##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-Q
  (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    April 3,
    2011oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For 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
    of incorporation or organization)

(I.R.S. Employer
    Identification No.)130 Cheshire Lane, Suite 101
    Minnetonka, Minnesota(Address of principal
    executive offices)

55305(Zip
    Code)   (952) 449-9092
 (Registrants telephone number, including area code)
  þ o
  Regulation S-T o o
  Rule 12b-2
  Large accelerated filer o
    Accelerated filer o
    Non-accelerated filero
    Smaller reporting company þ (Do not check if a smaller
    reporting company)
  Rule 12b-2 o þ




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##### 



LAKES
    ENTERTAINMENT, INC. AND SUBSIDIARIES
  INDEX
   
 Page ofForm 10-QPART I. FINANCIAL INFORMATIONITEM 1.


FINANCIAL STATEMENTS


3Consolidated Balance Sheets as of April 3,
    2011 (unaudited) and January 2, 2011


3Unaudited Consolidated Statements of Earnings
    (Loss) for the three months ended April 3, 2011 and
    April 4, 2010


4Unaudited Consolidated Statements of Cash Flows
    for the three months ended April 3, 2011 and April 4,
    2010


5Notes to Unaudited Consolidated Financial
    Statements


6ITEM 2.


MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS


14ITEM 3.


QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK


28ITEM 4.


CONTROLS AND PROCEDURES


28PART II. OTHER INFORMATIONITEM 1.


LEGAL PROCEEDINGS


29ITEM 1A.


RISK FACTORS


29ITEM 6.


EXHIBITS


29EX-31.1EX-31.2EX-32.1   2




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##### Table of Contents



Part I.
    Financial Information  ITEM 1.
    FINANCIAL
    STATEMENTS  LAKES
    ENTERTAINMENT, INC. AND SUBSIDIARIES
  Consolidated
    Balance Sheets
  April 3, 2011


January 2, 2011(Unaudited)(In thousands)AssetsCurrent assets:Cash and cash equivalents

$
31,426


$
45,233Accounts receivable


2,864



1,696Current portion of notes receivable from Indian casino projects


1,696



2,405Income tax receivable


929



Other


1,370



1,983Total current assets


38,285



51,317Property and equipment, net


5,051



5,103Long-term assets related to Indian casino projects:Notes and interest receivable, net of current portion and
    allowance


31,808



31,192Notes receivable at fair value


12,122



11,129Intangible assets, net of accumulated amortization of $24.9 and
    $22.9 million


13,930



15,873Land held for development


960



960Management fee receivable and other


5,884



5,195Total long-term assets related to Indian casino projects


64,704



64,349Other assets:Investment in unconsolidated investees


8,354



2,367Land held for development


3,470



3,470Other


40



40Total other assets


11,864



5,877Total assets

$
119,904


$
126,646Liabilities and shareholders equityCurrent liabilities:Current portion of contract acquisition costs payable, net of
    $1.1 and $1.2 million discount

$
1,311


$
1,326Income taxes payable






7,822Accounts payable


625



292Accrued payroll and related


377



776Other accrued expenses


543



615Total current liabilities


2,856



10,831Long-term contract acquisition costs payable, net of current
    portion and $2.2 and $2.4 million discount


5,518



5,830Total liabilities


8,374



16,661Commitments and contingenciesShareholders equity:Common stock, $.01 par value; authorized
    200,000 shares;26,406 and 26,369 common shares issued and outstanding


264



264Additional paid-in capital


203,313



203,148Deficit


(92,047
)


(93,427
)Total shareholders equity


111,530



109,985Total liabilities and shareholders equity

$
119,904


$
126,646    3




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##### Table of Contents



LAKES
    ENTERTAINMENT, INC. AND SUBSIDIARIES
  Unaudited
    Consolidated Statements of Earnings (Loss)
  Three Months EndedApril 3, 2011


April 4, 2010(In thousands, except per share data)Revenues:Management fees

$
5,835


$
6,937License fees and other


58



17Total revenues


5,893



6,954Costs and expenses:Selling, general and administrative


2,656



3,235Impairment losses  other


874



2,664Amortization of intangible assets related to operating casinos


1,943



2,785Depreciation


57



65Total costs and expenses


5,530



8,749Net unrealized gains on notes receivable


862



1,770Earnings (loss) from operations


1,225



(25
)Other income (expense):Interest income


1,468



2,247Interest expense


(321
)


(687
)Equity in loss of unconsolidated investees






(27
)Other






(72
)Total other income (expense), net


1,147



1,461Earnings before income taxes


2,372



1,436Income taxes


992



6,123Net earnings (loss)

$
1,380


$
(4,687
)Weighted-average common shares outstandingBasic


26,398



26,361Dilutive effect of stock options and restrictive stock units


30



Diluted


26,428



26,361Earnings (loss) per shareBasic

$
0.05


$
(0.18
)Diluted

$
0.05


$
(0.18
)    4




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##### Table of Contents



LAKES
    ENTERTAINMENT, INC. AND SUBSIDIARIES
  Unaudited
    Consolidated Statements of Cash Flows
  Three Months EndedApril 3, 2011


April 4, 2010(In thousands)OPERATING ACTIVITIES:Net earnings (loss)

$
1,380


$
(4,687
)Adjustments to reconcile net earnings (loss) to net cash
    provided by (used in) operating activities:Depreciation


57



65Amortization of debt issuance costs and contract acquisition
    costs


321



8Accretion and additions to long-term interest receivable


(684
)


(1,165
)Amortization of intangible assets related to operating casinos


1,943



2,785Net tax benefits related to share-based compensation






(406
)Equity in loss of unconsolidated investees






27Share-based compensation


176



179Net unrealized gains on notes receivable


(742
)


(1,770
)Impairment losses  other


874



2,664Changes in operating assets and liabilities:Accounts receivable


(1,168
)


(1,918
)Other current assets


(512
)


(144
)Income taxes receivable and payable


(8,750
)


5,881Accounts payable


314



(70
)Accrued expenses


(478
)


210Net cash provided by (used in) operating activities


(7,269
)


1,659INVESTING ACTIVITIES:Sales / redemptions of investment securities






2,400Payments to acquire investment in unconsolidated investee


(4,862
)


Increases in management fee receivable and other long-term
    assets related to Indian casino projects, net


(670
)


(380
)Purchase of property and equipment


(5
)


Advances on notes receivable


(2,125
)


(1,256
)Collection on notes receivable


1,777



1,910Increase in other long-term assets


(3
)


(2
)Net cash provided by (used in) investing activities


(5,888
)


2,672FINANCING ACTIVITIES:Repayments of lines of credit






(2,474
)Proceeds from borrowings






808Net tax benefits related to share-based compensation






406Contract acquisition costs payable


(650
)


(750
)Net cash used in financing activities


(650
)


(2,010
)Net increase (decrease) in cash and cash equivalents


(13,807
)


2,321Cash and cash equivalents  beginning of period


45,233



3,751Cash and cash equivalents  end of period

$
31,426


$
6,072    5




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##### Table of Contents



LAKES
    ENTERTAINMENT, INC. AND SUBSIDIARIES
  Notes
    to Unaudited Consolidated Financial Statements
  1.
    Basis of
    presentation  and/or
  Form 10-Q Form 10-K,
      2.
    New
    accounting standards  No. 2011-02, A Creditors Determination of Whether a Restructuring is
    a Troubled Debt Restructuring (Topic 310) 2011-02). 2011-02 2011-02 2011-02
  3.
    Financial
    instruments        4.
    Fair
    value measurements  Notes receivable at fair value.
 6




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##### Table of Contents




    Probability of the casino opening based on the status of
    critical project milestones and the expected opening date,
    estimated pre- and post-opening interest rates,
    contractual interest rate and other terms,
    yield rates on US Treasury Bills and other financial instruments,
    the risk/return indicators of equity investments in general,
    specific risks associated with operating the casino and similar
    projects, and
    scenario weighting alternatives.    Balance, January 2, 2011

$
11,129Net unrealized gains on notes receivable


742Advances, net of allocation to intangible, other


251Balance, April 3, 2011(unaudited)

$
12,122     Land held for development.
  5.
    Long-term
    assets related to Indian casino projects  notes and
    interest receivable   7




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##### Table of Contents



ShingleSprings


Jamul


IowaTribe


Tribe


Tribe


TotalBalance, January 2, 2011

$
32,166


$
11,129


$
1,431


$
44,726Advances, net


1,000



1,125







2,125Repayments


(918
)






(859
)


(1,777
)Accretion and additions to long-term interest receivable


642







42



684Allocation of advances to intangible assets






(874
)






(874
)Unrealized gains






742







742Balance, April 3, 2011 (unaudited)


32,890



12,122



614



45,626Less current portion of notes receivable


(1,082
)






(614
)


(1,696
)Long-term notes and interest receivable, April 3, 2011
    (unaudited)

$
31,808


$
12,122


$



$
43,930     Balance, January 2, 2011

$
20,975Impairment charge on notes receivable


Recoveries


Charge-offs


Accretion included in interest income


(167
)Balance, April 3, 2011

$
20,808   Shingle Springs Tribe.
   8




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##### Table of Contents



Jamul Tribe.
  As of April 3, 2011

As of January 2, 2011(Unaudited)Face value of note (principal and interest)

$63,056
    ($40,762 principal and $22,294 interest)

$61,108
    ($39,638 principal and $21,470 interest)Estimated months until casino opens (weighted average of three
    scenarios)

66 months

66 monthsProjected interest rate until casino opens

7.60%

7.29%Projected interest rate during the loan repayment term

10.34%

10.19%Discount rate

19.50%

20.00%Repayment terms of note

120 months

120 monthsProbability rate of casino opening (weighting of four scenarios)

50%

50%   6.
    Intangible
    and other assets related to Indian casino projects  Intangible assets.
    ShinglePokagon


Springs


JamulBand


Tribe


Tribe(*)


TotalBalances, January 2, 2011

$
10,631


$
5,242


$



$
15,873Allocation of advances










874



874Amortization


(1,678
)


(265
)






(1,943
)Impairment losses










(874
)


(874
)Balances, April 3, 2011 (unaudited)

$
8,953


$
4,977


$



$
13,930     (*)
    
    Due to the continued uncertainty surrounding the Jamul Casino
    project, Lakes recognized an impairment of $0.9 million
    related to the intangible assets associated with this project
    during the three months ended April 3, 2011.  Management fee receivable and other.
 9




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##### Table of Contents



7.
    Investment
    in unconsolidated investees    8.
    Debt    9.
    Contract
    acquisition costs payable  Pokagon Band.
    Shingle Springs Tribe.
  10.
    Share-based
    compensation    Stock options.
 10




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##### Table of Contents



Number of Common SharesWeighted-Avg.Options





Available


ExerciseOutstanding


Exercisable


for Grant


Price2011Balance at January 2, 2011


2,031,084



904,076



699,215


$
2.99Restricted stock unit activity, net














Forfeited/cancelled/expired


(151,667
)






1,667



3.24Balance at April 3, 2011(*)


1,879,417



797,982



700,882



2.972010Balance at January 3, 2010


1,704,187



442,350



1,121,413


$
3.93Restricted stock unit activity, net










3,333



3.25Forfeited/cancelled/expired


(98,955
)






6,355



11.58Balance at April 4, 2010(**)


1,605,232



462,656



1,131,101



3.46     (*)
    
    Options outstanding do not include 40,004 of outstanding
    restricted stock units.(**)
    
    Options outstanding do not include 86,662 of outstanding
    restricted stock units.        Restricted stock units.
  Weighted-AverageRestricted


Grant-DateNon-vested Shares:

Stock Units


Fair Value2011Balance at January 2, 2011


79,996


$
3.25Vested


(39,992
)


3.25Balance at April 3, 2011


40,004



3.252010Balance at January 3, 2010


135,000


$
3.25Vested


(45,005
)


3.25Forfeited


(3,333
)


3.25Balance at April 4, 2010


86,662



3.25    11




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##### Table of Contents



11.
    Earnings
    (loss) per share    12.
    Income
    taxes        Balance at January 2, 2011

$
8,000Settlement(*)


(8,000
)Balance at April 3, 2011

$
     (*)
    
    Of the $9.0 million Settlement Agreement discussed above,
    $8.0 million relates to taxes and $1.0 million relates
    to fees.  13.
    Commitments
    and contingencies  General.
  Rock Ohio Ventures, LLC.
  Miscellaneous legal matters.
 12




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##### Table of Contents



14.
    Segment
    information      Indian

Non-IndianCasino

Casino

Corporate &Projects

Projects

Eliminations

ConsolidatedThree months ended April 3, 2011Revenue

$
5.8


$



$
0.1


$
5.9Impairment losses  other


0.9











0.9Earnings (loss) from operations


3.7







(2.5
)


1.2Depreciation expense










0.1



0.1Amortization of intangible assets related to operating casinos


1.9











1.9Three months ended April 4, 2010Revenue

$
6.9


$



$
0.1


$
7.0Impairment losses  other


2.7











2.7Earnings (loss) from operations


2.4







(2.4
)


Depreciation expense










0.1



0.1Amortization of intangible assets related to operating casinos


2.8











2.8As of April 3, 2011Total assets

$
69.5


$
11.7


$
38.7


$
119.9Investment in unconsolidated investees






8.4







8.4As of January 2, 2011Total assets

$
68.7


$
6.9


$
51.0


$
126.6Investment in unconsolidated investees






2.4







2.4  13




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##### Table of Contents



ITEM 2.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Overview
    
    We developed, and have a five-year contract to manage, the Four
    Winds Casino Resort for the Pokagon Band of Potawatomi Indians
    (Pokagon Band) in New Buffalo Township, Michigan
    near Interstate 94. We began managing the Four Winds Casino
    Resort when it opened to the public on August 2, 2007. The
    Four Winds Casino Resort is located near the first Interstate 94
    exit in southwestern Michigan and approximately 75 miles
    east of Chicago. The facility features approximately 3,000 slot
    machines, 64 table games, a 12-table poker room, a 165-room
    hotel, five restaurants, three bars, a child care facility and
    arcade, retail space and a parking garage.
    We developed, and have a seven-year contract to manage, the Red
    Hawk Casino that was built on the Rancheria of the Shingle
    Springs Band of Miwok Indians (Shingle Springs
    Tribe) in El Dorado County, California, adjacent to
    U.S. Highway 50, approximately 30 miles east of
    Sacramento, California. We began managing the Red Hawk Casino
    when it opened to the public on December 17, 2008. The Red
    Hawk Casino features approximately 2,150 slot machines, 68 table
    games, seven poker tables, five restaurants, four bars, retail
    space, a parking garage, a child care facility and arcade.
    We have contracts to develop and finance a casino to be built on
    the reservation of the Jamul Indian Village (the Jamul
    Tribe) located on State Highway 94, approximately
    20 miles east of San Diego, California (the
    Jamul Casino). This project has been delayed due to
    various political and regulatory issues. Significant risk exists
    related to this project moving forward to completion, and we
    have recorded significant impairment charges against our
    investment in this project. However, the Jamul Tribe has the two
    basic requirements to eventually build a successful
    project  federal recognition as an Indian Tribe and
    Indian land eligible for gaming. We have concluded that it is
    not currently in our best interest to terminate our involvement
    with the Jamul Casino project and we will continue to monitor
    the status of this project.    
    In October 2009, Lakes entered into an agreement with Rock Ohio
    Ventures, LLC (Rock Ohio Ventures) for the purpose
    of funding a percentage of costs associated with the referendum
    to amend the Ohio constitution to authorize casino gaming in
    Ohio, which passed on November 3, 2009. As of April 3,
    2011, Lakes has contributed approximately $8.4 million to
    Rock Ohio Ventures. Lakes expects to contribute additional
    capital to Rock Ohio Ventures for the development of casinos in
    Cleveland and Cincinnati. If Lakes chooses not to fund any
    additional amounts, it will maintain an ownership position in
    Rock Ohio Ventures in a pro rata amount of what its
    $2.4 million payment is to the total amount funded to
    develop casino operations, and all equity funded in excess of
    the initial $2.4 million would be subject to a buy-out
    amount equal to the price paid for the subsequent equity funding.
    We have received various regulatory approvals to develop a
    casino on approximately 400 acres near Vicksburg,
    Mississippi. However, uncertainty exists surrounding the
    development of this project due primarily to changes in the
    economic environment and credit markets. As a result, the assets
    associated with the Vicksburg project are recorded at their
    estimated fair value of $3.3 million as of April 3,
    2011.  Results
    of Operations
  Form 10-Q
 14




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##### Table of Contents



Three
    months ended April 3, 2011, compared to the three months
    ended April 4, 2010
  Revenues.
  Selling, general and administrative
    expenses.
  Impairment losses-other.
  Amortization of intangible assets related to operating
    casinos.
  Net unrealized gains on notes receivable.
  Other income (expense), net.
  Income Taxes.
 15




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##### Table of Contents



Liquidity
    and Capital Resources
                    and/or
 16




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##### Table of Contents



Critical
    Accounting Policies and Estimates
      Revenue recognition:
  Share-based compensation expense:
  Income taxes: Income Taxes.
   17




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##### Table of Contents



Long-term
    assets related to Indian casino projects:
  Notes receivable.
  
    Has the U.S. Governments Bureau of Indian Affairs
    federally recognized the tribe as a tribe?
    Does the tribe hold or have the right to acquire land to be
    used for the casino site?
    Has the Department of the Interior put the land into trust
    for purposes of being used as a casino site?
    Has the tribe entered into a gaming agreement with the state
    in which the land is located, if required by the state?
    Has the tribe obtained approval by the National Indian Gaming
    Commission of the management agreement?
    Do other legal and political obstacles exist that could block
    development of the project and, if so, what is the likelihood of
    the tribe successfully prevailing?
    An evaluation by management of the financial projections of
    the project given the projects geographic location and the
    feasibility of the projects success given such
    location;
    The structure and stability of the tribal government;
    The scope of the proposed project, including the physical
    scope of the contemplated facility and the expected financial
    scope of the related development;
    An evaluation of the proposed projects ability to be
    built as contemplated and the likelihood that financing will be
    available; and
    The nature of the business opportunity to us, including
    whether the project would be a financing, development
    and/or
    management opportunity.  Investments  Debt and
    Equity Securities
     18




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##### Table of Contents



Receivables
    Intangible assets related to Indian casino
    projects. Intangibles  Goodwill and Other
    Land held for development.
  Management fee receivable and other. Form 10-K.
    Long-term assets related to Indian Casino
    projects.
 19




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##### Table of Contents



April 3, 2011ShinglePokagon


Springs


Jamul


IowaBand


Tribe


Tribe


Tribe


Other


Total(Unaudited)Notes and interest receivable, net of current portion and
    allowance for impaired notes receivable

$



$
31,808


$



$



$



$
31,808Notes receivable at fair value










12,122











12,122Intangible assets related to Indian casino projects


8,953



4,977















13,930Land held for development










960











960Management fee receivable and other(*)


60



3,836



334



237



1,417



5,884$
9,013


$
40,621


$
13,416


$
237


$
1,417


$
64,704   January 2, 2011ShinglePokagon


Springs


Jamul


IowaBand


Tribe


Tribe


Tribe


Other


TotalNotes and interest receivable, net of current portion and
    allowance for impaired notes receivable

$



$
31,192


$



$



$



$
31,192Notes receivable at fair value










11,129











11,129Intangible assets related to Indian casino projects


10,631



5,242















15,873Land held for development










960











960Management fee receivable and other(*)


60



3,001



315



257



1,562



5,195$
10,691


$
39,435


$
12,404


$
257


$
1,562


$
64,349     (*)
    
    Primarily includes deferred management fees due from the Shingle
    Springs Tribe for the management of the Red Hawk Casino of
    $3.7 million and $2.9 million as of April 3, 2011
    and January 2, 2011, respectively, and notes receivable
    from related parties of $1.7 million and $1.8 million,
    net of current portion, as of April 3, 2011 and
    January 2, 2011, respectively.   20




---



##### Table of Contents



Shingle
    Springs
    Jamul
    Tribe
    As of April 3, 2011

As of January 2, 2011(Unaudited)Face value of note (principal and interest)

$63,056
    ($40,762 principal and $22,294 interest)

$61,108
    ($39,638 principal and $21,470 interest)Estimated months until casino opens (weighted-average of three
    scenarios)

66 months

66 monthsProjected interest rate until casino opens

7.60%

7.29%Projected interest rate during the loan repayment term

10.34%

10.19%Discount rate

19.50%

20.00%Repayment terms of note

120 months

120 monthsProbability rate of casino opening (weighting of four scenarios)

50%

50%     Sensitivity AnalysisEstimated fair value of notes receivable

$
12,1225% less probable


10,714One year delay


10,751Both 5% less probable and one year delay


9,4805% increased probability


13,530One year sooner


13,640Both 5% increased probability and one year sooner


15,200    21




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##### Table of Contents



April 3,


January 2,Advances Principal Balance

2011


2011Note receivable, pre-construction(a)

$
39,812


$
38,688Note receivable, land(b)


950



950$
40,762


$
39,638     (a)
    
    We fund certain costs incurred to develop the casino project.
    These costs relate to construction costs, legal fees in
    connection with various regulatory approvals and litigation,
    environmental costs and design consulting, and we, in order to
    obtain the development agreement and management contract, agree
    to advance a monthly amount used by the tribe for a variety of
    tribal expenses.(b)
    
    We purchased land to be used and transferred to the tribe in
    connection with the casino project.    April 3,


January 2,2011


2011Monthly stipend

$
7,129


$
6,923Construction


2,564



2,546Legal


5,459



5,218Environmental


3,816



3,603Design


16,908



16,508Gaming license


1,239



1,193Lobbyist


2,697



2,697$
39,812


$
38,688   Evaluation of impairment related to long-term assets related
    to Indian casino projects, excluding the notes
    receivable.
   22




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##### Table of Contents



Shingle
    Springs
    Jamul
    Tribe
    April 3,

January 2,2011

2011No. of Class II electronic gaming devices


1,000



1,000No. of Table games


20



20No. of Poker tables


5



5Win/Class II electronic gaming devices/day  1st
    year

$
172


$
172Win/Table game/day  1st year

$
471


$
471Win/Poker table/day  1st year

$
312


$
312       Description
    of each Indian casino project and evaluation of critical
    milestones:
  Pokagon
    Band
  Business arrangement.
  Shingle
    Springs
  Business arrangement.
 23




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##### Table of Contents



Jamul
    Tribe
    Business arrangement. six-acre
 24




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##### Table of Contents



25




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##### Table of Contents



Our evaluation of the critical milestones.
  April 3,

January 2,Critical Milestone

2011

2011Federal recognition of the tribe

Yes

YesPossession of usable land corresponding with needs based on
    Lakes project plan

Yes

YesUsable land placed in trust by Federal government

Not necessary, as land is reservation land.

Not necessary, as land is reservation land.Usable county agreement, if applicable

N/A

N/AUsable state compact that allows for gaming consistent with
    that outlined in Lakes project plan

N/A  the Jamul Tribes current plan is to
    operate a solely class II electronic gaming device
    facility, which does not require a compact with the State.

N/A  the Jamul Tribes current plan is to
    operate a solely class II electronic gaming device
    facility, which does not require a compact with the State.NIGC approval of management contract in current and desired
    form

N/A as the Jamul Tribes current plan is to operate a
    solely class II electronic gaming device facility, which
    does not need to be approved by the NIGC.

N/A as the Jamul Tribes current plan is to operate a
    solely class II electronic gaming device facility, which
    does not need to be approved by the NIGC.Resolution of all litigation and legal obstacles

N/A, there has been some local opposition regarding the project
    and various political and regulatory issues related to site
    access.

N/A, there has been some local opposition regarding the project
    and various political and regulatory issues related to site
    access.Financing for construction

No, however, preliminary discussions with investment bankers
    regarding assisting in obtaining financing have taken place. The
    current general economic environment may limit our ability to
    obtain financing at desirable levels in the near-term.

No, however, preliminary discussions with investment bankers
    regarding assisting in obtaining financing have taken place. The
    current general economic environment may limit our ability to
    obtain financing at desirable levels in the near-term.Any other significant project milestones or contingencies,
    the outcome of which could have a material affect on the
    probability of project completion as planned

Yes. The current plan is for the gaming facility to be a solely
    class II electronic gaming device facility. The agreement
    between Lakes and the Jamul Tribe will also be modified as the
    political, regulatory and access issues move closer to
    resolution.

Yes. The current plan is for the gaming facility to be a solely
    class II electronic gaming device facility. The agreement
    between Lakes and the Jamul Tribe will also be modified as the
    political, regulatory and access issues move closer to
    resolution.   Our evaluation and conclusion regarding the above critical
    milestones and progress. land-in-trust
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Recently
    issued accounting pronouncements
  Form 10-Q.
  Seasonality
    Regulation
    and taxes
      Off-balance
    sheet arrangements
    Private
    Securities Litigation Reform Act
  Form 10-Q
     27




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Form 10-K
  ITEM 3.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK    ITEM 4.
    CONTROLS
    AND PROCEDURES  Rule 13a-15(e)
   28




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Part II.
    Other Information ITEM 1.
    LEGAL
    PROCEEDINGS    ITEM 1A.
    RISK
    FACTORS  Form 10-K,
  ITEM 6.
    EXHIBITS  Exhibits

Description31
.1

Certification of CEO pursuant to Securities Exchange Act
    Rules 13a-15(e)
    and 15d-15(e) as adopted pursuant to Section 302 of the
    Sarbanes-Oxley Act of 200231
.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 200232
.1

Certification of Chief Executive Officer and Chief Financial
    Officer pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  29




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##### Table of Contents



SIGNATURES
  Form 10-Q
  LAKES ENTERTAINMENT, INC. Registrant
  LYLE
    BERMAN
       TIMOTHY
    J. COPE
       30