<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                          ----------------------------

                                    FORM 10-Q
                                   (Mark One)

     [X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934

For the quarterly period ended October 3, 2004

                                       OR

     [ ]    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                                       41-1913991
            ---------                                       ----------
  (State or other jurisdiction                          (I.R.S. Employer
of incorporation or organization)                      Identification No.)

         130 Cheshire Lane
       Minnetonka, Minnesota                                  55305
       ---------------------                                  -----
(Address of principal executive offices)                    (Zip Code)

                                 (952) 449-9092
              (Registrant's telephone number, including area code)

Indicate by 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 check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

                Yes [ ]                          No [X]

As of November 10, 2004, there were 22,250,634 shares of Common Stock, $0.01 par
value per share, outstanding. All share and per share data for periods prior to
May 3, 2004 has been retroactively restated to give effect to a two-for-one
stock split (the "Stock Split") in the form of a 100% stock dividend paid on May
3, 2004 to shareholders of record on April 26, 2004.

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
                                      INDEX

<TABLE>
<CAPTION>
                                                                                  PAGE OF
                                                                                 FORM 10-Q
                                                                                 ---------
<S>                                                                              <C>
PART I.   FINANCIAL INFORMATION

          ITEM 1. FINANCIAL STATEMENTS

                  Condensed Consolidated Balance Sheets as of                         3
                  October 3, 2004 and December 28, 2003

                  Condensed Consolidated Statements of Loss for the                   4
                  three months ended October 3, 2004 and September 28, 2003

                  Condensed Consolidated Statements of Loss for the nine              5
                  months ended October 3, 2004 and September 28, 2003

                  Condensed Consolidated Statements of Cash Flows for
                  the 8 nine months ended October 3, 2004 and September
                  28, 2003                                                            6

                  Notes to Condensed Consolidated Financial Statements                7

          ITEM 2. MANAGEMENT'S DISCUSSION AND                                        24
                  ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS

          ITEM 3. QUANTITATIVE AND QUALITATIVE                                       37
                  DISCLOSURES ABOUT MARKET RISK

          ITEM 4. CONTROLS AND PROCEDURES                                            37

PART II.  OTHER INFORMATION

          ITEM 1. LEGAL PROCEEDINGS                                                  38

          ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                   41
</TABLE>

                                        2

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                                      (unaudited)
                                                                                           OCTOBER 3, 2004  DECEMBER 28, 2003
                                                                                           ---------------  -----------------
<S>                                                                                        <C>              <C>
ASSETS
Current Assets:
    Cash and cash equivalents                                                                $ 41,355           $ 25,340
     (balance includes $27.6 million and $0 of WPT Enterprises, Inc. cash)
    Short-term investments
                                                                                                7,188                  -
     (balance includes $6 million and $0 of WPT Enterprises, Inc. short-term investments)
    Accounts receivable, net                                                                      582              1,038
    Deferred tax asset                                                                          1,504              5,385
    Prepaids                                                                                    1,832              2,119
    Other current assets                                                                        1,165              1,645
                                                                                             --------           --------
Total Current Assets                                                                           53,626             35,527
                                                                                             --------           --------
Property and Equipment-Net                                                                      6,641              6,492
                                                                                             --------           --------
Other Assets:
    Land held under contract for sale
                                                                                                4,939              4,612
    Land held for development                                                                  14,195             14,536
    Notes receivable                                                                           90,939             84,682
    Investments                                                                                 7,937              8,717
    Deferred tax asset                                                                         12,024              6,634
    Other long-term assets                                                                      9,393              8,860
                                                                                             --------           --------
Total Other Assets                                                                            139,427            128,041
                                                                                             --------           --------
TOTAL ASSETS                                                                                 $199,694           $170,060
                                                                                             ========           ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:

    Accounts payable                                                                         $  1,428           $  1,906
    Income taxes payable                                                                        6,426              7,215
    Accrued payroll and related costs                                                             573                497
    Deferred revenue                                                                            4,067                505
    Other accrued expenses                                                                      2,504              2,513
                                                                                             --------           --------
Total Current Liabilities                                                                      14,998             12,636
                                                                                             --------           --------
TOTAL LIABILITIES                                                                              14,998             12,636
                                                                                             --------           --------

COMMITMENTS AND CONTINGENCIES

Minority interest                                                                              11,156                  -

Common shares issued by subsidiary subject to repurchase                                          608                  -

Shareholders' Equity:
    Capital stock, $.01 par value; authorized 200,000 shares; 22,247 and 21,474
    common shares issued and outstanding at October 3, 2004, and December 28,
    2003, respectively

                                                                                                  235                215
    Additional paid-in-capital
                                                                                              157,415            132,291
    Retained earnings                                                                          15,282             24,918
                                                                                             --------           --------
Total Shareholders' Equity                                                                    172,932            157,424
                                                                                             --------           --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                   $199,694           $170,060
                                                                                             ========           ========
</TABLE>

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

                                        3

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED STATEMENTS OF LOSS
                    (IN THOUSANDS, EXCEPT EARNINGS PER SHARE)

<TABLE>
<CAPTION>
                                                              (unaudited)
                                                           THREE MONTHS ENDED
                                                           ------------------
                                                   OCTOBER 3, 2004  SEPTEMBER 28, 2003
                                                   ---------------  ------------------
<S>                                                  <C>                <C>
REVENUES:
     License fee income                              $  2,974           $    377
                                                     --------           --------
         Total Revenues                                 2,974                377
                                                     --------           --------

COSTS AND EXPENSES:
     Selling, general and administrative                3,710              2,224
     Production costs                                   1,942                280
     Depreciation and amortization                        163                135
                                                     --------           --------
         Total Costs and Expenses                       5,815              2,639
                                                     --------           --------
LOSS FROM OPERATIONS                                   (2,841)            (2,262)
                                                     --------           --------

OTHER INCOME (EXPENSE):
     Interest income                                      104                 98
     Equity in loss of unconsolidated affiliates          (30)               (50)
     Other
                                                            1                  -
                                                     --------           --------
         Total other income, net                           75                 48
                                                     --------           --------
Loss before income taxes                               (2,766)            (2,214)
Benefit for income taxes                               (1,101)              (912)
                                                     --------           --------
Loss before minority interest                          (1,665)            (1,302)
Minority interest                                         (53)                 -
                                                     --------           --------
NET LOSS                                             ($ 1,718)          ($ 1,302)
                                                     ========           ========
BASIC LOSS PER SHARE                                 ($  0.08)          ($  0.06)
                                                     ========           ========
DILUTED LOSS PER SHARE                               ($  0.08)          ($  0.06)
                                                     ========           ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING             22,232             21,278
DILUTIVE EFFECT OF STOCK COMPENSATION PROGRAMS              -                  -
                                                     --------           --------
WEIGHTED AVERAGE COMMON AND DILUTED
  SHARES OUTSTANDING                                   22,232             21,278
                                                     ========           ========
</TABLE>

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

                                       4

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED STATEMENTS OF LOSS
                    (IN THOUSANDS, EXCEPT EARNINGS PER SHARE)

<TABLE>
<CAPTION>
                                                              (unaudited)
                                                           NINE MONTHS ENDED
                                                           -----------------
                                                  OCTOBER 3, 2004  SEPTEMBER 28, 2003
                                                  ---------------  ------------------
<S>                                               <C>              <C>
REVENUES:
     License fee income                              $ 11,832         $  3,881
                                                     --------         --------
         Total Revenues                                11,832            3,881
                                                     --------         --------
COSTS AND EXPENSES:
     Selling, general and administrative               10,125            8,063
     Production costs                                   7,059            2,370
     Impairment losses                                  6,407                -
     Reversal of litigation and claims accrual              -           (3,212)
     Depreciation and amortization                        456              394
                                                     --------         --------
         Total Costs and Expenses                      24,047            7,615
                                                     --------         --------
LOSS FROM OPERATIONS                                  (12,215)          (3,734)
                                                     --------         --------
OTHER INCOME (EXPENSE):

     Interest income                                      195              649
     Equity in earnings (loss) of unconsolidated          366             (197)
     affiliates

     Other                                                 43
                                                                           158
                                                     --------         --------
         Total other income, net                          604              610
                                                     --------         --------
Loss before income taxes                              (11,611)          (3,124)
Benefit for income taxes                               (2,028)          (1,284)
                                                     --------         --------
Loss before minority interest                          (9,583)          (1,840)
Minority interest                                         (53)               -
                                                     --------         --------
NET LOSS                                             ($ 9,636)        ($ 1,840)
                                                     ========         ========
BASIC LOSS PER SHARE                                 ($  0.44)        ($  0.09)
                                                     ========         ========
DILUTED LOSS PER SHARE                               ($  0.44)        ($  0.09)
                                                     ========         ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING             22,063           21,278
DILUTIVE EFFECT OF STOCK COMPENSATION PROGRAMS              -                -
                                                     --------         --------
WEIGHTED AVERAGE COMMON AND DILUTED
  SHARES OUTSTANDING                                   22,063           21,278
                                                     ========         ========
</TABLE>

The accompanying notes are an integral part of these condensed consolidated
financial statements.
                                        5

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                   (UNAUDITED)
                                                                                NINE MONTHS ENDED
                                                                                -----------------
                                                                        OCTOBER 3, 2004  SEPTEMBER 28, 2003
                                                                        ---------------  ------------------
<S>                                                                     <C>              <C>
OPERATING ACTIVITIES:
     Net loss                                                              ($ 9,636)        ($ 1,840)
     Adjustments to reconcile net loss to net cash
      provided by (used in) operating activities:
      Depreciation and amortization                                             456              394
      Unit-based compensation expense                                           545               45
      Equity in (earnings) loss of unconsolidated affiliates                   (366)             197
      Deferred income taxes                                                  (1,509)               -
      Minority interest                                                          53                -
      Impairments                                                             6,407                -
      Changes in operating assets and liabilities:
           Accounts receivable                                                  456             (494)
           Income taxes                                                        (789)            (782)
           Accounts payable                                                    (478)             (48)
           Deferred revenue                                                   3,562              (55)
           Accrued expenses                                                      67           (2,763)
           Other                                                                767             (459)
                                                                           --------         --------
Net Cash Used in Operating Activities                                          (465)          (5,805)
                                                                           --------         --------
INVESTING ACTIVITIES:
     Purchases of short-term investments                                     (8,188)               -
     Sales and maturities of short-term investments                           1,000                -
     Payments for land held under contract for sale                            (327)            (629)
     Payments received on land held under contract for sale                       -           16,766
     Payments received (made) for land held for development                    (158)          13,416
     Advances on notes receivable                                           (12,200)         (12,382)
     Proceeds from repayment of notes receivable                                  -            1,000
     Investment in and notes receivable from unconsolidated affiliates        1,181             (704)
     Decrease in restricted cash                                                  -            5,907
     Increase in other long-term assets                                        (533)            (370)
     Payments for property and equipment, net                                  (605)             (30)
                                                                           --------         --------
Net Cash Provided by (Used in) Investing Activities                         (19,830)          22,974
                                                                           --------         --------
FINANCING ACTIVITIES:
     Proceeds from issuance of common stock                                   3,905               17
     Net proceeds from issuance of common stock by subsidiary                32,405                -
                                                                           --------         --------
Net Cash Provided by Financing Activities                                    36,310               17
                                                                           --------         --------

Net increase in cash and cash equivalents                                    16,015           17,186
Cash and cash equivalents - beginning of period                              25,340           14,106
                                                                           --------         --------
CASH AND CASH EQUIVALENTS - END OF PERIOD                                  $ 41,355         $ 31,292
                                                                           ========         ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
     Cash paid during the period for:
      Interest                                                             $      -         $     74
      Income taxes                                                              165                9
     Noncash operating activities:
      Capitalized television costs related to unit options issued to
         consultants
                                                                                202                -
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS.

                                        6

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.    BUSINESS

Lakes Entertainment, Inc., a Minnesota corporation ("Lakes" or the "Company")
was established as a public corporation on December 31, 1998, via a distribution
(the "Distribution") of its common stock, par value $.01 per share (the "Common
Stock") to the shareholders of Grand Casinos, Inc. ("Grand").

Lakes' primary business is to develop and manage Indian-owned casino properties
that offer the opportunity for long-term development of related entertainment
facilities, including hotels, golf courses, theaters, recreational vehicle parks
and other complementary amenities. Lakes provides experienced corporate and
casino management and develops and implements a wide scale of marketing
programs. In conjunction with this part of Lakes' business strategy, Lakes has
entered into development and management agreements relating to one casino
project in Michigan and two casino projects in California, with development of
each subject to regulatory approvals. Lakes has also explored, and will continue
to explore, numerous other possible development projects.

Formed in March 2002 as a joint venture, World Poker Tour, LLC, a majority owned
subsidiary of Lakes, created a circuit of previously-established poker
tournaments affiliated under the "World Poker Tour" name, and produced the World
Poker Tour television series. During August of 2004, WPT Enterprises, Inc.
(WPTE) became a separate public company as a result of the completion of an
initial public offering. Lakes remains a majority shareholder of WPTE, owning
approximately 64% of the outstanding common stock. As a result, Lakes'
consolidated results continue to include WPTE operations. WPTE has an agreement
for a third season with the Travel Channel, LLC ("TRV"), for broadcast of the
World Poker Tour series on cable television. TRV also has options for four
additional seasons. WPTE receives a series of fixed license payments from TRV.

Lakes has recently created a new division to buy, license and/or market new
table game concepts for licensing to casinos. The Company is currently testing
and marketing a number of new games. See also Note 9.

                                       7

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

REVENUE RECOGNITION

License fee income includes the following sources of WPTE revenue.

DOMESTIC TELEVISION: Revenue from the distribution of the World Poker Tour
domestic television series to TRV is recognized as earned under the following
criteria established by the American Institute of Certified Public Accountants
Statement of Position ("SOP") No. 00-2, Accounting by Producers or Distributors
of Films:

-     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

-     Collectibility is reasonably assured

Revenue is recognized upon receipt and acceptance of completed episodes by TRV
in accordance with the terms of the contract.

INTERNATIONAL TELEVISION: Revenue for international distribution of the
television series is recognized as earned under the criteria of SOP 00-2, which
is noted above. WPTE presents international distribution license fee revenues
net of the distributor's fees, as the distributor is the primary obligator in
the transaction with the ultimate customer.

PRODUCT LICENSING: Product licensing revenues are recognized when the underlying
royalties from the sales of the related products are earned. WPTE recognizes
minimum revenue guarantees ratably over the term of the license or as earned
royalties based on actual sales of the related products, if greater.

HOST FEES: Host fee revenues paid by host casinos are recognized as episodes are
aired.

SPONSORSHIP: Sponsorship revenues are recognized as episodes are aired.

DEFERRED REVENUE

Licensing advances and guaranteed payments collected, but not yet earned by
WPTE, as well as host fee and sponsorship receipts, collected prior to the
airing of episodes, are classified as deferred revenue in the accompanying
balance sheets. Deferred revenue is derived from three primary sources: Domestic
Television, Product Licensing and Host Fees. Deferred revenue represents
advanced payments received from TRV and product licensees, and deposits paid by
casinos in order to secure a poker tournament date with the World Poker Tour as
a host site. Deferred revenue was $4.1 million and $0.5 million at October 3,
2004 and December 28, 2003, respectively. Deferred revenue at October 3, 2004
included $3.2 million from domestic television, $0.6 million from product
licensing and $0.3 million from host fees. The $0.5 million balance at December
28, 2003 related to host fees.

MINORITY INTEREST

As of October 3, 2004, the $11.2 million minority interest balance on the
accompanying balance sheet represents a 36% outside ownership interest in WPTE.

COMMON SHARES SUBJECT TO REPURCHASE

WPTE violated certain securities laws in connection with its initial public
offering by sending out written e-mail communications to individuals that did
not contain all of the information required to be in a prospectus and were not
preceded or accompanied by a prospectus meeting the requirements for a
prospectus. These violations could require WPTE to repurchase shares sold in the
offering to direct recipients of the e-mail communications for a period of up to
one year at the offering price plus interest. WPTE sold 75,200 shares in the
offering that are subject to such repurchase rights, and these shares are
classified as common shares subject to repurchase.

It is possible that indirect recipients of the written e-mail communications
would assert that they have shares subject to repurchase rights with respect to
shares purchased in the offering. WPTE believes that the repurchase rights do
not extend to indirect recipients and would contest any such assertion
vigorously; therefore, no such shares have been recorded in the common shares
subject to repurchase.

LAND HELD UNDER CONTRACT FOR SALE

On December 28, 2001, the Company entered into agreements to sell the Polo Plaza
shopping center property and the rights and obligations in the adjacent
Travelodge property in Las Vegas, to Metroflag Polo, LLC and Metroflag BP, LLC,
respectively ("Metroflag"). These sales were recorded under the deposit method
of accounting. The terms of the agreements were amended in 2002 and 2003,
including the selling prices and required payment dates. The amended sale prices
were $23.8 million and $7.5 million, respectively.

In 2003, the Company received a $16.8 million cash payment on the purchase price
for the Polo Plaza property, at which time the Polo Plaza transaction was
recorded as a sale. As of October 3, 2004, the Company is owed $8 million
(excluding interest) related to the Polo Plaza property through the contractual
requirement that Metroflag Polo, LLC redeem membership interests owned by the
Company. The Company owns a subordinated membership interest that must be
redeemed for $4 million of the purchase price if the secured debt related to the
Travelodge property, which is due on December 28, 2004, is paid, or if the
property is sold or the primary secured debt is refinanced. The Company also
holds a preferred membership interest that the Company can require to be
repurchased anytime after December 24, 2006 for the remaining $4 million
purchase price portion. A total of $7 million in the Metroflag membership
interests owned by the Company is included in "Investments" on the Company's
consolidated balance sheet as of October 3, 2004. The $1 million difference is
due to an impairment charge recorded in the fourth quarter of 2002 related to an
unexercised early payment option on the subordinated membership interest.

                                       8

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

As of October 3, 2004, the Company is contractually owed approximately $5.4
million plus interest related to the Travelodge property, and that amount
becomes due on December 28, 2004. Of this amount, $4.9 million is included in
"Land held under contract for sale" on the Company's consolidated balance
sheets, with an offsetting deposit of $500,000 included in "Other accrued
expenses". The difference between the $5.4 million owed to the Company and the
$4.4 million net amount recorded on the Company's books is due to a $1 million
impairment recorded in the fourth quarter of 2003. This charge was due to an
early payment discount that the Company was considering extending to Metroflag;
however, the discount was never granted.

Company management recently entered negotiations with Metroflag that may result
in further revisions to certain of the payment terms for one or both of the
properties. The Company believes the amounts recorded on its balance sheet are
collectible, as the obligations are supported by agreements documenting the
amounts owed to the Company and the related payment terms and the Company
believes that Metroflag will be able to pay the amounts owed. In addition, the
indebtedness due to Lakes for the Travelodge property is secured by a first
priority deed of trust against the leasehold interest. Therefore, if Metroflag
were to default on its payment obligations related to the Travelodge property,
ownership rights and obligations related to this property, consisting of a
long-term land lease and motel operation, would revert back to Lakes. The
Company believes the security for the Travelodge note receivable is adequate,
based on management's assessment of land, values for similarly situated
properties in Las Vegas, Nevada.

LAND HELD FOR DEVELOPMENT

Included in land held for development is land held for possible transfer to
Indian tribes for use in future casino resort projects in the amount of $14.1
million and $14.5 million as of October 3, 2004 and December 28, 2003,
respectively. In the event that this land is not transferred to the tribes, it
can be sold by the Company. The Company periodically evaluates whether events
and circumstances have occurred that may affect the recoverability of the net
book value of these assets. If such events or circumstances indicate that the
carrying amount of an asset may not be recoverable, the Company estimates the
future cash flows expected to result from the use of the asset. If the sum of
the expected future undiscounted cash flows does not exceed the carrying value
of the asset. the Company will recognize an impairment loss.

During the second quarter of 2004, an impairment related to the land held for
development in the amount of $0.5 million was recorded related to the Nipmuc
Nation casino development project. This amount was included in the total
impairment charge of $6.4 million related to the Nipmuc Nation project which
also included a $5.9 million impairment charge on related notes receivable. This
impairment occurred after the Nipmuc Nation was denied federal recognition as an
Indian Tribe and sovereign government within the meaning of federal law by the
Bureau of Indian Affairs (BIA).

RECENT ACCOUNTING PRONOUNCEMENTS

In March 2004, the FASB issued an exposure draft of a proposed standard entitled
"Share Based Payment", which would amend FAS No. 123, "Accounting for
Stock-Based Compensation", and FAS No. 95, "Statement of Cash Flows". The
proposed standard, if adopted, would require expensing stock options issued by
the Company based on their estimated fair value at the date of grant and would
be effective for the third quarter of 2005. Upon issuance of a final standard,
the Company will evaluate the impact on our consolidated financial position and
results of operations.

                                       9

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

2.    WPT ENTERPRISES, INC. INITIAL PUBLIC OFFERING

On August 9, 2004, the Securities and Exchange Commission declared effective a
registration statement of WPTE that registered the offer and sale of up to
4,000,000 shares of WPTE common stock, at $8.00 per share, in WPTE's initial
public offering and an additional 600,000 shares of WPT common stock that were
sold by the underwriters involved in the offering exercise related to their
over-allotment option. WPTE's common stock was approved for trading on The
Nasdaq Stock Market and began trading on August 10, 2004. Proceeds from the sale
of the 4,600,000 shares were $32.4 million, net of estimated offering expenses
and underwriting discounts. These proceeds have been and will continue to be
used to expand WPTE's entertainment production business and for its working
capital. There were no selling shareholders participating in the offering. Net
proceeds in excess of minority interest have been reflected as additional
paid-in-capital in the Company's financial statements. Lakes did not recognize a
gain on this transaction.

As of October 3, 2004, Lakes' consolidated balance sheet included unrestricted
cash and cash equivalents and short-term investment balances of $48.5 million.
Included in this amount was WPTE cash and cash equivalents and short-term
investments of $33.6 million, which as discussed above, will be used in WPTE's
business and not used in Lakes' business.

3.    BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements include
the accounts of Lakes and its wholly-owned and majority-owned subsidiaries. The
portion of the income applicable to non-controlling interests in the
majority-owned operations is reflected as minority interest in the accompanying
consolidated statement of loss. Investments in unconsolidated affiliates
representing 50% or less of voting interests are accounted for on the equity
method. All significant intercompany balances and transactions have been
eliminated in consolidation.

Lakes' investments in unconsolidated affiliates include a 50 percent ownership
interest in PCG Santa Rosa, LLC, a joint venture formed to develop a casino on
Indian-owned land in California and a 50% ownership interest in 2022 Ranch, LLC,
a joint venture formed to develop and/or sell approximately 2000 acres owned by
the joint venture in Eastern San Diego County. This land was sold during the
first quarter of 2004. The sale of the land reduced Lakes' investment in 2022
Ranch to less than $0.1 million.

The condensed consolidated financial statements have been prepared by the
Company in accordance with accounting principles generally accepted in the
United States of America for interim financial information, in accordance with
the rules and regulations of the Securities and Exchange Commission. Pursuant to
such rules and regulations, certain financial information and footnote
disclosures normally included in the condensed consolidated financial statements
have been condensed or omitted.

In the opinion of management, all adjustments considered necessary for fair
presentation have been included. Operating results for the nine months ended
October 3, 2004 are not necessarily indicative of the results that may be
expected for the year ending January 2, 2005. The condensed consolidated
financial statements should be read in conjunction with the condensed
consolidated financial statements and notes thereto included in the Company's
annual report on Form 10-K for the year ended December 28, 2003.

                                       10

<PAGE>

4.    STOCK-BASED COMPENSATION

At October 3, 2004, the Company has two stock-based employee compensation plans.
The Company accounts for those plans under the recognition and measurement
principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and
related Interpretations. No stock-based employee compensation cost is reflected
in net income, as all options granted under those plans had an exercise price
equal to the market value of the underlying common stock on the date of grant.

In connection with the initial public offering of WPTE and the conversion of
World Poker Tour, LLC (see Note 1) into a Delaware corporation named "WPT
Enterprises, Inc.", each of World Poker Tour, LLC's limited liability company
units was converted into shares of common stock. WPTE adopted a 2004 Stock
Incentive Plan that is authorized to grant stock-based awards to purchase up to
3,120,000 shares of WPTE common stock, including options to purchase up to
1,120,000 shares of WPTE common stock issued to WPTE employees and consultants
that were outstanding under World Poker Tour, LLC's 2002 Plan at the time of the
conversion. In addition, during August and September of 2004, WPTE granted stock
options to purchase an additional 1,412,000 shares, including 1,340,000 shares
to employees and 72,000 shares to non-employee directors.

                                       11

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

The Company accounts for the WPTE 2004 stock incentive plan and the World Poker
Tour, LLC 2002 unit-based employee compensation plan under the recognition and
measurement principles of APB Opinion No. 25, Accounting for Stock Issued to
Employees, and related Interpretations. Compensation expense for unit option
grants issued to employees was recorded to the extent the fair market value of
the units on the date of grant exceeds the option price. Compensation expense
for restricted 2002 unit grants was measured based on the fair market value of
the units on the date of grant. The compensation expense was amortized ratably
over the vesting period of the awards.

The Company accounts for WPTE unit-based consultant compensation according to
the recognition and measurement principles of EITF 96-18, Accounting for Equity
Instruments That are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services. Compensation expense for unit
option grants issued to consultants is recorded at the fair market value of the
options at the measurement date, defined as the date the options vest and
services have been provided.

The WPTE options resulting from conversion of the WPTE unit options become
exercisable in quarterly installments on each of the first four anniversaries of
the date of the grant and each installment expires six years after being
exercisable. The employee must be employed by WPTE on the anniversary date in
order to vest in any units that year. If the employee is terminated (voluntarily
or involuntarily) prior to the vesting of any portion of a unit option, the
unvested portion will be forfeited.

For WPTE unit options issued to certain employees in March 2002, deferred stock
compensation for the unit options is measured at the units' fair value in excess
of the exercise price on the date of grant and is being amortized over the
vesting period of four years. For WPTE unit options issued to consultants in
March 2002, compensation expense is measured at the option's fair value. Fair
value is measured when the unit options vest in annual installments on each of
the first four anniversaries of the date of the grant. Compensation expense is
estimated in periods prior to vesting based on the then current fair value.
Changes in the estimated fair value of unvested options are recorded in the
periods the change occurs.

No stock-based employee compensation cost is reflected in net income for WPTE
stock options granted to employees and non-employee directors in August and
September 2004, as all options granted had an exercise price equal to the market
value of the underlying common stock on the dates of grant.

The following table illustrated the effect on net income and earnings per share
if the Company had applied the fair value recognition provisions of FASB
Statement No. 123, Accounting for Stock-Based Compensation, to stock-based
employee compensation under the Lakes' and WPTE option plans and unit-based
employee and consultant compensation under the WPTE Plans (in thousands except
per share data).

                                       12

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED            NINE MONTHS ENDED
                                                           ------------------            -----------------
                                                     OCT. 3, 2004  SEPT. 28, 2003   OCT. 3, 2004   SEPT. 28, 2003
                                                     ------------  --------------   ------------   --------------
<S>                                                  <C>           <C>              <C>            <C>
Net earnings (loss):
    As reported                                      $   (1,718)     $   (1,302)     $   (9,636)     $   (1,840)
    Add:  Unit-based compensation expense                   276               8             545              35
        included in reported net earnings (loss)
    Less:  Total stock-based compensation                  (640)           (421)         (1,627)         (1,235)
        expense determined under the fair
        value method, net of related tax effects
    Pro forma                                            (2,082)         (1,715)        (10,718)         (3,040)
Net earnings (loss) per share:
    As reported -- Basic                             $    (0.08)     $    (0.06)     $    (0.44)     $    (0.09)
    Pro forma -- Basic                                    (0.09)          (0.08)          (0.49)          (0.14)
    As reported -- Diluted                                (0.08)          (0.06)          (0.44)          (0.09)
    Pro forma -- Diluted                                  (0.09)          (0.08)          (0.49)          (0.14)
</TABLE>

5.    MANAGEMENT CONTRACTS FOR INDIAN-OWNED CASINOS

The ownership, development, management and operation of gaming facilities are
subject to extensive federal, state, provincial, tribal and/or local laws,
regulation, and ordinances, which are administered by the relevant regulatory
agency or agencies in each jurisdiction. These laws, regulations and ordinances
vary from jurisdiction to jurisdiction, but generally concern the
responsibility, financial stability and character of the owners and managers of
gaming operations as well as persons financially interested or involved in
gaming operations. The Company is prohibited by the Indian Gaming Regulatory Act
from having an ownership interest in any casino it manages for Indian tribes.

The management contracts govern the relationship between the Company and the
tribes with respect to the management of the casinos. The development portion of
the agreements commences with the signing of the respective contracts and
continues throughout the construction phase until the casino is open for
business; thereafter, the management portion of the respective management
contracts continues for a period up to seven years. Under the terms of the
contracts, the Company, as manager of the casino, receives a percentage of the
distributable profits (as defined in the contract) of the operations as a
management fee after payment of certain priority distributions, a cash
contingency reserve, and guaranteed minimum payments to the tribes.

Lakes has a contract to be the exclusive developer and manager of an
Indian-owned gaming resort near New Buffalo, Michigan with the Pokagon Band of
Potawatomi Indians. The Company has formed partnerships that hold contracts to
develop and manage two casinos to be owned by Indian tribes in California, one
near San Diego with the Jamul Indian Village, and the other near Sacramento with
the Shingle Springs Band of Miwok Indians.

                                       13

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

6.    NOTES RECEIVABLE

The notes receivable from Indian Tribes result from costs incurred by the
Company for the development of gaming properties under which the Company has
signed management contracts. The Company has formal procedures governing its
evaluation of opportunities for potential development projects which it follows
before entering into agreements to provide financial support for the development
of these properties. The repayment terms related to these notes receivable are
specific to each tribe and are largely dependent upon the operating performance
of each gaming property. Repayments of the aforementioned notes receivable are
required to be made only if distributable profits are available from the
operation of the related casinos. Repayments are also subject to certain
distribution priorities specified in the management contracts. In addition,
repayment of the notes receivable and the manager's fees under the management
contracts are subordinated to certain other financial obligations of the
respective tribes.

Notes receivable consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                                                      Oct. 3, 2004  December 28, 2003
                                                                                      ------------  -----------------
<S>                                                                                   <C>           <C>
Properties under development:

Notes from the Pokagon Band of Potawatomi Indians with variable interest rates
(not to exceed 10%) (5.75% at October 3, 2004), receivable in 60 monthly
installments subsequent to commencement date                                            $  44,115       $  41,729

Notes from the Shingle Springs Band of Miwok Indians with variable interest
rates (6.75% at October 3, 2004), receivable in varying monthly installments
based on contract terms subsequent to commencement date                                    31,687          24,428

Notes from Jamul Indian Village with variable interest rates (6.75% at October
3, 2004), receivable in 60 monthly installments subsequent to commencement date            13,958          12,336

Notes from the Nipmuc Nation with variable interest rates                                       -           4,634

Other                                                                                       1,179           1,555
                                                                                        ---------       ---------
Total notes receivable                                                                  $  90,939       $  84,682
                                                                                        =========       =========
</TABLE>

Interest income on notes receivable from Indian Tribes related to properties
under development is deferred because realizability of the interest is
contingent upon the completion and positive cash flow from operation of the
casino. Interest deferred during the development period is recognized over the
remaining life of the note using the effective interest method. As of October 3,
2004 and December 28, 2003, $19.2 million and $15.2 million of interest on notes
related to properties under development has been deferred.

                                       14

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

The terms of these notes require the casinos to be constructed and to generate
positive cash flows prior to the Company receiving repayment. As such, an
estimate of the fair value of these notes requires an assessment of the timing
of the construction of the related casinos and the profitability of the related
casinos. Due to the significant uncertainty involved in such an assessment, the
Company does not believe that it is practicable to accurately estimate the fair
value of these notes with the degree of precision necessary to make such
information meaningful.

On a monthly basis, Company management evaluates the collectibility of the
Company's receivables, including notes receivable related to the Indian-owned
casino development projects. In the Company's experience, if a project is
successfully completed, the cash flows are more than sufficient to fund the debt
service. Therefore, in evaluating the receivables related to casino projects,
the principal ongoing assessment involves the likelihood of project completion.
If a significant event occurs that causes management to believe that the project
will likely not be successfully completed, then the Company will recognize an
impairment on the related receivables. A portion of the notes due from the
Pokagon Tribe in the approximate amount of $23.6 million resulted from funds
advanced by the Company for the Tribe's purchase of the development project
land. The Company has a first deed of trust against this property which will be
relinquished when the land is placed into trust by the BIA.

As part of the monthly assessment, the current status of each project is
discussed, as well as any recent developments such as contract approvals,
litigation, land in trust issues, or any other developments that may affect the
project's status. Management looks at the same factors it initially considered
with respect to the investment. The Company's policy is to assess assets for
impairment whenever events or changes in circumstances indicate that the
carrying amount of the asset may not be recoverable and to record an impairment
when the carrying value of the asset exceeds its fair value.

During the second quarter of 2004, the Company recorded an impairment related to
the Nipmuc Nation notes receivable in the amount of $5.9 million. This amount
was included in the total impairment charge of $6.4 million related to the
Nipmuc Nation project. The notes receivable related to amounts advanced by the
Company to the Nipmuc Nation since the Company entered a letter of intent with
the Nipmuc Nation in August 2000.

The impairment was recorded upon issuance by the BIA in June 2004 of its final
determination denying the Nipmuc Nation's application for federal recognition.
Although the determination can be appealed with the Bureau of Indian Affairs,
the Company determined in June 2004 that in the Company's opinion successful
completion of the project is unlikely given that a successful appeal would
involve a challenge to a final determination of the BIA.

                                       15

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

With the exception of the BIA's denial of federal recognition for the Nipmuc
Nation in June 2004, no events have occurred during 2004 that would cause
management to believe that its other projects will not be successfully
completed.

Various litigation and regulatory issues have caused delays to the Company's
current development projects. Management believes that the three pending
projects will ultimately be completed.

                                       16

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

7.    INCOME TAXES

The Company is currently under examination in various states for income and
franchise tax matters. The Internal Revenue Service has completed a field exam
of the Company's tax returns for the years ended December 30, 2001 and December
31, 2000. The Company has recorded a reserve assessment related to these
examinations and other tax matters. The reserve is reflected as part of income
taxes payable on the accompanying consolidated balance sheets.

No income tax benefit was recorded related to impairment losses of $6.4 million
in the second quarter of 2004, due to the uncertainty of realizability.

8.    COMMITMENTS AND CONTINGENCIES:

TRIBAL COMMITMENTS

Our management contracts with our tribal partners require that we provide
financial support related to project development, in the form of loans.

<TABLE>
<CAPTION>
                                            Casino Development Advances/Commitments
                                         ----------------------------------------------
                                                        (in millions)
                                                                            Remaining
                                         Pre-construction  Land Held for    Maximum
                                             Advances       Development    Commitment
                                         as of 10/3/04     as of 10/3/04  as of 10/3/04
                                         -------------     -------------  -------------
<S>                                      <C>               <C>            <C>
Jamul Indian Village                        $14.0             $ 6.6          $ 9.4
Shingle Springs Band of Miwok Indians        31.7               7.4            0.9
Pokagon Band of Potawatomi Indians           44.1                 -           24.4
</TABLE>

For the Pokagon project, the Company has agreed to provide additional financing
from its own funds if financing to the Tribe at an interest rate not to exceed
13% is not available from third parties. If this occurs and Lakes is required to
provide all financing, this would be an additional commitment of up to
approximately $54 million. Currently, it appears that third-party financing will
be available for this project. However, there can be no assurance that
third-party financing will be available and that Lakes will not be required to
provide this additional financing.

Lakes 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. Any guarantees by Lakes or similar off-balance sheet liabilities will
increase Lakes' potential exposure in the event of a default by any of these
tribes.

WPTE EMPLOYEE OBLIGATION

WPTE employee obligation includes the base salaries payable to three WPTE
executives under their respective employment agreements. Total payments of $1.8
million are due within the next three years under these agreements.

                                       17

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

LEASES

The Company leases an airplane, under a non-cancelable operating lease.
Approximate future minimum lease payments, due under this lease as of October 3,
2004, expiring April 30, 2005, are as follows (in thousands):

                                          Operating Leases
                                          ----------------
           2004                                $150
           2005                                 200
                                               $350

INDEMNIFICATION AGREEMENT

As a part of the transaction establishing Lakes as a separate public company on
December 31, 1998, the Company agreed to indemnify Grand through December 28,
2004 against all costs, expenses and liabilities incurred in connection with or
arising out of certain pending and threatened claims and legal proceedings
against Grand and to pay all related settlements and judgments. The Company's
indemnification obligations include the obligation to provide the defense of all
claims made in proceedings against Grand and to pay all related settlements and
judgments. The Company believes that no further payments are required to be made
pursuant to its indemnification obligations. The current carrying amount of the
liability for the Company's indemnification obligations is zero.

As a part of the indemnification agreement, Lakes agreed that it will not
declare or pay any dividends, make any distribution on account of Lakes' equity
interests, or otherwise purchase, redeem, defease or retire for value any equity
interests in Lakes without the written consent of Caesars Entertainment, Inc,
the parent Company of Grand.

LEGAL PROCEEDINGS

SLOT MACHINE LITIGATION

In 1994, William H. Poulos filed a class-action lawsuit in the United States
District Court for the Middle District of Florida against various parties,
including Grand and numerous other parties alleged to be casino operators or
slot machine manufacturers. This lawsuit was followed by several additional
lawsuits of the same nature against the same, as well as additional defendants,
all of which were subsequently consolidated into a single class-action pending
in the United States District Court for the District of Nevada.

                                       18

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

Following a court order dismissing all pending pleadings and allowing the
plaintiffs to re-file a single complaint, a complaint has been filed containing
substantially identical claims, alleging that the defendants fraudulently
marketed and operated casino video poker machines and electronic slot machines,
and asserting common law fraud and deceit, unjust enrichment and negligent
misrepresentation and claims under the federal Racketeering-Influenced and
Corrupt Organizations Act. Various motions were filed by the defendants seeking
to have this new complaint dismissed or otherwise limited. In December 1997, the
Court, in general, ruled on all motions in favor of the plaintiffs. The
plaintiffs then filed a motion seeking class certification and the defendants
opposed it. In June 2002, the District Court entered an order denying class
certification. On August 10, 2004, the Ninth Circuit Court of Appeals affirmed
the District Court's denial of class certification.

Management currently believes the final outcome of this matter is not likely to
have a material adverse effect upon the Company's consolidated financial
position or results of operations, and currently an estimate of any possible
loss cannot be made.

WILLARD EUGENE SMITH LITIGATION

On October 24, 2003, Lakes announced that it had been named as one of a number
of defendants in a counterclaim filed in state court in Harris County, Texas by
Willard Eugene Smith involving Kean Argovitz Resorts, LLC (KAR), related persons
and entities. In the counterclaim, Smith asserts that, under an alleged oral
agreement with Kevin Kean, he is entitled to a percentage of fees to be received
by the KAR entities or their principals relating to the Shingle Springs and
Jamul casinos that Lakes' subsidiaries are developing in California. Smith also
seeks recovery of damages through the remedy of either attachment of the
management fees generated from the projects or avoidance of buyout agreements
between Lakes and KAR based on their conduct with respect to the alleged
agreement.

Lakes believes the counterclaim against it is without merit. Lakes understands
that the alleged oral agreement upon which Smith bases his claim was rendered
null and void in a prior judgment issued against Smith by the Harris County,
Texas state court in October 2000. However, in September 2003, the court vacated
the prior judgment against Smith. Lakes acquired KAR's interests in the Shingle
Springs and Jamul projects on January 30, 2003. In the buyout agreements between
Lakes and certain KAR entities and related principals, the KAR entities
represented to Lakes that the KAR entities and their affiliates had no
continuing agreements with any third party relating to the Shingle Springs and
Jamul projects and agreed to indemnify Lakes and its affiliates from damages
resulting from prior dealings of the KAR entities and related principals
concerning the projects. Lakes will vigorously defend against the allegations
made against it and will pursue its indemnification rights against the KAR
entities and their principals under the buyout agreements if necessary.
Discovery is continuing and the trial is scheduled for March 2005.

Management currently believes the final outcome of this matter is not likely to
have a material adverse effect upon the Company's consolidated financial
position or results of operations, and currently an estimate of any possible
loss cannot be made.

                                       19

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

EL DORADO COUNTY, CALIFORNIA LITIGATION

On January 3, 2003, El Dorado County filed an action in the Superior Court of
the State of California, seeking to prevent the construction of a highway
interchange that was approved by a California state agency. The action does not
seek relief directly against Lakes. However, the interchange is necessary to
permit the construction of a casino to be developed and managed by Lakes through
a joint venture.

The casino will be owned by the Shingle Springs Band of Miwok Indians. The
matter was tried to the court on August 22, 2003. On January 2, 2004, Judge
Lloyd G. Connelly, Judge of the Superior Court for the State of California,
issued his ruling on the matter. The Court denied the petition in all respects
except one. As to the one exception, the Court sought clarification as to
whether the transportation conformity determination used to determine the
significance of the air quality impact of the interchange operations considered
the impact on attainment of the state ambient air quality standard for ozone.
The California Department of Transportation (Caltrans) prepared and filed the
clarification addendum sought by the Court.

Prior to the Court's determination of the adequacy of the clarification, El
Dorado County and Voices for Rural Living appealed Judge Connelly's ruling to
the California Court of Appeals on all of the remaining issues. The Company
believes that appellants have not presented sufficient grounds to justify
overturning the trial court's earlier conclusion and that the Company will
prevail on the consolidated appeals of the County and Voices for Rural Living.

A ruling with respect to the addendum was issued June 21, 2004 by the Superior
Court of California, County of Sacramento. The ruling indicates that the
addendum provided to the court by Caltrans did not provide a quantitative
showing to satisfy the court's earlier request for a clarification on meeting
the state ambient ozone standard. The court recognized that the information
provided by Caltrans does qualitatively show that the project may comply with
the state standard, but concluded that a quantitative analysis is necessary even
though the court recognized that the methodology for that analysis "is not
readily apparent". In addition, the ruling specifically states, "Moreover such
methodology appears necessary for the CEQA analysis of transportation projects
throughout the state, including transportation projects for which respondents
(i.e. Caltrans) have approval authority." Caltrans, the Shingle Springs Tribe
and Lakes responded to the court with a revised submission in August 2004.
Representatives of the California Air Resources Board and the Sacramento Area
Council of Governments filed declarations supporting the revised submission to
the court. Opposition to that revised submission was filed, a hearing on the
revised submission took place on August 20, 2004 and the Court again found the
revised submission of Caltrans, the Shingle Springs Tribe and Lakes to be
inadequate. That ruling has been separately appealed to the California Court of
Appeals.

Management currently believes the final outcome of this matter is not likely to
have a material adverse effect upon the Company's consolidated financial
position or results of operations, as it believes, but there can be no assurance
that, the courts' rulings will ultimately allow the project to commence.

GRAND CASINOS, INC. LITIGATION

In connection with the establishment of Lakes as a public corporation on
December 31, 1998, via a distribution of its common stock to the shareholders of
Grand, the Company and Grand entered into an agreement governing the sharing or
allocation of tax benefits accruing to Grand and certain affiliated companies.

                                       20

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

On August 13, 2004, an arbitrator awarded to the Company partial summary
judgment on certain of the Company's claims against Grand under the tax sharing
agreement. The dollar amount that will be awarded to the Company on these claims
has not been determined, certain other claims by the Company under the agreement
have not been decided, and no hearing date has been set to determine such dollar
amount or decide such claims.

OTHER LITIGATION

Lakes is involved in various other inquiries, administrative proceedings, and
litigation relating to contracts and other matters arising in the normal course
of business. While any proceeding or litigation has an element of uncertainty,
management currently believes that the final outcome of these matters, including
the matters discussed above, is not likely to have a material adverse effect
upon the Company's consolidated financial position or results of operations.

9.    RELATED PARTY TRANSACTIONS

Lakes has entered into a license agreement with Sklansky Games, LLC ("Sklansky)
pursuant to which Lakes is developing a World Poker Tour No Limit Texas Hold `Em
casino table game that uses certain of Sklansky's intellectual property rights.
Lakes had also entered into a license agreement with WPT pursuant to which Lakes
has obtained a license to utilize the World Poker Tour name and logo in
connection with the development of this casino table game. Under the terms of
this agreement, if Lakes elects to proceed with its development of the casino
table game, Lakes will be required to pay WPTE a specified minimum annual
royalty payment of 10% and Sklansky a specified minimum annual royalty payment
of 30% of the gross revenue Lakes receives from its sale or lease of the game,
whichever is greater. In addition to our indirect majority ownership in WPT
Enterprises, Inc. through one of our wholly owned subsidiaries, Lyle Berman and
his son, Brad Berman, own 28% and 44% equity interests in Sklansky,
respectively. Lyle Berman also serves as Chairman and Chief Executive Officer of
WPTE, and Brad Berman is a member of WPTE's Board of Directors.

Effective as of February 24, 2004, WPTE entered into a non-exclusive license
agreement with G-III Apparel Group, Ltd. ("G-III"). Morris Goldfarb, a Lakes
director, is a director, Co-Chairman of the Board and Chief Executive Officer of
G-III. Under the agreement, G-III licenses the World Poker Tour name, logo and
trademark from WPTE in connection with G-III's production of certain types of
apparel for distribution in authorized channels within the United States, its
territories and possessions and in certain circumstances, Canada. As
consideration for this non-exclusive license, G-III pays royalties and certain
other fees to WPTE.

                                       21

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

10.   SEGMENT INFORMATION

Lakes' principal business is the development and management of gaming related
properties. Additionally, the Company is the majority owner of WPT Enterprises,
Inc. (See Note 1). Substantially, all of our operations are conducted in the
United States. Episodes of the World Poker Tour series are distributed
internationally by a third party distributor. Lakes' reportable segments are as
follows (in millions):

<TABLE>
<CAPTION>
                                      Industry Segments
                                Real Estate      WPT             Corporate &     Total
                                Development  Enterprises, Inc.  Eliminations  Consolidated
                                -----------  -----------------  ------------  ------------
<S>                             <C>          <C>                <C>           <C>
Total Assets as of
October 3, 2004                 $ 135.9       $  37.0           $  26.8         $  199.7

Total Assets as of
December 28, 2003                 126.1           2.5              41.5            170.1

For the Three Months Ended/
as of October 3, 2004
Revenue                         $     -       $   3.0           $     -         $    3.0
Net earnings (loss)                   -          (0.5)             (1.2)            (1.7)
Depreciation expense                  -             -               0.2              0.2

For the Three Months Ended/
as of September 28, 2003
Revenue                         $     -       $   0.4           $     -         $    0.4
Net earnings (loss)                   -          (0.4)             (0.9)            (1.3)
Depreciation expense                  -             -               0.1              0.1
</TABLE>

11.   STOCK SPLIT

During April of 2004, the Company's Board of Directors declared a two-for-one
stock split, payable in the form of a 100% stock dividend on Lakes' outstanding
common stock. The stock dividend was paid on May 3, 2004 to shareholders of
record as of April 26, 2004. All share and per share data reflected in this
quarterly report has been retroactively restated to give effect to the stock
split.

                                       22

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

12.   SUBSEQUENT EVENTS

On November 10, 2004, the Company announced that it had signed a Letter of
Intent with the Kickapoo Traditional Tribe of Texas to negotiate an agreement
with the Tribe to consult on the further development and operations of the
Tribe's casino located in Eagle Pass, Texas. Subject to regulatory approval, the
consulting agreement will be replaced by a management contract.

The Tribe recently opened the expanded Luck Eagle Casino in Eagle Pass, Texas,
located approximately 140 miles southwest of San Antonio. The casino currently
consists of approximately 1,000 Class II type gaming devices, ten Kickapoo 21
tables and seventeen poker tables along with two restaurant outlets and a
multi-functional outlet that seats over 2,000 customers.

The Letter of Intent provides that the Tribe and Lakes will negotiate and enter
into a consulting agreement and a management contract. The consulting agreement
will be for a period of seven years or until approval by the National Indian
Gaming Commission of a proposed seven year management contract, which will then
replace the consulting agreement. If Lakes and the Tribe enter into the
agreements, Lakes does not expect to receive any significant fees under these
arrangements for at least twelve months.

                                       23

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

BUSINESS

BUSINESS OVERVIEW

Lakes' primary business is to develop and manage Indian-owned casino properties
that offer the opportunity for long-term development of related entertainment
facilities, including hotels, theaters, recreational vehicle parks and other
complementary amenities designed to enhance the customers' total entertainment
experience and to differentiate facilities managed by lakes from its
competitors. Lakes has entered into contracts with the following Indian Tribes
for the development, management and/or financing of new gaming resorts, all of
which are subject to various regulatory approvals and resolution of any existing
litigation before construction can begin:

      -     Shingle Springs Band of Miwok Indians near Sacramento, California

      -     Pokagon Band of Potawatomi Indians near New Buffalo, Michigan

      -     Jamul Indian Village near San Diego, California

In November 2004, Lakes announced that it had entered into a letter of intent
with an Indian tribe to negotiate a consulting agreement and, subject to
regulatory approval, a management contract, for a casino project in Texas. Lakes
has also explored, and will continue to explore, numerous other possible
development projects.

In addition, Lakes has recently created a new division to buy, license and/or
market new table game concepts for licensing to casinos. The Company is
currently testing and marketing a number of new games.

Lakes also owns a majority interest in WPT Enterprises, Inc., ("WPTE"), a media
and entertainment company engaged in the creation of branded entertainment
through the development, production and marketing of televised programming based
on poker and other gaming themes. WPTE's operations have principally revolved
around the creation of the World Poker Tour brand through the production and
licensing of a television series exhibited on the Travel Channel, LLC ("TRV")
that is based on a circuit of previously-established high-stakes poker
tournaments affiliated under the "World Poker Tour" name.

During August of 2004, WPTE completed an initial public offering that yielded
proceeds to WPTE of approximately $32.4 million, net of offering expenses and
underwriting discounts. WPTE common stock is traded on the Nasdaq National
Market. Lakes remains a majority shareholder of WPTE, owning approximately 64%
of the outstanding common stock. Therefore, Lakes' consolidated results continue
to include WPTE operations. Minority interest, representing the portion of
WPTE's income or loss applicable to non-controlling interests in WPTE, is
reflected in the consolidated statements of loss from the date of completion of
the initial public offering.

FINANCIAL OVERVIEW

In 2003 and 2004, all of Lakes' consolidated revenues have been derived from the
WPTE business, mainly from license fees for United States telecast of World
Poker Tour episodes. License fees have depended on the number of episodes
delivered to TRV in a particular period. Revenues from other parts of the WPTE
business are relatively small but increasing. Lakes' casino operations have not

                                       24
<PAGE>

generated revenues since early 2002, when Lakes' last casino management
agreement that carried over from the Distribution was terminated. The timing of
future revenues from Lakes' casino business will depend on the successful
opening of Lakes' proposed Pokagon, Shingle Springs and Jamul casino projects,
which in turn will depend on the resolution of litigation, necessary regulatory
approvals and other factors that have delayed the construction of those casinos.

For the nine months ended October 3, 2004, Lakes reported a consolidated
operating loss of $12.2 million. Lakes principal costs and expenses in 2003 and
2004 have consisted of the following categories:

-     WPTE-related costs and expenses. WPTE production costs are generally
      deferred and matched with revenues from completed episodes. WPTE's gross
      margins were 40% for the first nine months of 2004 and 39% in the 2003
      period. WPTE-related selling, general and administrative expenses
      increased significantly in 2004 due to business development and costs of
      WPTE becoming an independent public company.

-     Selling, general and administrative expenses from Lakes' business
      activities. These expenses have generally been flat, with some
      fluctuations due to litigation expenses.

-     Lakes impairment charges. Lakes has taken some significant impairment
      charges in recent years related to its investments in its Indian casino
      projects and several real estate holdings that carried over from its
      establishment as a public company via a distribution of its common stock
      to the shareholders of Grand Casinos, Inc. on December 31, 1998
      ("Distribution").

Lakes' impairment charge in the second quarter of 2004, relating to its
investment in the Nipmuc casino project, contributed $6.4 million to the
Company's net loss. The impairment was recorded upon issuance by the BIA in June
2004 of its final determination denying the Nipmuc Nation's application for
federal recognition. The Company believes that this impairment does not
represent a trend as the Company's remaining projects are with tribes that have
received recognition by the Bureau of Indian Affairs. The Company maintains on
its balance sheet an aggregate of $89.8 million in notes receivable and $14.1
million in land held for development relating to the Pokagon, Shingle Springs
and Jamul casino projects. Management believes that although various litigation
and regulatory issues associated with these development projects have caused
delays, the ultimate successful completion of the three pending projects is
still likely. However, the Company diligently monitors ongoing developments of
each prospective casino project to evaluate whether successful completion of the
project remains likely. If a significant event occurs that causes management to
believe that the project will likely not be successfully completed, then the
Company will recognize an impairment on the related receivables.

Lakes also took impairment charges of $3 million in the fourth quarter of 2002
and $1 million in the fourth quarter of 2003 related to the carrying value of
the Polo Plaza and Travelodge properties in Las Vegas. These properties were
owned by Grand at the time of the Distribution and are not part of the Company's
core business. The Company has contracted to sell these properties to Metroflag
and has received an aggregate $16.8 million in payments. The impairment charges
were related to the re-negotiation of the payment amounts and terms. The
properties are currently carried on the Company's balance sheet in the aggregate
amount of $11.9 million, included in investments and land held for sale. Company
management recently entered negotiations with Metroflag that may result in
further revisions to certain of the payment terms for one or both of the
properties. However, the Company believes the amounts recorded on its balance
sheet are collectible and the Company believes that it has adequate security in
the event of non-payment.

As of October 3, 2004, Lakes has an aggregate $48.5 million in cash and cash
equivalents and short-term investments on its balance sheet. Of this amount, an
aggregate $33.6 million consists of WPTE's cash and cash equivalents and
short-term investments, which will be used by WPTE for its business and will not
be available to Lakes. Lakes owns approximately 12.5 million shares, or
approximately 64% of WPTE's outstanding common stock. This stock is currently
restricted under a lock-up agreement with the underwriters of WPTE's public
offering and applicable securities laws. There is no assurance that Lakes will
be able to realize value from its holdings of WPTE shares equal to the market
value of the shares.

                                       25

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

Additionally, Lakes continually evaluates other opportunities to diversify the
Company's activities and bring in new revenue streams.

SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies, which Lakes believes are the most critical
to aid in fully understanding and evaluating its reported financial results,
include the following: revenue recognition and realizability of notes
receivable.

REVENUE RECOGNITION: Revenue from the management of Indian-owned casino gaming
facilities is recognized when earned according to the terms of the management
contracts. Currently all of the Indian-owned casino projects that Lakes is
involved with are in development stages and are not yet open. Therefore, until a
project is open and operating, Lakes will not recognize revenue related to
Indian casino management. Interest income on notes receivable from Indian tribes
related to casino development projects is deferred because realizability of the
interest is contingent upon the completion and generation of cash flow from the
operation of the casino. Interest deferred during the development period is
recognized over the remaining life of the note using the effective interest
method.

WPTE domestic and international television license fee revenues are recognized
as earned by the American Institute of Certified Public Accountants Statement of
Position (SOP) No. 00-2, Accounting by Producers or Distributors of Films.
Revenue is recognized upon receipt and acceptance of episodes by the ultimate
customer once the license period has begun. Currently, for international
television license fees WPTE does not consider collectibility to be reasonably
assured until the distributor has received payment. WPTE presents international
distribution license fee revenues net of the distributor's fees, as the
distributor is the primary obligator in the transaction with the ultimate
customer.

Product licensing revenues are recognized when the underlying royalties from
the sales of the related products are earned. WPTE recognizes minimum revenue
guarantees ratably over the term of the license or as earned royalties based on
actual sales of the related products, if greater.

Host fee revenues paid by host casinos are recognized as episodes are aired.

Sponsorship revenues are recognized as episodes are aired.


                                       26

<PAGE>
 Television costs related to WPTE's production of the World Poker Tour
television series are included in "Other current assets" on the Company's
balance sheet. Television costs include capitalizable direct costs, production
overhead and development costs and are stated at the lower of cost or net
realizable value based on anticipated revenue. WPTE has not currently
anticipated any revenues in excess of those subject to existing contractual
relationships. Marketing, distribution, and general and administrative costs are
expensed as incurred. Capitalized television production costs for each episode
of the World Poker Tour television series are expensed as revenues are
recognized upon delivery and acceptance by the Travel Channel of the completed
episode. WPTE currently estimates that approximately 95% and 100% of capitalized
television costs as of October 3, 2004 are expected to be expensed by the end of
fiscal 2004 and 2005, respectively.

                                       27

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

IMPAIRMENT OF LONG-TERM ASSETS: Currently, the Company's notes receivable from
Indian Tribes are generally for the pre-construction development of gaming
properties to be managed by the Company. The Company has formal procedures
governing its evaluation of opportunities for potential development projects
which it follows before entering into agreements to provide financial support to
those projects. The repayment terms are specific to each tribe and are largely
dependent upon the operating performance of each gaming property. However,
repayments of the notes receivable are required to be made only if distributable
profits are available from the operation of the related casinos. Repayments are
also subject to certain distribution priorities specified in the management
contracts. In addition, repayment of the notes receivable and the manager's fees
under the management contracts are subordinated to certain other financial
obligations of the respective tribes.

On a monthly basis, Company management evaluates the collectibility of the
Company's receivables, including notes receivable related to the Indian-owned
casino development projects. In the Company's experience, if a project is
successfully completed, the cash flows are more than sufficient to fund the debt
service. Therefore, in evaluating the receivables related to casino projects,
the principal ongoing assessment involves the likelihood of project completion.
If a significant event occurs that causes management to believe that the project
will likely not be successfully completed, then the Company will recognize an
impairment on the related receivables.

As part of the monthly assessment, the current status of each project is
discussed, as well as any recent developments such as contract approvals,
litigation, land in trust issues, among other developments that may affect the
project's status. Management looks at the same factors it initially considered
with respect to the investment. The Company's policy is to assess assets for
impairment whenever events or changes in circumstances indicate that the
carrying amount of the asset may not be recoverable and to record an impairment
if the carrying value of the asset exceeds its fair value.

                                       28

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

The Company currently holds land held for development and land held under
contract for sale and periodically evaluates whether events and circumstances
have occurred that may affect the recoverability of the net book value of these
assets. If such events or circumstances indicate that the carrying amount of an
asset may not be recoverable, the Company estimates the future cash flows
expected to result from the use of the asset. If the sum of the expected future
undiscounted cash flows does not exceed the carrying value of the asset, the
Company will recognize an impairment loss.

The following discussion and analysis should be read in conjunction with the
condensed consolidated financial statements and notes thereto and management's
discussion and analysis included in the Company's Annual Report on Form 10-K for
the year ended December 28, 2003.

RECENT ACCOUNTING PRONOUNCEMENTS

In March 2004, the FASB issued an exposure draft of a proposed standard entitled
"Share Based Payment", which would amend FAS No. 123, "Accounting for
Stock-Based Compensation", and FAS No. 95, "Statement of Cash Flows". The
proposed standard, if adopted, would require expensing stock options issued by
the Company based on their estimated fair value at the date of grant and would
be effective for the third quarter of 2005. Upon issuance of a final standard,
the Company will evaluate the impact on our consolidated financial position and
results of operations.

                                       29

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

RESULTS OF OPERATIONS

NINE MONTHS ENDED OCTOBER 3, 2004 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER
28, 2003

Revenues

Total revenues were $11.8 million for the nine months ended October 3, 2004
compared to $3.9 million for the same period in the prior year. Revenues for the
current and prior year periods were derived primarily from television license
fees related to the World Poker Tour series. WPTE receives fixed license
payments from TRV subject to satisfaction of production milestones and other
conditions. The increase in revenue is primarily due to increased license fees
relating to a greater number of season two episodes delivered to TRV during
2004, compared to the license fees resulting from the season one episodes
delivered to TRV during 2003. In April 2004, TRV exercised its option to
broadcast season three which is the first of a possible five additional seasons.
WPTE is currently in production of season three episodes and plans to begin to
deliver completed season three episodes starting in the fourth quarter of 2004
and expects to begin to recognize revenues at that time. Also contributing to
the increase was revenue of approximately $0.7 million related to WPTE-related
licensing, $0.5 million in sponsorship revenues, $0.9 million in host fees and
$0.2 million in merchandise included in total revenue for the nine months ended
October 3, 2004 compared to $0.3 million in host fees for the nine months ended
September 28, 2003. There were no significant WPTE-related licensing,
sponsorship or merchandise revenues in the 2003 period.

Costs and Expenses

Total costs and expenses were $24.0 million and $7.6 million for the nine months
ended October 3, 2004 and September 28, 2003, respectively. Included in 2004
costs and expenses is an impairment charge of approximately $6.4 million related
to the impairment of Lakes' investment in the Nipmuc Nation casino development
project. $5.9 million of the impairment was related to notes receivable in
connection with the project and the remaining $0.5 million related to land held
for development. This impairment charge was taken in the second quarter of 2004
following the Nipmuc Nation being denied recognition as an Indian Tribe and
sovereign government within the meaning of federal law by the Bureau of Indian
Affairs. The Company believes that this impairment does not represent a trend as
the Company's remaining projects are with tribes that have received recognition
by the Bureau of Indian Affairs. During the nine months ended September 28,
2003, costs and expenses were reduced by a reversal of unused litigation accrual
of $3.2 million under the Company's prior agreement to indemnify Grand Casinos,
Inc. in connection with the Stratosphere litigation matters. This reversal is
not representative of a trend as there are no similar accruals on the Company's
balance sheet.

Selling, general and administrative expenses increased from $8.1 million for the
nine months ended September 28, 2003 to $10.1 million for the nine months ended
October 3, 2004. WPTE selling, general and administrative costs were $1.2
million for the nine months ended September 28, 2003 compared to $3.5 million
for the nine months ended October 3, 2004. This increase is primarily due to an
increase in legal and consulting fees incurred during the 2004 period associated
with WPTE business development and an increase in WPTE payroll costs resulting
from business growth and becoming a separate public company. Lakes' selling,
general and administrative costs were $6.9 million for the nine months ended
September 28, 2003 and $6.6 million for the nine months ended October 3, 2004.
This decrease is primarily due to a decrease in professional fees which were
incurred during the prior year period associated with the sale of property in
Las Vegas, Nevada. WPTE production costs increased from $2.4 million for the
nine months ended September 28, 2003 to $7.1 million for the nine months ended
October 3, 2004. In the current year period, WPTE production costs and related
episode revenues were recognized in the period the relative episode was
delivered to TRV.

                                       30

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

However, because WPTE did not have an executed agreement in 2002, when a portion
of production costs related to the WPTE episodes delivered during the nine
months ended September 28, 2003 were incurred, such costs were expensed in 2002
rather than being capitalized. The increase was also due to a greater number of
episodes being delivered to TRV during the 2004 period compared to the 2003
period.

Other

Interest income was $0.2 million for the nine months ended October 3, 2004
compared to $0.6 million for the same period in the prior year. This decrease is
primarily due to a decrease in interest earned on amounts owed to Lakes by
Metroflag related to the properties sold to Metroflag by Lakes in Las Vegas,
Nevada.

Taxes

Benefit for income taxes was $2.0 million and $1.3 million for the nine months
ended October 3, 2004 and September 28, 2003, respectively. The effective tax
rates were 17% and 41% for the nine months ended October 3, 2004 and September
28, 2003, respectively. The decrease in the effective rate was due to the
provision of additional valuation allowances for tax benefits associated with
the impairment of capital assets.

Losses Per Common Share and Net Losses

For the nine months ended October 3, 2004, basic and diluted losses per common
share were $0.44, compared to basic and diluted losses of $0.09 per common
share, for the same period in the prior year. Losses for the period ended
October 3, 2004 were $9.6 million compared to $1.8 million for the nine months
ended September 28, 2003. This increase in losses is primarily due to the
impairment charge of $6.4 million taken in the current year period discussed
above.

THREE MONTHS ENDED OCTOBER 3, 2004 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER
28, 2003

Revenues

Total revenues were $3.0 million for the three months ended October 3, 2004,
compared to $0.4 million in the prior year period. Revenues for the current and
prior year periods were primarily derived from television license fees related
to the World Poker Tour series. The increase in revenue is primarily due to
increased license fees relating to a greater number of season two episodes
delivered to TRV during the third quarter of 2004, compared to the license fees
resulting from the season one episodes delivered to TRV during the third quarter
of 2003. Also contributing to the increase was revenue of approximately $0.5
million related to WPTE-related licensing and $0.1 million in host fees included
in total revenue for the three months ended October 3, 2004. There were no
significant WPTE-related licensing and host fees revenues in the 2003 period.

Costs and Expenses

Total costs and expenses were $5.8 million and $2.6 million for the three months
ended October 3, 2004 and September 28, 2003, respectively. WPTE selling,
general and administrative costs were $0.5 million for the three months ended
September 28, 2003 compared to $1.5 million for the three months ended October
3, 2004. This increase is primarily due to an increase in legal and consulting
fees incurred during the 2004 period associated with WPTE business development
and an increase in WPTE payroll costs resulting from growth related to becoming
a separate public company.

                                       31

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

Lakes' selling, general and administrative costs were $1.7 million for the three
months ended September 28, 2003 and $2.2 million for the three months ended
October 3, 2004. This increase is primarily due to professional fees incurred
related to business development. WPTE production costs increased from $0.3
million for the three months ended September 28, 2003 to $1.9 million for the
three months ended October 3, 2004. This increase in production costs is
primarily due to an increase in the number of episodes delivered to TRV during
the third quarter of 2004, compared to the number of episodes delivered to TRV
during the third quarter of 2003.

Taxes

Benefit for income taxes was $1.1 million and $0.9 million for the three months
ended October 3, 2004 and September 28, 2003, respectively. The effective tax
rates were 40% and 41% for the current and prior year quarters, respectively.

Earnings Per Common Share and Net Earnings

For the three months ended October 3, 2004, basic and diluted losses per common
share were $0.08, compared to basic and diluted losses of $0.06 per share, for
the same period in the prior year. Losses for the three months ended October 3,
2004 were $1.7 million compared to losses of $1.3 million for the three months
ended September 28, 2003. This increase in losses relates primarily to the
increased selling, general and administrative costs incurred by WPTE discussed
above.

Outlook

It is currently contemplated that there will be no operating revenues for 2004
from existing casino development projects. WPTE revenues are expected to result
primarily from broadcast license fees to be received from TRV, which has
exercised its option to license the World Poker Tour Season Three programming
that is currently in production. WPTE currently anticipates generating revenues
of approximately $10.8 million from Season Three license fees under the Travel
Channel agreement, depending on the number of episodes that ultimately comprise
that season. WPTE is expected to recognize approximately $3.1 million of this
revenue during the fourth quarters of fiscal 2004, with the rest being
recognized in fiscal 2005. Other sources of expected revenues during the fourth
quarter of 2004 include international television licensing revenues resulting
from the distribution of the World Poker Tour's Season One and Two and product
licensing fees.

Subsequent to the initial public offering of WPTE, Lakes continues to own a
majority of WPTE's equity. Therefore, WPTE's operating results continue to be
consolidated with our results.

FINANCIAL CONDITION

At October 3, 2004, Lakes' consolidated balance sheet included unrestricted cash
and cash equivalents and short-term investment balances of $48.5 million.
Included in this amount was Lakes' cash of $13.8 million and Lakes'short-term
investments of $1.1 million. Also included was WPTE cash of $27.6 million and
WPTE short-term investments of $6.0 million. WPTE cash and investments will be
used in WPTE's business and not used in Lakes' business. Lakes' has had no
operating revenues from casino operations since the expiration of the management
contract with the Coushatta Tribe in January 2002. In 2003, the operating
revenues derived from WPTE were offset almost entirely by production costs. In
the first nine months of 2004, operating revenues from WPTE operations were
$11.8 million, and WPTE's net income was approximately $1.2 million.

                                       32

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

In August and September 2004, WPTE raised a total of approximately $32.4 million
in cash proceeds from its initial public offering, net of underwriting discounts
and estimated offering expenses. WPTE's cash resources are expected to be used
for WPTE's business and will not be available for the Company's casino
operations or other non-WPTE businesses. The initial public offering resulted in
the termination of Lakes' obligation to fund WPTE operations under a limited
revolving note receivable. Lakes currently holds 12,480,000 shares or
approximately 64% of WPTE's common stock. Although WPTE common stock is traded
on the Nasdaq National Market, the shares held by Lakes are not liquid assets,
and there is no assurance that Lakes will be able to realize value from these
holdings equal to the current or future market value of the shares.

The Company's primary source of cash for its development of casino projects
during the past two years has been from the planned sale of assets. During the
first quarter of 2004, the 2022 Ranch land, which was owned by Lakes and its
joint venture partner Land Baron West, LLC, was sold. Lakes received cash in the
amount of approximately $1.7 million. Lakes also received proceeds of $16.8
million in May 2003 in connection with the sale of the Polo Plaza property. We
expect that proceeds from the sale of assets will decrease in future periods.

Our management contracts with our tribal partners require that we provide
financial support for project development in the form of loans. These loans are
interest bearing; however, the interest is deferred until the casino is built
and has established profitable operations. In the event that the casinos are not
built, our only recourse is to attempt to liquidate assets of the development,
if any, excluding any land in trust. A portion of the notes due from the Pokagon
Tribe in the approximate amount of $23.6 million resulted from funds advanced by
the Company for the Tribe's purchase of the development project land. The
Company has a first deed of trust against this property which will be
relinquished when the land is placed into trust by the BIA.


We currently believe that our existing casino development projects included in
the table below will be constructed and achieve profitable operation; however,
no assurance can be made that this will occur. If this does not occur, it is
likely that Lakes would incur substantial or complete losses on its
pre-construction advances.

Following is a table summarizing remaining maximum contractual obligations as of
October 3, 2004 (in millions):

<TABLE>
<CAPTION>
                                              Payment Due by Period
                                              ---------------------
                                              Less Than                           More Than
Contractual Obligations             Total       1 Year    1-3 Years   3-5 Years    5 Years
                                    ------      ------    ---------   ---------    -------
<S>                                 <C>       <C>         <C>         <C>         <C>
Remaining Casino
Development Commitment (1) (3)

      Jamul                         $  9.4      $    -      $    -      $    -       $   -
      Shingle Springs                  0.9           -           -           -           -
      Pokagon (2)                     24.4           -           -           -           -
Operating Leases (4)                   0.4         0.4           -           -           -
WPTE Employee Obligation(5)            1.8         1.0         0.8           -           -
                                    ------      ------      ------      ------      ------
                                    $ 36.9      $  1.4      $  0.8      $    -       $   -
                                    ======      ======      ======      ======      ======
</TABLE>

(1)   Remaining Casino Development Commitments are not due by period, but rather
      are expended as progress of each project dictates. Lakes anticipates that
      we will require additional capital through either public or private
      financings to meet the maximum casino development commitments. Currently,
      the Company believes that this will be necessary, when any of Lakes casino
      projects begin construction.

(2)   For the Pokagon project, the Company has agreed to provide additional
      financing from its own funds if financing at an interest rate not to
      exceed 13% is not available from third parties. If this occurs and Lakes
      is required to provide all financing, this would be an additional
      commitment of up to approximately $54 million. Currently, it appears that
      third-party financing will be available for this project. However, there
      can be no assurance that third-party financing will be available and that
      Lakes will not be required to provide this additional financing.

(3)   Lakes 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. Any guarantees by Lakes or similar off-balance sheet liabilities
      will increase Lakes' potential exposure in the event of a default by any
      of these tribes. No such guarantees or similar off-balance sheet
      liabilities existed at October 3, 2004.

(4)   The Company leases an airplane, under a non-cancelable operating lease
      expiring April 30, 2005.

(5)   WPTE employee obligation includes the base salaries payable to three WPTE
      executives under their respective employment agreements.

                                       33

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

Our major use of cash over the past three years has been Pre-construction
Financing provided to our tribal partners. At October 3, 2004, Lakes had
approximately $90.6 million in notes receivable from Indian tribes.

We believe that our cash and cash equivalents, along with expected cash
receipts, will be adequate to fund operating expenses and Pre-construction
Financing for at least the remainder of 2004. It is anticipated that we will
require additional capital through either public or private financings to meet
the maximum casino development commitments outlined in the table above.
Currently, the Company believes that this will be necessary when any of Lakes'
casino projects begin construction.

Lakes anticipates corporate costs, excluding WPTE which is not expected to
require additional capital from Lakes, in the next twelve months to approximate
$12.5 million. Additionally, development project-related costs are expected to
approximate $10 million during the next twelve months. These development costs
do not include possible additional construction-related costs that would be
incurred if any of the projects were to begin construction during the next
twelve months. As discussed above, the Company anticipates that it would be
necessary to raise additional capital when any of the projects begin
construction and believes such financing will be available based on preliminary
discussions with prospective lenders. The Company currently has $14.9 million of
cash and short-term investments exclusive of cash and short-term investments
held by WPTE. The Company anticipates receiving cash payments in the approximate
amount of $9.8 million in the fourth quarter of 2004 related to the sale of the
Travelodge property and repayment of a subordinated interest in the Polo Plaza
property in Las Vegas, Nevada. However, the Company has recently entered
negotiations that may result in revisions to the current payment terms related
to these properties. The Company also anticipates the receipt of a judgement
related to Grand Casinos, Inc. litigation within the next twelve months (see
Part II, Item 1. Legal Proceedings). The dollar amount that the Company will
receive has not been determined. Management also believes that additional
sources of liquidity are available if conditions necessitate additional capital.

As a part of the transaction establishing Lakes as a separate public company on
December 31, 1998, the Company agreed to indemnify Grand through December 28,
2004 against all costs, expenses and liabilities incurred in connection with or
arising out of certain pending and threatened claims and legal proceedings
against Grand and to pay all related settlements and judgments. The Company's
indemnification obligations include the obligation to provide the defense of all
claims made in proceedings against Grand and to pay all related settlements and
judgments. The Company believes that no further payments are required to be made
pursuant to its indemnification obligations. The current carrying amount of the
liability for the Company's indemnification obligations is zero.

As a part of the indemnification agreement, Lakes agreed that it will not
declare or pay any dividends, make any distribution on account of Lakes' equity
interests, or otherwise purchase, redeem, defease or retire for value any equity
interests in Lakes without the written consent of Grand.

SEASONALITY

The Company believes that the operations of all casinos to be managed by the
Company will be affected by seasonal factors, including holidays, weather and
travel conditions. WPTE's license revenues are affected by the timetable for
delivery of episodes to TRV.

                                       34

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

REGULATION AND TAXES

The Company is subject to extensive regulation by state gaming authorities. The
Company will also be subject to regulation, which may or may not be similar to
current state regulations, by the appropriate authorities in any jurisdiction
where it may conduct gaming activities in the future. Changes in applicable laws
or regulations could have an adverse effect on the Company.

The gaming industry represents a significant source of tax revenues. From time
to time, various federal legislators and officials have proposed changes in tax
law, or in the administration of such law, affecting the gaming industry. It is
not possible to determine the likelihood of possible changes in tax law or in
the administration of such law. Such changes, if adopted, could have a material
adverse effect on the Company's results of operations and financial results.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on its financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors, except
for the financing commitments previously discussed, and except for Lakes'
investments in unconsolidated affiliates (see Note 3).

PRIVATE SECURITIES LITIGATION REFORM ACT

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. Certain information included in this Form 10-K
and other materials filed or to be filed by the Company with the Securities and
Exchange Commission (as well as information included in oral statements or other
written statements made or to be made by the Company) contain statements that
are forward-looking, such as plans for future expansion and other business
development activities as well as other statements regarding capital spending,
financing sources and the effects of regulation (including gaming and tax
regulation) and competition.

Such forward looking information involves important risks and uncertainties that
could significantly affect the anticipated results in the future and,
accordingly, actual results may differ materially from those expressed in any
forward-looking statements made by or on behalf of the Company.

These risks and uncertainties include, but are not limited to, those relating to
possible delays in completion of Lakes' casino projects, including various
regulatory approvals and numerous other conditions which must be satisfied
before completion of these projects; possible termination or adverse
modification of management contracts; continued indemnification obligations to
Grand Casinos;

                                       35

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

highly competitive industries; possible changes in regulations; reliance on
continued positive relationships with Indian tribes and repayment of amounts
owed to Lakes by Indian tribes; possible need for future financing to meet
Lakes' expansion goals; risks of entry into new businesses; reliance on Lakes'
management; and the fact that the WPTE shares held by Lakes are currently not
liquid assets, and there is no assurance that Lakes will be able to realize
value from these holdings equal to the current or future market value of WPTE
common stock. There are also risks and uncertainties relating to WPTE that may
have a material effect on the Company's consolidated results of operations or
the market value of the WPTE shares held by the Company, including inability to
achieve financial results from the contemplated business expansion of WPTE;
WPTE's relatively short operating history; reliance on the agreement with TRV
for most of our consolidated revenues; possible inability of WPTE's programming
to maintain a sufficient audience and exposure to adverse trends in the
television production business generally; possible increases in production
expenses, compared to fixed license revenues for related episodes; risk of
inability to protect WPTE's proprietary rights or preserve the value of WPTE's
brands; dependence on WPTE's relationships with member casinos and strategic
partners; and reliance on Lakes' and WPTE's management. For further information
regarding the risks and uncertainties, see the "Business -- Risk Factors"
section of the Company's Annual Report on Form 10-K for the fiscal year ended
December 28, 2003.

                                       36

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK;
                             CONTROLS AND PROCEDURES

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's financial instruments include cash and cash equivalents and
marketable securities. The Company's main investment objectives are the
preservation of investment capital and the maximization of after-tax returns on
its investment portfolio. Consequently, the Company invests with only
high-credit-quality issuers and limits the amount of credit exposure to any one
issuer. The Company does not use derivative instruments for speculative or
investment purposes.

The Company's cash and cash equivalents are not subject to significant interest
rate risk due to the short maturities of these instruments. As of October 3,
2004, the carrying value of the Company's cash and cash equivalents approximates
fair value. The Company also holds short-term investments consisting of
marketable debt securities (principally consisting of commercial paper,
corporate bonds, and government securities) having a weighted average duration
of one year or less. Consequently, such securities are not be subject to
significant interest rate risk.

The Company's primary exposure to market risk associated with changes in
interest rates involves the Company's notes receivable related to loans for the
development and construction of Native American owned casinos. The loans and
related note balances earn various interest rates based upon a defined reference
rate. The floating rate receivables will generate more or less interest income
if interest rates rise or fall. Interest income is deferred during development
of the casinos because realizability of the interest is contingent upon the
completion and positive cash flow from operation of the casino. As of October 3,
2004, Lakes had $90.9 million of floating rate notes receivables. Based on the
applicable current reference rates and assuming all other factors remain
constant, deferred interest income for a twelve month period would be $5.7
million. A reference rate increase of 100 basis points would result in an
increase in deferred interest income of $0.9 million. A 100 basis point decrease
in the reference rate would result in a decrease of $0.9 million in deferred
interest income over the same twelve month period.

ITEM 4. CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including
our chief executive officer and chief financial officer, we conducted an
evaluation of our disclosure controls and procedures, as such term is defined
under Rule 13a-15(e) or Rule 15d - 15(e) promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as of the end of the
period covered by this quarterly report. Based on their evaluation, our chief
executive officer and chief financial officer concluded that Lakes
Entertainment, Inc.'s disclosure controls and procedures are effective.

There have been no significant changes (including corrective actions with regard
to significant deficiencies or material weaknesses) in our internal controls or
in other factors that could significantly affect these controls subsequent to
the date of the evaluation referenced above.

                                       37

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
                                     PART II
                                OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

SLOT MACHINE LITIGATION

In 1994, William H. Poulos filed a class-action lawsuit in the United States
District Court for the Middle District of Florida against various parties,
including Grand and numerous other parties alleged to be casino operators or
slot machine manufacturers. This lawsuit was followed by several additional
lawsuits of the same nature against the same, as well as additional defendants,
all of which were subsequently consolidated into a single class-action pending
in the United States District Court for the District of Nevada. Following a
court order dismissing all pending pleadings and allowing the plaintiffs to
re-file a single complaint, a complaint has been filed containing substantially
identical claims, alleging that the defendants fraudulently marketed and
operated casino video poker machines and electronic slot machines, and asserting
common law fraud and deceit, unjust enrichment and negligent misrepresentation
and claims under the federal Racketeering-Influenced and Corrupt Organizations
Act. Various motions were filed by the defendants seeking to have this new
complaint dismissed or otherwise limited. In December 1997, the Court, in
general, ruled on all motions in favor of the plaintiffs. The plaintiffs then
filed a motion seeking class certification and the defendants opposed it. In
June 2002, the Court entered an order denying class certification. On August 10,
2004, the Ninth Circuit Court of Appeals affirmed the District Court's denial of
class certification.

Management currently believes that the final outcome of this matter is not
likely to have a material adverse effect upon the Company's consolidated
financial position or results of operations, and currently an estimate of any
possible loss cannot be made.

WILLARD EUGENE SMITH LITIGATION

On October 24, 2003, Lakes announced that it had been named as one of a number
of defendants in a counterclaim filed in state court in Harris County, Texas by
Willard Eugene Smith involving Kean Argovitz Resorts, LLC (KAR), related persons
and entities. In the counterclaim, Smith asserts that, under an alleged oral
agreement with Kevin Kean, he is entitled to a percentage of fees to be received
by the KAR entities or their principals relating to the Shingle Springs and
Jamul casinos that Lakes' subsidiaries are developing in California. Smith also
seeks recovery of damages through the remedy of either attachment of the
management fees generated from the projects or avoidance of buyout agreements
between Lakes and KAR based on their conduct with respect to the alleged
agreement.

Lakes believes the counterclaim against it is without merit. Lakes understands
that the alleged oral agreement upon which Smith bases his claim was rendered
null and void in a prior judgment issued against Smith by the Harris County,
Texas state court in October 2000. However, in September 2003, the court vacated
the prior judgment against Smith. Lakes acquired KAR's interests in the Shingle
Springs and Jamul projects on January 30, 2003. In the buyout agreements between
Lakes and certain KAR entities and related principals, the KAR entities
represented to Lakes that the KAR entities and their affiliates had no
continuing agreements with any third party relating to the Shingle Springs and
Jamul projects and agreed to indemnify Lakes and its affiliates from damages of
the KAR entities and related principals concerning the projects. Lakes will
vigorously defend against the allegations made against it and will pursue its
indemnification rights against the KAR entities and their principals under the
buyout agreements if necessary. Discovery is continuing and the trial is
scheduled for March 2005.

                                       38

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
                                     PART II
                          OTHER INFORMATION (CONTINUED)

Management currently believes that the final outcome of this matter is not
likely to have a material adverse effect upon the Company's consolidated
financial position or results of operations, and currently an estimate of any
possible loss cannot be made.

EL DORADO COUNTY, CALIFORNIA LITIGATION

On January 3, 2003, El Dorado County filed an action in the Superior Court of
the State of California, seeking to prevent the construction of a highway
interchange that was approved by a California state agency. The action does not
seek relief directly against Lakes. However, the interchange is necessary to
permit the construction of a casino to be developed and managed by Lakes through
a joint venture.

The casino will be owned by the Shingle Springs Band of Miwok Indians. The
matter was tried to the court on August 22, 2003. On January 2, 2004, Judge
Lloyd G. Connelly, Judge of the Superior Court for the State of California,
issued his ruling on the matter. The Court denied the petition in all respects
except one. As to the one exception, the Court sought clarification as to
whether the transportation conformity determination used to determine the
significance of the air quality impact of the interchange operations considered
the impact on attainment of the state ambient air quality standard for ozone.
The California Department of Transportation (Caltrans) prepared and filed the
clarification addendum sought by the Court.

 Prior to the Court's determination of the adequacy of the clarification, El
Dorado County and Voices for Rural Living appealed Judge Connelly's ruling to
the California Court of Appeals on all of the remaining issues. The Company
believes that appellants have not presented sufficient grounds to justify
overturning the trial court's earlier conclusion, and that the Company will
prevail on the consolidated appeals of the County and Voices for Rural Living.

A ruling with respect to the addendum was issued June 21, 2004 by the Superior
Court of California, County of Sacramento. The ruling indicates that the
addendum provided to the court by Caltrans did not provide a quantitative
showing to satisfy the court's earlier request for a clarification on meeting
the state ambient ozone standard. The court recognized that the information
provided by Caltrans does qualitatively show that the project may comply with
the state standard, but concluded that a quantitative analysis is necessary even
though the court recognized that the methodology for that analysis "is not
readily apparent". In addition, the ruling specifically states, "Moreover such
methodology appears necessary for the CEQA analysis of transportation projects
throughout the state, including transportation projects for which respondents
(i.e. Caltrans) have approval authority." Caltrans, the Shingle Springs Tribe
and Lakes responded to the court with a revised submission in August 2004.
Representatives of the California Air Resources Board and the Sacramento Area
Council of Governments filed declarations supporting the revised submission to
the court. Opposition to that revised submission was filed, a hearing on the
revised submission took place on August 20, 2004, and the Court again found the
revised submission of Caltrans, the Shingle Springs Tribe and lakes to be
inadequate. That ruling has been separately appealed to the California Court of
Appeals.

Management currently believes that the final outcome of this matter is not
likely to have a material adverse effect upon the Company's consolidated
financial position or results of operations as it believes, but there can be no
assurance that, the courts' rulings will ultimately allow the project to
commence.

                                       39

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
                                     PART II
                          OTHER INFORMATION (CONTINUED)

GRAND CASINOS, INC. LITIGATION

In connection with the establishment of Lakes as a public corporation on
December 31, 1998, via a distribution of its common stock to the shareholders of
Grand, the Company and Grand entered into an agreement governing the sharing or
allocation of tax benefits accruing to Grand and certain affiliated companies.
On August 13, 2004, an arbitrator awarded to the Company partial summary
judgment on certain of the Company's claims against Grand under the tax sharing
agreement. The dollar amount that will be awarded to the Company on these claims
has not been determined, certain other claims by the Company under the agreement
have not been decided, and no hearing date has been set to determine such dollar
amount or decide such claims.

OTHER LITIGATION

Lakes is involved in various other inquiries, administrative proceedings, and
litigation relating to contracts and other matters arising in the normal course
of business. While any proceeding or litigation has an element of uncertainty,
management currently believes that the final outcome of these matters, including
the matters discussed above, is not likely to have a material adverse effect
upon the Company's consolidated financial position or results of operations.

                                       40

<PAGE>

                   LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
                                     PART II
                          OTHER INFORMATION (CONTINUED)

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits

      10.1  First Amended and Restated Memorandum of Agreement Regarding Gaming
            Development and Management Agreement between Shingle Springs Band of
            Miwok Indians, a Federally Recognized Tribe and Lakes KAR Shingle
            Springs, LLC, a Delaware Limited Liability Company, dated October
            13, 2003, as amended June 16, 2004, as approved by the National
            Indian Gaming Commission on July 19, 2004.

      10.2  Amendment dated August 18, 2004 to Acquisition Master Agreement
            dated August 22, 2003, by and between The Travel Channel, LLC and
            WPT Enterprises, Inc. (f/k/a World Poker Tour, LLC) (incorporated by
            reference from Exhibit 10.1 to Form 10-Q of WPT Enterprises, Inc.
            for the quarter ended 10/3/04)(portions of this exhibit have been
            omitted pursuant to a request for confidential treatment and have
            been filed separately with the Commission pursuant to Rule 24b-2 of
            the Securities Exchange Act of 1934).

      31.1  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 pursuant to 18 U.S.C.
            Section 1350, as adopted pursuant to Section 906 of the
            Sarbanes-Oxley Act of 2002

      32.2  Certification of Chief Financial Officer pursuant to 18 U.S.C.
            Section 1350, as adopted pursuant to Section 906 of the
            Sarbanes-Oxley Act of 2002

      ---------------

(b)   Reports on Form 8-K

      (i)   A Form 8-K, Item 7. Financial Statements, Pro Forma Financial
            Information and Exhibits, and Item 9. Regulation FD Disclosure, was
            filed on July 7, 2004

      (ii)  A Form 8-K, Item 7. Financial Statements, Pro Forma Financial
            Information and Exhibits, and Item 9. Regulation FD Disclosure, was
            filed on July 21, 2004

      (iii) A Form 8-K, Item 7. Financial Statements, Pro Forma Financial
            Information and Exhibits, and Item 9. Regulation FD Disclosure, was
            filed on August 10, 2004

                                       41

<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report on Form 10-Q to be signed on its behalf
by the undersigned, thereunto duly authorized.

Dated: November 17, 2004                 LAKES ENTERTAINMENT, INC.
                                         -------------------------
                                         Registrant

                                         /s/ Lyle Berman
                                         ---------------------------------------
                                         Lyle Berman
                                         Chairman of the Board and
                                         Chief Executive Officer

                                         /s/ Timothy J. Cope
                                         ---------------------------------------
                                         Timothy J. Cope
                                         President and
                                         Chief Financial Officer

                                       42