##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q/A
 Amendment No. 1
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended July 1, 2007
 Or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from              to
 Commission File No. 0-24993
 LAKES ENTERTAINMENT, INC.
 (Exact name of registrant as specified in its charter)
 Minnesota(State or other jurisdiction 
of incorporation or organization)
    
    41-1913991(I.R.S. Employer
Identification No.)130 Cheshire Lane, Suite 101
Minnetonka, Minnesota(Address of principal executive offices)
    
    55305(Zip Code)
 (952) 449-9092  (Registrants telephone number, including area code)
 þ o
  o þ o
 o þ




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##### 



LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
INDEX
  
 Page ofForm 10-QExplanatory Note
    
    
    3PART I. FINANCIAL INFORMATIONITEM 1.
    
    FINANCIAL STATEMENTSCondensed Consolidated Balance Sheets as of July 1, 2007
(unaudited) and December 31, 2006
    
    
    5Unaudited Condensed Consolidated Statements of Earnings
(Loss) and Comprehensive Earnings (Loss) for the three months
and six months ended July 1, 2007 and July 2, 2006
    
    
    6Unaudited Condensed Consolidated Statements of Cash Flows for
the six months ended July 1, 2007 and July 2, 2006
    
    
    7Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    8ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
    
    
    19ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    45ITEM 4.
    
    CONTROLS AND PROCEDURES
    
    
    46PART II. OTHER INFORMATIONITEM 1.
    
    LEGAL PROCEEDINGS
    
    
    46ITEM 1A.
    
    RISK FACTORS
    
    
    46ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    48ITEM 6.
    
    EXHIBITS
    
    
    48302 Certification of CEO302 Certification of CFO906 Certification of Chief Executive Officer and Chief Financial Officer
  2




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##### Table of Contents



Explanatory Note for Amendment No. 1 on Form 10-Q/A
  Background
 Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled
in, a Companys Own Stock
  Amendment to Form 10-Q
  3




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##### Table of Contents



Effects of Restatement




As of and for the six
monthsended
July 1, 2007Aspreviously(in thousands, except per share
data):
    

reported
    
    RestatedAdditional paid-in capital
    
    $
    188,824
    
    
    $
    187,659Retained earnings
    
    
    27,398
    
    
    
    28,563Interest expense, other (*)
    
    
    (2,588
    )
    
    
    (316
    )Net loss
    
    
    (4,076
    )
    
    
    (1,804
    )Loss per share  basic and
diluted
    
    
    (0.24
    )
    
    
    (0.14
    )
 As ofDecember 31, 2006Aspreviously(in thousands, except per share
data):
    

reported
    

RestatedWarrant liability
    
    $
    
    
    
    $
    5,816Additional paid-in capital
    
    
    176,419
    
    
    
    171,710Retained earnings
    
    
    34,357
    
    
    
    33,250
 For the three monthsended July 2, 2006Aspreviously(in thousands, except per share
data):
    
    reported
    
    RestatedInterest expense, other (*)
    
    $
    (1,303
    )
    
    $
    (2,458
    )Net earnings
    
    
    3,248
    
    
    
    2,093Earnings per share  basic
    
    
    0.14
    
    
    
    0.09Earnings per share  diluted
    
    
    0.13
    
    
    
    0.08
 For the six monthsended July 2, 2006Aspreviously(in thousands, except per share
data):
    

reported
    

RestatedInterest expense, other (*)
    
    $
    (1,834
    )
    
    $
    (4,640
    )Net earnings
    
    
    14,932
    
    
    
    12,126Earnings per share  basic
    
    
    0.66
    
    
    
    0.54Earnings per share  diluted
    
    
    0.61
    
    
    
    0.49
 
 *
    
    Restated amount includes the quarterly fair value adjustment related to the long-term liability
associated with the warrant as of February 28, 2007, the date on which the shares underlying the
warrant were registered for resale. 4




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##### Table of Contents



LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
 July 1, 2007
    
    
    December 31, 2006(Unaudited)(restated)
    
    
    (restated)AssetsCurrent assets:Cash and cash equivalents
    
    $
    18,629
    
    
    $
    9,759(balances include $1.5 million and $8.4 million
of WPT Enterprises, Inc. cash)Restricted cash
    
    
    
    
    
    
    12,738Investments in marketable securities
    
    
    56,612
    
    
    
    59,863(balances include $33.0 million and $31.3
million of WPT Enterprises, Inc. short-term
investments)Accounts receivable
    
    
    3,350
    
    
    
    2,963Other current assets
    
    
    1,984
    
    
    
    2,706Total current assets
    
    
    80,575
    
    
    
    88,029Property and equipment, net
    
    
    16,877
    
    
    
    17,460Long-term assets related to Indian casino projects:Notes receivable from Indian tribes
    
    
    78,566
    
    
    
    164,308Land held for development
    
    
    8,121
    
    
    
    16,790Intangible assets
    
    
    57,349
    
    
    
    54,279Other
    
    
    5,244
    
    
    
    8,450Total long-term assets related to Indian casino projects
    
    
    149,280
    
    
    
    243,827Other assets:Restricted cash
    
    
    347
    
    
    
    453Investments
    
    
    2,923
    
    
    
    2,923Deferred tax asset
    
    
    6,354
    
    
    
    6,248Debt issuance costs
    
    
    
    
    
    
    1,972Other long-term assets
    
    
    201
    
    
    
    264Total other assets
    
    
    9,825
    
    
    
    11,860Total Assets
    
    $
    256,557
    
    
    $
    361,176Liabilities and shareholders equityCurrent liabilities:Accounts payable
    
    $
    2,392
    
    
    $
    5,345Income taxes payable
    
    
    16,301
    
    
    
    14,593Accrued payroll and related costs
    
    
    2,003
    
    
    
    2,480Deferred revenue
    
    
    2,557
    
    
    
    4,740Accrued interest
    
    
    
    
    
    
    312Other accrued expenses
    
    
    1,635
    
    
    
    1,879Total current liabilities
    
    
    24,888
    
    
    
    29,349Long-term debt, other, net of unamortized discount of
$0.9 million at December 31, 2006
    
    
    
    
    
    
    104,471Warrant liability
    
    
    
    
    
    
    5,816Total long-term liabilities
    
    
    
    
    
    
    110,287Total liabilities
    
    
    24,888
    
    
    
    139,636Commitments and contingenciesMinority interest in subsidiary
    
    
    15,207
    
    
    
    16,764Shareholders equity:Series A preferred stock, $.01 par value; authorized
7,500 shares; 4,458 issued and outstanding at July
1, 2007 and December 31, 2006, respectively
    
    
    45
    
    
    
    45Common stock, $.01 par value; authorized 200,000
shares; 24,356 and 22,949 issued and outstanding at
July 1, 2007, and December 31, 2006, respectively
    
    
    244
    
    
    
    229Additional paid-in capital
    
    
    187,659
    
    
    
    171,710Retained earnings
    
    
    28,563
    
    
    
    33,250Accumulated other comprehensive loss
    
    
    (49
    )
    
    
    (458
    )Total shareholders equity
    
    
    216,462
    
    
    
    204,776Total liabilities and shareholders equity
    
    $
    256,557
    
    
    $
    361,176
 See notes to unaudited condensed consolidated financial statements
 5




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##### Table of Contents



LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings (Loss) and Comprehensive Earnings (Loss)
(In thousands, except per share data)
(Unaudited)
 Three months ended
    
    
    Six months endedJuly 1, 2007
    
    
    July 2, 2006
    
    
    July 1, 2007
    
    
    July 2, 2006(restated)
    
    
    (restated)
    
    
    (restated)Revenues:License fee income
    
    $
    6,072
    
    
    $
    8,750
    
    
    $
    9,839
    
    
    $
    13,426Host fees, sponsorship, online gaming and other
    
    
    1,671
    
    
    
    2,305
    
    
    
    2,425
    
    
    
    4,094Management, consulting and development fees
    
    
    386
    
    
    
    165
    
    
    
    835
    
    
    
    330Total revenues
    
    
    8,129
    
    
    
    11,220
    
    
    
    13,099
    
    
    
    17,850Costs and expenses:Selling, general and administrative
    
    
    9,966
    
    
    
    8,833
    
    
    
    19,721
    
    
    
    18,015Production costs
    
    
    3,087
    
    
    
    4,176
    
    
    
    5,239
    
    
    
    6,596Loss on abandonment of online gaming assets
    
    
    2,270
    
    
    
    
    
    
    
    2,270
    
    
    
    Net impairment losses
    
    
    
    
    
    
    
    
    
    
    331
    
    
    
    Depreciation and amortization
    
    
    191
    
    
    
    139
    
    
    
    386
    
    
    
    272Total costs and expenses
    
    
    15,514
    
    
    
    13,148
    
    
    
    27,947
    
    
    
    24,883Net realized and unrealized gains on notes
receivable
    
    
    8,939
    
    
    
    17,647
    
    
    
    9,104
    
    
    
    33,123Earnings (loss) from operations
    
    
    1,554
    
    
    
    15,719
    
    
    
    (5,744
    )
    
    
    26,090Other income (expense):Interest income
    
    
    5,495
    
    
    
    657
    
    
    
    6,633
    
    
    
    1,090Interest expense, related party
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (137
    )Interest expense, other
    
    
    
    
    
    
    (2,458
    )
    
    
    (316
    )
    
    
    (4,640
    )Amortization of debt issuance costs
    
    
    
    
    
    
    (176
    )
    
    
    (95
    )
    
    
    (312
    )Loss on extinguishment of debt
    
    
    
    
    
    
    (6,821
    )
    
    
    (3,830
    )
    
    
    (6,821
    )Gain on sale of investment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,675Other
    
    
    22
    
    
    
    (10
    )
    
    
    28
    
    
    
    76Total other income (expense), net
    
    
    5,517
    
    
    
    (8,808
    )
    
    
    2,420
    
    
    
    (5,069
    )Earnings (loss) before income taxes and minority
interest in net (earnings) loss of subsidiary
    
    
    7,071
    
    
    
    6,911
    
    
    
    (3,324
    )
    
    
    21,021Income taxes
    
    
    348
    
    
    
    3,837
    
    
    
    656
    
    
    
    6,547Earnings (loss) before minority interest in net
(earnings) loss of subsidiary
    
    
    6,723
    
    
    
    3,074
    
    
    
    (3,980
    )
    
    
    14,474Minority interest in net (earnings) loss of
subsidiary
    
    
    1,295
    
    
    
    (981
    )
    
    
    2,176
    
    
    
    (2,348
    )Net earnings (loss)
    
    
    8,018
    
    
    
    2,093
    
    
    
    (1,804
    )
    
    
    12,126Stock warrant inducement discount
    
    
    1,444
    
    
    
    
    
    
    
    1,444
    
    
    
    Net earnings (loss) available to common
shareholders
    
    
    6,574
    
    
    
    2,093
    
    
    
    (3,248
    )
    
    
    12,126Other comprehensive earnings (loss):Unrealized loss on marketable securities, net
of tax
    
    
    (23
    )
    
    
    (855
    )
    
    
    
    
    
    
    (426
    )Change in estimated fair value of derivative
    
    
    
    
    
    
    (161
    )
    
    
    409
    
    
    
    (161
    )Comprehensive earnings (loss)
    
    $
    6,551
    
    
    $
    1,077
    
    
    
    ($2,839
    )
    
    $
    11,539Earnings (loss) available to common shareholders
per share  basic
    
    $
    0.28
    
    
    $
    0.09
    
    
    
    ($0.14
    )
    
    $
    0.54Earnings (loss) available to common shareholders
per share  diluted
    
    $
    0.25
    
    
    $
    0.08
    
    
    
    ($0.14
    )
    
    $
    0.49Weighted-average common shares outstanding 
basic
    
    
    23,829
    
    
    
    22,875
    
    
    
    23,427
    
    
    
    22,642Dilutive effect of common stock equivalents
    
    
    2,077
    
    
    
    2,041
    
    
    
    
    
    
    
    1,862Weighted-average common shares outstanding 
diluted
    
    
    25,906
    
    
    
    24,916
    
    
    
    23,427
    
    
    
    24,504
 See notes to unaudited condensed consolidated financial statements
 6




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##### Table of Contents



LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 Six Months EndedJuly 1, 2007
    
    
    July 2, 2006(restated)
    
    
    (restated)OPERATING ACTIVITIES:Net earnings (loss)
    
    
    ($1,804
    )
    
    $
    12,126Adjustments to reconcile net earnings (loss) to net cash used in operating activities:Depreciation and amortization
    
    
    553
    
    
    
    431Amortization of debt issuance costs
    
    
    95
    
    
    
    688Amortization of debt discount
    
    
    33
    
    
    
    17Increase (decrease) in value of warrant liability
    
    
    (2,272
    )
    
    
    2,806Share-based compensation
    
    
    2,443
    
    
    
    3,689Loss on extinguishment of debt
    
    
    2,783
    
    
    
    6,821Loss on abandonment of online gaming assets
    
    
    2,270
    
    
    
    Net realized and unrealized gains on notes receivable
    
    
    (10,165
    )
    
    
    (33,123
    )Gain on sale of investment
    
    
    
    
    
    
    (5,675
    )Minority interest in net earnings (loss) of subsidiary
    
    
    (2,176
    )
    
    
    2,348Deferred income taxes
    
    
    (105
    )
    
    
    3,769Net impairment losses
    
    
    331
    
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    (405
    )
    
    
    1,022Other current assets
    
    
    427
    
    
    
    617Income taxes payable
    
    
    270
    
    
    
    2,642Accounts payable
    
    
    347
    
    
    
    (1,094
    )Deferred revenue
    
    
    (2,182
    )
    
    
    (1,799
    )Accrued expenses
    
    
    (1,035
    )
    
    
    723Net cash used in operating activities
    
    
    (10,592
    )
    
    
    (3,992
    )INVESTING ACTIVITIES:Purchase of marketable securities
    
    
    (59,997
    )
    
    
    (39,346
    )Sale / maturity of marketable securities
    
    
    63,257
    
    
    
    21,722Proceeds from sale of land held for development
    
    
    8,758
    
    
    
    Collections on notes receivable
    
    
    3,690
    
    
    
    2,865Increases in long-term assets related to Indian casino projects
    
    
    (13,495
    )
    
    
    (31,880
    )Proceeds from sale of investment
    
    
    
    
    
    
    5,686Purchase of property and equipment
    
    
    (1,867
    )
    
    
    (2,886
    )Increase in other long-term assets
    
    
    
    
    
    
    (445
    )Net cash provided by (used in) investing activities
    
    
    346
    
    
    
    (44,284
    )FINANCING ACTIVITIES:Decrease in restricted cash
    
    
    12,844
    
    
    
    Debt issuance costs
    
    
    
    
    
    
    (5,004
    )Restricted cash proceeds from long-term debt
    
    
    
    
    
    
    19,090Restricted cash proceeds from long-term debt available as of quarter end
    
    
    
    
    
    
    (19,090
    )Unrestricted cash proceeds from long-term debt
    
    
    
    
    
    
    109,860Repayment of long-term debt
    
    
    (105,000
    )
    
    
    (35,000
    )Repayment of long-term debt, related party
    
    
    
    
    
    
    Cash proceeds from issuance of common and preferred stock
    
    
    9,158
    
    
    
    3,277Increase in WPTE restricted cash
    
    
    
    
    
    
    (197
    )Shareholder trading settlement
    
    
    
    
    
    
    2,805Cash proceeds from sale of participation notes
    
    
    102,114
    
    
    
    Net cash provided by financing activities
    
    
    19,116
    
    
    
    75,741Net increase (decrease) in cash and cash equivalents
    
    
    8,870
    
    
    
    27,465Cash and cash equivalents  beginning of period
    
    
    9,759
    
    
    
    9,912Cash and cash equivalents  end of period
    
    $
    18,629
    
    
    $
    37,377
 See notes to unaudited condensed consolidated financial statements
 7




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##### Table of Contents



LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
 
 Notes to Unaudited Condensed Consolidated Financial Statements
 1. Basis of Presentation
    2. Restatement
 Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled
in, a Companys Own Stock
  8




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##### Table of Contents



As of andfor the six months
endedJuly
1, 2007As previously(in thousands, except per share
data):
    
    reported
    
    RestatedAdditional paid-in
capital
    
    $
    188,824
    
    
    $
    187,659Retained earnings
    
    
    27,398
    
    
    
    28,563Interest expense,
other (*)
    
    
    (2,588
    )
    
    
    (316
    )Net loss
    
    
    (4,076
    )
    
    
    (1,804
    )Loss per share 
basic and diluted
    
    
    (0.24
    )
    
    
    (0.14
    )
 As ofDecember
31, 2006As previously(in thousands, except per share
data):
    

reported
    

RestatedWarrant liability
    
    $
    
    
    
    $
    5,816Additional paid-in capital
    
    
    176,419
    
    
    
    171,710Retained earnings
    
    
    34,357
    
    
    
    33,250
 For thethree months endedJuly
2, 2006As previously(in thousands, except per share
data):
    
    reported
    
    RestatedInterest expense, other (*)
    
    $
    (1,303
    )
    
    $
    (2,458
    )Net earnings
    
    
    3,248
    
    
    
    2,093Earnings per share  basic
    
    
    0.14
    
    
    
    0.09Earnings per share  diluted
    
    
    0.13
    
    
    
    0.08
 For thesix months endedJuly
2, 2006As previously(in thousands, except per share
data):
    

reported
    

RestatedInterest expense, other (*)
    
    $
    (1,834
    )
    
    $
    (4,640
    )Net earnings
    
    
    14,932
    
    
    
    12,126Earnings per share  basic
    
    
    0.66
    
    
    
    0.54Earnings per share  diluted
    
    
    0.61
    
    
    
    0.49
 
 *
    
    Restated amount includes the quarterly fair value adjustment related to the long-term liability
associated with the warrant as of February 28, 2007, the date on which the shares underlying the
warrant were registered for resale. See notes to unaudited condensed consolidated financial statements
 9




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##### Table of Contents



3. Long-Term Assets Related to Indian Casino Projects
  July 1, 2007 (unaudited)ShinglePokagon
    
    
    Springs
    
    
    JamulBand
    
    
    Tribe
    
    
    Tribe
    
    
    Other
    
    
    TotalNotes receivable, at estimated fair value
    
    $
    
    
    
    $
    50,417
    
    
    $
    24,809
    
    
    $
    3,340
    
    
    $
    78,566Intangible assets related to Indian casino projects (*)
    
    
    23,573
    
    
    
    21,674
    
    
    
    11,116
    
    
    
    986
    
    
    
    57,349Land held for development
    
    
    
    
    
    
    
    
    
    
    6,751
    
    
    
    1,370
    
    
    
    8,121Other
    
    
    60
    
    
    
    767
    
    
    
    1,154
    
    
    
    3,263
    
    
    
    5,244$
    23,633
    
    
    $
    72,858
    
    
    $
    43,830
    
    
    $
    8,959
    
    
    $
    149,280
 December 31, 2006ShinglePokagon
    
    
    Springs
    
    
    JamulBand
    
    
    Tribe
    
    
    Tribe
    
    
    Other
    
    
    TotalNotes receivable, at estimated fair value
    
    $
    100,544
    
    
    $
    40,912
    
    
    $
    20,754
    
    
    $
    2,098
    
    
    $
    164,308Intangible assets related to Indian casino projects (*)
    
    
    23,573
    
    
    
    20,387
    
    
    
    9,760
    
    
    
    559
    
    
    
    54,279Land held for development
    
    
    
    
    
    
    8,739
    
    
    
    6,710
    
    
    
    1,341
    
    
    
    16,790Other
    
    
    60
    
    
    
    2,041
    
    
    
    2,207
    
    
    
    4,142
    
    
    
    8,450$
    124,177
    
    
    $
    72,079
    
    
    $
    39,431
    
    
    $
    8,140
    
    
    $
    243,827
 
 (*)
    
    Intangible assets consist primarily of contractual rights to develop, finance and/or manage
Indian-owned casino properties. Amortization of intangible assets begins once the related
project becomes operational, and is calculated using the straight line method over the term of
the underlying contract. Amortization related to projects currently operating is not material
for any periods presented in the accompanying unaudited condensed consolidated financial
statements. 10




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##### Table of Contents



Pokagon Band.
 Accounting
for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities
  Shingle Springs Tribe.
  As of July 1, 2007
    
    As of December 31, 2006Face value of note (principal and interest)
    
    $63,125
    
    
    
    $55,942($46,368 principal and
$16,757 interest)
    
    ($42,310 principal and
$13,632 interest)Estimated months until casino opens (weighted-average
of three scenarios)
    
    18 months
    
    28 monthsProjected interest rate until casino opens
    
    10.41%
    
    
    
    9.98%Projected interest rate during the loan repayment term
    
    10.26%
    
    
    
    9.76%Discount rate
    
    15%
    
    
    
    15%Repayment terms of note*
    
    84 months
    
    Projected repayment terms of note**
    
    
    
    
    
    24 monthsProbability rate of casino opening (weighting of four
scenarios)
    
    95%
    
    
    
    85%
 
 *
    
    Note is payable in even monthly installments over the course of the management agreement
subsequent to the casino opening.**
    
    Note was previously payable in varying monthly installments based on contract terms
subsequent to the casino opening.  11




---



##### Table of Contents



Jamul Tribe.
  As of July 1, 2007
    
    As of December 31, 2006Face value of note (principal and interest)
    
    $38,527
    
    
    
    $32,952($28,230 principal and
$10,297 interest)
    
    ($24,509 principal and
$8,443 interest)Estimated months until casino opens (weighted-average
of three scenarios)
    
    29 months
    
    29 monthsProjected interest rate until casino opens
    
    10.41%
    
    
    
    9.98%Projected interest rate during the loan repayment term
    
    10.38%
    
    
    
    9.76%Discount rate
    
    15.75%
    
    
    
    15.75%Projected repayment terms of note
    
    120 months
    
    120 monthsProbability rate of casino opening (weighting of four
scenarios)
    
    85%
    
    
    
    85%
  4. Long-Term Debt
  5. Stock Warrant
   12




---



##### Table of Contents



6. Share-based Compensation
  Three Months Ended
    
    Six Months EndedJuly 1,
    
    July 2,
    
    July 1,
    
    July 2,2007
    
    2006
    
    2007
    
    2006(In thousands)Total cost of share-based payment plans
    
    $
    1,203
    
    
    $
    1,424
    
    
    $
    2,435
    
    
    $
    3,676
    Lakes stock option plans:
 Three Months Ended
    
    Six Months EndedJuly 1,
    
    July 2,
    
    July 1,
    
    July 2,Key valuation assumptions:
    
    2007
    
    2006
    
    2007
    
    2006Expected volatility
    
    
    54.95
    %
    
    
    55.55
    %
    
    
    54.95
    %
    
    
    55.55
    %Expected dividend yield
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Risk-free interest rate
    
    
    4.89
    %
    
    
    5.10
    %
    
    
    4.89
    %
    
    
    5.10
    %Expected term (in years)
    
    8.2 years
    
    
    8.2 years
    
    
    8.2 years
    
    
    8.2 years
 
    
    Expected volatility  The volatility assumption is based on the historical weekly
price data of Lakes stock over a two-year period. Management evaluated whether there were
factors during that period which were unusual and which would distort the volatility figure
if used to estimate future volatility and concluded that there were no such factors.
 13




---



##### Table of Contents




    
    Forfeiture rate  As share-based compensation expense recognized is based on awards
ultimately expected to vest, expense for grants beginning upon adoption of SFAS 123(R) will
be reduced for estimated forfeitures. SFAS 123(R) requires forfeitures to be estimated at
the time of grant and revised, if necessary, in subsequent periods if actual forfeitures
differ from those estimates. The Company has reviewed the historical forfeitures which are
minimal, and as such will amortize the grants to the end of the vesting period and will
adjust for forfeitures at the end of the term.
    
    Expected term  The expected term of employee stock options represents the
weighted-average period that the stock options are expected to remain outstanding. It is
based upon an analysis of the historical behavior of option holders during the period from
September 1995 to July 1, 2007. Management believes historical data is reasonably
representative of future exercise behavior.
    
    Risk free interest rate  The risk free interest rate assumption is based on the U.S.
Treasury yield curve in effect at the time of grant and with maturities consistent with the
expected term of options.
  The following table summarizes Lakes stock option activity during the three months and six
months ended July 1, 2007 and July 2, 2006:
 Number of Common SharesWeighted-Avg.Options
    
    
    
    
    
    
    Available
    
    
    ExerciseOutstanding
    
    
    Exercisable
    
    
    for Grant
    
    
    Price2007Balance at December 31, 2006
    
    
    4,716,400
    
    
    
    3,712,350
    
    
    
    35,500
    
    
    $
    6.15Authorized
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited/cancel led/expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    (112,500
    )
    
    
    
    
    
    
    
    
    
    
    5.82Balance at April 1, 2007
    
    
    4,603,900
    
    
    
    4,025,750
    
    
    
    35,500
    
    
    $
    6.15Authorized
    
    
    
    
    
    
    
    
    
    
    500,000
    
    
    
    Granted
    
    
    2,500
    
    
    
    
    
    
    
    (2,500
    )
    
    
    11.84Forfeited/cancel led/expired
    
    
    (44,500
    )
    
    
    
    
    
    
    44,500
    
    
    
    9.79Exercised
    
    
    (74,500
    )
    
    
    
    
    
    
    
    
    
    
    5.83Balance at July 1, 2007
    
    
    4,487,400
    
    
    
    3,954,500
    
    
    
    577,500
    
    
    $
    6.132006Balance at January 1, 2006
    
    
    5,307,626
    
    
    
    4,153,476
    
    
    
    94,500
    
    
    $
    6.03Authorized
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    30,000
    
    
    
    
    
    
    
    (30,000
    )
    
    
    9.77Forfeited/cancel led/expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    (550,000
    )
    
    
    
    
    
    
    
    
    
    
    5.65Balance at April 2, 2006
    
    
    4,787,626
    
    
    
    3,711,626
    
    
    
    64,500
    
    
    $
    6.10Authorized
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    5,000
    
    
    
    
    
    
    
    (5,000
    )
    
    
    12.10Forfeited/cancel led/expired
    
    
    (5,000
    )
    
    
    
    
    
    
    5,000
    
    
    
    8.15Exercised
    
    
    (25,000
    )
    
    
    
    
    
    
    
    
    
    
    4.75Balance at July 2, 2006
    
    
    4,762,626
    
    
    
    3,718,126
    
    
    
    64,500
    
    
    $
    6.11
 14




---



##### Table of Contents



The following table summarizes significant ranges of Lakes outstanding and exercisable
options as of July 1, 2007:
 Options Outstanding at July 1, 2007Weighted-
    
    
    
    
    
    
    
    
    
    
    Options Exercisable at July 1, 2007Average
    
    
    
    
    
    
    Aggregate
    
    
    
    
    
    
    
    
    
    
    AggregateNumber
    
    
    Remaining
    
    
    Weighted-Average
    
    
    Intrinsic
    
    
    Number
    
    
    Weighted-
    
    
    IntrinsicRange of Exercise Prices
    
    Outstanding
    
    
    Contractual Life
    
    
    Exercise Price
    
    
    Value
    
    
    Exercisable
    
    
    Average Price
    
    
    Value$(3.253.63)
    
    
    286,200
    
    
    3.9 years
    
    $
    3.45
    
    
    $
    2,390,622
    
    
    
    286,200
    
    
    $
    3.45
    
    
    $
    2,390,622(3.64  5.45)
    
    
    2,374,700
    
    
    1.7 years
    
    
    4.22
    
    
    
    18,027,678
    
    
    
    2,374,700
    
    
    
    4.22
    
    
    
    18,027,678(5.46  7.26)
    
    
    60,000
    
    
    6.5 years
    
    
    7.18
    
    
    
    278,100
    
    
    
    45,000
    
    
    
    7.18
    
    
    
    208,575(7.27  9.08)
    
    
    1,438,500
    
    
    6.2 years
    
    
    8.13
    
    
    
    5,297,276
    
    
    
    1,099,000
    
    
    
    8.13
    
    
    
    4,047,068(9.09  10.90)
    
    
    72,000
    
    
    6.5 years
    
    
    10.36
    
    
    
    104,320
    
    
    
    27,050
    
    
    
    10.48
    
    
    
    35,936(10.91  12.71)
    
    
    91,000
    
    
    7.6 years
    
    
    11.47
    
    
    
    37,200
    
    
    
    41,050
    
    
    
    11.43
    
    
    
    17,647(12.72  14.53)
    
    
    95,000
    
    
    7.6 years
    
    
    14.00
    
    
    
    
    
    
    
    44,500
    
    
    
    14.04
    
    
    
    (14.54  16.34)
    
    
    5,000
    
    
    7.5 years
    
    
    16.11
    
    
    
    
    
    
    
    2,000
    
    
    
    16.11
    
    
    
    (16.35  18.16)
    
    
    65,000
    
    
    6.8 years
    
    
    17.91
    
    
    
    
    
    
    
    35,000
    
    
    
    17.97
    
    
    
    4,487,400
    
    
    3.7 years
    
    $
    6.13
    
    
    $
    26,135,196
    
    
    
    3,954,500
    
    
    $
    5.64
    
    
    $
    24,727,526
  WPTE stock option plan:
 Three Months Ended
    
    Six Months EndedJuly 1,
    
    July 2,
    
    July 1,
    
    July 2,2007
    
    2006
    
    2007
    
    2006Expected volatility
    
    
    72.22
    %
    
    
    78.91
    %
    
    
    73.03
    %
    
    
    81.57
    %Forfeiture rate
    
    
    12.99
    %
    
    
    4.13
    %
    
    
    12.99
    %
    
    
    4.13
    %Expected dividend yield
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Risk-free interest rate
    
    
    4.84
    %
    
    
    5.06
    %
    
    
    4.65
    %
    
    
    4.68
    %Expected term (in years)
    
    6 years
    
    
    6.5 years
    
    
    6 years
    
    
    6.5 years
 
    
    Expected volatility  As WPTE has a relatively short operating history and no
definitive peer or peer groups, expected volatility was based on historical volatility of
WPTEs stock price since it began trading in August 2004.
    
    Forfeiture rate  As share-based compensation expense recognized is based on awards
ultimately expected to vest, expense for grants beginning upon adoption of SFAS 123(R) will
be reduced for estimated forfeitures. SFAS 123(R) requires forfeitures to be estimated at
the time of grant and revised, if necessary, in subsequent periods if actual forfeitures
differ from those estimates. WPTE used historical data to estimate employee departure
behavior in estimating future forfeitures.
    
    Expected term  Due to WPTEs limited operating history including stock option
exercises and forfeitures, WPTE calculated expected term using the Simplified Method in
accordance with Staff Accounting Bulletin 107.
    
    Risk free interest rate  The risk free interest rate assumption is based on the U.S.
Treasury yield curve in effect at the time of grant and with maturities consistent with the
expected term of options.
 15




---



##### Table of Contents



The following table summarizes WPTE stock option activity during the three months and six
months ended July 1, 2007 and July 2, 2006:
 Number of Common SharesWeighted-Avg.Options
    
    
    
    
    
    
    Available
    
    
    Exerciseoutstanding
    
    
    Exercisable
    
    
    for Grant
    
    
    Price2007Balance at December 31, 2006
    
    
    2,318,166
    
    
    
    1,050,200
    
    
    
    983,501
    
    
    $
    6.76Authorized
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    287,000
    
    
    
    
    
    
    
    (287,000
    )
    
    
    4.80Forfeited/cancelled/expired
    
    
    (90,466
    )
    
    
    
    
    
    
    90,466
    
    
    
    8.49Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at April 1, 2007
    
    
    2,514,700
    
    
    
    1,010,533
    
    
    
    786,967
    
    
    $
    6.47Authorized
    
    
    Granted
    
    
    182,000
    
    
    
    
    
    
    
    (182,000
    )
    
    
    4.53Forfeited/cancelled/expired
    
    
    (85,667
    )
    
    
    
    
    
    
    85,667
    
    
    
    5.25Exercised
    
    
    (113,660
    )
    
    
    
    
    
    
    
    
    
    
    0.0049Balance at July 1, 2007
    
    
    2,497,373
    
    
    
    912,139
    
    
    
    690,634
    
    
    $
    6.672006Balance at January 1, 2006
    
    
    2,158,000
    
    
    
    620,333
    
    
    
    283,667
    
    
    $
    7.14Authorized
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    219,000
    
    
    
    
    
    
    
    (219,000
    )
    
    
    6.20Forfeited/cancelled/expired
    
    
    (159,333
    )
    
    
    
    
    
    
    159,333
    
    
    
    8.13Exercised
    
    
    (115,000
    )
    
    
    
    
    
    
    
    
    
    
    0.0049Balance at April 2, 2006
    
    
    2,102,667
    
    
    
    785,500
    
    
    
    224,000
    
    
    $
    7.36Authorized
    
    
    
    
    
    
    
    
    
    
    1,080,000
    
    
    
    Granted
    
    
    109,500
    
    
    
    
    
    
    
    (109,500
    )
    
    
    5.18Forfeited/cancelled/expired
    
    
    (153,501
    )
    
    
    
    
    
    
    153,501
    
    
    
    10.07Exercised
    
    
    (105,000
    )
    
    
    
    
    
    
    
    
    
    
    0.0049Balance at July 2, 2006
    
    
    1,953,666
    
    
    
    619,333
    
    
    
    1,348,001
    
    
    $
    7.42
 The following table summarizes significant ranges of WPTE outstanding and exercisable options
as of July 1, 2007:
 Options Outstanding
    
    
    Options ExercisableWeighted-Avg.
    
    
    Weighted-
    
    
    Aggregate
    
    
    
    
    
    
    
    
    
    
    AggregateRange of
    
    Number
    
    
    Remaining
    
    
    Avg. Exercise
    
    
    Intrinsic
    
    
    Number
    
    
    Weighted-
    
    
    IntrinsicExercise Prices
    
    Outstanding
    
    
    Contractual Life
    
    
    Price
    
    
    Value
    
    
    Exercisable
    
    
    Avg. Price
    
    
    Value$0.0049
    
    
    111,340
    
    
    
    4.66
    
    
    $
    0.0049
    
    
    $
    454,835
    
    
    
    111,340
    
    
    $
    0.0049
    
    
    $
    454,835$3.93  4.80
    
    
    824,000
    
    
    
    9.58
    
    
    
    4.46
    
    
    
    4,800
    
    
    
    
    
    
    
    
    
    
    
    $5.18  9.92
    
    
    1,325,366
    
    
    
    7.48
    
    
    
    7.57
    
    
    
    
    
    
    
    739,133
    
    
    
    7.88
    
    
    
    $11.95  14.51
    
    
    220,667
    
    
    
    8.12
    
    
    
    12.19
    
    
    
    
    
    
    
    56,000
    
    
    
    12.70
    
    
    
    $15.05  19.50
    
    
    16,000
    
    
    
    8.10
    
    
    
    15.33
    
    
    
    
    
    
    
    5,666
    
    
    
    15.57
    
    
    
    2,497,373
    
    
    
    8.10
    
    
    $
    6.67
    
    
    $
    459,635
    
    
    
    912,139
    
    
    $
    7.26
    
    
    $
    454,835
  7. Earnings (Loss) Available to Common Shareholders Per Share
  16




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##### Table of Contents



8. Income Taxes
    Accounting for Uncertainty in Income Taxes
    9. Contingencies
 IRS tax audit.
 Louisiana Department of Revenue Litigation Tax Matter.
 17




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##### Table of Contents



WPTE litigation.
 Miscellaneous legal matters.
 10. Segment Information
 ®
 Industry SegmentsIndianCasino
    
    
    WPT
    
    
    Corporate and
    
    
    TotalProjects
    
    
    Enterprises, Inc.
    
    
    Eliminations
    
    
    ConsolidatedTotal assets as of July 1, 2007
    
    $
    148.9
    
    
    $
    44.2
    
    
    $
    63.3
    
    
    $
    256.6Total assets as of December 31, 2006
    
    $
    242.8
    
    
    $
    51.3
    
    
    $
    67.1
    
    
    $
    361.2For the three months ended July 1, 2007
Revenue
    
    $
    0.4
    
    
    $
    7.7
    
    
    $
    
    
    
    $
    8.1Earnings (loss) from operations
    
    
    9.1
    
    
    
    (3.6
    )
    
    
    (3.9
    )
    
    
    1.6Depreciation and amortization expense
    
    
    
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.2For the three months ended July 2, 2006
Revenue
    
    $
    0.2
    
    
    $
    11.0
    
    
    $
    
    
    
    $
    11.2Earnings (loss) from operations
    
    
    14.3
    
    
    
    2.5
    
    
    
    (1.1
    )
    
    
    15.7Depreciation and amortization expense
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    0.1For the six months ended July 1, 2007
Revenue
    
    $
    0.8
    
    
    $
    12.2
    
    
    $
    0.1
    
    
    $
    13.1Earnings (loss) from operations
    
    
    10.0
    
    
    
    (6.5
    )
    
    
    (9.2
    )
    
    
    (5.7
    )Depreciation and amortization expense
    
    
    
    
    
    
    0.2
    
    
    
    0.2
    
    
    
    0.4For the six months ended July 2, 2006
Revenue
    
    $
    0.4
    
    
    $
    17.5
    
    
    $
    
    
    
    $
    17.9Earnings (loss) from operations
    
    
    27.2
    
    
    
    1.4
    
    
    
    (2.5
    )
    
    
    26.1Depreciation and amortization expense
    
    
    
    
    
    
    0.1
    
    
    
    0.2
    
    
    
    0.3
 18




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##### Table of Contents



11. Online Gaming Commitment and Related Loss on Abandonment of Online Gaming Assets
    12. Subsequent Events
 Four Winds Casino and Resort.
  WPTE agreement with China Leisure Sports Administrative Center.
 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Overview
  19




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##### Table of Contents



WPT Studios.
   Date of
    
    Number ofAgreement or
    
    EpisodesWorld Poker
    
    Option for
    
    (including
    
    Production Period and Delivery
    
    Initial Telecast ofTour Season
    
    Season
    
    specials)
    
    of Episodes
    
    Episodes in SeasonSeason One
    
    January 2003
    
    
    15
    
    
    February 2002  June 2003
    
    March 2003  June 2003Season Two
    
    August 2003
    
    
    25
    
    
    July 2003  June 2004
    
    December 2003  September 2004Season Three
    
    May 2004
    
    
    21
    
    
    May 2004  April 2005
    
    October 2004  August 2005Season Four
    
    March 2005
    
    
    21
    
    
    May 2005  April 2006
    
    October 2005  June 2006Season Five
    
    March 2006
    
    
    22
    
    
    May 2006  April 2007
    
    August 2006  August 2007Season Six
    
    April 2007
    
    
    23
    
    
    May 2007  April 2008
    
    January 2008  August 2008
(projected)
   20




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##### Table of Contents



WPT Global Marketing.
  WPT Online.
    21




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##### Table of Contents



Results of Operations
  Three months ended July 1, 2007 compared to the three months ended July 2, 2006
 Revenues.
  Selling, general and administrative expenses.
 Production costs.
 Loss on abandonment of online gaming assets.
 22




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##### Table of Contents



Net realized and unrealized gains on notes receivable.
    Other income (expense).
  Income taxes.
 Minority interest.
 Six months ended July 1, 2007 compared to the six months ended July 2, 2006
 Revenues.
 23




---



##### Table of Contents



Selling, general and administrative expenses.
 Production costs.
 Loss on abandonment of online gaming assets.
 Impairment losses.
 Net realized and unrealized gains on notes receivable.
    Other income (expense).
 24




---



##### Table of Contents



Income taxes.
  Minority interest.
 Liquidity and Capital Resources
       25




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##### Table of Contents



Payment Due by PeriodLess than
    
    
    
    
    
    
    
    
    
    
    More thanContractual Obligations
    
    Total
    
    
    1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 yearsRemaining Casino Development Commitment(1)
Jamul Tribe(2)
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Shingle Springs Tribe(3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Pokagon Band(4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Iowa Tribe of Oklahoma (Iowa Tribe)  Ioway Project(5)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Lakes operating lease(6)
    
    
    0.7
    
    
    
    0.7
    
    
    
    
    
    
    
    
    
    
    
    WPTE operating leases(7)
    
    
    3.5
    
    
    
    0.8
    
    
    
    1.8
    
    
    
    0.9
    
    
    
    WPTE purchase obligations(8)
    
    
    2.9
    
    
    
    1.2
    
    
    
    1.4
    
    
    
    0.3
    
    
    
    $
    7.1
    
    
    $
    2.7
    
    
    $
    3.2
    
    
    $
    1.2
    
    
    $
    
 
 (1)
    
    We may be required to provide a guarantee of tribal debt financing or otherwise provide
support for the tribal obligations related to any of the projects (see (2), (3) and (5)
below). Any guarantees by us or similar off-balance sheet liabilities will increase our
potential exposure in the event of a default by any of these tribes. No such guarantees or
similar off-balance sheet liabilities existed at July 1, 2007.(2)
    
    Effective March 30, 2006, we entered into a development financing and services agreement with
the Jamul Tribe. As part of the agreement, we will use our best efforts to obtain financing
from which advances will be made to the Jamul Tribe of up to $350 million to pay for the
design and construction of a casino project. It has been determined that the proposed gaming
facility will be reduced in size and scope. The current plan is for the gaming facility to
decrease in size and become a solely class II electronic gaming device facility which will not
require a compact. The agreement between Lakes and the Jamul Tribe will be modified to reflect
the new economics of the revised casino plan but will not be subject to approval by the State
of California or the NIGC.(3)
    
    The development agreement between Lakes and the Shingle Springs Tribe, as amended, provides
for pre-construction advances Lakes may make to the Shingle Springs Tribe in the form of a
transition loan and land loan up to a maximum combined amount of $75.0 million, but it does
not contractually require us to make such advances.(4)
    
    We will be obligated to pay an amount to an unrelated third party once the Pokagon Casino is
open and we are the manager of the casino. The amount is payable quarterly for five years and
is only payable if we are the manager and the casino is open and operational. The payment is
part of a settlement and release agreement associated with our obtaining the management
contract with the Pokagon Band. The maximum liability over the five-year period is
approximately $11 million. We will also be obligated to pay approximately $3.3 million to a
different third party on behalf of the Pokagon Band in accordance with the management contract
which is payable once the casino opens over 24 months.(5)
    
    We have agreed to make advances to the Iowa Tribe subject to a project budget to be agreed
upon by us and the Iowa Tribe and certain other conditions. The development loan will be for
preliminary development costs under the Ioway project budget. We have also agreed to use
reasonable efforts to assist the Iowa Tribe in obtaining permanent financing for any projects
developed under the Iowa consulting agreement.(6)
    
    We lease an airplane under a non-cancelable operating lease that expires on May 1, 2008. 26




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##### Table of Contents



(7)
    
    WPTE operating lease obligations include rent payments for WPTE corporate offices pursuant to
two lease agreements. For the first lease, monthly lease payments began at approximately
$38,000 and escalate to approximately $45,000 over the six-year lease term. For the second
lease, monthly payments began at approximately $28,000 and escalate up to approximately
$33,000 over the five year lease term. The lease obligations presented include rent payments
for WPTEs Israel office facility in Nahariya. The amounts set forth in the table above
include monthly lease payments through June 2011.(8)
    
    WPTE purchase obligations include minimum guarantees to CryptoLogic and operational expenses
associated with WPTEs online gaming division, as well as a $0.5 million payment to the China
Leisure Sports Administrative Center (CLSAC) for exclusive marketing and sponsorship
opportunities. Additionally, included in purchase obligations are open purchase orders of
approximately $0.2 million as of July 1, 2007. These liabilities are included in Other Accrued
Expenses within the Unaudited Condensed Consolidated Balance Sheets.    Critical Accounting Policies and Estimates
   Revenue recognition:
 Accounting by Producers or
Distributors of Films
 27




---



##### Table of Contents




    
    Persuasive evidence of an arrangement exists;
    
    The show/episode is complete, and in accordance with the terms of the arrangement, has
been delivered or is available for immediate and unconditional delivery;
    
    The license period has begun and the customer can begin its exploitation, exhibition or
sale;
    
    The sellers price to the buyer is fixed and determinable; and
    
    Collectibility is reasonably assured.
 Reporting Revenue Gross as a Principal versus Net as an Agent
    Deferred television costs:
 Share-based compensation expense:
 28




---



##### Table of Contents



Income taxes: Accounting for Income Taxes
   Accounting for Uncertainty in Income Taxes
 Accounting for long-term assets related to Indian casino projects:
 Notes receivable.
 
    
    Has the U.S. Governments Bureau of Indian Affairs federally recognized the tribe as a
tribe?
    
    Does the tribe hold or have the right to acquire land to be used for the casino site?
    
    Has the Department of the Interior put the land into trust for purposes of being used
as a casino site?
    
    Has the tribe entered into a gaming agreement with the state in which the land is
located, if required by the state?
    
    Has the tribe obtained approval by the National Indian Gaming Commission of the
management agreement?
    
    Do other legal and political obstacles exist that could block development of the
project and, if so, what is the likelihood of the tribe successfully prevailing?
 29




---



##### Table of Contents




    
    An evaluation by management of the financial projections of the project given the
projects geographic location and the feasibility of the projects success given such
location;
    
    The structure and stability of the tribal government;
    
    The scope of the proposed project, including the physical scope of the contemplated
facility and the expected financial scope of the related development;
    
    An evaluation of the proposed projects ability to be built as contemplated and the
likelihood that financing will be available; and
    
    The nature of the business opportunity to us, including whether the project would be a
financing, development and/or management opportunity.
 Recognition of Interest Income and Balance Sheet Classification of
Structured Notes
  Accounting by
Creditors for Impairment of a Loan.
 Intangible assets related to Indian casino projects. Goodwill and Other Intangible Assets
 30




---



##### Table of Contents



Land held for development.
 Other.
   July 1, 2007 (unaudited)ShinglePokagon
    
    
    Springs
    
    
    JamulBand
    
    
    Tribe
    
    
    Tribe
    
    
    Other
    
    
    TotalNotes receivable, at estimated fair value
    
    $
    
    
    
    $
    50,417
    
    
    $
    24,809
    
    
    $
    3,340
    
    
    $
    78,566Intangible assets related to Indian casino projects
    
    
    23,573
    
    
    
    21,674
    
    
    
    11,116
    
    
    
    986
    
    
    
    57,349Land held for development
    
    
    
    
    
    
    
    
    
    
    6,751
    
    
    
    1,370
    
    
    
    8,121Other
    
    
    60
    
    
    
    767
    
    
    
    1,154
    
    
    
    3,263
    
    
    
    5,244$
    23,633
    
    
    $
    72,858
    
    
    $
    43,830
    
    
    $
    8,959
    
    
    $
    149,280
 December 31, 2006ShinglePokagon
    
    
    Springs
    
    
    JamulBand
    
    
    Tribe
    
    
    Tribe
    
    
    Other
    
    
    TotalNotes receivable, at estimated fair value
    
    $
    100,544
    
    
    $
    40,912
    
    
    $
    20,754
    
    
    $
    2,098
    
    
    $
    164,308Intangible assets related to Indian casino projects
    
    
    23,573
    
    
    
    20,387
    
    
    
    9,760
    
    
    
    559
    
    
    
    54,279Land held for development
    
    
    
    
    
    
    8,739
    
    
    
    6,710
    
    
    
    1,341
    
    
    
    16,790Other
    
    
    60
    
    
    
    2,041
    
    
    
    2,207
    
    
    
    4,142
    
    
    
    8,450$
    124,177
    
    
    $
    72,079
    
    
    $
    39,431
    
    
    $
    8,140
    
    
    $
    243,827
  31




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##### Table of Contents



Shingle Springs Tribe:
 As of July 1, 2007 (unaudited)
    
    As of December 31, 2006Face value of note (principal and interest)
    
    $63,125
($46,368 principal and
$16,757 interest)
    
    $55,942
($42,310 principal and
$13,632 interest)Estimated months until casino opens (weighted-average
of three scenarios)
    
    18 months
    
    28 monthsProjected interest rate until casino opens
    
    10.41%
    
    9.98%Projected interest rate during the loan repayment term
    
    10.26%
    
    9.76%Discount rate
    
    15%
    
    15%Repayment terms of note*
    
    84 months
    
    Projected repayment terms of note**
    
    

    
    24 monthsProbability rate of casino opening (weighting of four
scenarios)
    
    95%
    
    85%
 
 *
    
    Note is payable in even monthly installments over the course of the management agreement
subsequent to the casino opening.**
    
    Note was previously payable in varying monthly installments based on contract terms
subsequent to the casino opening.  Jamul Tribe:
 As of July 1, 2007 (unaudited)
    
    As of December 31, 2006Face value of note (principal and interest)
    
    $38,527 
($28,230 principa land
$10,297 interest)
    
    $32,952
($24,509 principal and
$8,443 interest)Estimated months until casino opens (weighted-average
of three scenarios)
    
    29 months
    
    29 monthsProjected interest rate until casino opens
    
    10.41%

    

    9.98%Projected interest rate during the loan repayment term
Discount rate
    
    10.38%
15.75%
    
    
    9.76%
15.75%Projected repayment terms of note
    
    120 months
    
    120 monthsProbability rate of casino opening (weighting of four
scenarios)
    
    85%
    

    
    
    85%
   July 1, 2007 (unaudited)
 Estimated Fair
    
    
    Sensitivity AnalysisValue Notes
    
    
    5% Less
    
    
    One Year
    
    
    
    
    
    
    5% Increased
    
    
    One YearReceivable
    
    
    Probable
    
    
    Delay
    
    
    Both
    
    
    Probability
    
    
    Sooner
    
    
    Both(In thousands)Shingle Springs
    
    $
    50,417
    
    
    $
    47,752
    
    
    $
    48,621
    
    
    $
    46,051
    
    
    $
    53,082
    
    
    $
    52,279
    
    
    $
    55,041Jamul
    
    $
    24,809
    
    
    $
    23,347
    
    
    $
    23,772
    
    
    $
    22,370
    
    
    $
    26,271
    
    
    $
    25,891
    
    
    $
    27,417$
    75,226
    
    
    $
    71,099
    
    
    $
    72,393
    
    
    $
    68,421
    
    
    $
    79,353
    
    
    $
    78,170
    
    
    $
    82,458
 32




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##### Table of Contents



December 31, 2006
 Estimated Fair
    
    
    Sensitivity AnalysisValue Notes
    
    
    5% Less
    
    
    One Year
    
    
    
    
    
    
    5% Increased
    
    
    One YearReceivable
    
    
    Probable
    
    
    Delay
    
    
    Both
    
    
    Probability
    
    
    Sooner
    
    
    Both(In thousands)Shingle Springs
    
    $
    40,912
    
    
    $
    38,469
    
    
    $
    39,269
    
    
    $
    36,923
    
    
    $
    43,355
    
    
    $
    42,623
    
    
    $
    45,166Jamul
    
    $
    20,754
    
    
    $
    19,548
    
    
    $
    19,815
    
    
    $
    18,664
    
    
    $
    21,960
    
    
    $
    21,738
    
    
    $
    23,002$
    61,666
    
    
    $
    58,017
    
    
    $
    59,084
    
    
    $
    55,587
    
    
    $
    65,315
    
    
    $
    64,361
    
    
    $
    68,168
   Balance at July 1, 2007 (unaudited)ShingleAdvances Principal Balance
    
    Springs
    
    
    Jamul
    
    
    Other
    
    
    Total(In thousands)Note receivable, pre-construction(a), (c)
    
    $
    46,368
    
    
    $
    27,280
    
    
    $
    2,796
    
    
    $
    76,444Note receivable, land(b),(c)
    
    
    
    
    
    
    950
    
    
    
    973
    
    
    
    1,923$
    46,368
    
    
    $
    28,230
    
    
    $
    3,769
    
    
    $
    78,367
 Balance at December 31, 2006ShingleAdvances Principal Balance
    
    Springs
    
    
    Jamul
    
    
    Other
    
    
    Total(In thousands)Note receivable, pre-construction(a), (c)
    
    $
    42,310
    
    
    $
    23,559
    
    
    $
    1,386
    
    
    $
    67,255Note receivable, land(b),(c)
    
    
    
    
    
    
    950
    
    
    
    756
    
    
    
    1,706$
    42,310
    
    
    $
    24,509
    
    
    $
    2,142
    
    
    $
    68,961
 
 (a)
    
    We fund certain costs incurred to develop the casino project. These costs relate to
construction costs, legal fees in connection with various regulatory approvals and litigation,
environmental costs and design consulting, and we, in order to obtain the development
agreement and management contract, agree to advance a monthly amount used by the tribe for a
variety of tribal expenses.(b)
    
    We purchased land to be used and transferred to the tribe in connection with the casino
project.(c)
    
    Amounts listed under the other column represents amounts advanced under the agreements with
the Iowa Tribe.  July 1,
    
    
    December 31,Shingle Springs Tribe
    
    2007
    
    
    2006(unaudited)Monthly stipend
    
    $
    8,590
    
    
    $
    7,690Construction
    
    
    1,922
    
    
    
    1,657Legal
    
    
    14,193
    
    
    
    13,790Environmental
    
    
    1,739
    
    
    
    1,680Design
    
    
    11,230
    
    
    
    9,554Gaming license
    
    
    3,726
    
    
    
    3,626Lobbyist
    
    
    4,968
    
    
    
    4,313$
    46,368
    
    
    $
    42,310
 33




---



##### Table of Contents



July 1,
    
    
    December 31,Jamul Tribe
    
    2007
    
    
    2006(unaudited)Monthly stipend
    
    $
    4,760
    
    
    $
    4,451Construction
    
    
    983
    
    
    
    649Legal
    
    
    4,084
    
    
    
    3,675Environmental
    
    
    2,250
    
    
    
    1,985Design
    
    
    11,813
    
    
    
    9,578Gaming license
    
    
    710
    
    
    
    641Lobbyist
    
    
    2,680
    
    
    
    2,580$
    27,280
    
    
    $
    23,559
 Evaluation of impairment related to our long-term assets related to Indian casino projects,
excluding the notes receivable, which are valued at fair value:
    Pokagon Band
 April 1, 2007
    
    
    December 31, 2006No. of Class III slot machines
    
    
    3,000
    
    
    
    3,000No. of Table games
    
    
    90
    
    
    
    90No. of Poker tables
    
    
    20
    
    
    
    20Win/Class III slot machine/day  1st year
    
    $
    282
    
    
    $
    282Win/Table game/day  1st year
    
    $
    1,481
    
    
    $
    1,481Win/Poker game/day  1st year
    
    $
    1,025
    
    
    $
    1,025Expected increase in management fee cash flows
    
    Year 2  26.5%
    
    Year 2  26.5%Year 3  4.3%
    
    Year 3  4.3%Year 4  3.8%
    
    Year 4  3.8%Year 5  4.1%
    
    Year 5  4.1%
  34




---



##### Table of Contents



Jamul Tribe
  July 1,
    
    December 31,2007
    
    2006(unaudited)No. of Class II electronic gaming devices
    
    
    1,000
    
    
    
    1,000No. of Table games
    
    
    20
    
    
    
    20No. of Poker tables
    
    
    5
    
    
    
    5Win/Class II electronic gaming devices/day  1st year
    
    $
    250
    
    
    $
    250Win/Table game/day  1st year
    
    $
    900
    
    
    $
    900Win/Poker table/day  1st year
    
    $
    650
    
    
    $
    650
  Shingle Springs Tribe
 July 1, 2007
    
    
    December 31, 2006(unaudited)No. of Class III slot machines
    
    
    349
    
    
    
    349No. of Class II electronic gaming devices
    
    
    1,651
    
    
    
    1,651No. of Table games
    
    
    100
    
    
    
    100Win/Class II & III electronic gaming
devices/slot machine/day  1st year
    
    $
    350
    
    
    $
    350Win/Table game/day  1st year
    
    $
    1,275
    
    
    $
    1,275Expected increase (decrease) in
management fee cash flows
    
    Year 2  17.6%
    
    Year 2  8.0%Year 3  10.5%
    
    Year 3  7.5%Year 4  7.9%
    
    Year 4  7.1%Year 5  8.8%
    
    Year 5  6.4%Year 6  (4.0)%
    
    Year 6  (12.3)%(management fees were
    
    (management fees werereduced in year six)
    
    reduced in year six)Year 7  5.0%
    
    Year 7  11.7%
   35




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##### Table of Contents



Description of each Indian casino project and evaluation of critical milestones:
 Shingle Springs Tribe
 Business arrangement.
     36




---



##### Table of Contents



Our evaluation of the critical milestones.
 Critical Milestone
    
    July 1, 2007
    
    December 31, 2006
    
    January 1, 2006Federal recognition of the tribe
    
    Yes
    
    Yes
    
    YesPossession of usable land
corresponding with needs based
on Lakes project plan
    
    Yes
    
    Yes
    
    YesUsable land placed in trust by 
Federal government
    
    Not necessary, as
land is reservation
land.
    
    Not necessary, as
land is reservation
land.
    
    Not necessary, as
land is reservation
land.Usable county agreement, if 
applicable
    
    Yes
    
    Yes
    
    N/AUsable state compact that
allows for gaming consistent
with that outlined in Lakes
project plan
    
    Yes
    
    Yes
    
    YesNIGC approval of management
contract in current and desired
form
    
    Yes
    
    Yes  approval
received in 2004.
    
    Yes  approval
received in 2004.Resolution of all litigation
and legal obstacles
    
    No  See below.
    
    No  See below.
    
    No, Federal and state
litigation regarding
approval of highway
interchange,
environmental issues
and other issues. 
See below.Financing for construction
    
    Yes. On June 28,
2007 an affiliate of
the Shingle Springs
Tribe closed on a
$450 million senior
note financing to
fund the Foothill
Oaks Casino project
in Shingle Springs,
California.
    
    No, however the
Shingle Springs Tribe
has engaged
investment banks to
assist with obtaining
financing.
    
    No, however the
Shingle Springs Tribe
has engaged
investment banks to
assist with obtaining
financing.Any other significant project
milestones or contingencies,
the outcome of which could have
a material affect on the
probability of project
completion as planned
    
    No others known at
this time by Lakes.
    
    No others known at
this time by Lakes.
    
    No others known at
this time by Lakes.
 Our evaluation and conclusion regarding the above critical milestones and progress:
  37




---



##### Table of Contents



Jamul Tribe
 Business arrangement.
    38




---



##### Table of Contents



Lakes Evaluation of the Critical Milestones.
 Critical Milestone
    
    July 1, 2007
    
    December 31, 2006
    
    January 1, 2006Federal recognition of the tribe
    
    Yes
    
    Yes
    
    YesPossession of usable land
corresponding with needs based
on Lakes project plan
    
    Yes
    
    Yes
    
    YesUsable land placed in trust by 
Federal government
    
    Not necessary, as
land is reservation
land.
    
    Not necessary, as land is reservation
land.
    
    Yes, six acres is
reservation land held
by the Jamul Tribe on
which the casino will
be built. There is an
additional 82 acres
contiguous to the
reservation land
pending BIA approval
to be placed into
trust that could be
used for additional
development of the
project. The Jamul
Tribe and Lakes
prepared an EIS and
trust application,
which has been
submitted to,
reviewed and
recommended for
approval by the
regional office of
the BIA. The
Washington, D.C.
office of the BIA is
currently reviewing
the submission.
 39




---



##### Table of Contents



Critical Milestone
    
    July 1, 2007
    
    December 31, 2006
    
    January 1, 2006Usable county agreement, if 
applicable
    
    N/A
    
    N/A
    
    N/AUsable state compact that
allows for gaming consistent
with that outlined in Lakes
project plan
    
    Yes
    
    Yes
    
    YesNIGC approval of management
contract in current and desired
form
    
    N/A as the Jamul
Tribe and Lakes
entered into a
development financing
and services
agreement in March
2006, which does not
need to be approved
by the NIGC.
    
    N/A as the Jamul Tribe and Lakes
entered into a development financing
and services agreement in March 2006,
which does not need to be approved by
the NIGC.
    
    No, submitted for
approval by the NIGC
in 2000. We are in
communication with
the NIGC and have
responded to initial
comments. Approval is
not expected until
the process to place
land in trust by the
BIA is complete.Resolution of all litigation
and legal obstacles
    
    N/A, there has been
some local opposition
regarding the
project.
    
    N/A, there has been some local
opposition regarding the project.
    
    N/A, there has been
some local opposition
regarding the
project, although no
formal legal action
has been taken.Financing for construction
    
    No, however,
preliminary
discussions with
investment bankers
regarding assisting
in obtaining
financing have taken
place.
    
    No, however, preliminary discussions
with investment bankers regarding
assisting in obtaining financing have
taken place.
    
    No, however,
preliminary
discussions with
investment bankers
regarding assisting
in obtaining
financing have taken
place.Any other significant project
milestones or contingencies,
the outcome of which could have
a material affect on the
probability of project
completion as planned
    
    Yes. The Jamul Tribe and
the State of California
have had a series of
meetings to discuss what
requirements the State
has to either allow the
project to be built as
currently planned or to
enter into a new compact
similar to those
approved in 2004 for
other tribes in the
State. The Jamul Tribe
has decided to move
forward with building a
casino based solely on
class II electronic
gaming devices. This
plan will decrease the
size and scope of the
project, but will allow
it to move forward.
    
    Yes. The Jamul
Tribe and the State
of California have
had a series of
recent meetings to
discuss what
requirements the
State has to either
allow the project
to be built as
currently planned
or to enter into a
new compact similar
to those approved
in 2004 for other
tribes in the
State. Based on
these discussions,
the Jamul Tribe is
evaluating which of
any of these
requirements are
acceptable or in
lieu of a compact,
building a casino
based solely on
class II electronic
gaming devices.
    
    No others known at
this time by Lakes.
 40




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##### Table of Contents



Lakes evaluation and conclusion regarding the above critical milestones and progress.
     Iowa Tribe
 Business arrangement.
  Ioway Casino.
 41




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##### Table of Contents



Cimarron Casino.
 Arrangement with Consultant.
 Lakes Evaluation of the Ioway casino project.
 Critical
Milestone
    
    July 1, 2007
    
    December 31, 2006
    
    January 1, 2006Federal recognition of the tribe
    
    Yes
    
    Yes
    
    YesPossession of usable land
corresponding with needs based
on Lakes project plan
    
    Yes, the Iowa Tribe
has Tribal members
that own a 74-acre
allotment on US Route
66 midway between the
access points to
Warwick and Chandler,
Oklahoma from I44. The
Iowa Tribe has
obtained the rights to
purchase and/or lease
this parcel from the
allottees. An
additional 100 acres
of fee land has been
purchased to provide
the necessary site
area for the beginning
of the project.
    
    Yes, the Iowa Tribe
has members that own a
74-acre allotment on
US Route 66 midway
between the access
points to Warwick and
Chandler, Oklahoma
from I44. The Iowa
Tribe has obtained the
rights to purchase
and/or lease this
parcel from the
allottees. An
additional 100 acres
of fee land has been
optioned to provide
the necessary site
area for the beginning
of the project.
    
    Yes, the Iowa Tribe is
currently leasing and
acquiring land from
tribal members, which
is held in trust for
the individual tribal
members by the United
States Government.
These transactions
will need to be
approved by the BIA.
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##### Table of Contents



Critical
Milestone
    
    July 1, 2007
    
    December 31, 2006
    
    January 1, 2006Usable land placed in trust by 
Federal government
    
    Yes, the Iowa Tribe is
currently leasing and
acquiring land from
tribal members, which
is held in trust for
the individual tribal
members by the United
States Government.
These transactions
will need to be
approved by the BIA.
    
    Yes, the Iowa Tribe is
currently leasing and
acquiring land from
tribal members, which
is held in trust for
the individual tribal
members by the United
States Government.
These transactions
will need to be
approved by the BIA.
    
    Yes, the Iowa Tribe is
currently leasing and
acquiring land from
tribal members, which
is held in trust for
the individual tribal
members by the United
States Government.
These transactions
will need to be
approved by the BIA.Usable county agreement, if 
applicable
    
    N/A
    
    N/A
    
    N/AUsable state compact that
allows for gaming consistent
with that outlined in Lakes
project plan
    
    Yes
    
    Yes
    
    YesNIGC approval of management
contract in current and desired
form
    
    No, submitted to the
NIGC for review on
April 22, 2005. The
NIGC has provided
their final comments
to the Iowa Tribe on
the management
contract and the Iowa
Tribe has approved the
revisions and returned
the contract to the
NIGC for the final
action. There have
been no comments on
the consulting
agreement from the
NIGC and is therefore
considered operative.
    
    No, submitted to the
NIGC for review on
April 22, 2005. An EA
is currently being
prepared and is
necessary for the
management contract to
be approved.
Completion of the EA
is expected by Spring
2007. There have been
no comments on the
consulting agreement
from the NIGC and is
therefore considered
operative.
    
    No, submitted to the
NIGC for review on
April 22, 2005. An EA
will be prepared in
order for the
management contract to
be approved.Resolution of all litigation
and legal obstacles
    
    None at this time.
    
    None at this time.
    
    None at this time.Financing for construction
    
    No. Preliminary
discussions with
lending institutions
have occurred.
    
    No. Preliminary
discussions with
lending institutions
have occurred.
    
    No. Preliminary
discussions with
lending institutions
have occurred.Any other significant project
milestones or contingencies,
the outcome of which could have
a material affect on the
probability of project
completion as planned
    
    No others known at
this time by Lakes.
    
    No others known at
this time by Lakes.
    
    No others known at
this time by Lakes.
 Lakes evaluation and conclusion regarding the above critical milestones and progress.
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##### Table of Contents



Pawnee Nation of Oklahoma
 Business arrangement.
  Recently issued accounting pronouncements
 Fair Value Measurements The Fair Value Option for Financial
Assets and Financial Liabilities  Including an amendment of FASB Statement No. 115
 Seasonality
  Regulation and taxes
   Off-balance sheet arrangements
  44




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##### Table of Contents



Private Securities Litigation Reform Act
    
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   45




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##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES
     
 Part II.
Other Information
 
 ITEM 1. LEGAL PROCEEDINGS
 WPTE litigation.
 Miscellaneous legal matters.
 
 ITEM 1A. RISK FACTORS
  We cannot guarantee the financial results of the expansion of the World Poker Tour business,
which may negatively impact our financial results.
 46




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##### Table of Contents




    
    On April 23, 2007, WPTE entered into an agreement with CryptoLogic pursuant to which
CryptoLogic operates and manages WPTEs branded real-money gaming website,
WorldPokerTour.com, solely in jurisdictions where online gaming is not restricted. WPTE
cannot be assured that CryptoLogics operation of the site going forward will meet WPTEs
business expectations, the failure of which would have a material adverse impact on WPTEs
online gaming business.
    
    WPTE is currently reliant on CryptoLogic for WPTEs gaming website compliance with
all applicable regulations, including the initial verification that players who wish to
wager are actually from non-restricted countries. In addition, WPTE relies on CryptoLogic
and third party vendors to assure that players cannot place improper wagers on an on-going
basis. If CryptoLogics compliance or verification is inadequate or WPTEs third party
verification tools fail, regulators in the U.S. or other jurisdictions may impose fines or
other sanctions or threaten or take other actions that could adversely affect WPTEs
reputation and the revenues WPTE derives from the license of rights to CryptoLogic.
Additionally, certain territories and foreign networks may restrict WPTE from
incorporating marketing elements related to WPTEs online site into WPTEs international
telecasts and certain laws or regulations may restrict the type of advertising in general
in those territories. If these restrictions occur, WPTEs costs of customer acquisition
may be substantially higher than anticipated.
    
    WPTE has developed relationships with key strategic partners in many areas of WPTEs
business, including poker tournament event sponsorship, merchandise licensing, corporate
sponsorship, Internet gaming and international distribution. If WPTE was to fail to manage
its existing licensing relationships, this failure could have a material adverse effect on
WPTEs financial condition and results of operations. WPTE relies on a limited number of
contracts under which third parties provide WPTE with services vital to WPTEs business.
If WPTEs relationship with any third party was to be interrupted, or the services
provided by any third party were to be delayed or deteriorate for any reason without being
adequately replaced, WPTE business could be materially adversely affected. If WPTE is
forced to find a replacement for any strategic partner, this could create disruption in
WPTEs business and may result in reduced
 47




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##### Table of Contents



revenues, increased costs or diversion of managements attention and resources. In addition,
while WPTE has significant control over its licensed products and advertising, WPTE does not
have operational and financial control over third parties, and WPTE has limited influence
with respect to the manner in which they conduct their businesses. If any strategic partner
experiences a significant downturn in its business or were otherwise unable to honor its
obligations to WPTE, WPTEs business could be materially disrupted.
    
    WPTE intends to further expand business in foreign markets, including continued
international distribution of WPTEs U.S. telecasts, creating additional poker tours in
foreign countries and distributing branded merchandise in foreign countries. WPTEs
international operations could be adversely affected by changes in political and economic
conditions, trade protection measures and the status of regulatory requirements that may
restrict the sales of WPTE products, increase costs of foreign production or other costs
that prohibit Internet gaming activities in international jurisdictions. Also, changes in
exchange rates between the U.S. dollar and other currencies could potentially result in
significant increases in WPTE costs or decreases in earnings.
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 (a)
    
    The Annual Meeting of Shareholders was held on June 6, 2007.(b)
    
    At the Annual Meeting:(1)
    
    All nominees for directors as listed in the proxy statement were elected with the
following vote:
 Affirmative Votes
    
    Authority WithheldLyle Berman
    
    
    22,315,185
    
    
    
    146,085Timothy J. Cope
    
    
    21,969,874
    
    
    
    491,396Morris Goldfarb
    
    
    22,341,752
    
    
    
    119,518Neil I. Sell
    
    
    18,071,083
    
    
    
    4,390,187Ray Moberg
    
    
    22,345,734
    
    
    
    115,536Larry C. Barenbaum
    
    
    22,344,952
    
    
    
    116,318Richard White
    
    
    22,344,194
    
    
    
    117,076
 (2)
    
    The adoption of the 2007 Stock Option and Compensation Plan was approved with the
following vote:
 Affirmative Votes
    
    Negative Votes
    
    Abstentions
    
    Broker Non-Vote11,915,058
    
    
    4,481,003
    
    
    
    46,632
    
    
    
    6,018,577
 (3)
    
    The appointment of Piercy, Bowler, Taylor & Kern, Certified Public Accountants and
Business Advisors, a Professional Corporation, as the independent registered accounting
firm serving as auditors of the Company was ratified with the following vote:
 Affirmative Votes
    
    Negative Votes
    
    Abstentions
    
    Broker Non-Vote22,372,757
    
    
    38,950
    
    
    
    49,563
    
    
    
 
 ITEM 6. EXHIBITS
 Exhibits
    
    Description31.1
    
    Certification of CEO pursuant to Securities Exchange Act Rules 13a-15(e)
and 15d-15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.31.2
    
    Certification of CFO pursuant to Securities Exchange Act Rules 13a-15(e)
and 15d-15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.32.1
    
    Certification of Chief Executive Officer and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
 48




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##### Table of Contents



SIGNATURES
  LAKES ENTERTAINMENT, INC.Registrant/s/ LYLE BERMANLyle BermanChairman of the Board and Chief Executive Officer
(Principal Executive Officer)/s/ TIMOTHY J. COPETimothy J. CopePresident and Chief Financial Officer
(Principal Financial and Accounting Officer)  49