |            |   |      |   |            |  



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Archon Corporation and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)



|                                        |  |                                |      |      |   |       |  
|--------------------------------------- |  | ------------------------------ | ---- | ---- | - | ----- | -
|                                        |  | Three Months EndedDecember 31, |     
|                                        |  | 2007                           |      | 2006 |  
|Diluted income (loss) per common share: |  |                                |      |      |   |       |  
|From continuing operations              |  | $                              | 0.23 |      | $ | (0.12 | )
|From discontinued operations            |  |                                | 0.00 |      |   | 0.14  |  
|                                        |  |                                |      |      |   |       |  
|Net diluted income per common share     |  | $                              | 0.23 |      | $ | 0.02  |  
|                                        |  |                                |      |      |   |       |  

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.



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Archon Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)



|                                                                     |  |                            |            |   |      |   |          
|-------------------------------------------------------------------- |  | -------------------------- | ---------- | - | ---- | - | ---------
|                                                                     |  | Three Months EndedDecember
|                                                                     |  | 2007                       |            |   | 2006
|Net income                                                           |  | $                          | 1,650,198  |   |      | $ | 553,968  
|Unrealized gain (loss) on marketable securities, net of income taxes |  |                            | (2,483,354 | ) |      |   | 1,050,767
|                                                                     |  |                            |            |   |      |   |          
|Comprehensive income (loss)                                          |  | $                          | (833,156   | ) |      | $ | 1,604,735
|                                                                     |  |                            |            |   |      |   |          

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements



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Archon Corporation and Subsidiaries

Condensed Consolidated Statement of Stockholders Equity

For the Three Months Ended December 31, 2007

(Unaudited)



|                                         |  |             |        |                          |   |                    |  |   |                                     |   |  |               |            |   |       |   |         |   |  |   |            |  
|---------------------------------------- |  | ----------- | ------ | ------------------------ | - | ------------------ |  | - | ----------------------------------- | - |  | ------------- | ---------- | - | ----- | - | ------- | - |  | - | ---------- | -
|                                         |  | CommonStock |        | AdditionalPaid-InCapital |   | AccumulatedDeficit |  |   | AccumulatedOtherComprehensiveIncome |   |  | TreasuryStock |            |   | Total |  
|Balances, October 1, 2007                |  | $           | 62,809 |                          | $ | 61,482,194         |  | $ | (63,507,905                         | ) |  | $             | 4,122,320  |   |       | $ | (87,774 | ) |  | $ | 2,071,644  |  
|Net income                               |  |             |        |                          |   |                    |  |   | 1,650,198                           |   |  |               |            |   |       |   |         |   |  |   | 1,650,198  |  
|Unrealized loss on marketable securities |  |             |        |                          |   |                    |  |   |                                     |   |  |               | (2,483,354 | ) |       |   |         |   |  |   | (2,483,354 | )
|                                         |  |             |        |                          |   |                    |  |   |                                     |   |  |               |            |   |       |   |         |   |  |   |            |  
|Balances, December 31, 2007              |  | $           | 62,809 |                          | $ | 61,482,194         |  | $ | (61,857,707                         | ) |  | $             | 1,638,966  |   |       | $ | (87,774 | ) |  | $ | 1,238,488  |  
|                                         |  |             |        |                          |   |                    |  |   |                                     |   |  |               |            |   |       |   |         |   |  |   |            |  

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.



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Archon Corporation and Subsidiaries

Consolidated Condensed Statements of Cash Flows

(Unaudited)



|                                                                                  |  |                                |            |   |                |   |           |  
|--------------------------------------------------------------------------------- |  | ------------------------------ | ---------- | - | -------------- | - | --------- | -
|                                                                                  |  | Three Months EndedDecember 31, |           
|                                                                                  |  | 2007                           |            |   | 2006(Restated) |  
|Cash flows from operating activities:                                             |  |                                |            |   |                |   |           |  
|Net income                                                                        |  | $                              | 1,650,198  |   |                | $ | 553,968   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                |            |   |                |   |           |  
|Depreciation and amortization                                                     |  |                                | 1,070,387  |   |                |   | 1,368,766 |  
|Disposal gain, discontinued component, net of tax effect                          |  |                                | 0          |   |                |   | (948,250  | )
|Gain on sale of assets, continuing operations                                     |  |                                | (6,187     | ) |                |   | (22,817   | )
|Gain on sale of marketable securities                                             |  |                                | (2,289,660 | ) |                |   | 0         |  
|Change in assets and liabilities:                                                 |  |                                |            |   |                |   |           |  
|Accounts receivable                                                               |  |                                | 889,020    |   |                |   | 966,077   |  
|Inventories                                                                       |  |                                | 49,767     |   |                |   | (9,445    | )
|Prepaid expenses and other                                                        |  |                                | (104,092   | ) |                |   | (43,081   | )
|Deferred income taxes                                                             |  |                                | 650,102    |   |                |   | 285,377   |  
|Other assets                                                                      |  |                                | 20,993     |   |                |   | (132,914  | )
|Accounts payable                                                                  |  |                                | 69,870     |   |                |   | 474,704   |  
|Interest payable                                                                  |  |                                | (918,692   | ) |                |   | (933,746  | )
|Accrued expenses and other current liabilities                                    |  |                                | 61,056     |   |                |   | (202,087  | )
|Other liabilities                                                                 |  |                                | (742,362   | ) |                |   | (742,362  | )
|                                                                                  |  |                                |            |   |                |   |           |  
|Net cash provided by operating activities                                         |  |                                | 400,400    |   |                |   | 614,190   |  
|                                                                                  |  |                                |            |   |                |   |           |  
|Cash flows from investing activities:                                             |  |                                |            |   |                |   |           |  
|Proceeds from disposal of discontinued component                                  |  |                                | 0          |   |                |   | 1,800,000 |  
|Proceeds from sale of assets, continuing operations                               |  |                                | 19,545     |   |                |   | 32,500    |  
|Increase in deferred income from sale and extensions of land purchase option      |  |                                | 6,987,501  |   |                |   | 1,172,500 |  
|Capital expenditures                                                              |  |                                | (124,719   | ) |                |   | (186,869  | )
|Marketable securities purchased                                                   |  |                                | (2,171,006 | ) |                |   | (198,251  | )
|Marketable securities sold                                                        |  |                                | 4,061,704  |   |                |   | 0         |  
|                                                                                  |  |                                |            |   |                |   |           |  
|Net cash provided by investing activities                                         |  |                                | 8,773,025  |   |                |   | 2,619,880 |  
|                                                                                  |  |                                |            |   |                |   |           |  
|Cash flows from financing activities:                                             |  |                                |            |   |                |   |           |  
|Payments on debt and obligation under capital lease                               |  |                                | (748,065   | ) |                |   | (715,078  | )
|Preferred stock redeemed and retired                                              |  |                                | (113,053   | ) |                |   | 0         |  
|                                                                                  |  |                                |            |   |                |   |           |  
|Net cash used in financing activities                                             |  |                                | (861,118   | ) |                |   | (715,078  | )
|                                                                                  |  |                                |            |   |                |   |           |  
|Increase in cash and cash equivalents                                             |  |                                | 8,312,307  |   |                |   | 2,518,992 |  
|Cash and cash equivalents, beginning of period                                    |  |                                | 27,484,222 |   |                |   | 6,187,533 |  
|                                                                                  |  |                                |            |   |                |   |           |  
|Cash and cash equivalents, end of period                                          |  | $                              | 35,796,529 |   |                | $ | 8,706,525 |  
|                                                                                  |  |                                |            |   |                |   |           |  

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.



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ARCHON CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



|1. | Basis of Presentation and General Information
|-- | ---------------------------------------------

Archon Corporation (the Company or Archon) conducts its primary business operations through a wholly-owned subsidiary, Pioneer Hotel Inc. (PHI), which operates the Pioneer Hotel & Gambling Hall
(the Pioneer) in Laughlin, Nevada. In addition, the Company owns investment real estate on Las Vegas Boulevard South (the Strip) in Las Vegas, Nevada, and other investment properties in Dorchester, Massachusetts and
Gaithersburg, Maryland. In June 2006, the Company entered into an option agreement whereby it sold an option to another party for the purchase of the real estate the Company owns on the Strip for a total sales price of $475 million, subject to the
terms of the agreement.

The condensed consolidated financial statements included herein have been prepared by the Company pursuant to the
rules and regulations of the United States Securities and Exchange Commission (SEC). Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, all
adjustments (which include normal recurring adjustments) necessary for a fair presentation of results for the interim periods have been made. The results for the current three-month period are not necessarily indicative of results to be expected for
the full fiscal year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the year ended
September 30, 2007, from which the balance sheet information as of that date is derived.

Principles of
Consolidation. The accompanying unaudited condensed consolidated financial statements include the accounts of Archon and its wholly-owned subsidiaries. Amounts representing the Companys investment in less than majority-owned
companies but in which an equity ownership interest of 20% or greater is held are accounted for by the equity method. All material intercompany accounts and transactions have been eliminated in consolidation.

Earnings (Loss) Per Share. Dilutive stock options of approximately 700,000 and 400,000 were included in diluted calculations during
the quarters ended December 31, 2007 and 2006.



|2. | Other Assets
|-- | ------------

Other assets, includes an
unconsolidated investee of the Company, which is a 50% owned LLC with the following financial profile as of December 31, 2007 and 2006 (amounts in thousands):



|                    |  |              |     |      |   |      
|------------------- |  | ------------ | --- | ---- | - | -----
|                    |  | December 31,
|                    |  | 2007         |     | 2006
|Current assets      |  | $            | 198 |      | $ | 222  
|Total assets        |  |              | 950 |      |   | 1,012
|Current liabilities |  |              | 132 |      |   | 127  
|Total liabilities   |  |              | 138 |      |   | 219  
|Total equity        |  |              | 812 |      |   | 793  



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Summarized operating information for this unconsolidated investee for the three months ended
December 31, 2007 and 2006 (amounts in thousands) follows:



|           |  |                                |     |      |   |    
|---------- |  | ------------------------------ | --- | ---- | - | ---
|           |  | Three Months EndedDecember 31,
|           |  | 2007                           |     | 2006
|Revenues   |  | $                              | 394 |      | $ | 486
|Net income |  |                                | 12  |      |   | 101

This entity is indebted to a bank in the amount of $0.1 million and $0.2 million as of
December 31, 2007 and 2006, respectively. The debt is secured by a deed of trust and is guaranteed by the Company.



|3. | Related Parties
|-- | ---------------

The Company is subject to a Patent
Rights and Royalty Agreement with the brother of the Companys Chairman of the Board and CEO with respect to certain gaming technology for which he had been issued a patent. The Company agreed to pay certain royalty payments with respect to the
technology incorporated into gaming devices placed in operation, as well as costs related to maintain the patent. The patentholder granted the Company an exclusive five-year license that expired in January 2007 in the United States with respect to
the technology, but which automatically renewed until 2009 and will renew for an additional two-year term unless the Company terminates the agreement. The Company also has an understanding with the related party patentholder that it will pay for the
costs of commercial development of the technology. Through September 30, 2006, the Company had expended approximately $0.4 million for commercial development of the technology, and no additional costs were expended during the three-month
periods ended December 31, 2007 or 2006. No royalties were paid to the patentholder during the periods presented.



|4. | Federal Income Tax
|-- | ------------------

The Company recorded federal
income tax provisions and benefits based on annualized statutory rates.

Deferred tax liabilities relate principally to gains on sales of
real estate, net of deferred tax assets principally relating to net operating loss carryforwards.



|5. | Sale of Option for Strip Land
|-- | -----------------------------

The Company owns,
through its wholly- owned subsidiary Sahara Las Vegas Corp. (SLVC), an approximately 27-acre parcel of real property on the Strip. In connection with the acquisition of the property, the Company assumed an operating lease under which a
water theme park operated. The lease was terminated September 30, 2004. The Company presently leases the property to two different lessees for an aggregate amount of $364,000 per month. Both leases may be terminated with sixty days written
notice in the event the property is sold to a third party.

On June 24, 2006, SLVC, a Nevada corporation and subsidiary of Archon
Corporation entered into an Option Agreement (the Agreement) between SLVC and LVTI LLC, a Delaware limited liability company (LVTI). Pursuant to the Agreement, SLVC granted to LVTI an option (the Option) to
purchase an approximately 27 acre parcel of real property located on Las Vegas Boulevard South (the Property) or, alternatively, SLVCs membership interest in a limited liability company (LVT LLC) that may be formed and
into which the Property would be contributed.



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The initial purchase price to be paid by LVTI for
purchase of the Property or the membership interest in LVT LLC was $450 million. LVTI paid an initial deposit of $5.0 million on June 27, 2006. The Agreement also provided for a second deposit of $40.0 million due on or before
September 22, 2006, and additional monthly payments of approximately $2.3 million in each month (Carry Option Payments) commencing on the 13thcalendar month following the date the second deposit is paid until the closing of the exercise of the Option. The 30-day due diligence period ended and LVTI did not terminate the Agreement. Upon exercise of the
Option, the initial deposit and the second deposit will be credited against the total purchase price. The Agreement provides for certain adjustments to the purchase price if certain easements are entered into with respect to the Property prior to
the closing. The Option may be exercised by LVTI at any time between the last day of the 12thcalendar month and the last day of the 18thcalendar month following the date on which the second deposit is paid; provided that the option term may be extended by up to 30 days if SLVC does not give
written notice to LVTI of the option term expiration as required by the Agreement. The first and second deposits and any additional monthly payments paid to SLVC prior to termination of the Agreement will be retained by SLVC upon termination of the
Agreement without exercise of the option, except under certain circumstances specified in the Agreement.

Pursuant to a First Amendment of
the Agreement, LVTI elected to pay to the Company $750,000 to extend the date on which the second deposit of $40.0 million was due from September 22, 2006 to December 31, 2006. Pursuant to a Second Amendment, LVTI elected to pay to the
Company $1.2 million to further extend the date on which the second deposit of $40.0 million was due from December 31, 2006 to March 31, 2007. Pursuant to a Third and a Fourth Amendment to the Agreement, LVTI elected to pay to the Company
two additional payments in April 2007 totaling $500,000 to further extend the date on which the second deposit was due from March 31, 2007 to May 31, 2007. LVTI paid the $40.0 million second deposit on May 25, 2007. Additionally, the
initial purchase price was increased from $450 million to $475 million. Pursuant to a Fifth Amendment, three months, to be exercised in the discretion of LVTI, were added to the Option term, extending the end of the Option term from March 31,
2008 to June 30, 2008. LVTI will pay Carry Option Payments of $2.9 million for each of the three month extensions utilized, with a proration for any partial month utilized. All Carry Option Payments and all monthly option extension payments are
nonrefundable and will not be applied against the purchase price under the Agreement.

The nonrefundable payment of $5.0 million and a
nonrefundable extension fee of $750,000 were recorded as deferred revenue, at September 30, 2006. The Company received an additional nonrefundable extension fee of $1.2 million in December 2006 which was also recorded as deferred revenue at
March 31, 2007. The Company received additional nonrefundable extension fees of $500,000 in April 2007 and the nonrefundable second deposit payment of $40.0 million on May 25, 2007, which payments were also recorded as deferred revenue at
June 30, 2007. On September 27, 2007, the Company received an additional option Carry Option Payment of $2.3 million, which was recorded as deferred revenue at September 30, 2007. In addition, the Company received Carry Option
Payments of $2.3 million each in October, November and December 2007, which were recorded as deferred revenue at December 31, 2007.



|6. | Redemption of the Companys Preferred Stock and Redemption Price Disputes
|-- | -------------------------------------------------------------------------

The Company called all outstanding shares of its Exchangeable Redeemable Preferred Stock for redemption on and as of August 31, 2007, at a redemption
price of $5.241 per share, which sum included accrued and unpaid dividends to the date of redemption. From and after August 31, 2007, all shares of the Exchangeable Redeemable Preferred Stock ceased to be outstanding and to accrue dividends. As
of February 13, 2008, the holders of 4,238,532 shares of the Exchangeable Redeemable Preferred Stock have surrendered their shares and received payment of the redemption price.

On August 27, 2007, the following institutional investors: D. E. Shaw Laminar Portfolios, L.L.C., LC Capital Master Fund, Ltd, LC Capital/Capital Z
SPV, LP, Magten Asset Management Corp, Mercury Real Estate Securities Fund LP, Mercury Real Estate Securities Offshore Fund Limited, Black Horse Capital LP, Black Horse Capital (QP) LP, Black Horse Capital Offshore Ltd, and Plainfield Special
Situations Master Fund Limited filed an action against the registrant in the United States District Court for The District of Nevada entitled D.E. Shaw Laminar Portfolios, LLC; et al. v. Archon Corporation, 2:07-CV-01146-PMP-LRL (D. Nev.). The
Complaint was subsequently amended to add an additional party plaintiff (collectively, the Laminar Plaintiffs). The Amended Complaint: (i) seeks a finding by the Court that the Company has breached its obligations under the
Companys



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Certificate of Designation of the Preferred Stock, dated September 30, 1993 (the Certificate), and awarding the Laminar Plaintiffs full
compensation of any and all available damages suffered by the Laminar Plaintiffs as a result of the Companys breach of the Certificate; (ii) seeks a finding by the Court that the Companys issuance of its redemption notice with an
improper redemption price is an anticipatory breach of a material term of the Certificate and awarding the Laminar Plaintiffs full compensation of any and all available damages suffered as a result of the Companys anticipatory breach of the
Certificate; (iii) seeks a declaration by the Court that the dividends be properly calculated and compounded per the terms of the Certificate in an amount no less than $7,235,351 up through and including the date of final judgment;
(iv) seeks an order from the Court calling for the Company to reimburse the Laminar Plaintiffs attorneys fees, expenses and costs incurred in enforcing the their rights; and (v) seeks such other and further relief as the Court
may deem appropriate. The Company has answered the amended complaint. In November 2007, and subsequent to the end of the Companys fiscal year ended September 30, 2007, the Laminar Plaintiffs filed a motion for partial summary judgment on
liability. The Company responded, and the parties will await a ruling from the Court following the Plaintiffs filing of its reply brief. The plaintiffs have also filed a motion to strike certain affirmative defenses.

Also subsequent to the end of the Companys fiscal year, two former holders of the Exchangeable Redeemable Preferred Stock filed Complaints in the
United States District Court, District of Nevada, entitled Rainero v. Archon Corporation, District of Nevada Case No. 2:07-cv-01553, and Leeward Capital, L.P. v. Archon Corporation, District of Nevada Case No. 2:08-cv-00007,
both alleging essentially the same claim as the first Complaint. The plaintiff in the Rainero action purports to bring the action as a class action claim on behalf of all those preferred stock shareholders similarly situated. If the plaintiffs are
correct, the redemption price as of August 31, 2007 should have been $8.69 per share and not $5.241 per share as calculated by the Company which, if applied to all the then outstanding shares of Exchangeable Redeemable Preferred Stock,
including the shares held by the Companys officers and directors, would increase the redemption price in excess of $15.2 million. The Company has answered the Rainero and Leeward complaints.

The Company is vigorously defending these lawsuits. No provision has been made in the financial statements due to managements inability at this
time to measure minimum loss, if any, to be incurred in this matter.



|7. | Stock-Based Compensation
|-- | ------------------------

As of
December 31, 2007, the Company has the following share-based compensation plans:

Key Employee Stock Option Plan

The Companys Key Employee Stock Option Plan (the Stock Option Plan) provided for the grant of up to 1.2 million shares of its
common stock to key employees. The Stock Option Plan provided for both incentive stock options and non-qualified stock options. Stock option grants generally vest over a three-year period from the employees hire date. During the quarter ended
December 31, 2007, there were no stock options granted under the Stock Option Plan. As of December 31, 2007, there were approximately 700,000 options outstanding and exercisable under the Stock Option Plan. During the quarter ended
December 31, 2007, no options were exercised.

1995 Non-Employee Director Stock Option Plan

In December 1995, the Company adopted the 1995 Non-Employee Director Stock Option Plan (the Non-Employee Director Plan) that provided for the
grant of up to 100,000 shares of its common stock to the directors. Under the Non-Employee Director Plan, directors were automatically granted an option to purchase 12,500 shares of the common stock at an exercise price equal to the market value of
such shares on the date of election to the board. Stock option grants vested immediately. The Non-Employee Director Plan ceased granting options on March 21, 2002. As of December 31, 2007, there were no options outstanding or exercisable
under the Non-Employee Director Plan.

Subsidiary Stock Option Plans

SFHI, SLVC and PHI (collectively, the Subsidiaries), have adopted subsidiary stock option plans (the Subsidiary Plans). The
Subsidiary Plans provide for the grant of options by each



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of the Subsidiaries with respect to an aggregate of up to 10% of the outstanding shares of such Subsidiarys Common Stock to employees, non-employee
directors, consultants or affiliates of the Company or the Subsidiaries. The purpose of the Subsidiary Plans is to enable the Subsidiaries and the Company to attract, retain and motivate their employees, non-employee directors, consultants and
affiliates by providing for or increasing the proprietary interest of such persons in the Subsidiaries. As of December 31, 2007, no options had been granted under any of the Subsidiary Plans.

The following table summarizes stock option activity during the first quarter of fiscal 2007 under all plans:



|                                           |  |                       |  |                                         |      |                                          |          |                                 |   |       
|------------------------------------------ |  | --------------------- |  | --------------------------------------- | ---- | ---------------------------------------- | -------- | ------------------------------- | - | ------
|                                           |  | NumberofShares(000s) |  | Weighted-AverageExercise PricePer Share |      | Weighted-AverageRemainingContractualTerm |          | AggregateIntrinsicValue($000s)
|Options outstanding at September 30, 2007: |  | 705                   |  | $                                       | 9.30 |                                          | 3.4 yrs. |                                 | $ | 13,121
|Granted                                    |  | 0                     |  |                                         | N/A  |                                          | N/A      |                                 |   | N/A   
|Exercised                                  |  | 0                     |  |                                         | N/A  |                                          | N/A      |                                 |   | N/A   
|Canceled                                   |  | 13                    |  |                                         | 1.00 |                                          | N/A      |                                 |   | N/A   
|                                           |  |                       |  |                                        
|Options outstanding at December 31, 2007   |  | 692                   |  | $                                       | 9.45 |                                          | 3.2 yrs. |                                 | $ | 16,669
|Exercisable at December 31, 2007           |  | 692                   |  | $                                       | 9.45 |                                          | 3.2 yrs. |                                 | $ | 16,669

As of December 31, 2007, there was no unrecognized compensation cost related to unvested
stock options. There were no options exercised or vested in the first quarter of fiscal 2007.The Company has not recognized, and does not expect to recognize in the near future, any tax benefit related to the exercise of vested options as a
result of net operating loss carryforwards.



|8. | Discontinued Operations
|-- | -----------------------

In October 2006, the
Company sold real estate with a net book value of $400,000 for $1.8 million. A gain of $900,000, net of taxes of $500,000, on the sale was recorded as discontinued operations. The operating results from this property are insignificant and are not
recorded as discontinued operations.



|9. | Supplemental Statement of Cash Flows Information
|-- | ------------------------------------------------

Supplemental statement of cash flows information for the three months ended December 31, 2007 and 2006 is presented below (amounts in thousands):



|                                         |  |      |       |      |   |      
|---------------------------------------- |  | ---- | ----- | ---- | - | -----
|                                         |  | 2007 |       | 2006
|Operating activities:                    |  |      |       |      |   |      
|Cash paid during the period for interest |  | $    | 2,996 |      | $ | 3,012
|                                         |  |      |       |      |   |      



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|10. | Segment Information
|--- | -------------------

The Companys operations
are in the hotel/casino industry and investment properties. The Companys hotel/casino operations are conducted at the Pioneer in Laughlin, Nevada. The Company owns investment properties in Dorchester, Massachusetts and Gaithersburg, Maryland.
Other and Eliminations below includes financial information for the Companys corporate operations, adjusted to reflect eliminations upon consolidation.

Set forth below is the unaudited financial information for the segments in which the Company operates for the three months ended December 31, 2007
and 2006 (dollars in thousands).



|                                  |  |                                |         |   |                |   |         |  
|--------------------------------- |  | ------------------------------ | ------- | - | -------------- | - | ------- | -
|                                  |  | Three Months EndedDecember 31, |        
|                                  |  | 2007                           |         |   | 2006(Restated) |  
|Pioneer Hotel:                    |  |                                |         |   |                |   |         |  
|Net operating revenues            |  | $                              | 6,612   |   |                | $ | 7,431   |  
|Operating income                  |  |                                | (942    | ) |                |   | (1,491  | )
|Depreciation and amortization     |  |                                | 386     |   |                |   | 549     |  
|Interest expense                  |  |                                | 312     |   |                |   | 335     |  
|Interest and other income         |  |                                | 3       |   |                |   | 2       |  
|Loss before income taxes          |  |                                | (1,251  | ) |                |   | (1,824  | )
|Capital expenditures / transfers  |  |                                | 16      |   |                |   | 23      |  
|Identifiable assets (1)           |  |                                | 28,432  |   |                |   | 29,489  |  
|                                  |  |                               
|Investment Properties:            |  |                                |         |   |                |   |         |  
|Net operating revenues            |  | $                              | 3,101   |   |                | $ | 3,101   |  
|Operating income                  |  |                                | 2,450   |   |                |   | 2,308   |  
|Depreciation and amortization     |  |                                | 650     |   |                |   | 793     |  
|Interest expense                  |  |                                | 1,815   |   |                |   | 1,855   |  
|Interest and other income         |  |                                | 1       |   |                |   | 1       |  
|Income before income taxes        |  |                                | 636     |   |                |   | 453     |  
|Capital expenditures / transfers  |  |                                | 0       |   |                |   | 0       |  
|Identifiable assets (1)           |  |                                | 128,737 |   |                |   | 131,154 |  
|                                  |  |                               
|Other and Eliminations:           |  |                                |         |   |                |   |         |  
|Net operating revenues            |  | $                              | 1,725   |   |                | $ | 550     |  
|Operating income                  |  |                                | 356     |   |                |   | 1,116   |  
|Depreciation and amortization     |  |                                | 34      |   |                |   | 27      |  
|Interest expense                  |  |                                | (47     | ) |                |   | (46     | )
|Interest and other income         |  |                                | 2,713   |   |                |   | 100     |  
|Income (loss) before income taxes |  |                                | 3,115   |   |                |   | 1,262   |  
|Capital expenditures / transfers  |  |                                | 109     |   |                |   | 164     |  
|Identifiable assets (1)           |  |                                | 65,889  |   |                |   | 59,339  |  
|                                  |  |                               
|Total:                            |  |                                |         |   |                |   |         |  
|Net operating revenues            |  | $                              | 11,438  |   |                | $ | 11,082  |  
|Operating income                  |  |                                | 1,864   |   |                |   | 1,422   |  
|Depreciation and amortization     |  |                                | 1,070   |   |                |   | 1,369   |  
|Interest expense                  |  |                                | 2,080   |   |                |   | 2,144   |  
|Interest and other income         |  |                                | 2,717   |   |                |   | 103     |  
|Income (loss) before income taxes |  |                                | 2,500   |   |                |   | (620    | )
|Capital expenditures / transfers  |  |                                | 125     |   |                |   | 187     |  
|Identifiable assets (1)           |  |                                | 223,058 |   |                |   | 219,982 |  



|(1) | Identifiable assets
represent total assets less elimination for intercompany items
|--- | ----------------------------------------------------------------------------------



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ARCHON CORPORATION



|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

This discussion is intended to further the readers understanding of the consolidated financial condition and results of operations of Archon
Corporation (the Company or Archon). It should be read in conjunction with the financial statements included in this quarterly report on Form 10-Q and the Companys annual report on Form 10-K for the year ended
September 30, 2007. These historical financial statements may not be indicative of the Companys future performance.

General

Overview of Business Operations and Trends

The Company, historically, has owned, managed and operated hotel/casino properties through a number of acquisitions or developments, and it has subsequently divested certain of these properties. Presently, the Company
operates the Pioneer Hotel & Gambling Hall (the Pioneer) in Laughlin, Nevada. The Company also owns property on Las Vegas Boulevard (the Strip) in Las Vegas, Nevada that may be sold pursuant to an Option Agreement
entered into in fiscal 2006 whereby the Optionee has the right to purchase the property from the Company for $475 million.

The Pioneer has
experienced a flattening and, to a certain extent, a decline of its revenues over the last few years after experiencing strong revenue and profit growth in the early 1990s. Management believes the growth of casino properties on Native American
lands in such locations as California and Arizona within the last several years caused revenue declines and caused the Company to focus on market definition and development in Laughlin to maintain profitability. Management believes Laughlin has now
become a mature market with marginal growth forecasted for the next few years based on its current plans.

The Company also owns investment
properties on the East Coast but these investment properties do not contribute significant profitability or net cash flow to the Company.

Management believes the recent revenue and expense trends of the Pioneer may not change significantly over the next few years.

Investment
Properties:

During fiscal year 2001, the Company acquired certain investment properties as part of a Section 1031 exchange.
The investment properties are located in Gaithersburg, MD and Dorchester, MA. The Company acquired the properties and nonrecourse debt associated with the properties which are subject to long-term leases. Tenants remit payments to banks according to
the terms of the leases and notes. The payments are used to liquidate the nonrecourse debt obligations. Rental income is recorded by the Company on a straight-line basis and totals approximately $12.4 million annually and will remain at this level
until approximately 2020. The buildings are also being depreciated on a straight-line basis and the depreciation expense is approximately $3.2 million annually and will remain at this level until approximately 2020 or until the assets are sold,
otherwise disposed of or become impaired. Interest expense is also recorded based on the outstanding nonrecourse debt remaining to be paid based on unamortized loan issue costs and remaining debt amortization timetables. At any time during the life
of the leases and debt amortization, the fair market values of the properties may be different than its book values. Interest is presently being expensed at approximately $7.0 million annually and will decrease in relation to debt principal
reductions through 2020.



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Critical Accounting Policies and Estimates

Managements Discussion and Analysis of Financial Condition and Results of Operations discusses Archons unaudited, condensed consolidated
financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis,
management evaluates its estimates and judgments, including those related to customer incentives, bad debts, inventories, investments, estimated useful lives for depreciable and amortizable assets, valuation reserves and estimated cash flows in
assessing the recoverability of long-lived assets, estimated liabilities for slot club bonus point programs, income taxes, contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other
factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions.

Management believes the following critical accounting policies
affect its more significant judgments and estimates used in the preparation of its consolidated financial statements:

Allowance for
Doubtful Accounts. The Company allows for an estimated amount of receivables that may not be collected. The Company estimates its allowance for doubtful accounts using a specific formula applied to aged receivables as well as a specific
review of large balances. Historical experience is considered, as are customer relationships, in determining specific reserves.

Long-Lived Assets. The Company has a significant investment in long-lived property and equipment. It estimates that the undiscounted future cash flows expected to result from the use of these assets exceeds the current
carrying value of these assets. Any adverse change in the estimate of these undiscounted future cash flows could necessitate an impairment charge that would adversely affect operating results. The Company estimates useful lives for its assets based
on historical experience, estimates of assets commercial lives, and the likelihood of technological obsolescence. Should the actual useful life of a class of assets differ from the estimated useful life, the Company would record an impairment
charge. The Company reviews useful lives and obsolescence and assesses commercial viability of these assets periodically.

Income
Taxes. The Company has recorded deferred tax assets related to net operating losses as the Company is able to offset these assets with deferred tax liabilities. Realization of the net deferred tax assets is dependent on the Companys
ability to generate profits from operations or from the sale of long-lived assets that would reverse the temporary differences that established the deferred tax liabilities. There can be no assurance that the Company will generate profits from
operations or sell those assets or will generate profits from sales if they were to occur in the future. In the event the Company does generate profits from sales of long-lived assets in the future a valuation allowance may need to be recorded,
which would impact the Companys future results of operations. Annualized effective income tax rates for calculating interim period provisions and benefits have been estimated to be not significantly different than the annual statutory rate.



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Results of Operations  Three Months Ended December 31, 2007 and 2006

General

During the quarter ended December 31,
2007, the Companys net operating revenues increased $0.3 million and operating expenses decreased $0.1 million, resulting in an increase in operating income of $0.4 million from the quarter ended December 31, 2006. The
improvement in operating results was primarily due to $1.5 million received as rental income associated with the Strip property, offset by a reduction of $0.6 million at the Pioneer. Operating results at the investment properties were
substantially unchanged.

Consolidated

Net Operating Revenues.Consolidated net operating revenues for the quarter ended December 31, 2007 were $11.4 million, a $0.4 million, or 3%, increase from $11.0 million for the
quarter ended December 31, 2006. Income from the investment properties was $3.1 million in each of the quarters ended December 31, 2007 and 2006. Revenues at the Pioneer of $6.6 million for the quarter ended December 31, 2007,
decreased $0.6 million or 8%, from $7.2 million for the quarter ended December 31, 2006.

Operating
Expenses. Total operating expenses decreased $0.1 million, or 1%, to $9.6 million for the quarter ended December 31, 2007 from $9.7 million for the quarter ended December 31, 2006. Total operating expenses as a percentage
of net revenue decreased to 84% for the 2007 quarter from 87% for the 2006 quarter. Operating expenses at the Pioneer of $7.6 million for the quarter ended December 31, 2007 decreased approximately $0.1 million or 2%, from $7.7 million for
the quarter ended December 31, 2006.

Operating Income. Consolidated operating income for the quarter
ended December 31, 2007 was $1.9 million, an increase of approximately $0.5 million, or 31%, from $1.4 million for the quarter ended December 31, 2006. This increase was due to the aforementioned changes in net operating
revenues and operating expenses. Operating income of $2.3 million for each of the three-month periods ended December 31, 2007 and 2006 is attributable to the investment properties. Operating income was unchanged at the Pioneer.

Interest Expense. Consolidated interest expense for the quarter ended December 31, 2007 was $2.1 million, a
$64,000 or 3%, decrease compared to $2.1 million for the quarter ended December 31, 2006.

Interest and Other
Income. Consolidated interest and other income for the quarter ended December 31, 2007, was $2.7 million, a $2.6 million or 2,546% increase compared to $0.1 million for the quarter ended December 31, 2006. This increase was
primarily a result of a $2.3 million realized gain from the sale of marketable securities, combined with an increase in interest income of $0.3 million.

Federal Income Tax. The company recorded a federal income tax expense of $0.9 million for the quarter ended December 31, 2007. The Company recorded a federal income tax provision of
$0.3 million for the quarter ended December 31, 2006 comprised of a $0.2 million benefit on continuing operations and a $0.5 million provision on discontinued operations, based on federal statutory rates.

Pioneer

Net Operating
Revenues. Net operating revenues at the Pioneer were $6.6 million for the quarter ended December 31, 2007, a decrease of $0.6 million, or 8%, compared to $7.2 million in the quarter ended December 31, 2006.

Casino revenues for the three months ended December 31, 2007 were $5.4 million, a decrease of $0.6 million, or 10%, compared to
$6.0 million in the three months ended December 31, 2006. Slot and video poker revenues were approximately $4.9 million, a decrease of $0.6 million, or 10%, compared to approximately $5.5 million. Other gaming revenues, including
table games, decreased $46,000 or 7%, to $0.6 million from approximately $0.7 million. Casino promotional allowances were approximately $1.4 million compared to $1.6 million, a decrease of approximately $0.2 million or 9%.



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Hotel revenues for the three months ended December 31, 2007 were $0.5 million, a decrease of
$0.1 million or 15%, compared to $0.6 million in the three months ended December 31, 2006. A decrease in hotel occupancy was compounded by a decrease in the average room rate. Competitive pressures in the Laughlin market in the 2007 period
caused the decline in average room rate. Food and beverage revenues decreased $0.1 million, or 4%, to $1.7 million from $1.8 million. Other revenues increased $0.1 million, or 29%, to $0.4 million from $0.3 million.

Operating Expenses. Operating expenses were $7.6 million for the quarter ended December 31, 2007, a decrease of
approximately $0.1 million, or 2%, from $7.7 million in the quarter ended December 31, 2006. Operating expenses as a percentage of net revenue increased to 114% in the current quarter from 108% in the prior year quarter.

Casino expenses were $3.3 million, a decrease of $0.3 million, or 8%, from $3.6 million, primarily due to the decrease in casino revenues.
Casino expenses as a percentage of casino revenues decreased to 49% from 50%.

Hotel expenses were $0.3 million, a decrease of $17,000 or
6%, from $0.3 million, as a result of the decline in room occupancy. Food and beverage expenses were $1.1 million, an increase of approximately $0.2 million or 14%, from $0.9 million, due to an increase in the cost of sales. Food and beverage
expenses as a percentage of food and beverage revenues increased to 62% from 52%. Other expenses were $0.3 million, a decrease of $0.1 million or 30%, from approximately $0.4 million. Other expenses as a percentage of other revenues
decreased to 90% from 165%.

Selling, general and administrative expenses were $1.1 million, an increase of $0.2 million, or 24%,
compared to $0.9 million. Selling, general and administrative expenses as a percentage of revenues increased to 17% from 13%. Pioneers selling, general and administrative expenses are greater than the consolidated total due to the elimination
of intercompany transactions in consolidation. Depreciation and amortization expenses were $0.4 million, a decrease of approximately $0.1 million or 30%, from $0.5 million. Depreciation and amortization as a percentage of other revenues
decreased to 6% from 8%.



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##### Table of Contents

Liquidity and Capital Resources; Trends and Factors Relevant to Future Operations

Contractual Obligations and Commitments: The following table summarizes the Companys fiscal year contractual obligations and commitments as
of December 31, 2007 (for the nine-month period ending September 30, 2008 and for the fiscal years ending September 30, 2009 2010, 2011, 2012, 2013, 2014 and thereafter.) (amounts in thousands):



|                    |  |                             |        |      |   |       |  |      |       |      |   |       |  |                    |       |       |   |       |  |   |        |  |   |        
|------------------- |  | --------------------------- | ------ | ---- | - | ----- |  | ---- | ----- | ---- | - | ----- |  | ------------------ | ----- | ----- | - | ----- |  | - | ------ |  | - | -------
|                    |  | Payments Due By Periods (1)
|                    |  | 2008                        |        | 2009 |   | 2010  |  | 2011 |       | 2012 |   | 2013  |  | 2014 andthereafter |       | Total
|Non-recourse debt:  |  |                             |        |      |   |       |  |      |       |      |   |       |  |                    |       |       |   |       |  |   |        |  |   |        
|Gaithersburg        |  | $                           | 2,491  |      | $ | 2,828 |  | $    | 3,186 |      | $ | 3,573 |  | $                  | 3,987 |       | $ | 4,448 |  | $ | 25,107 |  | $ | 45,620 
|Sovereign           |  |                             | 0      |      |   | 0     |  |      | 0     |      |   | 0     |  |                    | 0     |       |   | 0     |  |   | 31,199 |  |   | 31,199 
|                    |  |                             |        |      |   |       |  |     
|Debt:               |  |                             |        |      |   |       |  |      |       |      |   |       |  |                    |       |       |   |       |  |   |        |  |   |        
|Equipment           |  |                             | 1,143  |      |   | 52    |  |      | 0     |      |   | 0     |  |                    | 0     |       |   | 0     |  |   | 0      |  |   | 1,195  
|Mortgage obligation |  |                             | 9,798  |      |   | 0     |  |      | 0     |      |   | 0     |  |                    | 0     |       |   | 0     |  |   | 0      |  |   | 9,798  
|                    |  |                             |        |      |   |       |  |     
|Operating leases:   |  |                             |        |      |   |       |  |      |       |      |   |       |  |                    |       |       |   |       |  |   |        |  |   |        
|Ground lease        |  |                             | 371    |      |   | 373   |  |      | 373   |      |   | 373   |  |                    | 373   |       |   | 373   |  |   | 24,267 |  |   | 26,503 
|Corporate offices   |  |                             | 59     |      |   | 30    |  |      | 0     |      |   | 0     |  |                    | 0     |       |   | 0     |  |   | 0      |  |   | 89     
|                    |  |                             |        |      |   |       |  |      |       |      |   |       |  |                    |       |       |   |       |  |   |        |  |   |        
|Total               |  | $                           | 13,862 |      | $ | 3,283 |  | $    | 3,559 |      | $ | 3,946 |  | $                  | 4,360 |       | $ | 4,821 |  | $ | 80,573 |  | $ | 114,404
|                    |  |                             |        |      |   |       |  |      |       |      |   |       |  |                    |       |       |   |       |  |   |        |  |   |        



|(1) | The Company is required to make the following cash interest payments related to the above debt obligations: (i) Non-recourse debt  $7.0 million (2008), $6.8 million
(2009), $6.6 million (2010), $6.3 million (2011), $6.1 million (2012), $5.8 million (2013) and $28.1 million (2014 and thereafter)), and (ii) Long-term debt - $1.1 million (2008), $0 million (2009), $0 million (2010), $0 million (2011), $0
million (2012), $0 million (2013) and $0 million (2014 and thereafter).
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Company has no significant purchase
commitments or obligations other than those included in the above schedule.

The Companys ability to service its contractual
obligations and commitments, other than the non-recourse debt, will be dependent on the future performance of the Pioneer, which will be affected by, among other things, prevailing economic conditions and financial, business and other factors,
including competitive pressure from the expansion of Native American gaming facilities in the southwest United States, certain of which are beyond the Companys control. In addition, the Company will be dependent on the continued ability of the
tenants in the investment properties in Gaithersburg, Maryland and Dorchester, Massachusetts to make payments pursuant to the leases with the Company. The payments under the leases are contractually committed to be used to make payments on the
Companys non-recourse debt obligations related to the properties.



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Liquidity. As of December 31, 2007, the Company held cash and cash equivalents of
approximately $35.8 million compared to $27.5 million at September 30, 2007. The Company had $7.6 million in investment in marketable securities at December 31, 2007 compared to $11.0 million at September 30, 2007. The investment
properties are structured such that future tenants payments cover future required mortgage payments including any balloon payments. Management believes that the Company will have sufficient available cash and cash resources to meet its cash
requirements for a reasonable period of time.

The Company has a balloon payment due in January 2009 of approximately $9.4 million related
to debt owed to a bank. The Company plans to either refinance the debt or sell certain assets of the Company to pay the obligation. The debt obligation is secured by 27 acres of land owned on the Las Vegas Strip and is personally guaranteed by Paul
W. Lowden, the Companys CEO, Chairman of the Board and primary stockholder.

Cash Flows from Operating
Activities. The Companys cash provided by operating activities was $0.4 million for the three months ended December 31, 2007 as compared to $0.6 million for the three months ended December 31, 2006. The decrease of $213,790
was primarily due to the aforementioned reduction in operating revenues.

Cash Flows from Investing
Activities. Cash provided by investing activities was $8.8 million for the three months ended December 31, 2007, as compared to $2.6 million for the three months ended December 31, 2006. In the current year period, the Company
received $2.3 million form the sale of marketable securities, and $7.0 million in option and extension payments relating to the Las Vegas Strip property. In the prior year period, the company received $1.8 million from the sale of marketable
securities.

Cash Used in Financing Activities. Cash used in financing activities was $0.9 million for the
three months ended December 31, 2007 as compared to $0.7 million for the three months ended December 31, 2006, all of which was used to make debt payments.

The Companys primary source of operating cash is from the Pioneer operations, from interest income on available cash and cash equivalents and investments in marketable securities and, to a lesser extent, from
net cash generated from the leasing of certain land owned on the Las Vegas strip. Rental income from the Companys two investment properties is contractually committed to reducing the non-recourse indebtedness issued or assumed in connection
with the acquisition of the investment properties. Under the two leases, the tenants are responsible for substantially all obligations related to the property. Sahara Las Vegas Corp. (SLVC), an indirect wholly-owned subsidiary of the
Company, owns an approximately 27-acre parcel of real property on Las Vegas Boulevard South which is subject to a lease with a condominium developer. SLVC generates minimal cash from the lease agreement after payment of property costs, most notably
property taxes.

Pioneer

Pioneers principal uses of cash are for payments of slot machine debt obligations, ground lease rent and capital expenditures to maintain the facility. The Company has implemented changes in personnel and promotional programs and
installed new slot equipment to address the decreases in revenues and operating income. One of managements main focuses is to recapture market share in the Laughlin market. Management, however, can give no assurance that market share will be
recaptured in its Laughlin market as its competition in the market typically has greater capital resources than does the Pioneer.

Payments
of rent were approximately $100,000 for each of the three months ended December 31, 2007 and 2006. Capital expenditures to maintain the facility in fiscal 2007 are expected to be less than $1 million.



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Redemption of the Companys Preferred Stock and Redemption Price Disputes

The Company called all outstanding shares of its Exchangeable Redeemable Preferred Stock for redemption on and as of August 31, 2007, at a redemption
price of $5.241 per share, which sum included accrued and unpaid dividends to the date of redemption. From and after August 31, 2007, all shares of the Exchangeable Redeemable Preferred Stock ceased to be outstanding and to accrue dividends. As
of February 13, 2008, the holders of 4,248,532 shares of the Exchangeable Redeemable Preferred Stock have surrendered their shares and received payment of the redemption price.

On August 27, 2007, the following institutional investors: D. E. Shaw Laminar Portfolios, L.L.C., LC Capital Master Fund, Ltd, LC Capital/Capital Z
SPV, LP, Magten Asset Management Corp, Mercury Real Estate Securities Fund LP, Mercury Real Estate Securities Offshore Fund Limited, Black Horse Capital LP, Black Horse Capital (QP) LP, Black Horse Capital Offshore Ltd, and Plainfield Special
Situations Master Fund Limited filed an action against the registrant in the United States District Court for The District of Nevada entitled D.E. Shaw Laminar Portfolios, LLC; et al. v. Archon Corporation, 2:07-CV-01146-PMP-LRL (D. Nev.). The
Complaint was subsequently amended to add an additional party plaintiff (collectively, the Laminar Plaintiffs). The Amended Complaint: (i) seeks a finding by the Court that the Company has breached its obligations under the
Companys Certificate of Designation of the Preferred Stock, dated September 30, 1993 (the Certificate), and awarding the Laminar Plaintiffs full compensation of any and all available damages suffered by the Laminar Plaintiffs
as a result of the Companys breach of the Certificate; (ii) seeks a finding by the Court that the Companys issuance of its redemption notice with an improper redemption price is an anticipatory breach of a material term of the
Certificate and awarding the Laminar Plaintiffs full compensation of any and all available damages suffered as a result of the Companys anticipatory breach of the Certificate; (iii) seeks a declaration by the Court that the dividends be
properly calculated and compounded per the terms of the Certificate in an amount no less than $7,235,351 up through and including the date of final judgment; (iv) seeks an order from the Court calling for the Company to reimburse the Laminar
Plaintiffs attorneys fees, expenses and costs incurred in enforcing the their rights; and (v) seeks such other and further relief as the Court may deem appropriate. The Company has answered the amended complaint. In November 2007,
and subsequent to the end of the Companys fiscal year ended September 30, 2007, the Laminar Plaintiffs filed a motion for partial summary judgment on liability. The Company responded, and the parties will await a ruling from the Court
following the Plaintiffs filing of its reply brief. The plaintiffs have also filed a motion to strike certain affirmative defenses.

Also subsequent to the end of the Companys fiscal year, two former holders of the Exchangeable Redeemable Preferred Stock filed Complaints in the United States District Court, District of Nevada, entitled Rainero v. Archon
Corporation, District of Nevada Case No. 2:07-cv-01553, and Leeward Capital, L.P. v. Archon Corporation, District of Nevada Case No. 2:08-cv-00007, both alleging essentially the same claim as the first Complaint. The plaintiff
in the Rainero action purports to bring the action as a class action claim on behalf of all those preferred stock shareholders similarly situated. If the plaintiffs are correct, the redemption price as of August 31, 2007 should have been $8.69
per share and not $5.241 per share as calculated by the Company which, if applied to all the then outstanding shares of Exchangeable Redeemable Preferred Stock, including the shares held by the Companys officers and directors, would increase
the redemption price in excess of $15.2 million. The Company has answered the Rainero and Leeward complaints.

The Company is vigorously
defending these lawsuits. No provision has been made in the financial statements due to managements inability at this time to measure minimum losses, if any, to be incurred in this matter.

Recently Issued Accounting Standards

In
December 2007, the Financial Accounting Standards Board (FASB) issued Statement of Accounting Standards (SFAS) No. 160, Noncontrolling Interests in Consolidated Financial Statements. It requires that a noncontrolling (minority) interest
in a subsidiary or variable interest entity should be reported as equity in the consolidated financial statements. SFAS 160 will not likely have any effect on the Companys consolidated financial statements since we do not presently have
and are not contemplating investing in, establishing or acquiring a subsidiary or a variable interest entity with a noncontrolling interest. SFAS 160 will be effective, if applicable, for the Companys fiscal year beginning October 1,
2009.

In December 2007, the FASB issued SFAS 141R, Business Combinations, which will replace SFAS 141, Business
Combinations. We have not yet evaluated SFAS 141R for the impact, if any, that SFAS 141R might have on our financial statements, in the event we make any business combinations or other covered acquisitions after its effective date, which for us
will be September 30, 2009, and which transactions are not presently contemplated.



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In September 2006, the FASB issued SFAS 157, Fair Value Measurements. SFAS 157 defines fair
value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States, and expands disclosure about fair value measurements. In February 2007, the FASB issued SFAS 159, The Fair Value Option
for Financial Assets and Financial Liabilities  Including an Amendment of FASB Statement 115, which will permit the option of choosing to measure certain eligible items at fair value at specified election dates and report unrealized gains
and losses in earnings. SFAS 157 and 159 were scheduled to become effective for us for fiscal year 2009, including interim periods within that year; however, the effective date for SFAS 157 has been delayed one year to the extent not already
adopted, which we have not. We are currently evaluating the provisions of SFAS 157 and 159 and have not yet determined the likely impact, if any, on our future financial statements upon adoption.

Effects of Inflation

The Company has been
generally successful in recovering costs associated with inflation through price adjustments in its hotel. Any such future increases in costs associated with casino operations and maintenance of properties may not be completely recovered by the
Company.

Private Securities Litigation Reform Act

Certain statements in this Quarterly Report on Form 10-Q which are not historical facts are forward-looking statements, such as statements relating to future operating results, existing and expected competition,
financing and refinancing sources and availability and plans for future development or expansion activities, capital expenditures and expansion of business operations into new areas. Such forward-looking statements involve a number of risks and
uncertainties that may significantly affect the Companys liquidity and results in the future and, accordingly, actual results may differ materially from those expressed in any forward-looking statements. Such risks and uncertainties include,
but are not limited to, those related to effects of competition, leverage and debt service, general economic conditions, changes in gaming laws or regulations (including the legalization of gaming in various jurisdictions) and risks related to
development activities and the startup of non-gaming operations.



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

Market risk is the risk of loss arising from changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity process. Excluding its non-recourse debt, the Company has total
interest-bearing debt at December 31, 2006 of approximately $11.5 million, of which approximately $10.0 million bears interest at a variable rate (approximately 9.25% at December 31, 2006). Therefore, the Company maintains certain market
rate risk related to this debt. A change in the interest rates of 1% would cause an approximate $100,000 change in the amount of interest the Company would incur based on the amount of variable-interest rate debt outstanding for any current or
future year in which this debt is outstanding. Future borrowings related to this debt will be exposed to this same market rate risk.

The
Company holds investments in various available-for-sale securities; however, management believes that exposure to price risk arising from the ownership of these investments is not material to the Companys consolidated financial position,
results of operations or cash flow as historically price fluctuations of these securities have not been material.



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##### Table of Contents

|Item 4. | Controls and Procedures
|------- | -----------------------

Evaluation of Disclosure
Controls and Procedures:

We maintain disclosure controls and procedures that are designed to ensure that information required
to be disclosed in our Securities Exchange Act of 1934 reports is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and that such information is accumulated and communicated to our
management, including our Chief Executive Officer and Principal Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes
that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.

As of the end of the period covered by this report, we carried out an
evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Principal Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on
the foregoing, our Chief Executive Officer and Principal Accounting Officer concluded that Archons disclosure controls and procedures are effective.

As a part of our normal operations, we update our internal controls as necessary to accommodate any modifications to our business processes or accounting procedures. There have not been any other changes in our
internal controls or in other factors that materially affected, or are reasonably likely to materially affect these controls as of the end of the period covered by this report.

ARCHON CORPORATION

PART II  OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

Mercury Real Estate Securities
Fund, LP and Mercury Real Estate Securities Offshore Limited v. Archon Corporation:

The Company called all outstanding shares
of its Exchangeable Redeemable Preferred Stock for redemption on and as of August 31, 2007, at a redemption price of $5.241 per share, which sum included accrued and unpaid dividends to the date of redemption. From and after August 31,
2007, all shares of the Exchangeable Redeemable Preferred Stock ceased to be outstanding and to accrue dividends. As of February 13, 2008, the holders of 4,248,532 shares of the Exchangeable Redeemable Preferred Stock have surrendered their
shares and received payment of the redemption price.

On August 27, 2007, the following institutional investors: D. E. Shaw Laminar
Portfolios, L.L.C., LC Capital Master Fund, Ltd, LC Capital/Capital Z SPV, LP, Magten Asset Management Corp, Mercury Real Estate Securities Fund LP, Mercury Real Estate Securities Offshore Fund Limited, Black Horse Capital LP, Black Horse Capital
(QP) LP, Black Horse Capital Offshore Ltd, and Plainfield Special Situations Master Fund Limited filed an action against the registrant in the United States District Court for The District of Nevada entitled D.E. Shaw Laminar Portfolios, LLC; et al.
v. Archon Corporation, 2:07-CV-01146-PMP-LRL (D. Nev.). The Complaint was subsequently amended to add an additional party plaintiff (collectively, the Laminar Plaintiffs). The Amended Complaint: (i) seeks a finding by the Court that
the Company has breached its obligations under the Companys



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##### Table of Contents

Certificate of Designation of the Preferred Stock, dated September 30, 1993 (the Certificate), and awarding the Laminar Plaintiffs full
compensation of any and all available damages suffered by the Laminar Plaintiffs as a result of the Companys breach of the Certificate; (ii) seeks a finding by the Court that the Companys issuance of its redemption notice with an
improper redemption price is an anticipatory breach of a material term of the Certificate and awarding the Laminar Plaintiffs full compensation of any and all available damages suffered as a result of the Companys anticipatory breach of the
Certificate; (iii) seeks a declaration by the Court that the dividends be properly calculated and compounded per the terms of the Certificate in an amount no less than $7,235,351 up through and including the date of final judgment;
(iv) seeks an order from the Court calling for the Company to reimburse the Laminar Plaintiffs attorneys fees, expenses and costs incurred in enforcing the their rights; and (v) seeks such other and further relief as the Court
may deem appropriate. The Company has answered the amended complaint. In November 2007, and subsequent to the end of the Companys fiscal year ended September 30, 2007, the Laminar Plaintiffs filed a motion for partial summary judgment on
liability. The Company responded, and the parties will await a ruling from the Court following the Plaintiffs filing of its reply brief. The plaintiffs have also filed a motion to strike certain affirmative defenses.

Also subsequent to the end of the Companys fiscal year, two former holders of the Exchangeable Redeemable Preferred Stock filed Complaints in the
United States District Court, District of Nevada, entitled Rainero v. Archon Corporation, District of Nevada Case No. 2:07-cv-01553, and Leeward Capital, L.P. v. Archon Corporation, District of Nevada Case No. 2:08-cv-00007,
both alleging essentially the same claim as the first Complaint. The plaintiff in the Rainero action purports to bring the action as a class action claim on behalf of all those preferred stock shareholders similarly situated. If the plaintiffs are
correct, the redemption price as of August 31, 2007 should have been $8.69 per share and not $5.241 per share as calculated by the Company which, if applied to all the then outstanding shares of Exchangeable Redeemable Preferred Stock,
including the shares held by the Companys officers and directors, would increase the redemption price in excess of $15.2 million. The Company has answered the complaint.

The Company will continue to vigorously defend these lawsuits and has both procedural and substantive defenses. Management estimates that the minimum
probable loss is zero, and therefore no provision has been made in the financial statements.



|Item 2. | Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
|------- | --------------------------------------------------------------------------------

None



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------

None



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

None



|Item 5. | Other Information
|------- | -----------------

None



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##### Table of Contents

|Item 6. | Exhibits
|------- | --------



| | a. | Exhibits.
| | -- | ---------



|              |  |                                                                                                         
|------------- |  | --------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Exhibit                                                                                  
|              | 
|31.1          |  | Certification of Chief Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.         
|              | 
|31.2          |  | Certification of Principal Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|              | 
|32            |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                



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##### Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



ARCHON CORPORATION, RegistrantBy:

/s/    Paul W. LowdenPaul W. Lowden Chairman of the Board, President and Chief Executive Officer


Date: February 15, 2008



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