##### Table of Contents





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: March 31, 2010



| ̈ | 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, a non-accelerated filer or a smaller
reporting company. See definition of large accelerated filer, accelerated filer and small reporting company in Rule 12b-2 of the Exchange Act.



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈ |  | Accelerated filer         |  |  ̈
|                        |  |   | 
|Non-accelerated filer   |  |  ̈ |  | Smaller Reporting Company |  | 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.

6,017,944as of May 10, 2010









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##### Table of Contents

ARCHON CORPORATION

INDEX



|                             |  |                                                                                                                               |  |     
|---------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------- |  | ----
|                             |  |                                                                                                                               |  | Page
|PART I FINANCIAL INFORMATION
|                             |  |                                                                                                                              
|Item 1                       |  | Unaudited Condensed Consolidated Financial Statements:                                                                        |  |     
|                             |  |                                                                                                                              
|                             |  | Consolidated Balance Sheets as of March 31, 2010 (Unaudited) and September 30, 2009 (Audited)                                 |  | 1   
|                             |  |                                                                                                                              
|                             |  | Consolidated Statements of Operations for the Three and Six Months Ended March 31, 2010 and 2009 (Unaudited)                  |  | 3   
|                             |  |                                                                                                                              
|                             |  | Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended March 31, 2010 and 2009 (Unaudited) |  | 5   
|                             |  |                                                                                                                              
|                             |  | Consolidated Statement of Stockholders Equity for the Six Months Ended March 31, 2010 (Unaudited)                            |  | 6   
|                             |  |                                                                                                                              
|                             |  | Consolidated Statements of Cash Flows for the Six Months Ended March 31, 2010 and 2009 (Unaudited)                            |  | 7   
|                             |  |                                                                                                                              
|                             |  | Notes to Unaudited Consolidated Financial Statements                                                                          |  | 8   
|                             |  |                                                                                                                              
|Item 2                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                         |  | 21  
|                             |  |                                                                                                                              
|Item 3                       |  | Quantitative and Qualitative Disclosures About Market Risk                                                                    |  | 34  
|                             |  |                                                                                                                              
|Item 4                       |  | Controls and Procedures                                                                                                       |  | 35  
|                            
|PART II OTHER INFORMATION   
|                             |  |                                                                                                                              
|Item 1                       |  | Legal Proceedings                                                                                                             |  | 36  
|                             |  |                                                                                                                              
|Item 2                       |  | Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities                                              |  | 37  
|                             |  |                                                                                                                              
|Item 3                       |  | Defaults Upon Senior Securities                                                                                               |  | 37  
|                             |  |                                                                                                                              
|Item 4                       |  | Submission of Matters to a Vote of Security Holders                                                                           |  | 37  
|                             |  |                                                                                                                              
|Item 5                       |  | Other Information                                                                                                             |  | 37  
|                             |  |                                                                                                                              
|Item 6                       |  | Exhibits                                                                                                                      |  | 38  



-i-



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##### Table of Contents

PART I  FINANCIAL INFORMATION



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

Archon Corporation and Subsidiaries

Consolidated Balance Sheets



|                                         |  |               |             |   |                   |   |             |  
|---------------------------------------- |  | ------------- | ----------- | - | ----------------- | - | ----------- | -
|                                         |  | March 31,2010 |             |   | September 30,2009 |  
|                                         |  | (Unaudited)   |             |   | (Audited)         |  
|ASSETS                                   |  |               |             |   |                   |   |             |  
|Current assets:                          |  |               |             |   |                   |   |             |  
|Cash and cash equivalents                |  | $             | 20,862,981  |   |                   | $ | 31,646,498  |  
|Investment in marketable securities      |  |               | 10,907,275  |   |                   |   | 5,995,289   |  
|Accounts receivable, net                 |  |               | 403,863     |   |                   |   | 170,935     |  
|Inventories                              |  |               | 166,970     |   |                   |   | 231,689     |  
|Prepaid expenses and other               |  |               | 982,209     |   |                   |   | 945,167     |  
|Deferred tax assets                      |  |               | 590,143     |   |                   |   | 512,695     |  
|                                         |  |               |             |   |                   |   |             |  
|Total current assets                     |  |               | 33,913,441  |   |                   |   | 39,502,273  |  
|                                         |  |               |             |   |                   |   |             |  
|Property held for sale                   |  |               | 55,125,454  |   |                   |   | 55,357,905  |  
|                                         |  |               |             |   |                   |   |             |  
|Property and equipment:                  |  |               |             |   |                   |   |             |  
|Rental property held for investment, net |  |               | 88,669,863  |   |                   |   | 89,511,868  |  
|Land used in operations                  |  |               | 3,960,589   |   |                   |   | 3,925,589   |  
|Buildings and improvements               |  |               | 25,751,045  |   |                   |   | 25,751,045  |  
|Machinery and equipment                  |  |               | 8,288,479   |   |                   |   | 8,264,373   |  
|Accumulated depreciation                 |  |               | (28,448,460 | ) |                   |   | (28,103,429 | )
|                                         |  |               |             |   |                   |   |             |  
|Property and equipment, net              |  |               | 98,221,516  |   |                   |   | 99,349,446  |  
|                                         |  |               |             |   |                   |   |             |  
|Other assets                             |  |               | 3,020,157   |   |                   |   | 2,774,685   |  
|                                         |  |               |             |   |                   |   |             |  
|Total assets                             |  | $             | 190,280,568 |   |                   | $ | 196,984,309 |  
|                                         |  |               |             |   |                   |   |             |  

The accompanying notes are an integral part of these consolidated financial statements



1



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##### Table of Contents

Archon Corporation and Subsidiaries

Consolidated Balance Sheets (continued)



|                                                                                                                                              |  |               |             |   |                   |   |             |  
|--------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ----------- | - | ----------------- | - | ----------- | -
|                                                                                                                                              |  | March 31,2010 |             |   | September 30,2009 |  
|                                                                                                                                              |  | (Unaudited)   |             |   | (Audited)         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                          |  |               |             |   |                   |   |             |  
|Current liabilities:                                                                                                                          |  |               |             |   |                   |   |             |  
|Line of credit                                                                                                                                |  | $             | 7,866,659   |   |                   | $ | 7,866,659   |  
|Accounts payable                                                                                                                              |  |               | 1,352,189   |   |                   |   | 2,099,581   |  
|Other accrued expenses                                                                                                                        |  |               | 2,303,815   |   |                   |   | 2,722,690   |  
|Exchangeable redeemable preferred stock  unredeemed                                                                                          |  |               | 821,259     |   |                   |   | 821,259     |  
|Current liabilities  property held for sale                                                                                                  |  |               | 3,530,465   |   |                   |   | 3,342,837   |  
|                                                                                                                                              |  |               |             |   |                   |   |             |  
|Total current liabilities                                                                                                                     |  |               | 15,874,387  |   |                   |   | 16,853,026  |  
|Long term liabilities  property held for sale                                                                                                |  |               | 35,380,996  |   |                   |   | 37,114,921  |  
|Non-recourse debt  less current portion                                                                                                      |  |               | 31,199,288  |   |                   |   | 31,199,288  |  
|Deferred tax liabilities                                                                                                                      |  |               | 22,320,885  |   |                   |   | 21,828,674  |  
|Deferred rent income                                                                                                                          |  |               | 35,123,142  |   |                   |   | 36,836,466  |  
|                                                                                                                                              |  |               |             |   |                   |   |             |  
|Total liabilities                                                                                                                             |  |               | 139,898,698 |   |                   |   | 143,832,375 |  
|                                                                                                                                              |  |               |             |   |                   |   |             |  
|Stockholders equity:                                                                                                                         |  |               |             |   |                   |   |             |  
|Preferred stock, exchangeable, redeemable 16.0% cumulative $2.14 liquidation value, authorized-10,000,000 shares; none issued and
outstanding |  |               | 0           |   |                   |   | 0           |  
|Common stock , $.01 par value; authorized-100,000,000 shares; issued and outstanding  6,316,576, and 6,316,576
shares                        |  |               | 63,166      |   |                   |   | 63,166      |  
|Additional paid-in capital                                                                                                                    |  |               | 63,247,158  |   |                   |   | 62,982,941  |  
|Accumulated deficit                                                                                                                           |  |               | (7,991,259  | ) |                   |   | (8,737,568  | )
|Accumulated other comprehensive loss                                                                                                          |  |               | (793,941    | ) |                   |   | (1,044,883  | )
|                                                                                                                                              |  |               |             |   |                   |   |             |  
|Sub-total                                                                                                                                     |  |               | 54,525,124  |   |                   |   | 53,263,656  |  
|Less: Notes receivable from stockholders                                                                                                      |  |               | (111,722    | ) |                   |   | (111,722    | )
|Treasury stock  298,632 and 0 common shares, at cost                                                                                         |  |               | (4,031,532  | ) |                   |   | 0           |  
|                                                                                                                                              |  |               |             |   |                   |   |             |  
|Total stockholders equity                                                                                                                    |  |               | 50,381,870  |   |                   |   | 53,151,934  |  
|                                                                                                                                              |  |               |             |   |                   |   |             |  
|Total liabilities and stockholders equity                                                                                                    |  | $             | 190,280,568 |   |                   | $ | 196,984,309 |  
|                                                                                                                                              |  |               |             |   |                   |   |             |  

The accompanying notes are an integral part of these consolidated financial statements



2



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##### Table of Contents

Archon Corporation and Subsidiaries

Consolidated Statements of Operations

(Unaudited)



|                                                                                                                          |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|------------------------------------------------------------------------------------------------------------------------- |  | --------------------------- | ---------- | - | ------------------------- | - | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                                                                                                          |  | Three Months EndedMarch 31, |            |   | Six Months
EndedMarch 31, |  
|                                                                                                                          |  | 2010                        |            |   | 2009                      |   |            | 2010 |  |   | 2009       |  
|Revenues:                                                                                                                 |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Casino                                                                                                                    |  | $                           | 3,541,120  |   |                           | $ | 4,787,513  |      |  | $ | 6,767,872  |   |  | $ | 8,944,610  |  
|Hotel                                                                                                                     |  |                             | 393,400    |   |                           |   | 441,022    |      |  |   | 714,207    |   |  |   | 797,539    |  
|Food and beverage                                                                                                         |  |                             | 1,184,091  |   |                           |   | 1,578,233  |      |  |   | 2,398,304  |   |  |   | 2,956,904  |  
|Rental properties held for investment                                                                                     |  |                             | 1,910,180  |   |                           |   | 2,763,381  |      |  |   | 3,792,860  |   |  |   | 5,540,762  |  
|Other                                                                                                                     |  |                             | 358,161    |   |                           |   | 499,302    |      |  |   | 998,774    |   |  |   | 917,157    |  
|                                                                                                                          |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Gross revenues                                                                                                            |  |                             | 7,386,952  |   |                           |   | 10,069,451 |      |  |   | 14,672,017 |   |  |   | 19,156,972 |  
|Less casino promotional allowances                                                                                        |  |                             | (868,679   | ) |                           |   | (940,118   | )    |  |   | (1,778,037 | ) |  |   | (2,067,133 | )
|                                                                                                                          |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Net operating revenues                                                                                                    |  |                             | 6,518,273  |   |                           |   | 9,129,333  |      |  |   | 12,893,980 |   |  |   | 17,089,839 |  
|                                                                                                                          |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Operating expenses:                                                                                                       |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Casino                                                                                                                    |  |                             | 2,020,399  |   |                           |   | 2,773,973  |      |  |   | 4,247,665  |   |  |   | 5,045,852  |  
|Hotel                                                                                                                     |  |                             | 143,537    |   |                           |   | 181,131    |      |  |   | 279,192    |   |  |   | 362,750    |  
|Food and beverage                                                                                                         |  |                             | 714,741    |   |                           |   | 1,003,050  |      |  |   | 1,459,209  |   |  |   | 1,960,838  |  
|Other                                                                                                                     |  |                             | 83,699     |   |                           |   | 172,206    |      |  |   | 164,324    |   |  |   | 383,499    |  
|Selling, general and administrative:                                                                                      |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Corporate expenses                                                                                                        |  |                             | 837,101    |   |                           |   | 872,076    |      |  |   | 1,669,745  |   |  |   | 1,778,834  |  
|Other                                                                                                                     |  |                             | 655,063    |   |                           |   | 781,345    |      |  |   | 1,420,911  |   |  |   | 1,532,840  |  
|Utilities and property expenses                                                                                           |  |                             | 953,203    |   |                           |   | 973,073    |      |  |   | 1,924,555  |   |  |   | 1,962,348  |  
|Depreciation and amortization                                                                                             |  |                             | 593,462    |   |                           |   | 650,380    |      |  |   | 1,187,762  |   |  |   | 1,315,134  |  
|                                                                                                                          |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Total operating expenses                                                                                                  |  |                             | 6,001,205  |   |                           |   | 7,407,234  |      |  |   | 12,353,363 |   |  |   | 14,342,095 |  
|                                                                                                                          |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Operating income                                                                                                          |  |                             | 517,068    |   |                           |   | 1,722,099  |      |  |   | 540,617    |   |  |   | 2,747,744  |  
|Other income and (expense):                                                                                               |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Interest expense                                                                                                          |  |                             | (1,075,599 | ) |                           |   | (1,220,611 | )    |  |   | (2,179,808 | ) |  |   | (2,350,498 | )
|Loss on sale of marketable securities                                                                                     |  |                             | (3,329     | ) |                           |   | (33,982    | )    |  |   | (67,607    | ) |  |   | (94,989    | )
|Interest and other income                                                                                                 |  |                             | 462,241    |   |                           |   | 126,743    |      |  |   | 768,333    |   |  |   | 397,100    |  
|                                                                                                                          |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Income (loss) before income tax expense                                                                                   |  |                             | (99,619    | ) |                           |   | 594,249    |      |  |   | (938,465   | ) |  |   | 699,357    |  
|Federal income tax (expense) benefit from continuing operations                                                           |  |                             | 34,867     |   |                           |   | (198,112   | )    |  |   | 353,436    |   |  |   | (230,200   | )
|                                                                                                                          |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Income (loss) from continuing operations                                                                                  |  |                             | (64,752    | ) |                           |   | 396,137    |      |  |   | (585,029   | ) |  |   | 469,157    |  
|Discontinued operations gain, net of tax expense of $236,096 and $137,639 QTD and $716,874 and $265,334 YTD,
respectively |  |                             | 438,465    |   |                           |   | 255,616    |      |  |   | 1,331,337  |   |  |   | 492,764    |  
|                                                                                                                          |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Net income                                                                                                                |  | $                           | 373,713    |   |                           | $ | 651,753    |      |  | $ | 746,308    |   |  | $ | 961,921    |  
|                                                                                                                          |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  

The accompanying notes are an integral part of these consolidated financial statements



3



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##### Table of Contents

Archon Corporation and Subsidiaries

Consolidated Statements of Operations

(Unaudited)



|                                                          |  |                             |           |                           |      |   |           |  |   |           |   |  |   |          
|--------------------------------------------------------- |  | --------------------------- | --------- | ------------------------- | ---- | - | --------- |  | - | --------- | - |  | - | ---------
|                                                          |  | Three Months EndedMarch
31, |           | Six Months EndedMarch
31,
|                                                          |  | 2010                        |           |                           | 2009 |   | 2010      |  |   | 2009     
|Average common shares outstanding                         |  |                             | 6,316,576 |                           |      |   | 6,370,176 |  |   | 6,316,576 |   |  |   | 6,349,677
|                                                          |  |                             |           |                           |      |   |           |  |   |           |   |  |   |          
|Average common and common equivalent shares outstanding   |  |                             | 6,316,576 |                           |      |   | 6,370,176 |  |   | 6,316,576 |   |  |   | 6,349,677
|                                                          |  |                             |           |                           |      |   |           |  |   |           |   |  |   |          
|Income (loss) from continuing operations per common share |  |                             |           |                           |      |   |           |  |   |           |   |  |   |          
|Net basic income (loss) per common share                  |  | $                           | (0.01     | )                         |      | $ | 0.06      |  | $ | (0.09     | ) |  | $ | 0.07     
|                                                          |  |                             |           |                           |      |   |           |  |   |           |   |  |   |          
|Diluted income per common share                           |  | $                           | (0.01     | )                         |      | $ | 0.06      |  | $ | (0.09     | ) |  | $ | 0.07     
|                                                          |  |                             |           |                           |      |   |           |  |   |           |   |  |   |          
|Discontinued operations per share                         |  |                             |           |                           |      |   |           |  |   |           |   |  |   |          
|Net basic income per common share                         |  | $                           | 0.07      |                           |      | $ | 0.04      |  | $ | 0.21      |   |  |   | 0.08     
|                                                          |  |                             |           |                           |      |   |           |  |   |           |   |  |   |          
|Diluted income per common share                           |  | $                           | 0.07      |                           |      | $ | 0.04      |  | $ | 0.21      |   |  |   | 0.08     
|                                                          |  |                             |           |                           |      |   |           |  |   |           |   |  |   |          
|Income (loss) per common share                            |  |                             |           |                           |      |   |           |  |   |           |   |  |   |          
|Net basic income (loss) per common share                  |  | $                           | 0.06      |                           |      | $ | 0.10      |  | $ | 0.12      |   |  | $ | 0.15     
|                                                          |  |                             |           |                           |      |   |           |  |   |           |   |  |   |          
|Diluted income per common share                           |  | $                           | 0.06      |                           |      | $ | .010      |  | $ | 0.12      |   |  | $ | 0.15     
|                                                          |  |                             |           |                           |      |   |           |  |   |           |   |  |   |          

The accompanying notes are an integral part of these
consolidated financial statements



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##### Table of Contents

Archon Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)



|                                                                     |  |                             |         |      |                           |          |      |  |      |         |  |   |            |  
|-------------------------------------------------------------------- |  | --------------------------- | ------- | ---- | ------------------------- | -------- | ---- |  | ---- | ------- |  | - | ---------- | -
|                                                                     |  | Three Months EndedMarch 31, |         |      | Six Months EndedMarch 31, |         
|                                                                     |  | 2010                        |         | 2009 |                           |          | 2010 |  | 2009 |        
|Net income                                                           |  | $                           | 373,713 |      | $                         | 651,753  |      |  | $    | 746,308 |  | $ | 961,921    |  
|Unrealized gain (loss) on marketable securities, net of income taxes |  |                             | 316,683 |      |                           | (392,141 | )    |  |      | 250,942 |  |   | (1,757,205 | )
|                                                                     |  |                             |         |      |                           |          |      |  |      |         |  |   |            |  
|Comprehensive income (loss)                                          |  | $                           | 690,396 |      | $                         | 259,612  |      |  | $    | 997,250 |  | $ | (795,284   | )
|                                                                     |  |                             |         |      |                           |          |      |  |      |         |  |   |            |  

The accompanying notes are an integral part of these consolidated financial statements



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##### Table of Contents

Corporation and Subsidiaries

Consolidated Statement of Stockholders Equity

For the Six Months Ended March 31, 2010

(Unaudited)



|                                         |  |                  |   |             |           |               |   |                          |  |                    |            |  |                                            |            |   |                                 |   |            |               |  |   |          |   |  |   |            |   |  |   |            |  
|---------------------------------------- |  | ---------------- | - | ----------- | --------- | ------------- | - | ------------------------ |  | ------------------ | ---------- |  | ------------------------------------------ | ---------- | - | ------------------------------- | - | ---------- | ------------- |  | - | -------- | - |  | - | ---------- | - |  | - | ---------- | -
|                                         |  | PreferredStock $ |   | CommonStock |           | CommonStock $ |   | AdditionalPaid-InCapital |  | AccumulatedDeficit |            |  | AccumulatedOtherComprehensiveIncome (Loss) |            |   | NotesReceivableFromStockholders |   |            | TreasuryStock |  |   | Total    |  
|Balances, October 1, 2009                |  | $                | 0 |             | 6,316,576 |               | $ | 63,166                   |  | $                  | 62,982,941 |  | $                                          | (8,737,568 | ) |                                 | $ | (1,044,883 | )             |  | $ | (111,722 | ) |  | $ | 0          |   |  | $ | 53,151,934 |  
|Net income                               |  |                  |   |             |           |               |   |                          |  |                    |            |  |                                            | 746,309    |   |                                 |   |            |               |  |   |          |   |  |   |            |   |  |   | 746,309    |  
|Additional Paid-In Capital               |  |                  |   |             |           |               |   |                          |  |                    | 264,217    |  |                                            |            |   |                                 |   |            |               |  |   |          |   |  |   |            |   |  |   | 264,217    |  
|Purchase of treasury stock               |  |                  |   |             |           |               |   |                          |  |                    |            |  |                                            |            |   |                                 |   |            |               |  |   |          |   |  |   | (4,031,532 | ) |  |   | (4,031,532 | )
|Unrealized gain on marketable securities |  |                  |   |             |           |               |   |                          |  |                    |            |  |                                            |            |   |                                 |   | 250,942    |               |  |   |          |   |  |   |            |   |  |   | 250,942    |  
|                                         |  |                  |   |             |           |               |   |                          |  |                    |            |  |                                            |            |   |                                 |   |            |               |  |   |          |   |  |   |            |   |  |   |            |  
|Balances, March 31, 2010                 |  | $                | 0 |             | 6,316,576 |               | $ | 63,166                   |  | $                  | 63,247,158 |  | $                                          | (7,991,259 | ) |                                 | $ | (793,941   | )             |  | $ | (111,722 | ) |  | $ | (4,031,532 | ) |  | $ | 50,381,870 |  
|                                         |  |                  |   |             |           |               |   |                          |  |                    |            |  |                                            |            |   |                                 |   |            |               |  |   |          |   |  |   |            |   |  |   |            |  

The accompanying notes are an integral part of these consolidated financial statements



6



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##### Table of Contents

Archon Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)



|                                                                                  |  |                           |             |   |      |   |            |  
|--------------------------------------------------------------------------------- |  | ------------------------- | ----------- | - | ---- | - | ---------- | -
|                                                                                  |  | Six Months
EndedMarch 31, |            
|                                                                                  |  | 2010                      |             |   | 2009 |  
|Cash flows from operating activities:                                             |  |                           |             |   |      |   |            |  
|Net income                                                                        |  | $                         | 746,308     |   |      | $ | 961,921    |  
|Discontinued operations, net of tax effect                                        |  |                           | (1,331,337  | ) |      |   | (492,764   | )
|                                                                                  |  |                           |             |   |      |   |            |  
|Net income (loss) from continuing operations -                                    |  |                           | (585,029    | ) |      |   | 469,157    |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                           |             |   |      |   |            |  
|Depreciation and amortization                                                     |  |                           | 1,187,762   |   |      |   | 1,772,634  |  
|Interest expense from amortization of debt issuance costs                         |  |                           | 114,046     |   |      |   | 245,039    |  
|Loss on sale of marketable securities                                             |  |                           | (67,607     | ) |      |   | (94,989    | )
|Change in assets and liabilities:                                                 |  |                           |             |   |      |   |            |  
|Accounts receivable                                                               |  |                           | (232,928    | ) |      |   | 58,441     |  
|Inventories                                                                       |  |                           | 64,719      |   |      |   | 73,098     |  
|Prepaid expenses and other                                                        |  |                           | (37,042     | ) |      |   | 347,263    |  
|Deferred income taxes                                                             |  |                           | (437,232    | ) |      |   | 495,534    |  
|Other assets                                                                      |  |                           | (359,517    | ) |      |   | 70,585     |  
|Accounts payable                                                                  |  |                           | (747,392    | ) |      |   | (1,037,233 | )
|Interest payable                                                                  |  |                           | 0           |   |      |   | (330       | )
|Accrued expenses and other current liabilities                                    |  |                           | (154,658    | ) |      |   | (976,382   | )
|Other liabilities                                                                 |  |                           | (1,713,324  | ) |      |   | (1,484,725 | )
|                                                                                  |  |                           |             |   |      |   |            |  
|Net cash provided by (used in) operating activities                               |  |                           | (2,968,202  | ) |      |   | (61,908    | )
|                                                                                  |  |                           |             |   |      |   |            |  
|Cash flows from investing activities:                                             |  |                           |             |   |      |   |            |  
|Capital expenditures                                                              |  |                           | (59,832     | ) |      |   | (1,187,154 | )
|Marketable securities purchased                                                   |  |                           | (6,819,989  | ) |      |   | (2,779,199 | )
|Marketable securities sold or redeemed                                            |  |                           | 2,361,673   |   |      |   | 2,322,809  |  
|                                                                                  |  |                           |             |   |      |   |            |  
|Net cash used in investing activities                                             |  |                           | (4,518,148  | ) |      |   | (1,643,544 | )
|                                                                                  |  |                           |             |   |      |   |            |  
|Cash flows from financing activities:                                             |  |                           |             |   |      |   |            |  
|Payments on debt and obligation under capital lease                               |  |                           | 0           |   |      |   | (932,184   | )
|Common stock purchased and retired                                                |  |                           | 0           |   |      |   | (230,259   | )
|Common stock purchased and held in treasury                                       |  |                           | (4,031,532  | ) |      |   | 0          |  
|Preferred stock redeemed and retired                                              |  |                           | 0           |   |      |   | (9,806     | )
|                                                                                  |  |                           |             |   |      |   |            |  
|Net cash used in financing activities                                             |  |                           | (4,031,532  | ) |      |   | (1,172,249 | )
|                                                                                  |  |                           |             |   |      |   |            |  
|Cash flows from discontinued operations                                           |  |                           | 734,365     |   |      |   | 7,181      |  
|                                                                                  |  |                           |             |   |      |   |            |  
|Decrease in cash and cash equivalents                                             |  |                           | (10,783,517 | ) |      |   | (2,870,520 | )
|Cash and cash equivalents, beginning of period                                    |  |                           | 31,646,498  |   |      |   | 37,973,564 |  
|                                                                                  |  |                           |             |   |      |   |            |  
|Cash and cash equivalents, end of period                                          |  | $                         | 20,862,981  |   |      | $ | 35,103,044 |  
|                                                                                  |  |                           |             |   |      |   |            |  

The accompanying notes are an integral part of these consolidated financial statements



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##### Table of Contents

ARCHON CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended March 31, 2010, and 2009

1. BASIS OF PRESENTATION AND GENERAL INFORMATION

The primary business operations of Archon Corporation (the Company or Archon) are conducted through a wholly-owned
subsidiary corporation, Pioneer Hotel Inc. (PHI), which operates the Pioneer Hotel & Gambling Hall (the Pioneer) in Laughlin, Nevada. In addition, the Company owns real estate on Las Vegas Boulevard South (the
Strip) in Las Vegas, Nevada, which is currently rented and also owns rental properties in the Dorchester Section of Boston, Massachusetts and Gaithersburg, Maryland.

The consolidated financial statements included herein have been prepared by management of the Company pursuant to the rules and
regulations of the United States Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in annual 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 under Regulation S-X of the SEC, management believes that the disclosures are adequate to make the information presented not misleading. In the
opinion of management, all adjustments necessary for a fair presentation of results for the interim periods have been made. The results for the current three and six month periods ended March 31, 2010 are not necessarily indicative of results
to be expected for the full fiscal year ended September 30, 2010. These 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, 2009, from which the balance sheet information as of that date is derived.

Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in
the United States requires management to make estimates that affect the reported amounts. Actual results may differ from estimates.

Income (Loss) Per Common Share. The Company computes net income (loss) per share in accordance with FASB
ASC 260-10, Earnings per share. FASB ASC 260-10 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders
(numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all potentially dilutive common shares outstanding during the period. In computing diluted EPS, the average stock price for
the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all potentially dilutive shares if their effect is anti-dilutive. Dilutive stock options of
approximately 741,000 were not included in calculations of diluted income per common share for the three months and six months ended March 31, 2010, as the options were out of the money and, therefore, would be anti-dilutive.

Uninsured Deposits. At various times during the period and subsequently, the Company maintained account balances that
exceeded federally insured limits, and the risk of losses related to such concentrations may be increasing as a result of economic developments.

Investment in Marketable Securities. Debt securities available-for-sale are stated at fair market value with unrealized
gains or losses determined by the specific identification method and reported as a component of accumulated other comprehensive income. Debt securities available-for-sale at March 31, 2010 includes investments in corporate bonds.



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##### Table of Contents

ARCHON CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the six months ended March 31, 2010, and 2009



Equity securities available-for-sale are reported at fair value with unrealized gains or
losses reported as a component of accumulated other comprehensive income. Realized and unrealized gains and losses are determined by the specific identification method. At March 31, 2010, investments in equity securities available-for-sale
included common and preferred stocks.

Included in Loss on sale of marketable securities on the consolidated
statements of operations are approximately $67,607 and $94,989 realized losses for the six months ended March 31, 2010 and 2009, respectively. The Company recorded approximately $0.3 million and $(0.4) million and $0.3 million and $(1.8)
million of other comprehensive gains and (losses), net of tax effect, associated with unrealized gains and (losses) during the three and six months ended March 31, 2010 and 2009, respectively.

The following is a summary of available-for-sale marketable securities as of March 31, 2010 and September 30, 2009,
respectively (amounts in thousands):



|                  |  |         |        |                |   |                  |  |   |                     |   |  |   |       
|----------------- |  | ------- | ------ | -------------- | - | ---------------- |  | - | ------------------- | - |  | - | ------
|                  |  | 3/31/10
|                  |  | Cost    |        | UnrealizedGain |   | UnrealizedLosses |  |   | Market orFair Value
|Debt securities   |  | $       | 3,363  |                | $ | 178              |  | $ | (11                 | ) |  | $ | 3,530 
|Equity securities |  |         | 8,766  |                |   | 412              |  |   | (1,801              | ) |  |   | 7,377 
|                  |  |         |        |                |   |                  |  |   |                     |   |  |   |       
|Total             |  | $       | 12,129 |                | $ | 590              |  | $ | (1,812              | ) |  | $ | 10,907
|                  |  |         |        |                |   |                  |  |   |                     |   |  |   |       



|                  |  |         |       |                |   |                    |  |   |                     |   |  |   |      
|----------------- |  | ------- | ----- | -------------- | - | ------------------ |  | - | ------------------- | - |  | - | -----
|                  |  | 9/30/09
|                  |  | Cost    |       | UnrealizedGain |   | Unrealized(Losses) |  |   | Market orFair Value
|Debt securities   |  | $       | 3,261 |                | $ | 231                |  | $ | (20                 | ) |  | $ | 3,472
|Equity securities |  |         | 4,342 |                |   | 228                |  |   | (2,047              | ) |  |   | 2,523
|                  |  |         |       |                |   |                    |  |   |                     |   |  |   |      
|Total             |  | $       | 7,603 |                | $ | 459                |  | $ | (2,067              | ) |  | $ | 5,995
|                  |  |         |       |                |   |                    |  |   |                     |   |  |   |      

The following is a summary of the net unrealized gains
and losses as presented in accumulated Other Comprehensive Income as of March 31, 2010 and September 30, 2009, respectively (amounts in thousands):



|                  |  |                 |     |                              |   |     |                             |  |   |                        |   |  |                                         |      |   |  |   |      |  
|----------------- |  | --------------- | --- | ---------------------------- | - | --- | --------------------------- |  | - | ---------------------- | - |  | --------------------------------------- | ---- | - |  | - | ---- | -
|                  |  | 3/31/10         |    
|Description       |  | UnrealizedGains |     | Unrealized(Losses)Short Term |   |     | (UnrealizedLosses)Long Term |  |   | DeferredTaxes(Benefit) |   |  | AccruedOtherComprehensiveIncome
 (Loss) |     
|Debt Securities   |  | $               | 178 |                              | $ | (3  | )                           |  | $ | (8                     | ) |  | $                                       | 58   |   |  | $ | 109  |  
|Equity Securities |  |                 | 412 |                              |   | (30 | )                           |  |   | (1,771                 | ) |  |                                         | (486 | ) |  |   | (903 | )
|                  |  |                 |     |                              |   |     |                             |  |   |                        |   |  |                                         |      |   |  |   |      |  
|Total             |  | $               | 590 |                              | $ | (33 | )                           |  | $ | (1,779                 | ) |  | $                                       | (428 | ) |  | $ | (794 | )
|                  |  |                 |     |                              |   |     |                             |  |   |                        |   |  |                                         |      |   |  |   |      |  



|                  |  |                 |     |                              |   |      |                             |  |   |                        |   |  |                                        |      |   |  |   |        |  
|----------------- |  | --------------- | --- | ---------------------------- | - | ---- | --------------------------- |  | - | ---------------------- | - |  | -------------------------------------- | ---- | - |  | - | ------ | -
|                  |  | 9/30/09         |    
|Description       |  | UnrealizedGains |     | Unrealized(Losses)Short Term |   |      | (UnrealizedLosses)Long Term |  |   | DeferredTaxes(Benefit) |   |  | AccruedOtherComprehensiveIncome
(Loss) |     
|Debt Securities   |  | $               | 231 |                              | $ | (1   | )                           |  | $ | (19                    | ) |  | $                                      | 74   |   |  | $ | 137    |  
|Equity Securities |  |                 | 228 |                              |   | (464 | )                           |  |   | (1,583                 | ) |  |                                        | (637 | ) |  |   | (1,182 | )
|                  |  |                 |     |                              |   |      |                             |  |   |                        |   |  |                                        |      |   |  |   |        |  
|Total             |  | $               | 459 |                              | $ | (465 | )                           |  | $ | (1,602                 | ) |  | $                                      | (563 | ) |  | $ | (1,045 | )
|                  |  |                 |     |                              |   |      |                             |  |   |                        |   |  |                                        |      |   |  |   |        |  



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##### Table of Contents

ARCHON CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the six months ended March 31, 2010, and 2009



The Company recorded the combined total of unrealized gains and (losses) disclosed in
the above tables, on the balance sheet as $0.8 million or 65% as retained earnings  other comprehensive income, and $0.4 million or 35% as deferred income taxes.

The following is a summary of the proceeds from sale of marketable securities and the gains or losses reclassified from Other
Comprehensive Income (OCI) as of March 31, 2010 and 2009 (amounts in thousands):



|                  |  |                   |       |                    |   |                       |  |   |                                   |   |  |   |     |  
|----------------- |  | ----------------- | ----- | ------------------ | - | --------------------- |  | - | --------------------------------- | - |  | - | --- | -
|                  |  | 3/31/10           |      
|Description       |  | ProceedsFromSales |       | GrossRealizedGains |   | GrossRealized(Losses) |  |   | Gain or (LossReclassifiedFrom OCI |  
|Debt securities   |  | $                 | 0     |                    | $ | 0                     |  | $ | 0                                 |   |  | $ | 0   |  
|Equity securities |  |                   | 2,362 |                    |   | 13                    |  |   | (81                               | ) |  |   | (68 | )
|                  |  |                   |       |                    |   |                       |  |   |                                   |   |  |   |     |  
|Total             |  | $                 | 2,362 |                    | $ | 13                    |  | $ | (81                               | ) |  | $ | (68 | )
|                  |  |                   |       |                    |   |                       |  |   |                                   |   |  |   |     |  



|                  |  |                   |       |                    |   |                       |  |   |                                   |   |  |   |     |  
|----------------- |  | ----------------- | ----- | ------------------ | - | --------------------- |  | - | --------------------------------- | - |  | - | --- | -
|                  |  | 3/31/09           |      
|Description       |  | ProceedsFromSales |       | GrossRealizedGains |   | GrossRealized(Losses) |  |   | Gain or (LossReclassifiedFrom OCI |  
|Debt securities   |  | $                 | 0     |                    | $ | 0                     |  | $ | 0                                 |   |  | $ | 0   |  
|Equity securities |  |                   | 2,323 |                    |   | 44                    |  |   | (139                              | ) |  |   | (95 | )
|                  |  |                   |       |                    |   |                       |  |   |                                   |   |  |   |     |  
|Total             |  | $                 | 2,323 |                    | $ | 44                    |  | $ | (139                              | ) |  | $ | (95 | )
|                  |  |                   |       |                    |   |                       |  |   |                                   |   |  |   |     |  

Revenue Recognition. Casino revenue is recorded as gaming wins less losses. Hotel, food and
beverage, entertainment and other operating revenues are recognized as services are performed. Casino revenues are recognized net of certain sales incentives in accordance with FASB ASC 605-50, Revenue Recognition, Customer Payments and
Incentives. Accordingly, cash incentives to customers for gambling, and the cash value of points and coupons earned by the slot club members totaling $0.1 million for the three months ended March 31, 2010 and 2009, have been recognized as a
direct reduction of casino revenue.

Advance deposits on rooms, if any, are recorded as deferred revenue until services are
provided to the customer. Revenues include the retail amount of room, food, beverage and other services provided gratuitously to customers totaling $0.9 million and $1.1 million for the three months ended March 31, 2010 and 2009, respectively.
The estimated cost of providing these promotional services has been reported in the accompanying consolidated statements of operations as an expense of each department granting complimentary services. The table below summarizes each
departments costs of such services (amounts in thousands):



|                  |  |         |     |         |   |    
|----------------- |  | ------- | --- | ------- | - | ---
|                  |  | 3/31/10 |     | 3/31/09
|Food and beverage |  | $       | 505 |         | $ | 701
|Hotel             |  |         | 119 |         |   | 159
|Other             |  |         | 4   |         |   | 4  
|                  |  |         |     |         |   |    
|Total             |  | $       | 628 |         | $ | 864
|                  |  |         |     |         |   |    

Rental revenue from the Dorchester rental property
held for investment is recognized as earned on a straight-line basis over the term of the lease. When rental payments received exceed rents earned and recognized, the difference is recorded as deferred rental income in the current liabilities
section of the balance sheet, and conversely, when rents earned and recognized exceed rental payments received, the difference is recorded as other assets. Rental revenue from the Las Vegas Strip property is recognized as earned.



10



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##### Table of Contents

ARCHON CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the six months ended March 31, 2010, and 2009



Concentrations. The Companys primary operations are concentrated in
the geographic area of Laughlin, Nevada and in the hotel and casino industry. As a result, the Company is at risk of unfavorable changes in general economic conditions including recession, economic slowdown, or higher fuel or other transportation
costs. These factors may reduce disposable income of casino patrons or result in fewer patrons visiting casinos.

The Company
owns real estate on the Las Vegas Strip in Las Vegas, Nevada and on the East Coast of the United States. Although the Company is presently not dependent on cash flows from these properties, a significant decline in real estate values in these
markets could have an impact on the Companys ability to readily generate cash flow from the real estate.

Concentrations
of revenue by segment as of March 31, 2010 and 2009 follows (dollars in thousands)



|                                      |  |         |       |  |    |  
|------------------------------------- |  | ------- | ----- |  | -- | -
|                                      |  | 3/31/10 |      
|Pioneer                               |  | $       | 8,518 |  | 66 | %
|                                      |  |         |       |  |    |  
|Rental properties held for investment |  | $       | 3,794 |  | 29 | %
|                                      |  |         |       |  |    |  
|Other and eliminations                |  | $       | 582   |  | 5  | %
|                                      |  |         |       |  |    |  



|                                      |  |         |        |  |    |  
|------------------------------------- |  | ------- | ------ |  | -- | -
|                                      |  | 3/31/09 |       
|Pioneer                               |  | $       | 11,089 |  | 65 | %
|                                      |  |         |        |  |    |  
|Rental properties held for investment |  | $       | 5,541  |  | 32 | %
|                                      |  |         |        |  |    |  
|Other and eliminations                |  | $       | 460    |  | 3  | %
|                                      |  |         |        |  |    |  

Reclassifications. Certain reclassifications have been made in prior years consolidated
financial statements to conform to the classifications used in fiscal 2010.

Consolidated Statements of
Operations. A new line item was added allowing the separation of the gain or (loss) on sale of marketable securities from interest and other income. These changes did not change the net income or earnings per share. The property reclassified
from rental property held for investment to property held for sale is reflected as discontinued operations net of tax in both years for comparison purposes.

Other minor reclassifications were made throughout the remaining schedules, all without any change to the overall total numbers

2. FEDERAL INCOME TAX

Deferred income taxes are reported for timing differences between items of income or expense reported in the financial statements and
those reported for income tax purposes in accordance with FASB ASC 740-10, Income Taxes, which requires the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future
tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax loss and credit carry-forwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company provides for deferred taxes for the estimated future tax effects attributable
to temporary differences and carryforwards when realization is more likely than not.



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##### Table of Contents

ARCHON CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the six months ended March 31, 2010, and 2009



3. RELATED PARTIES

The Companys Chairman of the Board and CEO has personally guaranteed certain loans for which the Company has accrued a loan
guarantee fee equal to 0.5% of the guaranteed loan balance per calendar quarter. These loan fees were disclosed in the annual report for fiscal year ended September 30, 2009. Mr. Lowden has agreed to forgo payment of the loan fees which
were accrued prior to the fiscal year ended September 30, 2009. Accordingly, loan guarantee fees accrued prior to the fiscal year ended September 30, 2009, in the amount of $0.3 million, has been transferred to additional paid in capital,
with a corresponding reduction in the remaining amount accrued. The accrual increased slightly during the quarter ended March 31, 2010 with no significant change from the remaining $0.1 million in the quarter ended September 30, 2009.

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 royalty license that expired in January 2007 in the United States with respect to the technology, but which automatically renewed until 2011 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,
2009, the Company had expended approximately $0.4 million for commercial development of the technology, and no additional costs were expended during the six-month periods ended March 31, 2010. No royalties were paid to the patentholder during
the periods referenced above.

4. PURCHASE AND SALE AGREEMENT OF GAITHERSBURG PROPERTY

On May 28, 2009, the Company, through its wholly owned subsidiary SFHI, LLC (SFHI), entered into a Purchase and Sale
Agreement (the Agreement) with Montgomery County, Maryland (the County) whereby the County will purchase SFHIs 51.57 acre parcel of land together with an approximately 341,693 square feet office building erected thereon
(the Property), located at 100 Edison Park Drive in Gaithersburg, Maryland. The purchase price for the Property will be seventy-six million three hundred forty thousand dollars ($76.3 million). The Agreement provided the County with a
90-day feasibility period during which the County determined that the Property is suitable for its intended use, and the County will now proceed to close escrow by notifying the Company of the closing date, which date may be no sooner than 90 days
from the date of notice and no later than April 30, 2014.

Simultaneous with the execution of the Purchase and Sale
Agreement, the County entered into a sublease with the existing tenant of SFHI at this location, GXS, Inc., whereby the County, as of October 1, 2009, leased and occupied the entire Property until the earlier of (i) completion of its
purchase of the Property or (ii) April 30, 2014. Pursuant to the applicable provisions of the existing lease with GXS, Inc., SFHI consented to the sublease. In addition, GXS, Inc. agreed to pay SFHI the sum of $2,125,000, $1,725,000 of
which was paid on October 1, 2009, with the balance of $0.4 million payable on or before July 1, 2010.



12



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##### Table of Contents

ARCHON CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the six months ended March 31, 2010, and 2009



Assets Held For Sale. The Company reviewed the guidance provided by FASB
ASC 360-10-45-11, and thus has classified the assets associated to the Gaithersburg Property as held for sale. The following table summarizes the asset components classified as held for sale as of March 31, 2010 and September 30, 2009
(amounts in thousands):



|                           |  |           |         |   |           |   |         |  
|-------------------------- |  | --------- | ------- | - | --------- | - | ------- | -
|                           |  | 3/31/2010 |         |   | 9/30/2009 |  
|Gaithersburg - Warehouse:  |  |           |         |   |           |   |         |  
|Loan Issue Costs           |  | $         | 826     |   |           | $ | 929     |  
|Deferred Rent              |  |           | 2,553   |   |           |   | 2,683   |  
|Land                       |  |           | 23,000  |   |           |   | 23,000  |  
|Buildings & Improvements   |  |           | 36,600  |   |           |   | 36,600  |  
|Machinery & Equipment      |  |           | 3,000   |   |           |   | 3,000   |  
|Allowance for depreciation |  |           | (10,854 | ) |           |   | (10,854 | )
|                           |  |           |         |   |           |   |         |  
|Total                      |  | $         | 55,125  |   |           | $ | 55,358  |  
|                           |  |           |         |   |           |   |         |  

Liabilities On Assets Held For Sale. The Company issued approximately $55.4 million of first
mortgage debt with a 7.01% interest rate per annum in connection with its acquisition of a commercial office building located in Gaithersburg, Maryland. The building is under lease through April 2014. The monthly lease payments are applied against
the outstanding indebtedness. Monthly principal and interest payments amortize the debt to approximately $22.3 million by the end of the lease in April 2014 and is subject to acquisition by the County before that date. The Company anticipates that
the future tenant payments related to the net leases will be sufficient to fund required payments under the first mortgage notes and IRC Section 467 debt. The principal balance due as of March 31, 2010 and September 30, 2009 was $39
million and $40 million, respectively. The following debt table is related to assets held for sale (amounts in thousands):



|                                    |  |           |        |           |   |       
|----------------------------------- |  | --------- | ------ | --------- | - | ------
|                                    |  | 3/31/2010 |        | 9/30/2009
|Interest payable                    |  | $         | 156    |           | $ | 157   
|Current portion of debt             |  |           | 3,374  |           |   | 3,186 
|                                    |  |           |        |           |   |       
|Total current liability             |  |           | 3,530  |           |   | 3,343 
|Long-term debt less current portion |  |           | 35,381 |           |   | 37,115
|                                    |  |           |        |           |   |       
|Total                               |  | $         | 38,911 |           | $ | 40,458
|                                    |  |           |        |           |   |       

Discontinued Operations. As a result of
the pending sale of the Gaithersburg Property, the result of operations related to this Property has been reflected as discontinued operations. The prior year result of operations of this Property has also been reclassified and discontinued for
comparative purposes.

The Property in Gaithersburg, Maryland, is a building used for commercial office space. The Property is
under a net lease through 2014 with a single tenant. Under the lease, the tenant is responsible for substantially all obligations related to the Property. The Property was acquired for $62.6 million, plus debt issuance costs of $2.7 million. The
Company paid $9.9 million in cash and issued $55.4 million in nonrecourse first mortgage indebtedness. The Company allocated approximately $23.0 million of the purchase price to land, $3.0 million to machinery and equipment and the balance to
building and improvements. The expenses incurred to acquire the Property (approximately $2.7 million) are recorded in other assets in the accompanying Consolidated Balance Sheets and are being amortized over the remaining loan period.



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ARCHON CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the six months ended March 31, 2010, and 2009



6. OPEN MARKET PURCHASES OF COMPANY COMMON STOCK

During fiscal year 2009 the Company determined that as a result of the current difficult economy and in light of low interest rates being
paid on its deposit of surplus funds, that open market purchase(s) of the Companys own shares, up to 5.0% of its outstanding common stock, represented a desirable use of its available and surplus cash.

In December 2008, the Board of Directors of the Company approved the Companys adoption of a plan, effective January 5, 2009,
for the Company to make periodic and ongoing open market purchases of up to 5.0% of its own common stock (up to 319,539 shares of common stock) in accordance with Rule 10b-18 (the Rule) of the Rules and Regulations Promulgated Under The
Securities Exchange Act Of 1934 (the Act), and, more specifically, in accordance with SEC Release No. 33-8335 (the Release). The Release is a safe harbor and approved method to make open market purchases of a
companys own common stock in compliance with the Rule without those purchases being deemed manipulative under the Act.

The Rule and Release impose certain specific restrictions on the Company as to purchases of its own common shares. These include specific
restrictions as to timing of open market purchases, manner of purchases, pricing of purchases and when purchases will (and will not) be allowed.

The Rule and Release also mandate certain additional and periodic disclosures that the Company must make concerning the open market
purchases in its Series 10 filings (Report on Forms 10-K and 10-Q).

On January 8, 2010, the Company purchased a grouping
of shares of common stock of the Company sufficient to cause it to effectively reach the maximum shares allotted to be purchased pursuant to the Rule and Release referenced above (when combined with prior program purchases since December 2008). As a
result, the Company, on January 13, 2010, announced the close of the common stock purchase program.

All open market
purchases were voluntary and effected utilizing licensed securities broker-dealers.



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ARCHON CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the six months ended March 31, 2010, and 2009



The table below summarizes the Companys buy back of its common stock for the last
12-month period ended March 31, 2010:



|                  |  |                                               |  |                                          |       |                                                                                            |         |                                                                                                                         |        
|----------------- |  | --------------------------------------------- |  | ---------------------------------------- | ----- | ------------------------------------------------------------------------------------------ | ------- | ----------------------------------------------------------------------------------------------------------------------- | -------
|Period            |  | (a)
TotalNumber ofShares (or 
Units)Purchased |  | (b) AveragePrice Paid 
perShare (orUnit) |       | (c) Total Number ofShares (or
Units)Purchased as Partof
PubliclyAnnounced Plans orPrograms |         | (d) Maximum Number(or 
Approximate DollarValue) of Shares (orUnits) that May Yet
BePurchased Under thePlans or Programs
|Beginning balance |  |                                               |  |                                          |       |                                                                                            |         |                                                                                                                         | 316,215
|January 2009      |  | 3,996                                         |  | $                                        | 27.83 |                                                                                            | 3,996   |                                                                                                                         | 312,219
|February 2009     |  | 4,590                                         |  |                                          | 16.96 |                                                                                            | 8,586   |                                                                                                                         | 307,629
|March 2009        |  | 7,150                                         |  |                                          | 16.60 |                                                                                            | 15,736  |                                                                                                                         | 300,479
|April 2009        |  | 0                                             |  |                                          | 0     |                                                                                            | 15,736  |                                                                                                                         | 300,479
|May 2009          |  | 0                                             |  |                                          | 0     |                                                                                            | 15,736  |                                                                                                                         | 300,479
|June 2009         |  | 0                                             |  |                                          | 0     |                                                                                            | 15,736  |                                                                                                                         | 300,479
|July 2009         |  | 0                                             |  |                                          | 0     |                                                                                            | 15,736  |                                                                                                                         | 300,479
|August 2009       |  | 0                                             |  |                                          | 0     |                                                                                            | 15,736  |                                                                                                                         | 300,479
|September 2009    |  | 0                                             |  |                                          | 0     |                                                                                            | 15,736  |                                                                                                                         | 300,479
|October 2009      |  | 0                                             |  |                                          | 0     |                                                                                            | 15,736  |                                                                                                                         | 300,479
|November 2009     |  | 0                                             |  |                                          | 0     |                                                                                            | 15,736  |                                                                                                                         | 300,479
|December 2009     |  | 0                                             |  |                                          | 0     |                                                                                            | 15,736  |                                                                                                                         | 300,479
|January 2010      |  | 298,632                                       |  |                                          | 13.50 |                                                                                            | 314,368 |                                                                                                                         | 1,847  
|Ending balance    |  | 314,368                                       |  | $                                        | 13.80 |                                                                                            | 314,368 |                                                                                                                         | 1,847  

As of March 31,
2010, the Company retired 15,736 of the shares repurchased and is holding 298,632 shares in treasury.

7. 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 May 7, 2010, the holders of 4,259,878 shares of the Exchangeable Redeemable Preferred Stock have surrendered their shares and received payment of
the redemption price; while 156,699 shares have yet to be surrendered and still have the right to receive their payment due without interest. As of March 31, 2010 and September 30, 2009, exchangeable redeemable preferred stock
unredeemed was $821,259 and $821,259, respectively.

On August 27, 2007, a group of institutional investors filed
an action, in Nevada, against the Company. The Complaint was subsequently amended to add an additional party plaintiff (collectively, the 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 Plaintiffs full compensation of any and all available damages suffered
by the 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 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 not 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
Plaintiffs attorneys fees, expenses and costs incurred in enforcing their rights; and (v) seeks such other and further relief as the Court may deem appropriate.



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ARCHON CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the six months ended March 31, 2010, and 2009



The Plaintiffs, thereafter, filed a motion for partial summary judgment, seeking a
ruling from the court that the Company breached its obligations under the Certificate by calculating the redemption price as it did. The Court granted that motion on August 8, 2008, finding the language of the Certificate to be unambiguous and
that the redemption price should have been calculated differently. The Court has not yet issued a monetary judgment against the Company. Subsequent to the Courts ruling on the motion for partial summary judgment, Plaintiffs filed a motion for
entry of final judgment, seeking entry of judgment that the redemption price for the preferred shares should have been $8.69 per share. At the same time, the Company filed a request for certification asking the Court to certify its partial summary
judgment order for immediate interlocutory appeal. The Court granted the request for certification and denied the request for entry of final judgment without prejudice. The Company filed a Petition for Permission to Appeal with the Ninth Circuit
Court of Appeals and the Ninth Circuit declined to accept the matter for interlocutory review.

Recently, Plaintiffs have
filed a second motion for entry of final judgment, again seeking entry of judgment that the redemption price for the preferred shares should have been $8.69 per share. The Company have substantively opposed that motion and has urged the Court to
reconsider its August 8, 2008 order. Briefing on Plaintiffs second motion for entry of final judgment is not complete and no hearing date has been set on the motion.

The Company has initiated proceedings against a third-party law firm concerning that firms potential liability related to the
drafting of the Certificate of Designation. This third-party action has subsequently been removed by the firm to Federal Court in April, 2009 and is at an early stage of resolution. The third-party has moved to compel arbitration of the dispute. The
Magistrate Judge issued an order that the matter be referred to arbitration and the District Court confirmed that order. The Company intends to pursue its claims against the firm in arbitration. The Company is also considering rights and remedies it
may have with regard to other parties who participated in the issuance of the Preferred Stock in the event that the Company does not prevail on its interpretation of the Certificate.

Also, two other holders of the Exchangeable Redeemable Preferred Stock filed Complaints, both alleging essentially the same claim as the
first complaint related to the case set forth immediately above. If the plaintiffs in these two additional actions 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. If applied to all the then outstanding shares of Exchangeable Redeemable Preferred Stock, including the shares held by the Companys officers and directors, valuation of the redemption price at $8.69 per share would increase the
redemption price in excess of $15.2 million.

Management is unable to estimate the minimum liability that may be incurred, if
any, as a result of the outcome of each of these matters and, therefore, has made no provision in the financial statements for liability related to these cases.

8. STOCK-BASED COMPENSATION

The Companys Stock Option Plan (Plan) provides for the grant of up to 1.4 million shares of its common stock to key
employees. The Plan provides 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 quarters ended March 31, 2010 and 2009,
zero options were granted. As of March 31, 2010 and 2009, there were approximately 741,500 and 741,500 options, respectively, outstanding and exercisable under the Plan. During the quarters ended March 31, 2010 and 2009, zero options were
exercised.



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ARCHON CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the six months ended March 31, 2010, and 2009



The outstanding options have expiration dates through 2018 and have an average remaining
life of approximately 7.0 years. The average exercise price of the outstanding options at March 31, 2010 is approximately $28.09.

In December 2008, the Companys Board of Directors authorized and the shareholders on June 15, 2009 approved, of an increase of
250,000 in the number of shares available for grant under the Plan.

SFHI Inc., 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 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 March 31, 2010, no options had been granted under any of the
Subsidiary Plans.

The following table summarizes stock option activity during the fiscal quarter 2010 under all plans:



|                                           |  |                       |  |                                         |       |                                          |         |                                 |   |         |  
|------------------------------------------ |  | --------------------- |  | --------------------------------------- | ----- | ---------------------------------------- | ------- | ------------------------------- | - | ------- | -
|                                           |  | NumberofShares(000s) |  | Weighted-AverageExercisePricePer
 Share |       | Weighted-AverageRemainingContractualTerm |         | AggregateIntrinsicValue($000s) |  
|Options outstanding at September 30, 2009: |  | 742                   |  | $                                       | 28.09 |                                          | 8.3yrs  |                                 | $ | (12,457 | )
|Granted                                    |  | 0                     |  |                                         | N/A   |                                          | N/A     |                                 |   | N/A     |  
|Exercised                                  |  | 0                     |  |                                         | N/A   |                                          | N/A     |                                 |   | N/A     |  
|Canceled                                   |  | 0                     |  |                                         | N/A   |                                          | N/A     |                                 |   | N/A     |  
|Options outstanding at March 31, 2010      |  | 742                   |  | $                                       | 28.09 |                                          | 6.8yrs. |                                 | $ | 14,867  |  
|Exercisable at March 31, 2010              |  | 742                   |  | $                                       | 28.09 |                                          | 6.8yrs. |                                 | $ | 14,867  |  

As of March 31,
2010, there was no unrecognized compensation cost related to unvested stock options.

9. SUPPLEMENTAL STATEMENT OF CASH FLOWS INFORMATION

Supplemental statement of cash flows information for the six-month periods ended March 31, 2010 and 2009,
respectively, is presented below (amounts in thousands).



|                                         |  |         |       |         |   |      
|---------------------------------------- |  | ------- | ----- | ------- | - | -----
|                                         |  | 3/31/10 |       | 3/31/09
|Operating activities:                    |  |         |      
|Cash paid during the period for interest |  | $       | 2,180 |         | $ | 2,350
|                                         |  |         |       |         |   |      



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ARCHON CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the six months ended March 31, 2010, and 2009



10. SEGMENT INFORMATION

The Companys operations are in the hotel/casino industry and the rental of commercial real estate properties. The Companys
hotel/casino operations are conducted at the Pioneer in Laughlin, Nevada. As discussed above, the Company owns rental properties held for investment in the Dorchester Section of Boston, Massachusetts and Las Vegas Strip, Nevada. Property Held
for Sale below includes a rental property in 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-month and
six-month periods ended March 31, 2010 and 2009 (amounts in thousands).



|                                       |  |                              |       |   |      |   |       |  
|-------------------------------------- |  | ---------------------------- | ----- | - | ---- | - | ----- | -
|                                       |  | Three Months EndedMarch 
31, |      
|                                       |  | 2010                         |       |   | 2009 |  
|Pioneer Hotel:                         |  |                              |       |   |      |   |       |  
|Net operating revenues                 |  | $                            | 4,559 |   |      | $ | 6,151 |  
|Operating income                       |  |                              | 108   |   |      |   | 59    |  
|Depreciation and amortization          |  |                              | 136   |   |      |   | 192   |  
|Interest expense                       |  |                              | 0     |   |      |   | 313   |  
|Interest and other income              |  |                              | 53    |   |      |   | 2     |  
|Income (loss) before income taxes      |  |                              | 161   |   |      |   | (252  | )
|Capital expenditures / transfers       |  |                              | 28    |   |      |   | 427   |  
|                                       |  |                             
|Rental Properties Held for Investment: |  |                              |       |   |      |   |       |  
|Net operating revenues                 |  | $                            | 1,911 |   |      | $ | 2,763 |  
|Operating income                       |  |                              | 1,269 |   |      |   | 2,147 |  
|Depreciation and amortization          |  |                              | 421   |   |      |   | 421   |  
|Interest expense                       |  |                              | 1,075 |   |      |   | 955   |  
|Interest and other income              |  |                              | 1     |   |      |   | 3     |  
|Income before income taxes             |  |                              | 194   |   |      |   | 1,194 |  
|Capital expenditures / transfers       |  |                              | 0     |   |      |   | 0     |  
|                                       |  |                             
|Property Held for Sale:                |  |                              |       |   |      |   |       |  
|Net operating revenues                 |  | $                            | 0     |   |      | $ | 0     |  
|Operating income                       |  |                              | 0     |   |      |   | 0     |  
|Depreciation and amortization          |  |                              | 0     |   |      |   | 0     |  
|Interest expense                       |  |                              | 0     |   |      |   | 0     |  
|Interest and other income              |  |                              | 0     |   |      |   | 0     |  
|Discontinued operations, net of tax    |  |                              | 438   |   |      |   | 256   |  
|Capital expenditures / transfers       |  |                              | 0     |   |      |   | 0     |  
|                                       |  |                             
|Other and Eliminations:                |  |                              |       |   |      |   |       |  
|Net operating revenues                 |  | $                            | 48    |   |      | $ | 215   |  
|Operating loss                         |  |                              | (860  | ) |      |   | (484  | )
|Depreciation and amortization          |  |                              | 36    |   |      |   | 37    |  
|Interest expense                       |  |                              | 1     |   |      |   | (47   | )
|Interest and other income              |  |                              | 408   |   |      |   | 122   |  
|Loss before income taxes               |  |                              | (455  | ) |      |   | (348  | )
|Capital expenditures / transfers       |  |                              | 0     |   |      |   | 0     |  



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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the six months ended March 31, 2010, and 2009



|                                       |  |                             |        |   |      |   |        |  
|-------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------ | -
|                                       |  | Three Months EndedMarch
31, |       
|                                       |  | 2010                        |        |   | 2009 |  
|Total:                                 |  |                             |        |   |      |   |        |  
|Net operating revenues                 |  | $                           | 6,518  |   |      | $ | 9,129  |  
|Operating income                       |  |                             | 517    |   |      |   | 1,722  |  
|Depreciation and amortization          |  |                             | 593    |   |      |   | 650    |  
|Interest expense                       |  |                             | 1,076  |   |      |   | 1,221  |  
|Interest and other income              |  |                             | 462    |   |      |   | 127    |  
|Income before income taxes             |  |                             | (100   | ) |      |   | 594    |  
|Discontinued operations, net of tax    |  |                             | 438    |   |      |   | 256    |  
|Capital expenditures / transfers       |  |                             | 28     |   |      |   | 427    |  
|                                       | 
|                                       |  | Six Months EndedMarch 31,   |       
|                                       |  | 2010                        |        |   | 2009 |  
|Pioneer Hotel:                         |  |                             |        |   |      |   |        |  
|Net operating revenues                 |  | $                           | 8,518  |   |      | $ | 11,089 |  
|Operating loss                         |  |                             | (764   | ) |      |   | (591   | )
|Depreciation and amortization          |  |                             | 272    |   |      |   | 398    |  
|Interest expense                       |  |                             | 0      |   |      |   | 519    |  
|Interest and other income              |  |                             | 53     |   |      |   | 4      |  
|Loss before income taxes               |  |                             | (711   | ) |      |   | (1,105 | )
|Capital expenditures / transfers       |  |                             | 59     |   |      |   | 1,173  |  
|Identifiable assets(1)                 |  |                             | 12,444 |   |      |   | 16,809 |  
|                                       |  |                            
|Rental Properties Held for Investment: |  |                             |        |   |      |   |        |  
|Net operating revenues                 |  | $                           | 3,794  |   |      | $ | 5,541  |  
|Operating income                       |  |                             | 2,519  |   |      |   | 4,311  |  
|Depreciation and amortization          |  |                             | 843    |   |      |   | 843    |  
|Interest expense                       |  |                             | 2,177  |   |      |   | 1,911  |  
|Interest and other income              |  |                             | 4      |   |      |   | 32     |  
|Income before income taxes             |  |                             | 346    |   |      |   | 2,432  |  
|Capital expenditures / transfers       |  |                             | 0      |   |      |   | 0      |  
|Identifiable assets(1)                 |  |                             | 89,387 |   |      |   | 91,356 |  
|                                       |  |                            
|Property Held for Sale:                |  |                             |        |   |      |   |        |  
|Net operating revenues                 |  | $                           | 0      |   |      | $ | 0      |  
|Operating income                       |  |                             | 0      |   |      |   | 0      |  
|Depreciation and amortization          |  |                             | 0      |   |      |   | 0      |  
|Interest expense                       |  |                             | 0      |   |      |   | 0      |  
|Interest and other income              |  |                             | 0      |   |      |   | 0      |  
|Discontinued operations, net of tax    |  |                             | 1,331  |   |      |   | 493    |  
|Capital expenditures / transfers       |  |                             | 0      |   |      |   | 0      |  
|Identifiable assets(1)                 |  |                             | 55,286 |   |      |   | 56,257 |  
|                                       |  |                            
|Other and Eliminations:                |  |                             |        |   |      |   |        |  
|Net operating revenues                 |  | $                           | 582    |   |      | $ | 460    |  
|Operating loss                         |  |                             | (1,214 | ) |      |   | (972   | )
|Depreciation and amortization          |  |                             | 73     |   |      |   | 74     |  
|Interest expense                       |  |                             | 3      |   |      |   | (80    | )
|Interest and other income              |  |                             | 711    |   |      |   | 361    |  
|Loss before income taxes               |  |                             | (574   | ) |      |   | (628   | )
|Capital expenditures / transfers       |  |                             | 0      |   |      |   | 15     |  
|Identifiable assets(1)                 |  |                             | 33,164 |   |      |   | 39,150 |  



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ARCHON CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the six months ended March 31, 2010, and 2009



|                                    |  |                           |         |   |      |   |        
|----------------------------------- |  | ------------------------- | ------- | - | ---- | - | -------
|                                    |  | Six Months EndedMarch
31,
|                                    |  | 2010                      |         |   | 2009
|Total:                              |  |                           |         |   |      |   |        
|Net operating revenues              |  | $                         | 12,894  |   |      | $ | 17,090 
|Operating income                    |  |                           | 541     |   |      |   | 2,748  
|Depreciation and amortization       |  |                           | 1,188   |   |      |   | 1,315  
|Interest expense                    |  |                           | 2,180   |   |      |   | 2,350  
|Interest and other income           |  |                           | 768     |   |      |   | 397    
|Income (loss) before income taxes   |  |                           | (938    | ) |      |   | 699    
|Discontinued operations, net of tax |  |                           | 1,331   |   |      |   | 493    
|Capital expenditures / transfers    |  |                           | 59      |   |      |   | 1,188  
|Identifiable
assets(1)              |  |                           | 190,281 |   |      |   | 203,572



|(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, 2009. These historical financial statements may not be indicative of the Companys future performance.

General

Overview of Business Operations and Trends: Historically, the Company, has owned, managed and operated hotel/casino
properties through a number of acquisitions or developments, and it has recently divested itself of certain of these properties. Presently, the Company operates the Pioneer in Laughlin, Nevada.

The Pioneer has experienced 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 nearby locations as California and Arizona within the last several years caused revenue declines. In response, the Company focused on market
definition and development in the local Laughlin area to maintain profitability. Unexpectedly difficult economic conditions impacting customers, including relatively high fuel costs, has significantly reduced disposable income, and limited customer
travel and gaming activity. Management believes Laughlin is a mature market with marginal growth forecasted for the next few years based on its current development plans. Management believes the recent revenue and expense trends in its Laughlin
hotel/casino property may not change significantly over the next few years, or until the current economic conditions and trends begin to materially improve.

The Company also owns rental properties on the East Coast and on the Las Vegas Strip, but revenues from these rental properties are used
to meet their related mortgages and thus do not contribute significant net cash flow to the Company.

Property Held for
Sale

During fiscal year 2001, the Company acquired certain properties as part of an IRS Section 1031 exchange.
The property held for sale is located in Gaithersburg, Maryland. The Company acquired the property and nonrecourse debt associated with the property which is subject to a long-term lease. A tenant remits payment to the bank according to the terms of
the lease and note. 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 $5.6 million annually and will remain at this level until
approximately 2014 or until the asset is sold, otherwise disposed of or becomes impaired. The buildings are no longer being depreciated subsequent to the classification being changed from a rental property held for investment to a property held for
sale. 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 lease and debt amortization,
the fair market value of the property may be different from its book values. Interest is presently being expensed at approximately $2.9 million annually and will decrease in relation to debt principal reductions through 2014 or until the asset is
sold, otherwise disposed of or becomes impaired.



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On May 28, 2009, the Company, through its wholly owned subsidiary SFHI, LLC
(SFHI), entered into a Purchase and Sale Agreement (the Agreement) with Montgomery County, Maryland (the County) whereby the County will purchase SFHIs 51.57 acre parcel of land together with an
approximately 341,693 square feet office building erected thereon (the Property), located at 100 Edison Park Drive in Gaithersburg, Maryland. The purchase price for the Property will be seventy-six million three hundred forty thousand
dollars ($76,340,000). The Agreement provided the County with a 90-day feasibility period during which the County determined that the Property is suitable for its intended use, and the County will now proceed to close escrow by notifying the Company
of the closing date, which date may be no sooner than 90 days from the date of notice and no later than April 30, 2014.

Simultaneous with the execution of the Purchase and Sale Agreement, the County entered into a sublease with the existing tenant of SFHI
at this location, GXS, Inc., whereby the County, as of October 1, 2009, leased and occupied the entire Property until the earlier of (i) completion of its purchase of the Property or (ii) April 30, 2014. Pursuant to the
applicable provisions of the existing lease with GXS, Inc., SFHI consented to the sublease. In addition, GXS, Inc. agreed to pay SFHI the sum of $2,125,000, $1,725,000 of which was paid on October 1, 2009, with the balance of $400,000 payable
on or before July 1, 2010. Due to the pending sale of this property, the related results of operations have been reported as discontinued operations. See Notes to Consolidated Financial Statements, Note 4, Sale of Gaithersburg Property

Rental Properties Held for Investment

During fiscal year 2001, the Company acquired certain rental property as part of an IRS Section 1031 exchange. The rental property is
located in the Dorchester Section of Boston, Massachusetts. The Company acquired the property with improvements and nonrecourse debt associated with the property which is subject to a long-term lease. A tenant remits payments to a bank according to
the terms of the lease and note. 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 $6.7 million annually and will remain at this level
until approximately 2020 or until the asset is sold, otherwise disposed of or becomes impaired. The buildings are also being depreciated on a straight-line basis and the depreciation expense is approximately $1.7 million annually and will remain at
this level until approximately 2041 or until the asset is sold, otherwise disposed of or becomes 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 lease and debt amortization, the fair market values of the property may be different from its book value. Interest is presently being expensed at approximately $4.5 million
annually and will decrease in relation to debt principal reductions through 2020 or until the asset is sold, otherwise disposed of or becomes impaired.

The Company owns, through its wholly owned subsidiary, Sahara Las Vegas Corp. (SLVC), an approximately 27-acre parcel of land
(the Property) located on the east side of Las Vegas Boulevard South, to the south of Sahara Avenue. The Company presently leases the Property to three different lessees for an aggregate amount of $35,000 per month. The leases may be
terminated in the event the property is sold or developed by the Company.

On December 22, 2008, SLVC, entered into an
Option Agreement with Las Vegas Towers, LLC (LVT), a Delaware limited liability company, in which SLVC granted LVT an option to purchase SLVCs approximately 27-acre parcel of land located at 2600 Las Vegas Boulevard South, Las
Vegas, Nevada.

The Option Agreement designated the purchase price to acquire the land at $618.0 million.



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Simultaneous with the execution of the Option Agreement, SLVC executed a Contingent Warrant
(the Warrant) to Purchase Series A Preferred Stock (the Preferred Stock), entitling LVT to purchase 60,000 shares of Series A Preferred Stock of SLVC upon terms and conditions set forth in the Warrant. The designation and
amount of the Preferred Stock as well as the powers, preferences and relative, participating, optional and other special rights of the shares of the series of this Preferred Stock and the qualifications, limitations or restrictions thereof are set
forth in the Certificate of Designation, Preferences and Rights of the Series A Preferred Stock also dated December 22, 2008. Had LVT exercised the Warrant prior to its expiration on April 1, 2009, the Option Agreement would have remained
valid until March 31, 2010. LVT failed to exercise the Warrant before its expiration, thus the Option Agreement terminated on March 31, 2009.

Critical Accounting Policies and Estimates

The preparation of these consolidated 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, among
others, affects 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.
Management reviews useful lives and obsolescence and assesses commercial viability of these assets periodically, at least annually. Based on these reviews, management 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. Management also
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. We review useful lives and obsolescence and we assess 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
which 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



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different from the estimated annual effective rate and the statutory rate. Although Financial Accounting Standards Board, Accounting Standard Codification (FASB ASC) 740-10, Income Taxes,
became effective for the year ending September 30, 2008, based on its evaluation, management determined that FASB ASC 740-10 did not have a material effect on the financial statements or the net operating loss carryovers or the related deferred
tax assets or valuation allowance.

Revenue Recognition: Casino revenue is recorded as gaming wins less losses.
Hotel, food and beverage, entertainment and other operating revenues are recognized as services are performed. Casino revenues are recognized net of certain sales incentives in accordance with FASB ASC 605-50 Revenue Recognition, Customer
Payments and Incentives. Accordingly, cash incentives to customers for gambling, and the cash value of points and coupons earned by the slot club members totaling $0.1 million and $0.2 million for the quarters ended March 31, 2010 and 2009,
respectively, have been recognized as a direct reduction of casino revenue.

Advance deposits on rooms, if any, are recorded
as deferred revenue until services are provided to the customer. Hotel, food and beverage revenues are recognized as services are performed.

Rental revenue from rental properties is recognized as earned on a straight-line basis over the term of the lease. When rental payments
received exceed rents earned and recognized, the difference is recorded as deferred rental income in the current liabilities section of the balance sheet, and conversely, when rents earned and recognized exceed rental payments received, the
difference is recorded as other assets.

Recently Issued Accounting Standards

FASB ASC 105-10: In June 2009, the FASB issued FASB ASC 105-10, Overview and Background FASB
Codification. FASB ASC 105-10 establishes the FASB Accounting Standards Codification (Codification) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the
preparation of financial statements in conformity with generally accepted accounting principles (GAAP). FASB ASC 105-10 is effective for interim and annual periods ending after September 15, 2009. The Company implemented the new
Codification when referring to GAAP in its annual report on Form 10-K for the fiscal year ending September 30, 2009. This did not have an impact on the consolidated results of the Company.

FASB ASC 810-10: In June 2009, the FASB issued FASB ASC 810-10, Consolidation. The amendments include:
(1) the elimination of the exemption for qualifying special purpose entities, (2) a new approach for determining who should consolidate a variable-interest entity, and (3) changes to when it is necessary to reassess who should
consolidate a variable-interest entity. FASB ASC 810-10 is effective for the first annual reporting period beginning after November 15, 2009 and for interim periods within that first annual reporting period. The Company will adopt FASB ASC
810-10 during fiscal year 2010. The Company does not expect that the adoption of FASB ASC 810-10 will have a material impact on the consolidated financial statements.

FASB ASC 860-10: In June 2009, the FASB issued FASB ASC 860-10, Transfers and
Servicing. FASB ASC 860-10 eliminates the concept of a qualifying special-purpose entity, changes the requirements for derecognizing financial assets, and requires additional disclosures in order to enhance information reported to
users of financial statements by providing greater transparency about transfers of financial assets, including securitization transactions, and an entitys continuing involvement in and exposure to the risks related to transferred financial
assets. FASB ASC 860-10 is effective for fiscal years beginning after November 15, 2009. The Company will adopt FASB ASC 860-10 during fiscal year 2010. The Company does not expect that the adoption of FASB ASC 860-10 will have a material
impact on the consolidated financial statements.



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FASB ASC 855-10: In June 2009, the FASB issued FASB ASC 855-10, Subsequent
Events. FASB ASC 855-10 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. FASB ASC 855-10 applies to both
interim financial statements and annual financial statements. FASB ASC 855-10 is effective for interim or annual financial periods ending after June 15, 2009. FASB ASC 855-10 does not have a material impact on our consolidated financial
statements.

FASB ASC 944-20: In May 2008, the FASB issued FASB ASC 944-20, Financial Services-Insurance.
FASB ASC 944-20 requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This Statement also
clarifies how previous standards apply to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities. Those clarifications will increase comparability in
financial reporting of financial guarantee insurance contracts by insurance enterprises. This Statement requires expanded disclosures about financial guarantee insurance contracts. The accounting and disclosure requirements of the Statement will
improve the quality of information provided to users of financial statements. FASB ASC 944-20 is effective for financial statements issued for fiscal years beginning after December 15, 2008. The Company does not expect the adoption of FASB ASC
944-20 will have a material impact on its financial condition or results of operation.

FASB ASC 815-10: In
March 2008, the FASB issued FASB ASC 815-10, Derivative Instruments and Hedging. FASB ASC 815-10, which will require enhanced disclosures regarding the impact on financial position, financial performance, and cash flows,
is effective for the Company beginning on October 1, 2009. However, since the Company does not now have, nor does it contemplate issuing or obtaining any derivative instruments, or engaging in any hedging activities, in the
foreseeable future, we do not currently expect any effect on our future financial statements by adopting FASB ASC 815-10.

FASB ASC 810-10: In December 2007, the FASB issued FASB ASC 810-10, Consolidation. It requires that a noncontrolling
(minority) interest in a subsidiary, including a consolidatable variable interest entity should be reported as equity in the consolidated financial statements. FASB ASC 810-10 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 with a noncontrolling interest. FASB ASC 810-10 is effective, if applicable, for the Companys fiscal year
beginning October 1, 2009.

FASB ASC 820-10 and 825-10: In September 2006, the FASB issued FASB ASC 810-10,
Fair Value Measurements. FASB ASC 810-10 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 FASB ASC 810-10, Financial Instruments, 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. We have no present intention of opting to adopt FASB ASC 810-10. FASB ASC 810-10 is effective for the Company for financial assets and liabilities carried at fair value for fiscal year ended September 30, 2009 but will not become
effective for nonfinancial assets until fiscal year ended September 30, 2010 (including interim periods within those years). We do not now expect any other effects of FASB ASC 810-10 since it is unlikely that we will choose to value assets or
liabilities at fair value.

FASB ASC 805-10: In December 2007, the FASB issued FASB ASC 805-10, Business
Combinations. This Statement requires that the acquisition method of accounting (which previous standards called the purchase method) be used for all business combinations and for an acquirer to be identified for each business
combination. We have not yet evaluated this statement for the impact, if any, which FASB ASC 805-10 might have on the consolidated financial statements, in the event we make any business combination or other covered acquisitions after
September 30, 2009.



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Results of Operations  Six Months Ended March 31, 2010 and 2009

General

During the six months ended March 31, 2010, the Companys net operating revenues decreased by $4.2 million and operating
expenses decreased approximately $2.0 million, resulting in a decrease in operating income of $2.2 million from the six months ended March 31, 2009. The change in operating results was due to a decrease in all the operating revenues, offset
with decreases in all of the expenses.

Consolidated

Net Operating Revenues: Consolidated net operating revenues of $12.9 million for the six months ended March 31, 2010
decreased $4.2 million, or 25%, from $17.1 million for the six months ended March 31, 2009. Revenues at the Pioneer of $8.5 million for the six months ended March 31, 2010 decreased $2.6 million, or 23%, from $11.1 million for
the six months ended March 31, 2009. Revenues from the investment properties of $3.8 million for the six months ended March 31, 2010 decreased $1.7 million, or 31%, from $5.5 million for the six months ended March 31, 2009. Revenues
at corporate increased $0.1 million in the six months ended March 31, 2010 from the six months period ended March 31, 2009.

Operating Expenses: Total operating expenses decreased $1.9 million, or 13%, to $12.4 million for the six months ended
March 31, 2010 from $14.3 million for the six months ended March 31, 2009. Total operating expenses as a percentage of revenue increased to 96% in the current year period from 84% in the prior year period. Operating expenses at the
Pioneer of $9.3 million for the six months ended March 31, 2010 decreased by approximately $2.4 million, or 21% from $11.7 million for the six months ended March 31, 2009.

Operating Income: Consolidated operating income for the six months ended March 31, 2010 was $0.5 million, a
decrease of $2.2 million, or 81%, from $2.7 million for the six months ended March 31, 2009. This decrease was due to the aforementioned changes in net operating revenues and operating expenses. Operating income at the investment
properties for the six months ended March 31, 2010 was $2.5 million, a decrease of $1.8 million or 50%, from $4.3 million for the six months ended March 31, 2009. Operating income decreased by $0.2 million at the Pioneer to an operating
loss of $0.8 million. The operating loss at corporate was unchanged at approximately $1.0 million.

Interest
Expense: Consolidated interest expense for the six months ended March 31, 2010 was $2.2 million, approximately a $0.2 million, or 8%, decrease compared to $2.4 million for the six months ended March 31, 2009. The decrease
was primarily due to the reduction of non-recourse debt associated with the investment properties.

Interest and Other
Income: Consolidated interest and other income for the six months ended March 31, 2010 was $0.8 million, an approximate $0.4 million, or 93% increase compared to $0.4 million for the six months ended March 31, 2009. This increase
was primarily a result of an increase in interest income of $0.4 million.

Loss on Sale of Marketable
Securities: The loss on marketable securities for the six months ended March 31, 2010 was approximately $0.1 million, relatively unchanged from the quarter ended March 31, 2009.



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Federal Income Tax: The Company recorded a combined federal income tax expense
on continuing and discontinued operations of $0.4 million for the six months ended March 31, 2010, compared to $0.5 million for the six months ended March 31, 2009, based on statutory income tax rates.

Pioneer

Net Operating Revenues. Net operating revenues at the Pioneer decreased $2.6 million, or 23%, to $8.5 million in the
six months ended March 31, 2010 from $11.1 million in the six months ended March 31, 2009.

Casino revenues for the
six months ended March 31, 2010 were $6.8 million, a decrease of approximately $2.1 million, or 24%, compared to $8.9 million in the six months ended March 31, 2009. Slot and video poker revenues were $6.2 million, a decrease of $1.9
million, or 24%, compared to $8.1 million in the six months ended March 31, 2009. Other gaming revenues, including table games, decreased $0.2 million, or 25%, to $0.6 million in the six months ended March 31, 2010 from $0.8 million
in the six months ended March 31, 2009. Casino promotional allowances were $1.8 million compared to $2.1 million, a decrease of $0.3 million.

Hotel revenues for the six months ended March 31, 2010 were $0.7 million, a decrease of $0.1 million or 13%, compared to $0.8
million for the six months ended March 31, 2009. An increase in hotel occupancy was offset by a decrease in the average room rate. Continued competitive pressures in the Laughlin market in 2009 and continuing through March 31, 2010 caused
the decline in average room rate. Food and beverage revenues for the six months ended March 31, 2010 were $2.4 million, a decrease of $0.6 million or 19%, compared to $3.0 million for the six months ended March 31, 2009. Other revenues
were $0.4 million compared to $0.5 million, a decrease of approximately $0.1 million.

Operating Expenses.
Operating expenses decreased approximately $2.4 million, or 21%, to $9.3 million in the six months ended March 31, 2010 from approximately $11.7 million in the six months ended March 31, 2009. Operating expenses as a percentage
of net revenue increased to 109% in the current six month period from 105% in the prior year period.

Casino expenses were
$4.2 million, a decrease of $0.8 million, or 16%, from $5.0 million, primarily due to the decrease in casino revenues. Casino expenses as a percentage of casino revenues increased to 63% from 56%.

Hotel expenses were $0.3 million, a decrease of $0.1 million, or 25%, from $0.4 million, primarily due to aggressive cost saving
measures. Hotel expenses as a percentage of hotel revenues decreased to 43% from 50%. Food and beverage expenses decreased $0.5 million, or 26%, to $1.5 million compared to $2.0 million, primarily due to lower food and beverage revenues. Food and
beverage expenses as a percentage of food and beverage revenues decreased to 63% from 67%. Other expenses were $0.2 million compared to $0.4 million, a decrease of $0.2 million. Other expenses as a percentage of other revenues decreased to 50% from
80%.

Selling, general and administrative expenses were $1.4 million, a decrease of $0.6 million, or 31%, compared to $2.0
million. Selling, general and administrative expenses as a percentage of revenues decreased to 16% in the current year period from 18% in the prior year period. Pioneers selling, general and administrative expenses are greater than the
consolidated total due to the elimination of intercompany transactions in consolidation. Utilities and property expenses were unchanged at approximately $1.5 million. Utilities and property expenses as a percentage of revenues increased to 17% from
14%. Depreciation and amortization expenses were $0.3 million, a decrease of approximately $0.1 million, or 25%, from $0.4 million.



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Results of Operations  Three Months Ended March 31, 2010 and 2009

General

During the quarter ended March 31, 2010, the Companys net operating revenues decreased $2.6 million and operating expenses
decreased $1.4 million, resulting in a decrease in operating income of $1.2 million from the quarter ended March 31, 2009. The change in operating results was due to a decrease in all of the operating revenues offset by decreases in all of the
expenses.

Consolidated

Net Operating Revenues. Consolidated net operating revenues were $6.5 million for the quarter ended March 31, 2010, a
$2.6 million, or 29%, decrease from $9.1 million for the quarter ended March 31, 2009. Revenues at the Pioneer of $4.6 million for the three months ended March 31, 2010 decreased $1.6 million, or 26%, from $6.2 million for the three
months ended March 31, 2009. Income from the investment properties were $1.9 million for the quarter ended March 31, 2010 a $0.9 million, or 32%, decrease from $2.8 million for the quarter ended March 31, 2009. Revenues at corporate
decreased $0.2 million in the quarter ended March 31, 2010 from the quarter ended March 31, 2009.

Operating
Expenses. Total operating expenses decreased $1.4 million, or 19%, to $6.0 million for the quarter ended March 31, 2010 from $7.4 million for the quarter ended March 31, 2009. Total operating expenses as a percentage of
revenue increased to 92% for the current year quarter from 81% for the prior year quarter. Operating expenses at the Pioneer of $4.5 million decreased by $1.6 million, or 27%, from $6.1 million.

Operating Income. Consolidated operating income for the quarter ended March 31, 2010 was $0.5 million, a decrease
of $1.2 million, or 71%, from $1.7 million for the quarter ended March 31, 2009. The decrease was due to the aforementioned changes in net operating revenues and operating expenses. Operating income at the investment properties for the
quarter ended March 31, 2010 was $1.3 million, a decrease of $0.8 million, or 38%, from $2.1 million in the quarter ended March 31, 2009. Operating income was unchanged at $0.1 million, in both quarters at the Pioneer. The operating loss
at corporate increased by approximately $0.4 million to $0.9 million from an operating loss of $0.5 million in the prior year.

Interest Expense. Consolidated interest expense for the quarter ended March 31, 2010 was $1.1 million, a decrease of
$0.1 million, or 12%, from $1.2 million for the quarter ended March 31, 2009.

Interest and Other Income.
Consolidated interest and other income for the quarter ended March 31, 2010 was approximately $0.5 million, a $0.4 million, or 400% increase compared to $0.1 million for the quarter ended March 31, 2009.

Federal Income Tax. The Company recorded a combined federal income tax expense on continuing and discontinued operations of
$0.2 million for the quarter ended March 31, 2010 compared to $0.3 million for the quarter ended March 31, 2009 based on statutory income tax rates.



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Pioneer

Net Operating Revenues. Net operating revenues at the Pioneer decreased $1.6 million, or 26%, to $4.6 million in the
quarter ended March 31, 2010 from $6.2 million in the quarter ended March 31, 2009.

Casino revenues for the
quarter ended March 31, 2010 were $3.5 million, a decrease of approximately $1.3 million, or 26%, compared to $4.8 million in the quarter ended March 31, 2009. Slot and video poker revenues were $3.2 million, a decrease of $1.1
million, or 25%, compared to $4.3 million in the quarter ended March 31, 2009. Management believes this decrease was a result of increased competition from other local casinos combined with the economic climate. Other gaming revenues,
including table games for the quarter ended March 31, 2010 were $0.3 million, a decrease of $0.2 million, or 40%, compared to $0.5 million for the quarter ended March 31, 2009.

Hotel revenues were $0.4 million in each of the quarters ended March 31, 2010 and 2009. Food and beverage revenues for the quarter
ended March 31, 2010 were $1.2 million, a decrease of $0.4 million or 25% compared to $1.6 million for the quarter ended March 31, 2009. Other revenues were $0.3 million in each of the quarters ended March 31, 2010 and 2009.

Operating Expenses. Operating expenses decreased by $1.6 million, or 26%, to $4.5 million in the quarter ended
March 31, 2010 from $6.1 million in the quarter ended March 31, 2009. Operating expenses as a percentage of revenue remained unchanged at 98%.

Casino expenses were $2.0 million, a decrease of $0.8 million, or 29% from $2.8 million, primarily due to the decrease in casino
revenues. Casino expenses as a percentage of casino revenues decreased to 57% from 58%.

Hotel expenses were $0.1 million, a
decrease of approximately $0.1 million, or 50% from $0.2 million in the quarter ended March 31, 2009. Hotel expenses as a percentage of hotel revenues decreased to 25% from 50%. Food and beverage expenses were $0.7 million, a decrease of $0.3
million, or 30% from $1.0 million in prior year quarter. Food and beverage expenses as a percentage of food and beverage revenues decreased to 58% from 63%. Other expenses were approximately $0.1 million, a decrease of approximately $0.1 million, or
50%, from $0.2 million. Other expenses as a percentage of other revenues decreased to 33% from 67%.

Selling, general and
administrative expenses were $0.6 million, a decrease of $0.4 million, or 40%, compared to $1.0 million. Selling, general and administrative expenses as a percentage of revenues decreased to 13% from 16%. Pioneers selling, general and
administrative expenses are greater than the consolidated total due to the elimination of intercompany transactions in consolidation. Utilities and property expenses were $0.7 million, a decrease of approximately $0.1 million, or 13%, compared to
$0.8 million. Utilities and property expenses as a percentage of revenues increased to 15% from 13%. Depreciation and amortization expenses were $0.1 million, a decrease of approximately $0.1 million or 50%, from $0.2 million.



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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 March 31, 2010 (for the six-month period ending September 30, 2010 and for the fiscal years ending September 30, 2011, 2012, 2013, 2014, 2015 and thereafter.) (amounts in thousands):



|                            |  |                        |       |      |   |       |  |      |       |      |   |                    |  |       |        |  |   |        |  |   |       
|--------------------------- |  | ---------------------- | ----- | ---- | - | ----- |  | ---- | ----- | ---- | - | ------------------ |  | ----- | ------ |  | - | ------ |  | - | ------
|                            |  | Payments Due By Period
|                            |  | 2010                   |       | 2011 |   | 2012  |  | 2013 |       | 2014 |   | 2015 andThereafter |  | Total
|Continuing Operations       |  |                        |       |      |   |       |  |      |       |      |   |                    |  |       |        |  |   |        |  |   |       
|Nonrecourse debt:           |  |                        |       |      |   |       |  |      |       |      |   |                    |  |       |        |  |   |        |  |   |       
|Dorchester                  |  | $                      | 0     |      | $ | 0     |  | $    | 0     |      | $ | 0                  |  | $     | 0      |  | $ | 31,199 |  | $ | 31,199
|Long-term debt:             |  |                        |       |      |   |       |  |      |       |      |   |                    |  |       |        |  |   |        |  |   |       
|Mortgage obligation         |  |                        | 7,867 |      |   | 0     |  |      | 0     |      |   | 0                  |  |       | 0      |  |   | 0      |  |   | 7,867 
|Operating leases:           |  |                        |       |      |   |       |  |      |       |      |   |                    |  |       |        |  |   |        |  |   |       
|Ground lease                |  |                        | 191   |      |   | 383   |  |      | 383   |      |   | 383                |  |       | 383    |  |   | 24,530 |  |   | 26,253
|Corporate offices           |  |                        | 28    |      |   | 0     |  |      | 0     |      |   | 0                  |  |       | 0      |  |   | 0      |  |   | 28    
|                            |  |                        |       |      |   |       |  |      |       |      |   |                    |  |       |        |  |   |        |  |   |       
|Total Continuing Operations |  | $                      | 8,086 |      | $ | 383   |  | $    | 383   |      | $ | 383                |  | $     | 383    |  | $ | 55,729 |  | $ | 65,347
|                            |  |                        |       |      |   |       |  |      |       |      |   |                    |  |       |        |  |   |        |  |   |       
|Discontinued Operations     |  |                        |       |      |   |       |  |      |       |      |   |                    |  |       |        |  |   |        |  |   |       
|Gaithersburg                |  | $                      | 1,641 |      | $ | 3,573 |  | $    | 3,987 |      | $ | 4,448              |  | $     | 25,107 |  | $ | 0      |  | $ | 38,756
|                            |  |                        |       |      |   |       |  |      |       |      |   |                    |  |       |        |  |   |        |  |   |       

The Company is required to make the following cash
interest payments related to the above debt obligations: (i) Nonrecourse debt - $1.9 million (2010), $3.8 million (2011), $3.8 million (2012), $3.8 million (2013), $3.8 million (2014) and $21.9 million (2015 and thereafter);
(ii) Long-term debt - $0.2 million (2010), $0.0 million (2011), $0.0 million (2012), $0.0 million (2013) $0.0 million (2014), and $0.0 million (2015 and thereafter); (iii) Discontinued operations - $1.4 million (2010), $2.5 million
(2011), $2.3 million (2012), $2.0 million (2013) $1.0 million (2014), and $0.0 million (2015 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 nonrecourse 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 factors are beyond the Companys control. In addition, the
Company will be dependent on the continued ability of the tenants in the rental property in the Dorchester Section of Boston, Massachusetts, and the property held for sale in Gaithersburg, Maryland, 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 nonrecourse debt obligations related to the properties.

Liquidity and Capital Resources

Mortgage Note Obligation. The Companys wholly owned subsidiary, SLVC, secured and maintains a $15.0 million line of
credit loan granted by a Nevada bank. The loan and promissory note, secured by deed of trust on SLVCs approximate 27 acre parcel of land on Las Vegas Boulevard South (the Property), are for a period of one year commencing
November 15, 2009, and ending November 14,



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2010. The line of credit loan is revolving and is subject to additional lending requirements. The line of credit loan in the amount of $7.9 million at the end of the fiscal year is reported as a
current liability. The initial advance under the line of credit loan was used to pay in full the previous line of credit loan secured by the Property. The SLVC line of credit loan is guaranteed by SLVC and the Company, as well as, personally
guaranteed by Paul W. Lowden, President of SLVC, and by Suzanne Lowden, Secretary/Treasurer of SLVC.

As of March 31,
2010, the Company held cash and cash equivalents of approximately $20.9 million compared to $31.6 million at September 30, 2009. The Company had $10.9 million in investment in marketable securities at March 31, 2010 compared to $6.0
million at September 30, 2009. The rental 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.

Cash Flows from (Used
in) Operating Activities. The Companys cash used for operating activities was $3.0 million for the six months ended March 31, 2010 as compared to $0.1 million provided by operating activities for the six months ended
March 31, 2009.

Cash Flows Used in Investing Activities. Cash used in investing activities
was $4.5 million for the six months ended March 31, 2010, as compared to $1.6 million in the six months ended March 31, 2009. In the current six-month period, the Company received $2.4 million from the sale of marketable securities
offset by $0.1 million in capital expenditures and $6.8 million for the purchase of marketable securities. In the prior six-month period, the Company received $2.3 million from the sale of marketable securities offset by $1.2 million in capital
expenditures and $2.8 million for the purchase of marketable securities.

Cash Used in Financing Activities.
Cash used in financing activities was $4.0 million for the six months ended March 31, 2010 as compared to $1.3 million for the six months ended March 31, 2008. In the current six-month period, the Company used $4.0 million for the purchase
of Treasury Stock. In the prior six-month period, the Company used $1.1 million to make debt payments, and $0.2 million for the purchase of Treasury Stock.

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 an adjacent property owner to
facilitate development of the adjacent property. 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 the Laughlin market since its competition in the market typically has greater capital resources than does the Pioneer.



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Payments of rent were approximately $0.3 million and $0.2 million for the six-month periods
ended March 31, 2010 and 2009 respectively. Capital expenditures to maintain the facility in fiscal 2010 are expected to be less than $1.0 million.

Property Held for Sale

The property in Gaithersburg, Maryland is located on 51.57 acres and includes one building with approximately 342,000 square feet of
commercial office space. The property was acquired for $62.6 million, plus debt issuance costs of $2.7 million. The Company paid $9.9 million in cash and issued $55.4 million in nonrecourse first mortgage indebtedness. The property is under a net
lease through 2014 with a single tenant with an investment grade credit rating. Under the lease, the tenant is responsible for substantially all obligations related to the property. The Gaithersburg, Maryland, property is under contract to be sold.
See Note 6, Purchase and Sale Agreement of Gaithersburg Property.

Rental Properties Held for Investment

The Company acquired rental property in the Dorchester Section of Boston, Massachusetts in March 2001. The Dorchester,
Massachusetts property is located on 12 acres and includes several buildings with approximately 425,000 square feet of commercial office space. The property was acquired for approximately $82.4 million plus $0.5 million in debt issuance costs. The
Company paid $5.6 million in cash and assumed $77.3 million in nonrecourse debt associated with the property. The property is under a net lease through 2020 with a single tenant with an investment grade credit rating. Under the lease, the tenant is
responsible for substantially all obligations related to the property.

Termination of Option to Purchase Las Vegas
Boulevard Land

On December 22, 2008, SLVC, a wholly owned subsidiary of Archon Corporation, entered into an
Option Agreement with Las Vegas Towers, LLC (LVT), a Delaware limited liability company, in which SLVC granted LVT an option to purchase SLVCs approximately 27-acre parcel of land located at 2600 Las Vegas Boulevard South, Las
Vegas, Nevada.

The Option Agreement designated the purchase price to acquire the land at $618.0 million.

Simultaneous with the execution of the Option Agreement, SLVC executed a Contingent Warrant (the Warrant) to Purchase Series
A Preferred Stock (the Preferred Stock), entitling LVT to purchase 60,000 shares of Series A Preferred Stock of SLVC upon terms and conditions set forth in the Warrant. The designation and amount of the Preferred Stock as well as the
powers, preferences and relative, participating, optional and other special rights of the shares of the series of this Preferred Stock and the qualifications, limitations or restrictions thereof are set forth in the Certificate of Designation,
Preferences and Rights of the Series A Preferred Stock (the Certificate) also dated December 22, 2008. Had LVT exercised the Warrant prior to its expiration on April 1, 2009, the Option Agreement would have remained valid until
March 31, 2010. LVT failed to exercise the Warrant before its expiration, thus the Option Agreement terminated on March 31, 2009.



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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 May 7, 2010, the holders of 4,259,878 shares of the Exchangeable Redeemable Preferred Stock have surrendered their shares and received payment of the redemption price; while 156,699 shares have yet to
be surrendered and still have the right to receive their payment due without interest.

On August 27, 2007, a group of
institutional investors filed an action, in Nevada, against the Company. The Complaint was subsequently amended to add an additional party plaintiff (collectively, the 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 Plaintiffs full compensation of any and all
available damages suffered by the 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 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 not 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 Plaintiffs attorneys fees, expenses and costs incurred in enforcing their rights; and (v) seeks such other and further relief as the Court may deem appropriate.

The Plaintiffs, thereafter, filed a motion for partial summary judgment, seeking a ruling from the court that the Company breached its
obligations under the Certificate by calculating the redemption price as it did. The Court granted that motion on August 8, 2008, finding the language of the Certificate to be unambiguous and that the redemption price should have been
calculated differently. The Court has not yet issued a monetary judgment against the Company. Subsequent to the Courts ruling on the motion for partial summary judgment, Plaintiffs filed a motion for entry of final judgment, seeking entry of
judgment that the redemption price for the preferred shares should have been $8.69 per share. At the same time, the Company filed a request for certification asking the Court to certify its partial summary judgment order for immediate interlocutory
appeal. The Court granted the request for certification and denied the request for entry of final judgment without prejudice. The Company filed a Petition for Permission to Appeal with the Ninth Circuit Court of Appeals and the Ninth Circuit
declined to accept the matter for interlocutory review.

Recently, Plaintiffs have filed a second motion for entry of final
judgment, again seeking entry of judgment that the redemption price for the preferred shares should have been $8.69 per share. The Company have substantively opposed that motion and has urged the Court to reconsider its August 8, 2008 order.
Briefing on Plaintiffs second motion for entry of final judgment is not complete and no hearing date has been set on the motion.

The Company has initiated proceedings against a third-party law firm concerning that firms potential liability related to the
drafting of the Certificate of Designation. This third-party action has subsequently been removed by the firm to Federal Court in April, 2009 and is at an early stage of resolution. The third-party has moved to compel arbitration of the dispute. The
Magistrate Judge issued an order that the matter be referred to arbitration and the District Court confirmed that order. The Company intends to pursue its claims against the firm in arbitration. The Company is also considering rights and remedies it
may have with regard to other parties who participated in the issuance of the Preferred Stock in the event that the Company does not prevail on its interpretation of the Certificate.

Also, two other holders of the Exchangeable Redeemable Preferred Stock filed Complaints, both alleging essentially the same claim as the
first complaint related to the case set forth immediately above.



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If the plaintiffs in these two additional actions 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. If applied to all the then outstanding shares of Exchangeable Redeemable Preferred Stock, including the shares held by the Companys officers and directors, valuation of the redemption price at $8.69 per share would increase the
redemption price in excess of $15.2 million.

Management is unable to estimate the minimum liability that may be incurred, if
any, as a result of the outcome of each of these matters and, therefore, has made no provision in the financial statements for liability related to these cases.

Effects of Inflation

The Company has been generally successful in recovering increased costs associated with inflation through price adjustments in its hotel
operations. 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, 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 nonrecourse debt, the Company has total interest-bearing debt at March 31, 2010 of approximately $7.9 million, which bears interest at a variable rate (approximately 6% at March 31, 2010). Therefore,
the Company maintains certain market rate risk related to this debt. A change in the interest rates of 1% would cause an approximate $0.1 million 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 on a historical basis as price fluctuations of these securities have not been material.



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

Evaluation of Disclosure Controls and Procedures:

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined
in Exchange Act Rule 13a-15(f). The Companys internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the
preparation of the financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Our internal controls over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the
Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Companys assets that could have a material effect on the financial statements.

As of the end of the period covered by this report, under the supervision and with the participation of management, including our Chief
Executive Officer and Principal Accounting Officer, an evaluation of the effectiveness of the Companys internal controls over financial reporting was conducted based on the framework in Internal Control  Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, the Companys management concluded that the Companys control over financial reporting was effective.

Changes in Internal Controls:

As 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 significant changes in our internal controls or in other factors that materially affected, or are reasonably likely to materially affect these internal controls as of the end of the period covered by
this report.

Limitations on the Effectiveness of Internal Controls:

Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. All internal
control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal controls over financial reporting can provide only
reasonable assurance with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.



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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 May 7, 2010, the holders of 4,259,878 shares of the Exchangeable Redeemable Preferred Stock have surrendered their shares and received payment of the redemption price; while 156,699 shares have yet to
be surrendered and still have the right to receive their payment due without interest.

On August 27, 2007, a group of
institutional investors filed an action, in Nevada, against the Company. The Complaint was subsequently amended to add an additional party plaintiff (collectively, the 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 Plaintiffs full compensation of any and all
available damages suffered by the 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 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 not 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 Plaintiffs attorneys fees, expenses and costs incurred in enforcing their rights; and (v) seeks such other and further relief as the Court may deem appropriate.

The Plaintiffs, thereafter, filed a motion for partial summary judgment, seeking a ruling from the court that the Company breached its
obligations under the Certificate by calculating the redemption price as it did. The Court granted that motion on August 8, 2008, finding the language of the Certificate to be unambiguous and that the redemption price should have been
calculated differently. The Court has not yet issued a monetary judgment against the Company. Subsequent to the Courts ruling on the motion for partial summary judgment, Plaintiffs filed a motion for entry of final judgment, seeking entry of
judgment that the redemption price for the preferred shares should have been $8.69 per share. At the same time, the Company filed a request for certification asking the Court to certify its partial summary judgment order for immediate interlocutory
appeal. The Court granted the request for certification and denied the request for entry of final judgment without prejudice. The Company filed a Petition for Permission to Appeal with the Ninth Circuit Court of Appeals and the Ninth Circuit
declined to accept the matter for interlocutory review.

Recently, Plaintiffs have filed a second motion for entry of final
judgment, again seeking entry of judgment that the redemption price for the preferred shares should have been $8.69 per share. The Company have substantively opposed that motion and has urged the Court to reconsider its August 8, 2008 order.
Briefing on Plaintiffs second motion for entry of final judgment is not complete and no hearing date has been set on the motion.



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The Company has initiated proceedings against a third-party law firm concerning that
firms potential liability related to the drafting of the Certificate of Designation. This third-party action has subsequently been removed by the firm to Federal Court in April, 2009 and is at an early stage of resolution. The third-party has
moved to compel arbitration of the dispute. The Magistrate Judge issued an order that the matter be referred to arbitration and the District Court confirmed that order. The Company intends to pursue its claims against the firm in arbitration. The
Company is also considering rights and remedies it may have with regard to other parties who participated in the issuance of the Preferred Stock in the event that the Company does not prevail on its interpretation of the Certificate.

Also, two other holders of the Exchangeable Redeemable Preferred Stock filed Complaints, both alleging essentially the same claim as the
first complaint related to the case set forth immediately above. If the plaintiffs in these two additional actions 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. If applied to all the then outstanding shares of Exchangeable Redeemable Preferred Stock, including the shares held by the Companys officers and directors, valuation of the redemption price at $8.69 per share would increase the
redemption price in excess of $15.2 million.

Management is unable to estimate the minimum liability that may be incurred, if
any, as a result of the outcome of each of these matters and, therefore, has made no provision in the financial statements for liability related to these cases.



|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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|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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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: May 10, 2010



39