Exhibit 99.1  DESCRIPTION
OF GOVERNMENT REGULATIONS  The
ownership and operation of casino gaming facilities are subject to extensive
state and local regulations. We are required to obtain and maintain gaming
licenses in each of the jurisdictions in which we conduct gaming. The
limitation, conditioning or suspension of gaming licenses could (and the
revocation or non-renewal of gaming licenses, or the failure to reauthorize
gaming in certain jurisdictions, would) materially adversely affect our
operation in that jurisdiction. In addition, changes in law that restrict or
prohibit our gaming operations in any jurisdiction could have a material
adverse effect on us.  Colorado  The State of Colorado
created the Division of Gaming (Colorado Division) within the Department of
Revenue to license, implement, regulate and supervise the conduct of limited
gaming under the Colorado Limited Gaming Act. The Director of the Colorado
Division (Colorado Director), pursuant to regulations promulgated by, and
subject to the review of, a five-member Colorado Limited Gaming Control
Commission (Colorado Commission), has been granted broad power to ensure
compliance with the Colorado gaming laws and regulations (collectively, the Colorado
Regulations). The Colorado Director may inspect without notice, impound or
remove any gaming device. The Colorado Director may examine and copy any
licensees records, may investigate the background and conduct of licensees and
their employees, and may bring disciplinary actions against licensees and their
employees. The Colorado Director may also conduct detailed background
investigations of persons who loan money to, or otherwise provide financing to,
a licensee.  The Colorado Commission
is empowered to issue five types of gaming and gaming-related licenses, and has
delegated authority to the Colorado Director to issue certain types of licenses
and approve certain changes in ownership. The licenses are revocable and
non-transferable. The failure or inability of the Isle of Capri Black Hawk, LLC
(Isle-Black Hawk) or CCSC/Blackhawk, Inc. (Colorado Central
Station-Black Hawk) (each, a Colorado Casino or collectively, the Colorado
Casinos), or the failure or inability of others associated with any of the
Colorado Casinos, including us, to maintain necessary gaming licenses or
approvals would have a material adverse effect on our operations. All persons
employed by any of the Colorado Casinos, and involved, directly or indirectly,
in gaming operations in Colorado also are required to obtain a Colorado gaming
license. All licenses must be renewed every two years. As a general rule, under
the Colorado Regulations, no person may have an ownership interest in more
than three retail gaming licenses in Colorado. The Colorado Commission has ruled
that a person does not have an ownership interest in a retail gaming licensee
for purposes of the multiple license prohibition if:  ·
  
  that person has less
  than a 5% ownership interest in an institutional investor that has an
  ownership interest in a publicly traded licensee or publicly traded company
  affiliated with a licensee;·
  
  a person has a 5% or
  more ownership interest in an institutional investor, but the institutional
  investor has less than a 5% ownership interest in a publicly traded licensee
  or publicly traded company affiliated with a licensee;·
  
  an institutional
  investor has less than a 5% ownership interest in a publicly traded licensee
  or publicly traded company affiliated with a licensee;·
  
  an institutional
  investor possesses voting securities in a fiduciary capacity for another
  person, and does not exercise voting control over 5% or more of the
  outstanding voting securities of a publicly traded licensee or of a publicly
  traded company affiliated with a licensee;·
  
  a registered broker or
  dealer retains possession of voting securities of a publicly traded licensee
  or of a publicly traded company affiliated with a licensee for its customers
  and not for its own account, and exercises voting rights for less than 5% of
  the outstanding voting securities of a publicly traded licensee or publicly
  traded company affiliated with a licensee;·
  
  a registered broker or
  dealer acts as a market maker for the stock of a publicly traded licensee or
  of a publicly traded company affiliated with a licensee and exercises voting
  rights in less than 5% of  1


the outstanding voting
  securities of the publicly traded licensee or publicly traded company
  affiliated with a licensee;·
  
  an underwriter is
  holding securities of a publicly traded licensee or publicly traded company
  affiliated with a licensee as part of an underwriting for no more than 90
  days after the beginning of such underwriting if it exercises voting rights
  of less than 5% of the outstanding voting securities of a publicly traded
  licensee or publicly traded company affiliated with a licensee;·
  
  a book entry transfer
  facility holds voting securities for third parties, if it exercises voting
  rights with respect to less than 5% of the outstanding voting securities of a
  publicly traded licensee or publicly traded company affiliated with a
  licensee; or·
  
  a persons sole
  ownership interest is less than 5% of the outstanding voting securities of
  the publicly traded licensee or publicly traded company affiliated with a
  licensee.  Because we own the
Colorado Casinos, our business opportunities, and those of persons with an ownership
interest in us, or any of the Colorado Casinos, are limited to interests that
comply with the Colorado Regulations and the Colorado Commissions rule.  In addition, pursuant to
the Colorado Regulations, no manufacturer or distributor of slot machines or
associated equipment may, without notification being provided to the Colorado
Division within ten days, knowingly have an interest in any casino operator,
allow any of its officers or any other person with a substantial interest in
such business to have such an interest, employ any person if that person is
employed by a casino operator, or allow any casino operator or person with a
substantial interest therein to have an interest in a manufacturers or
distributors business. A substantial interest means the lesser of (i) as
large an interest in an entity as any other person or (ii) any financial
or equity interest equal to or greater than 5%. The Colorado Commission has
ruled that a person does not have a substantial interest if such persons
sole ownership interest in such licensee is through the ownership of less than
5% of the outstanding voting securities of a publicly traded licensee or
publicly traded affiliated company of a licensee.  We are a publicly traded
corporation under the Colorado Regulations.  Under the Colorado
Regulations, any person or entity having any direct or indirect interest in a
gaming licensee or an applicant for a gaming license, including, but not
limited to, us, Casino America of Colorado, Inc., IC Holdings Colorado, Inc.,
IOC Black Hawk Distribution Company, LLC or either of the two Colorado Casinos
and their security holders, may be required to supply the Colorado Commission
with substantial information, including, but not limited to, background
information, source of funding information, a sworn statement that such person
or entity is not holding his or her interest for any other party, and
fingerprints. Such information, investigation and licensing (or finding of
suitability) as an associated person automatically will be required of all
persons (other than certain institutional investors discussed below) which
directly or indirectly beneficially own 10% or more of a direct or indirect
beneficial ownership or interest in either of the two Colorado Casinos, through
their beneficial ownership of any class of voting securities of us, Casino
America of Colorado, Inc., IC Holdings Colorado, Inc., IOC Black Hawk
Distribution Company, LLC or either of the two Colorado Casinos. Those persons
must report their interest within 10 days (including institutional investors)
and file appropriate applications within 45 days after acquiring that interest
(other than certain institutional investors discussed below). Persons
(including institutional investors) who directly or indirectly beneficially own
5% or more (but less than 10%) of a direct or indirect beneficial ownership or
interest in either of the two Colorado Casinos, through their beneficial
ownership of any class of voting securities of us, Casino America of Colorado, Inc.,
IC Holdings Colorado, Inc., IOC Black Hawk Distribution Company, LLC or
either of the two Colorado Casinos, must report their interest to the Colorado
Commission within 10 days after acquiring that interest and may be required to
provide additional information and to be found suitable. (It is the current
practice of the gaming regulators to require findings of suitability for
persons beneficially owning 5% or more of a direct or indirect beneficial
ownership or interest, other than certain institutional investors discussed
below.) If certain institutional investors provide specified information to the
Colorado Commission within 45 days after acquiring their interest (which, under
the current practice of the gaming regulators is an interest of 5% or more,
directly or indirectly) and are holding for investment purposes only, those
investors,  2


in the Colorado
Commissions discretion, may be permitted to own up to 14.99% of the Colorado
Casinos through their beneficial ownership in any class of voting of securities
of us, Casino America of Colorado, Inc., IC Holdings Colorado, Inc.,
IOC Black Hawk Distribution Company, LLC or either of the two Colorado Casinos,
before being required to be found suitable. All licensing and investigation
fees will have to be paid by the person in question.  The Colorado Regulations
define a voting security to be a security the holder of which is entitled to
vote generally for the election of a member or members of the board of
directors or board of trustees of a corporation or a comparable person or
persons of another form of business organization.  The Colorado Commission
also has the right to request information from any person directly or
indirectly interested in, or employed by, a licensee, and to investigate the
moral character, honesty, integrity, prior activities, criminal record,
reputation, habits and associations of: (1) all persons licensed pursuant
to the Colorado Limited Gaming Act; (2) all officers, directors and
stockholders of a licensed privately held corporation; (3) all officers,
directors and stockholders holding either a 5% or greater interest or a
controlling interest in a licensed publicly traded corporation; (4) all
general partners and all limited partners of a licensed partnership; (5) all
persons that have a relationship similar to that of an officer, director or
stockholder of a corporation (such as members and managers of a limited
liability company); (6) all persons supplying financing or loaning money
to any licensee connected with the establishment or operation of limited
gaming; (7) all persons having a contract, lease or ongoing financial or
business arrangement with any licensee, where such contract, lease or
arrangement relates to limited gaming operations, equipment devices or
premises; and (8) all persons contracting with or supplying any goods and
services to the gaming regulators.  Certain public officials
and employees are prohibited from having any direct or indirect interest in a
license or limited gaming.  In addition, under the
Colorado Regulations, every person who is a party to a gaming contract (as
defined below) or lease with an applicant for a license, or with a licensee,
upon the request of the Colorado Commission or the Colorado Director, must
promptly provide the Colorado Commission or Colorado Director all information
that may be requested concerning financial history, financial holdings, real
and personal property ownership, interests in other companies, criminal
history, personal history and associations, character, reputation in the
community and all other information that might be relevant to a determination
of whether a person would be suitable to be licensed by the Colorado
Commission. Failure to provide all information requested constitutes sufficient
grounds for the Colorado Director or the Colorado Commission to require a
licensee or applicant to terminate its gaming contract or lease with any
person who failed to provide the information requested. In addition, the
Colorado Director or the Colorado Commission may require changes in gaming
contracts before an application is approved or participation in the contract
is allowed. A gaming contract is defined as an agreement in which a person
does business with or on the premises of a licensed entity.  The Colorado Commission
and the Colorado Division have interpreted the Colorado Regulations to permit
the Colorado Commission to investigate and find suitable persons or entities
providing financing to or acquiring securities from us, Casino America of
Colorado, Inc., IC Holdings Colorado, Inc., IOC Black Hawk Distribution
Company, LLC or either of the two Colorado Casinos. As noted above, any person
or entity required to file information, be licensed or found suitable would be
required to pay the costs thereof and of any investigation. Although the
Colorado Regulations do not require the prior approval for the execution of
credit facilities or issuance of debt securities, the Colorado regulators
reserve the right to approve, require changes to or require the termination of
any financing, including if a person or entity is required to be found suitable
and is not found suitable. In any event, lenders, note holders, and others
providing financing will not be able to exercise certain rights and remedies
without the prior approval of the Colorado gaming authorities. Information
regarding lenders and holders of securities will be periodically reported to
the Colorado gaming authorities.  Except under certain
limited circumstances relating to slot machine manufacturers and distributors,
every person supplying goods, equipment, devices or services to any licensee in
return for payment of a  3


percentage, or calculated
upon a percentage, of limited gaming activity or income must obtain an operator
license or be listed on the retailers license where such gaming will take
place.  An application for
licensure or suitability may be denied for any cause deemed reasonable by the
Colorado Commission or the Colorado Director, as appropriate. Specifically, the
Colorado Commission and the Colorado Director must deny a license to any
applicant who, among other things: (1) fails to prove by clear and
convincing evidence that the applicant is qualified; (2) fails to provide
information and documentation requested; (3) fails to reveal any fact material
to qualification, or supplies information which is untrue or misleading as to a
material fact pertaining to qualification; (4) has been convicted of, or
has a director, officer, general partner, stockholder, limited partner or other
person who has a financial or equity interest in the applicant who has been
convicted of, specified crimes, including the service of a sentence upon
conviction of a felony in a correctional facility, city or county jail, or
community correctional facility or under the state board of parole or any
probation department within ten years prior to the date of the application,
gambling-related offenses, theft by deception or crimes involving fraud or
misrepresentation, is under current prosecution for such crimes (during the pendency
of which license determination may be deferred), is a career offender or a
member or associate of a career offender cartel, or is a professional gambler;
or (5) has refused to cooperate with any state or federal body
investigating organized crime, official corruption or gaming offenses. If the
Colorado Commission determines that a person or entity is unsuitable to
directly or indirectly own interests in us, Casino America of Colorado, Inc.,
IC Holdings Colorado, Inc., or either of the two Colorado Casinos, one or
more of the Colorado Casinos may be sanctioned, which may include the loss of
our approvals and licenses.  The Colorado Commission
does not need to approve in advance a public offering of securities but rather
requires the filing of notice and additional documents prior to a public
offering of (i) voting securities, and (ii) non-voting securities if
any of the proceeds will be used to pay for the construction of gaming
facilities in Colorado, to directly or indirectly acquire an interest in a gaming
facility in Colorado, to finance the operation of a gaming facility in Colorado
or to retire or extend obligations for any of the foregoing. The Colorado
Commission may, in its discretion, require additional information and prior
approval of such public offering.  In addition, the Colorado
Regulations prohibit a licensee or affiliated company thereof, such as us,
Casino America of Colorado, Inc., IC Holdings Colorado, Inc., IOC
Black Hawk Distribution Company, LLC or either of the two Colorado Casinos,
from paying any unsuitable person any dividends or interest upon any voting
securities or any payments or distributions of any kind (except as set forth
below), or paying any unsuitable person any remuneration for services or
recognizing the exercise of any voting rights by any unsuitable person.
Further, under the Colorado Regulations, each of the Colorado Casinos and IOC
Black Hawk Distribution Company, LLC may repurchase its voting securities from
anyone found unsuitable at the lesser of the cash equivalent to the original
investment in the applicable Colorado Casino or IOC Black Hawk Distribution
Company, LLC or the current market price as of the date of the finding of
unsuitability unless such voting securities are transferred to a suitable
person (as determined by the Colorado Commission) within sixty (60) days after
the finding of unsuitability. A licensee or affiliated company must pursue all
lawful efforts to require an unsuitable person to relinquish all voting
securities, including purchasing such voting securities. The staff of Colorado
Division has taken the position that a licensee or affiliated company may not
pay any unsuitable person any interest, dividends or other payments with
respect to non-voting securities, other than with respect to pursuing all
lawful efforts to require an unsuitable person to relinquish non-voting
securities, including by purchasing or redeeming such securities. Further, the
regulations require anyone with a material involvement with a licensee,
including a director or officer of a holding company, such as us, Casino
America of Colorado, Inc., IC Holdings Colorado, Inc., IOC Black Hawk
Distribution Company, LLC or either of the two Colorado Casinos, to file for a
finding of suitability if required by the Colorado Commission.  Because of their
authority to deny an application for a license or suitability, the Colorado
Commission and the Colorado Director effectively can disapprove a change in
corporate position of a licensee and with respect to any entity which is required
to be found suitable, or indirectly can cause us, Casino America of Colorado, Inc.,
IC Holdings Colorado, Inc., IOC Black Hawk Distribution Company, LLC or
the applicable Colorado Casino to suspend or dismiss managers, officers,
directors and other key employees or sever  4


relationships with other
persons who refuse to file appropriate applications or who the authorities find
unsuitable to act in such capacities.  Generally, a sale, lease,
purchase, conveyance or acquisition of any interest in a licensee is prohibited
without the Colorado Commissions prior approval. However, because we are a
publicly traded corporation, persons may acquire an interest in us (even, under
current staff interpretations, a controlling interest) without the Colorado
Commissions prior approval, but such persons may be required to file notices
with the Colorado Commission and applications for suitability (as discussed
above) and the Colorado Commission may, after such acquisition, find such
person unsuitable and require them to dispose of their interest. Under some
circumstances, we may not sell any interest in our Colorado gaming businesses
without the prior approval of the Colorado Commission.  Each Colorado Casino must
meet specified architectural requirements, fire safety standards and standards
for access for disabled persons. Each Colorado Casino also must not exceed
specified gaming square footage limits as a total of each floor and the full
building. Each Colorado Casino may permit only individuals 21 or older to
gamble in the casino. No Colorado Casino may provide credit to its gaming
patrons.  Each Colorado Casino must
comply with Colorados Gambling Payment Intercept Act, which governs the
collection of unpaid child support costs on certain cash winnings from limited
gaming.  As originally enacted by
amendment to the Colorado Constitution, limited stakes gaming in Colorado was
limited to slot machines, blackjack and poker, with a maximum single bet of
$5.00, and casinos could operate only between 8 a.m. and 2 a.m.. On November 4,
2008, however, Colorado voters approved a subsequent amendment to the Colorado
Constitution that allowed the towns of Cripple Creek, Black Hawk, and Central
City to add table games of craps and roulette, increase the maximum single bet
to $100.00, and increase the permitted hours of operation to 24 hours per day
effective July 2, 2009.  A licensee is required to
provide information and file periodic reports with the Colorado Division,
including identifying those who have a 5% or greater ownership, financial or
equity interest in the licensee, or who have the ability to control the
licensee, or who have the ability to exercise significant influence over the
licensee, or who loan money or other things of value to a licensee, or who have
the right to share in revenues of limited gaming, or to whom any interest or
share in profits of limited gaming has been pledged as security for a debt or
performance of an act. A licensee, and any parent company or subsidiary of a
licensee, who has applied to a foreign jurisdiction for licensure or permission
to conduct gaming, or who possesses a license to conduct foreign gaming, is
required to notify the Colorado Division. Any person licensed by the Colorado
Commission and any associated person of a licensee must report criminal
convictions and criminal charges to the Colorado Division.  The Colorado Commission
has broad authority to sanction, fine, suspend and revoke a license for
violations of the Colorado Regulations. Violations of many provisions of the
Colorado Regulations also can result in criminal penalties.  The Colorado Constitution
currently permits gaming only in a limited number of cities and certain
commercial districts in such cities.  The Colorado Constitution
permits a gaming tax of up to 40% on adjusted gross gaming proceeds, and
authorizes the Colorado Commission to change the rate annually. The current
gaming tax rate is 0.25% on adjusted gross gaming proceeds of up to and
including $2.0 million, 2% over $2.0 million up to and including $5.0 million,
9% over $5.0 million up to and including $8.0 million, 11% over $8.0 million up
to and including $10.0 million, 16% over $10.0 million up to and including
$13.0 million and 20% on adjusted gross gaming proceeds in excess of $13.0
million. The City of Black Hawk has imposed an annual device fee of $750 per
gaming device and may revise it from time to time. The City of Black Hawk also
has imposed other fees, including a business improvement district fee and
transportation fee, calculated based on the number of devices and may revise
the same or impose additional such fees.  Colorado participates in
multi-state lotteries.  5


The sale of alcoholic
beverages is subject to licensing, control and regulation by the Colorado
liquor agencies. All persons who directly or indirectly hold a 10% or more
interest in, or 10% or more of the issued and outstanding capital stock of, any
of the Colorado Casinos, through their ownership of us, Casino America of
Colorado, Inc., IC Holdings Colorado, Inc., or either of the two
Colorado Casinos, must file applications and possibly be investigated by the
Colorado liquor agencies. The Colorado liquor agencies also may investigate
those persons who, directly or indirectly, loan money to or have any financial
interest in liquor licensees. In addition, there are restrictions on
stockholders, directors and officers of liquor licensees preventing such
persons from being a stockholder, director, officer or otherwise interested in
some persons lending money to liquor licensees and from making loans to other
liquor licensees. All licenses are revocable and transferable only in
accordance with all applicable laws. The Colorado liquor agencies have the full
power to limit, condition, suspend or revoke any liquor license and any
disciplinary action could (and revocation would) have a material adverse effect
upon the operations of us, Casino America of Colorado, Inc., IC Holdings
Colorado, Inc., or the applicable Colorado Casino. Each Colorado Casino
holds a retail gaming tavern liquor license for its casino, hotel and
restaurant operations.  Persons directly or
indirectly interested in either of the two Colorado Casinos may be limited in
certain other types of liquor licenses in which they may have an interest, and
specifically cannot have an interest in a retail liquor license (but may have
an interest in a hotel and restaurant liquor license and several other types of
liquor licenses). No person can hold more than three retail gaming tavern
liquor licenses. The remedies of certain lenders may be limited by applicable
liquor laws and regulations.  Florida  In June 1995, the
Florida Department of Business and Professional Regulation, acting through the
Division of Pari-Mutuel Wagering (the Florida Division), issued its final
order approving the transfer to the Companys wholly owned subsidiary, PPI, Inc.
(PPI), the pari-mutuel wagering permits which authorize the acceptance of
pari-mutuel wagers on harness horse and quarter horse races conducted at the
Pompano Park Racetrack (Pompano Park) located in Pompano Beach, Florida.
Harness horse racing at Pompano Park has been continuously conducted by PPI
since the time it acquired the foregoing described harness horse permit through
the present. In February 2008, The Florida Division issued a license to
PPI to conduct live evening harness racing performances at Pompano Park during
the State of Floridas fiscal year beginning July 1, 2008 to June 30,
2009. PPI also has a quarter horse permit that is not currently active.  The Florida statutes and
the applicable rules and regulations of the Florida Division set forth in
the Florida Administrative Code (the Florida Law) establish a regulatory
framework for pari-mutuel wagering activities in the State of Florida,
including licensing requirements, a taxing structure on pari-mutuel
permitholders and requirements for payments to the horsemen, including owners
and breeders. The Florida Law grants to the Florida Division full regulatory
power over all permitholders and licensees, including the power to revoke or
suspend any permit or license upon the willful violation by a permitholder or a
licensee of the Florida Law. The Florida Division must approve any transfer of
10% or more of the stock or other evidence of ownership or equity in all
pari-mutuel racing permitholders such as PPI. In addition to the power to
suspend or revoke a permit or license on account of a willful violation of the
Florida Law, the Florida Division is also granted the power to impose various
civil penalties on the permitholder or licensee on account of other violations.
Penalties may not exceed $1,000 for each count or separate offense.  Pursuant to  Florida law, PPI is authorized to conduct
full-card pari-mutuel wagering on: (1) simulcast harness races from
outside Florida throughout the racing season; and (2) night-time (after 6 p.m.)
thoroughbred races conducted outside of the State of Florida if such races are
simulcast to a Florida thoroughbred track and then rebroadcast to PPI. PPI also
has the right under Florida Law to conduct full-card simulcasting of harness
racing on days during which no live racing is held at Pompano Park. However, on
non-race days, Pompano Park must rebroadcast the simulcast signals to other
pari-mutuel facilities that are eligible to conduct intertrack wagering. In
addition, Pompano Park may transmit its live harness races into any dog racing
or jai alai facility in Florida, including facilities in Miami-Dade and Broward
Counties, for intertrack wagering. 
Florida Law establishes the allocation of contributions to the
pari-mutuel pools between Pompano Park and the other facilities sharing such
signals.  6


Florida
Law authorizes pari-mutuel facilities, including Pompano Park, to operate card
rooms in those counties in which a majority vote of the County Commission has
been obtained and a local ordinance has been adopted. The County Commission of
Broward County, where Pompano Park is located, has approved the operation of
cardrooms in Broward County. Although the provisions of Florida Law regarding
cardroom operations have been amended frequently by the Florida Legislature,
the amendments have generally resulted in the regulatory scheme becoming more
liberal as opposed to being more restrictive. Under   amendments which became effective on July 1,
2007, the beneficial changes included permitting daily operations for any 12
hour period without the requirement for live racing, raising the limit on the
maximum bet amount from $2.00 to $5.00 with up to 3 raises allowed per round,
providing less restrictive regulations for tournaments and allowing the
operator to award prizes and create jackpots not tied to the amount bet.  In November 2004,
the voters in the State of Florida amended the Florida State Constitution to
allow the voters of Miami-Dade and Broward Counties to decide whether to
approve slot machines in racetracks and jai alai frontons in their respective
counties. Broward County voters approved that countys local referendum in 2005
and Miami Dade voters approved that countys local referendum in 2008.
Legislation enacted by the Florida Legislature in 2005, and amended in 2007,
(the Florida Slot Law) implemented the constitutional amendment by
authorizing Pompano Park and three other pari-mutuel facilities in Broward and
the pari-mutuel facilities in Miami-Dade County to offer slot machine gaming to
patrons at these facilities. Although there are pari-mutuel facilities in
numerous other counties in the State of Florida, slot machine gaming is
presently authorized only in Broward and Miami-Dade County. In April 2007,
a new casino facility was opened at Pompano Park adjacent to the harness race
facility.  Under the Florida Slot
law, the following regulatory provisions are applicable to slot machine gaming
at Pompano Park:  ·
  
  The facility may be
  operated 365 days per year, 18 hours per weekday and 24 hours on weekends.·
  
  The maximum number of
  machines is 2,000 Vegas-style (Class III) slot machines per facility.·
  
  The annual license fee
  is $3,000,000.00.·
  
  The tax payable to the
  State of Florida is 50% of net slot machine revenue.·
  
  The machines will not
  accept coins or currency, but are ticket in/ticket out.·
  
  The minimum age to play
  the machines is 21 years.·
  
  ATMs are permitted in
  the facility but not on the gaming floor.·
  
  The Florida Division is
  the regulatory agency charged with the duty to enforce the provisions of the
  Florida Law.  PPI also pays combined
county and city taxes of approximately 3.5% on the first $250 million of net
slot machine revenue and 5% on net slot machine revenue over $250 million.  In April 2009,
legislation was passed which set forth the parameters under which and granted
the Governor authority to enter into an Indian Gaming Compact (Compact:) on
behalf of the State of Florida with the Seminole Indian Tribe of Florida for
the purpose of authorizing Class III gaming.  Additionally, the legislation provided for a
reduction of the tax rate on slot machines operated by pari-mutuel facilities
from 50% to 35% with a guarantee of tax revenue to be no less than the amount
that was collected in the fiscal year ended June 30, 2009.  The tax guarantee could have been easily met.
Two new slot facilities opened in Miami-Dade County after the proposed
effective date of the legislation These facilities would create enough new tax
revenue to ensure that total revenues exceeded 
revenue collected in the base year. The legislation, also reduced the
annual license fee from $3million to $2.5 million for the State of Floridas
2010 Fiscal Year and $2 million per fiscal year thereafter,  It allowed 
slot machines to be linked using a progressive system and expanded poker
operations to allow operation for 18 hours per day on week days and 24 hours
per day on weekends, In addition, it authorized no limit poker games and
tournaments In order for this legislation t become effective in 2009 the
following conditions must have been  met:  7


(i)it must have been approved by or allowed
to become law by the Governor;  (ii)a Compact must have been entered into
with the Seminole Indian Tribe of Florida by August 31, 2009; and  (iii)the legislature must have ratified the
Compact and the Compact must have been published in the Federal Registry.  We expected this
legislation to become effective in the fall of 2009; however the conditions
were not met and it did not become effective. Subsequently the 2010 Legislature
enacted new legislation and all of the provisions outlined above will become
effective July 1, 2010  Iowa  In 1989, the State of
Iowa legalized riverboat gaming on the Mississippi River and other waterways
located in Iowa. The legislation authorized the granting of licenses to
non-profit corporations that, in turn, are permitted to enter into operating
agreements with qualified persons who also actually conduct riverboat gaming
operations. Such operators must likewise be approved and licensed by the Iowa
Racing and Gaming Commission (the Iowa Gaming Commission).  The Isle-Bettendorf has
the right to renew its operators contract with the Scott County Regional
Authority, a non-profit corporation organized for the purpose of facilitating
riverboat gaming in Bettendorf, Iowa, for succeeding three-year periods as long
as Scott County voters approve gaming in the jurisdiction. Under the operators
contract, the Isle-Bettendorf pays the Scott County Regional Authority a fee
equal to 4.1% of the adjusted gross receipts. Further, the Isle-Bettendorf pays
a fee to the City of Bettendorf equal to 1.65% of adjusted gross receipts.  In June 1994, Upper
Mississippi Gaming Corporation, a non-profit corporation organized for the
purpose of facilitating riverboat gaming in Marquette, Iowa, entered into an
operators agreement for the Isle-Marquette for a period of twenty-five years.
Under the management agreement, the non-profit organization is to be paid a fee
of $0.50 per passenger. Further, pursuant to a dock site agreement (which also
has a term of twenty-five years), the Isle-Marquette is required to pay a fee
to the City of Marquette in the amount of $1.00 per passenger, plus a fixed
amount of $15,000 per month and 2.5% of gaming revenues (less state wagering
taxes) in excess of $20.0 million but less than $40.0 million; 5% of gaming
revenues (less state wagering taxes) in excess of $40.0 million but less than
$60.0 million; and 7.5% of gaming revenues (less state wagering taxes) in
excess of $60.0 million.  In October 2000, the
Riverboat Development Authority, a non-profit corporation entered into an
operators agreement with the Isle-Davenport to conduct riverboat gaming in
Davenport, Iowa.  The operating agreement
was amended in June 2009.  The
operating agreement requires the Isle-Davenport to make weekly payments to the
qualified sponsoring organization equal to 4.1% of each weeks adjusted gross
receipts (as defined in the enabling legislation).  Further, the Isle-Davenport has agreed that
the Riverboat Development Authority will be paid at least the minimum amount of
$2,000,000, which minimum is subject to certain termination events (i.e.
increase in the number of area casinos or suspension of Isle-Davenports right
under its leases with the City of Davenport or any city permits for more than
30 days) and an appropriate negotiated reduction should the casinos gaming
floor lose its current smoking ban exemption. 
Subject to Iowa Gaming Commission approval, this agreement will remain
in effect through March 31, 2019, provided that as long as Isle-Davenport
has substantially complied with the agreement, gaming laws and regulations and
the parties gaming license is renewed and in effect, the agreement will
automatically renew on an annual basis for successive one-year terms. In
addition, the Isle-Davenport pays a docking fee, admission fee, gaming tax and
a payment in lieu of taxes to the City of Davenport. Pursuant to a development
agreement with the City, the Isle-Davenport has exclusive docking privileges in
the City of Davenport until March 31, 2017 in consideration for this
docking fee. The docking fee has both a fixed base and a per passenger
increment. The fixed fee commenced April 1, 1994 at $111,759 and increases
annually by 4%. The incremental component is a $0.10 charge for each passenger
in excess of 1,117,579 passengers (which charge also increases by 4% per
year). The City is also guaranteed an annual gaming tax  8


of $558,789.50 per year
(based on a minimum passenger floor count of 1,117,579 passengers at $0.50 per
passenger).  In lieu of the foregoing the
Isle-Davenport is currently paying the City of Davenport a fee of 1.65% of
adjusted gross receipts.  Finally, the
Isle-Davenport is obligated to pay a payment in lieu of taxes to support the
downtown development district. This annual lump sum payment is in the amount of
$123,516 plus $0.20 per passenger in excess of 1,117,579 passengers. This
payment in lieu of taxes is further subject to a minimum $226,179 per year
payment.  In November 2004,
the Black Hawk County Gaming Association, a non-profit corporation organized
for the purpose of facilitating riverboat gaming in Waterloo, Iowa entered into
an operators agreement with the Isle-Waterloo to conduct riverboat gaming in
Waterloo, Iowa. The operating agreement requires that upon commencement of
operations the Isle-Waterloo is to make weekly payments to the qualified
sponsoring organization equal to 4.1% of each weeks adjusted gross receipts
and an additional fee of 1.65% of each weeks adjusted gross receipts in lieu
of any admission or docking fee which might otherwise be charged by the county
or any city (as defined in Section 99F.1(1) of the Iowa Code). This
agreement will remain in effect through March 31, 2015 and may be extended
by the Isle-Waterloo so long as it holds a license to conduct gaming. In
addition, the Isle-Waterloo has agreed to pay a development fee to the City.
Pursuant to an admission fee administration and development agreement with the
City and Black Hawk County Gaming Association the Isle-Waterloo shall pay a
development fee equal to 1% of each weeks adjusted gross receipts.  Iowa law permits gaming
licensees to offer unlimited stakes gaming on games approved by the Iowa Gaming
Commission on a 24-hour basis. Land-based casino gaming was authorized on July 1,
2007 and the Iowa Gaming Commission now permits licensees the option to operate
on permanently moored vessels or approved gambling structures. The legal age
for gaming is 21.  All Iowa licenses were
approved for renewal at the March 4, 2010 Iowa Gaming Commission meeting.
These licenses are not transferable and will need to be renewed in March 2011
and prior to the commencement of each subsequent annual renewal period.  The ownership and
operation of gaming facilities in Iowa are subject to extensive state laws,
regulations of the Iowa Gaming Commission and various county and municipal
ordinances (collectively, the Iowa Gaming Laws), concerning the responsibility,
financial stability and character of gaming operators and persons financially
interested or involved in gaming operations. Iowa Gaming Laws seek to: (1) prevent
unsavory or unsuitable persons from having direct or indirect involvement with
gaming at any time or in any capacity; (2) establish and maintain
responsible accounting practices and procedures; (3) maintain effective
control over the financial practices of licensees (including the establishment
of minimum procedures for internal fiscal affairs, the safeguarding of assets
and revenues, the provision of reliable record keeping and the filing of
periodic reports with the Iowa Gaming Commission); (4) prevent cheating
and fraudulent practices; and (5) provide a source of state and local
revenues through taxation and licensing fees. Changes in Iowa Gaming Laws could
have a material adverse effect on the Iowa gaming operations.  Gaming licenses granted
to individuals must be renewed every year, and licensing authorities have broad
discretion with regard to such renewals. Licenses are not transferable. The
Iowa gaming operations must submit detailed financial and operating reports to
the Iowa Gaming Commission. Certain contracts of licensees in excess of
$100,000 must be submitted to and approved by the Iowa Gaming Commission.  Certain officers,
directors, managers and key employees of the Iowa gaming operations are
required to be licensed by the Iowa Gaming Commission. Employees associated
with gaming must obtain work permits that are subject to immediate suspension
under specific circumstances. In addition, anyone having a material
relationship or involvement with the Iowa gaming operations may be required to
be found suitable or to be licensed, in which case those persons would be
required to pay the costs and fees of the Iowa Gaming Commission in connection
with the investigation. The Iowa Gaming Commission may deny an application for
a license for any cause deemed reasonable. In addition to its authority to deny
an application for license, the Iowa Gaming Commission has jurisdiction to
disapprove a change in position by officers or key employees and the power to
require the Iowa gaming operations to suspend or dismiss officers, directors or
other key employees or sever relationships with other persons who refuse to
file appropriate applications or whom the Iowa Gaming Commission finds
unsuitable to act in such capacities.  9


The Iowa Gaming
Commission may revoke a gaming license if the licensee:  ·
  
  has been suspended from
  operating a gaming operation in another jurisdiction by a board or commission
  of that jurisdiction;·
  
  has failed to
  demonstrate financial responsibility sufficient to meet adequately the
  requirements of the gaming enterprise;·
  
  is not the true owner
  of the enterprise;·
  
  has failed to disclose
  ownership of other persons in the enterprise;·
  
  is a corporation 10% of
  the stock of which is subject to a contract or option to purchase at any time
  during the period for which the license was issued, unless the contract or
  option was disclosed to the Iowa Gaming Commission and the Iowa Gaming
  Commission approved the sale or transfer during the period of the license;·
  
  knowingly makes a false
  statement of a material fact to the Iowa Gaming Commission;·
  
  fails to meet a
  monetary obligation in connection with an excursion gaming boat;·
  
  pleads guilty to, or is
  convicted of a felony;·
  
  loans to any person,
  money or other thing of value for the purpose of permitting that person to
  wager on any game of chance;·
  
  is delinquent in the
  payment of property taxes or other taxes or fees or a payment of any other
  contractual obligation or debt due or owed to a city or county; or·
  
  assigns, grants or
  turns over to another person the operation of a licensed excursion boat (this
  provision does not prohibit assignment of a management contract approved by
  the Iowa Gaming Commission) or permits another person to have a share of the
  money received for admission to the excursion boat.  If it were determined
that the Iowa Gaming Laws were violated by a licensee, the gaming licenses held
by a licensee could be limited, made conditional, suspended or revoked. In
addition, the licensee and the persons involved could be subject to substantial
fines for each separate violation of the Iowa Gaming Laws in the discretion of
the Iowa Gaming Commission. Limitations, conditioning or suspension of any
gaming license could (and revocation of any gaming license would) have a
material adverse effect on operations.  The Iowa Gaming
Commission may also require any individual who has a material relationship with
the Iowa gaming operations to be investigated and licensed or found suitable.
The Iowa Gaming Commission, prior to the acquisition, must approve any person
who acquires 5% or more of a licensees equity securities. The applicant
stockholder is required to pay all costs of this investigation.  Gaming taxes
approximating 22% of the adjusted gross receipts will be payable by each
licensee on its operations to the State of Iowa. In addition, reimbursable
assessments have been in an amount equal to 2.152% of each licensees adjusted
gross receipts for fiscal year 2004. These assessments will be offset by future
state gaming taxes paid by each licensee with a credit for 20% of the
assessments paid allowed each year beginning July 1, 2010 for five
consecutive years. The state of Iowa is also reimbursed by the licensees for
all costs associated with monitoring and enforcement by the Iowa Gaming
Commission and the Iowa Department of Criminal Investigation.  Louisiana  In July 1991,
Louisiana enacted legislation permitting certain types of gaming activity on
certain rivers and waterways in Louisiana. The legislation granted authority to
supervise riverboat gaming activities to the Louisiana Riverboat Gaming
Commission and the Riverboat Gaming Enforcement Division of the Louisiana State
Police. The Louisiana Riverboat Gaming Commission was authorized to hear and
determine all appeals relative to the granting, suspension, revocation,
condition or renewal of all licenses, permits and applications. In addition,
the Louisiana Riverboat Gaming Commission established regulations concerning
authorized routes, duration of excursions, minimum levels of insurance,
construction of  10


riverboats and periodic
inspections. The Riverboat Gaming Enforcement Division of the Louisiana State
Police was authorized to investigate applicants and issue licenses, investigate
violations of the statute and conduct continuing reviews of gaming activities.  In May 1996,
regulatory oversight of riverboat gaming was transferred to the Louisiana
Gaming Control Board, which is comprised of nine voting members appointed by
the governor. The Louisiana Gaming Control Board now oversees all licensing
matters for riverboat casinos, land-based casinos, racinos, video poker and
certain aspects of Native American gaming other than those responsibilities
reserved to the Louisiana State Police.  The Louisiana Gaming
Control Board is empowered to issue up to 15 licenses to conduct gaming
activities on a riverboat in accordance with applicable law. However, no more
than six licenses may be granted to riverboats operating from any one
designated waterway.  The Louisiana State
Police continues to be involved broadly in gaming enforcement and reports to
the Louisiana Gaming Control Board. Louisiana law permits the Louisiana State
Police, among other things, to continue to (1) conduct suitability
investigations, (2) audit, investigate and enforce compliance with
standing regulations, (3) initiate enforcement and administrative actions and
(4) perform all other duties and functions necessary for the efficient,
efficacious, and thorough regulation and control of gaming activities and
operations under the Louisiana Gaming Control Boards jurisdiction.  Louisiana gaming law
specifies certain restrictions relating to the operation of riverboat gaming,
including the following:  ·
  
  agents of the Louisiana
  State Police are permitted on board at any time during gaming operations;·
  
  gaming devices,
  equipment and supplies may only be purchased or leased from permitted
  suppliers and, with respect to gaming equipment, from permitted
  manufacturers;·
  
  gaming may only take
  place in the designated gaming area while the riverboat is docked on a
  designated river or waterway;·
  
  gaming equipment may
  not be possessed, maintained or exhibited by any person on a riverboat except
  in the specifically designated gaming area or in a secure area used for
  inspection, repair or storage of such equipment;·
  
  wagers may be received
  only from a person present on a licensed riverboat;·
  
  persons under 21 are
  not permitted in designated gaming areas;·
  
  except for slot machine
  play, wagers may be made only with tokens, chips or electronic cards
  purchased from the licensee aboard a riverboat;·
  
  licensees may only use
  docking facilities and routes for which they are licensed and may only board
  and discharge passengers at the riverboats licensed berth;·
  
  licensees must have
  adequate protection and indemnity insurance;·
  
  licensees must have all
  necessary federal and state licenses, certificates and other regulatory approvals
  prior to operating a riverboat; and·
  
  gaming may only be
  conducted in accordance with the terms of the license and Louisiana law.  11


To receive a gaming
license in Louisiana, an applicant must be found to be a person of good
character, honesty and integrity and a person whose prior activities, criminal
record, if any, reputation, habits and associations do not (1) pose a
threat to the public interest of the State of Louisiana or to the effective
regulation and control of gaming or (2) create or enhance the dangers of
unsuitable, unfair or illegal practices, methods and activities in the conduct
of gaming or the carrying on of business and financial arrangements of gaming
activities. In addition, the Louisiana Gaming Control Board will not grant a
license unless it finds that, among other things:  ·
  
  the applicant can
  demonstrate the capability, either through training, education, business
  experience or a combination of the preceding, to operate a gaming operation;·
  
  the proposed financing
  of the riverboat and the gaming operations is adequate for the nature of the
  proposed operation and is from a suitable and acceptable source;·
  
  the applicant
  demonstrates a proven ability to operate a vessel of comparable size,
  capacity and complexity to a riverboat so as to ensure the safety of its
  passengers;·
  
  the applicant submits
  with its application for a license a detailed plan of design of the
  riverboat;·
  
  the applicant
  designates the docking facilities to be used by the riverboat;·
  
  the applicant shows
  adequate financial ability to construct and maintain a riverboat; and·
  
  the applicant has a
  good faith plan to recruit, train and upgrade minorities in all employment
  classifications.  An initial license to
conduct riverboat gaming operations is valid for a term of five years and
legislation passed in the 1999 legislative session provides for renewals every
five years thereafter. Louisiana gaming law provides that a renewal application
for the period succeeding the initial five-year term of an operators license
must be made to the Louisiana Gaming Control Board and must include a statement
under oath of any and all changes in information, including financial
information, provided in the previous application. The transfer of a license or
an interest in a license is prohibited. A gaming license is deemed to be a
privilege under Louisiana law and, as such, may be denied, revoked, suspended,
conditioned or limited at any time by the Louisiana Gaming Control Board. The
Isle-Lake Charles received its first five-year renewal of its licenses on July 20,
1999 and received its second five-year renewal of its two licenses on March 29,
2005. The third five (5) year renewal was granted to Grand Palais on July 21,
2009 and St. Charles Gaming on February 23, 2010.  Certain persons
affiliated with a riverboat gaming licensee, including directors and officers
of the licensee, directors and officers of any holding company of the licensee
involved in gaming operations, persons holding 5% or greater interests in the
licensee and persons exercising influence over a licensee, are subject to the
application and suitability requirements of Louisiana gaming law.  The sale, purchase,
assignment, transfer, pledge or other hypothecation, lease, disposition or
acquisition by any person of securities that represent 5% or more of the total
outstanding shares issued by a licensee is subject to the approval of the
Louisiana Gaming Control Board. A security issued by a licensee must generally
disclose these restrictions. Prior approval from the Louisiana Gaming Control
Board is required for the sale, purchase, assignment, transfer, pledge or other
hypothecation, lease, disposition or acquisition of any ownership interest of
5% or more of any non-corporate licensee or for the transfer of any economic
interest of 5% or more of any licensee or affiliated gaming person. An economic
interest is defined as any interest whereby a person receives or is entitled
to receive, by agreement or otherwise, a profit, gain, thing of value, loan,
credit, security interest, ownership interest or other benefit.  Fees payable to the state
for conducting gaming activities on a riverboat include (1) $50,000 per
riverboat for the first year of operation and $100,000 per year per riverboat
thereafter, plus (2) 18.5% of net gaming  12


proceeds. Legislation was
passed during the 2001 legislative session that allowed those riverboats that
had been required to conduct cruises, including the riverboats at the Isle-Lake
Charles, to remain permanently dockside beginning April 1, 2001. The
legislation also increased the gaming tax for operators from 18.5% to 21.5%. A
statute also authorizes local governing authorities to levy boarding fees. We
currently have development agreements in Lake Charles with certain local
governing authorities in the jurisdictions in which we operate pursuant to
which we make payments in lieu of boarding fees.  A licensee must notify
and/or seek approval from the Louisiana Gaming Control Board in connection with
any withdrawals of capital, loans, advances or distributions in excess of 5% of
retained earnings for a corporate licensee, or of capital accounts for a
partnership or limited liability company licensee, upon completion of any such
transaction. The Louisiana Gaming Control Board may issue an emergency order
for not more than ten days prohibiting payment of profits, income or accruals
by, or investments in, a licensee. Unless excepted or waived by the Louisiana
Gaming Control Board, riverboat gaming licensees and their affiliated gaming
persons must notify the Louisiana Gaming Control Board 60 days prior to the
receipt by any such persons of any loans or extensions of credit or
modifications thereof. The Louisiana Gaming Control Board is required to
investigate the reported loan, extension of credit or modification thereof and
to determine whether an exemption exists on the requirement of prior written
approval and, if such exemption is not applicable, to either approve or
disapprove the transaction. If the Louisiana Gaming Control Board disapproves
of a transaction, the transaction cannot be entered into by the licensee or
affiliated gaming person. We are an affiliated gaming person of our
subsidiaries that hold the licenses to conduct riverboat gaming at the
Isle-Lake Charles.  The failure of a licensee
to comply with the requirements set forth above may result in the suspension or
revocation of that licensees gaming license. Additionally, if the Louisiana
Gaming Control Board finds that the individual owner or holder of a security of
a corporate license or intermediary company or any person with an economic
interest in a licensee is not qualified under Louisiana law, the Louisiana
Gaming Control Board may require, under penalty of suspension or revocation of
the license, that the person not:  ·
  
  receive dividends or
  interest on securities of the corporation;·
  
  exercise directly or
  indirectly a right conferred by securities of the corporation;·
  
  receive remuneration or
  economic benefit from the licensee;·
  
  exercise significant
  influence over activities of the licensee; or·
  
  continue its ownership
  or economic interest in the licensee.  A licensee must
periodically report the following information to the Louisiana Gaming Control
Board, which is not confidential and is available for public inspection: (1) the
licensees net gaming proceeds from all authorized games, (2) the amount
of net gaming proceeds tax paid and (3) all quarterly and annual financial
statements presenting historical data, including annual financial statements
that have been audited by an independent certified public auditor.  During the 1996 special
session of the Louisiana legislature, legislation was enacted placing on the
ballot for a statewide election a constitutional amendment limiting the
expansion of gaming, which was subsequently passed by the voters. As a result,
local option elections are required before new or additional forms of gaming
can be brought into a parish.  Proposals to amend or
supplement Louisianas riverboat gaming statute are frequently introduced in
the Louisiana State Legislature. There is no assurance that changes in
Louisiana gaming law will not occur or that such changes will not have a
material adverse effect on our business in Louisiana.  13


Mississippi  In
June 1990, Mississippi enacted legislation legalizing dockside casino
gaming for counties along the Mississippi River, which is the western border
for most of the state, and the Gulf Coast, which is the southern border for
most of the state. The legislation gave each of those counties the opportunity
to hold a referendum on whether to allow dockside casino gaming within its
boundaries.  In
its 2005 regular session, the legislature amended Mississippi law to allow
gaming to be conducted on vessels or cruise vessels placed upon permanent structures
located on, in or above the Mississippi River, on, in or above navigable waters
in eligible counties along the Mississippi River or on, in or above the waters
lying south of the counties along the Mississippi Gulf Coast. Later, after
Hurricane Katrina, the Mississippi legislature again amended the law to allow
land-based gaming along the Gulf Coast in very limited circumstances.
Mississippi law permits unlimited stakes gaming on a 24-hour basis and does not
restrict the percentage of space that may be utilized for gaming. There are no
limitations on the number of gaming licenses that may be issued in Mississippi.  The
ownership and operation of gaming facilities in Mississippi are subject to
extensive state and local regulation intended to:  ·
  
  prevent unsavory or unsuitable
  persons from having any direct or indirect involvement with gaming at any
  time or in any capacity;·
  
  establish and maintain
  responsible accounting practices and procedures for gaming operations;·
  
  maintain effective control over
  the financial practices of licensees, including establishing minimum
  procedures for internal fiscal affairs and safeguarding of assets and
  revenues, providing reliable record keeping and making periodic reports;·
  
  provide a source of state and
  local revenues through taxation and licensing fees;·
  
  prevent cheating and fraudulent
  practices; and·
  
  ensure that gaming licensees, to
  the extent practicable, employ Mississippi residents.  State
gaming regulations are subject to amendment and interpretation by the
Mississippi Gaming Commission. Changes in Mississippi laws or regulations may
limit or otherwise materially affect the types of gaming that may be conducted
in Mississippi and such changes, if enacted, could have an adverse effect on us
and our Mississippi gaming operations.  We
are registered as a publicly traded corporation under the Mississippi Gaming
Control Act. Our gaming operations in Mississippi are subject to regulatory
control by the Mississippi Gaming Commission, the State Tax Commission and
various other local, city and county regulatory agencies (collectively referred
to as the Mississippi Gaming Authorities). Our subsidiaries have obtained
gaming licenses from the Mississippi Gaming Authorities. We must obtain a
waiver from the Mississippi Gaming Commission before beginning certain proposed
gaming operations outside of Mississippi, and we must notify the Mississippi
Gaming Commission in writing within 30 days after commencing certain gaming
operations outside the state. The licenses held by our Mississippi gaming
operations have terms of three years and are not transferable. The Isle-Biloxi,
the Isle-Natchez and the Isle-Lula hold licenses effective from May 23,
2009, through May 22, 2012. In addition, our wholly-owned subsidiary, IOC
Manufacturing, Inc. holds a manufacturer and distributors license, so
that we may perform certain upgrades to our Mississippi player tracking system.
This license has a term of three years, is effective from June 16, 2008
through June 15, 2011, and is not transferable. There is no assurance that
new licenses can be obtained at the end of each three-year period of a license.
Moreover, the Mississippi Gaming Commission may, at any time, and for any cause
it deems reasonable, revoke, suspend, condition, limit or restrict a license or
approval to own shares of stock in our subsidiaries that operate in
Mississippi.  Substantial
fines for each violation of Mississippis gaming laws or regulations may be
levied against us, our subsidiaries and the persons involved. Disciplinary
action against us or one of our subsidiary gaming licensees in any jurisdiction
may lead to disciplinary action against us or any of our subsidiary licensees
in Mississippi, including, but not limited to, the revocation or suspension of
any such subsidiary gaming license.  14


We,
along with each of our Mississippi gaming subsidiaries, must periodically
submit detailed financial, operating and other reports to the Mississippi
Gaming Commission and/or the State Tax Commission. Numerous transactions,
including but not limited to substantially all loans, leases, sales of
securities and similar financing transactions entered into by any of our
Mississippi gaming subsidiaries must be reported to or approved by the
Mississippi Gaming Commission. In addition, the Mississippi Gaming Commission
may, at its discretion, require additional information about our operations.  Certain
of our officers and employees and the officers, directors and certain key
employees of our Mississippi gaming subsidiaries must be found suitable or be
licensed by the Mississippi Gaming Commission. We believe that all required
findings of suitability and key employee licenses related to all of our Mississippi
properties have been applied for or obtained, although the Mississippi Gaming
Commission at its discretion may require additional persons to file
applications for findings of suitability or key employee licenses. In addition,
any person having a material relationship or involvement with us may be
required to be found suitable or licensed, in which case those persons must pay
the costs and fees associated with such investigation. The Mississippi Gaming
Commission may deny an application for a finding of suitability for any cause
that it deems reasonable. Changes in certain licensed positions must be
reported to the Mississippi Gaming Commission. In addition to its authority to
deny an application for a finding of suitability, the Mississippi Gaming Commission
has jurisdiction to disapprove a change in a licensed position. The Mississippi
Gaming Commission has the power to require us and any of our Mississippi gaming
subsidiaries to suspend or dismiss officers, directors and other key employees
or to sever relationships with other persons who refuse to file appropriate
applications or who the authorities find unsuitable to act in such capacities.  Employees
associated with gaming must obtain work permits that are subject to immediate
suspension under certain circumstances. The Mississippi Gaming Commission will
refuse to issue a work permit to a person who has been convicted of a felony,
committed certain misdemeanors or knowingly violated the Mississippi Gaming
Control Act, and it may refuse to issue a work permit to a gaming employee for
any other reasonable cause.  At
any time, the Mississippi Gaming Commission has the power to investigate and
require the finding of suitability of any record or beneficial stockholder of
ours. The Mississippi Gaming Control Act requires any person who individually
or in association with others acquires, directly or indirectly, beneficial
ownership of more than 5% of our common stock to report the acquisition to the
Mississippi Gaming Commission, and such person may be required to be found
suitable. In addition, the Mississippi Gaming Control Act requires any person
who, individually or in association with others, becomes, directly or
indirectly, a beneficial owner of more than 10% of our common stock, as
reported to the U.S. Securities and Exchange Commission, to apply for a finding
of suitability by the Mississippi Gaming Commission and pay the costs and fees
that the Mississippi Gaming Commission incurs in conducting the investigation.  The
Mississippi Gaming Commission has generally exercised its discretion to require
a finding of suitability of any beneficial owner of 5% or more of a registered
publicly traded corporations stock. However, the Mississippi Gaming Commission
has adopted a regulation that may permit certain institutional investors to
obtain waivers that allow them to beneficially own, directly or indirectly, up
to 15% (19% in certain specific instances) of the voting securities of a
registered publicly traded corporation without a finding of suitability. If a
stockholder who must be found suitable is a corporation, partnership or trust,
it must submit detailed business and financial information, including a list of
beneficial owners.  Any
person who fails or refuses to apply for a finding of suitability or a license
within 30 days after being ordered to do so by the Mississippi Gaming
Commission may be found unsuitable. We believe that compliance by us with the
licensing procedures and regulatory requirements of the Mississippi Gaming
Commission will not affect the marketability of our securities. Any person
found unsuitable who holds, directly or indirectly, any beneficial ownership of
our securities beyond such time as the Mississippi Gaming Commission prescribes
may be guilty of a misdemeanor. We are subject to disciplinary action if, after
receiving notice that a person is unsuitable to be a stockholder or to have any
other relationship with us or our subsidiaries operating casinos in
Mississippi, we:  15


·
  
  pay the unsuitable person any
  dividend or other distribution upon its voting securities;·
  
  recognize the exercise, directly
  or indirectly, of any voting rights conferred by its securities;·
  
  pay the unsuitable person any
  remuneration in any form for services rendered or otherwise, except in
  certain limited and specific circumstances; or·
  
  fail to pursue all lawful efforts
  to require the unsuitable person to divest itself of the securities,
  including, if necessary, our immediate purchase of the securities for cash at
  a fair market value.  We
may be required to disclose to the Mississippi Gaming Commission upon request
the identities of the holders of any of our debt securities. In addition, under
the Mississippi Gaming Control Act, the Mississippi Gaming Commission may, in
its discretion, (1) require holders of our securities, including our
notes, to file applications, (2) investigate such holders and (3) require
such holders to be found suitable to own such securities. Although the
Mississippi Gaming Commission generally does not require the individual holders
of obligations such as the notes to be investigated and found suitable, the
Mississippi Gaming Commission retains the discretion to do so for any reason,
including but not limited to a default, or where the holder of the debt
instrument exercises a material influence over the gaming operations of the
entity in question. Any holder of debt securities required to apply for a
finding of suitability must pay all investigative fees and costs of the
Mississippi Gaming Commission in connection with such an investigation.  The
Mississippi regulations provide that a change in control of us may not occur
without the prior approval of the Mississippi Gaming Commission. Mississippi
law prohibits us from making a public offering of our securities without the
approval of the Mississippi Gaming Commission if any part of the proceeds of
the offering is to be used to finance the construction, acquisition or
operation of gaming facilities in Mississippi, or to retire or extend
obligations incurred for one or more such purposes. The Mississippi Gaming
Commission has the authority to grant a continuous approval of securities
offerings and has granted such approval to us, subject to renewal every three
years.  Regulations
of the Mississippi Gaming Commission prohibit certain repurchases of securities
of publicly traded corporations registered with the Mississippi Gaming
Commission, including holding companies such as ours, without prior approval of
the Mississippi Gaming Commission. Transactions covered by these regulations
are generally aimed at discouraging repurchases of securities at a premium over
market price from certain holders of greater than 3% of the outstanding
securities of the registered publicly traded corporation. The regulations of
the Mississippi Gaming Commission also require prior approval for a plan of
recapitalization as defined in such regulations.  We
must maintain in the State of Mississippi current stock ledgers, which may be
examined by the Mississippi Gaming Authorities at any time. If any securities
are held in trust by an agent or by a nominee, the record holder may be
required to disclose the identity of the beneficial owner to the Mississippi
Gaming Authorities. A failure to make such disclosure may be grounds for
finding the record holder unsuitable. We must render maximum assistance in
determining the identity of the beneficial owner.  Mississippi
law requires that certificates representing shares of our common stock bear a
legend to the general effect that the securities are subject to the Mississippi
Gaming Control Act and regulations of the Mississippi Gaming Commission. The
Mississippi Gaming Commission has the authority to grant a waiver from the
legend requirement, which we have obtained. The Mississippi Gaming Commission,
through the power to regulate licenses, has the power to impose additional
restrictions on the holders of our securities at any time.  The
Mississippi Gaming Commission enacted a regulation in 1994 requiring that, as a
condition to licensure, an applicant must provide a plan to develop
infrastructure facilities amounting to 25% of the cost of the casino and a
parking facility capable of accommodating 500 cars. In 1999, the Mississippi
Gaming Commission approved amendments to this regulation that increased the
infrastructure development requirement from 25% to 100% for new casinos (or
upon acquisition of a closed casino), but grandfathered  16


existing
licensees and development plans approved prior to the effective date of the new
regulation. Infrastructure facilities include any of the following:  ·
  
  a 250-room or larger hotel of at
  least a two-star rating as defined by the current edition of the Mobil Travel
  Guide;·
  
  theme parks;·
  
  golf courses;·
  
  marinas;·
  
  entertainment facilities;·
  
  tennis complexes; or·
  
  any other facilities approved by
  the Mississippi Gaming Commission.  Parking
facilities, roads, sewage and water systems or civic facilities are not
considered infrastructure facilities. The Mississippi Gaming Commission may
reduce the number of rooms required in a hotel if it is satisfied that
sufficient rooms are available to accommodate the anticipated number of visitors.
In 2003 and in 2006, the Mississippi Gaming Commission again amended its
regulation regarding development plan approval but left the 100% infrastructure
requirement intact. In 2007, the Mississippi Gaming Commission further amended
this regulation. Among other things, the 2007 amendment retained the 100%
infrastructure requirement and added a requirement that the qualified
infrastructure be owned or leased by certain specified persons.  License
fees and taxes are payable to the State of Mississippi and to the counties and
cities in which a Mississippi gaming subsidiarys respective operations will be
conducted. The license fee payable to the state of Mississippi is based upon
gross revenue of the licensee (generally defined as gaming receipts less payout
to customers as winnings) and equals 4% of gross revenue of $50,000 or less per
month, 6% of gross revenue in excess of $50,000 but less than $134,000 per
calendar month, and 8% of gross revenue in excess of $134,000 per calendar
month. The foregoing license fees are allowed as a credit against the licensees
Mississippi income tax liability for the year paid. Additionally, a licensee
must pay a $5,000 annual license fee and an annual fee based upon the number of
games it operates. The gross revenue tax imposed by the Mississippi communities
and counties in which our casino operations are located equals 0.4% of gross
revenue of $50,000 or less per calendar month, 0.6% of gross revenue over
$50,000 and less than $134,000 per calendar month and 0.8% of gross revenue
greater than $134,000 per calendar month. These fees have been imposed in,
among other cities and counties, Biloxi and Coahoma County. Certain local and
private laws of the state of Mississippi may impose fees or taxes on the
Mississippi gaming subsidiaries in addition to the fees described above.  In April 2010,
the Mississippi Gaming Commission adopted a regulation amendment that imposes a
flat annual fee on each casino operator licensee, covering all investigative
fees for that year associated with an operator licensee,any entity
registered as a holding company or publicly traded corporation of that
licensee, and any person required to be found suitable in connection with that
licensee or any holding company or publicly traded corporation of that
licensee.The particular fee is based
onthe average number of gaming devices operated by the licensee during a
twelve (12) month period, as reported to the Mississippi Gaming
Commission.The investigative fee is $325,000 for licensees with
1500 or more gaming devices, $250,000 for licensees with 1000 to 1499 gaming
devices, and $150,000 for licensees with less than 1000 gaming devices.  The fee is payable in four (4) equal
quarterly installments.  The amendment
provides that should such total investigative fees collected by the Mississippi
Gaming Commission exceed the amount allowed by Mississippi statute, then theexcess fees
will be credited to the licensees for the following year.  The amended regulation also provides a
schedule of various fees applicable to licensees and persons not covered by the
annual investigative fee.  The
Mississippi Gaming Commission requires, as a condition of licensure or license
renewal, that casino vessels on the Mississippi Gulf Coast that are not
self-propelled must be moored to withstand a Category 4 hurricane with 155
mile-per-hour winds and 15-foot tidal surge. However, after Hurricane Katrina,
Isle -  17


Biloxi
reopened its casino on shore rather than on a vessel. A 1996 Mississippi Gaming
Commission regulation prescribes the hurricane emergency procedure to be used
by the Mississippi Gulf Coast casinos.  The
sale of food or alcoholic beverages at our Mississippi gaming locations is
subject to licensing, control and regulation by the applicable state and local
authorities. The agencies involved have full power to limit, condition, suspend
or revoke any such license, and any such disciplinary action could (and
revocation would) have a material adverse effect upon the operations of the
affected casino or casinos. Certain of our officers and managers and our
Mississippi gaming subsidiaries must be investigated by the Alcoholic Beverage
Control Division of the State Tax Commission in connection with liquor permits
that have been issued. The Alcoholic Beverage Control Division of the State Tax
Commission must approve all changes in licensed positions.  On
three separate occasions since 1998, certain anti-gaming groups have proposed
referenda that, if adopted, would have banned gaming in Mississippi and
required that gaming entities cease operations within two years after the ban.
All three referenda were declared invalid by Mississippi courts because each
lacked a required government revenue impact statement.  Missouri  Conducting gambling
activities and operating an excursion gambling boat in Missouri are subject to
extensive regulation under Missouris Riverboat Gambling Act and the rules and
regulations promulgated thereunder.  The
Missouri Gaming Commission was created by the Missouri Riverboat Gambling Act
and is charged with regulatory authority over riverboat gaming operations in
Missouri, including the issuance of riverboat gaming licenses to owners,
operators, suppliers and certain affiliates of riverboat gaming facilities. In June 2000,
IOC-Kansas City, Inc., a subsidiary of ours, was issued a riverboat gaming
license in connection with our Kansas City operation. In December 2001,
IOC-Boonville, Inc., a subsidiary of ours, was issued a riverboat gaming
license for our Boonville operation. Additionally, in June of 2007,
IOC-Caruthersville, LLC f/k/a Aztar Missouri Riverboat Gaming Company, LLC was
acquired by us and operates as a subsidiary of ours under a Missouri riverboat
gaming license.  In order to obtain a
license to operate a riverboat gaming facility, the proposed operating business
entity must complete a Riverboat Gaming Application Form requesting a Class B
License.  In order to obtain a license to
own and/or control a riverboat gaming facility as its ultimate holding company,
a company must complete a Riverboat Gaming Application Form requesting a Class A
License.  The Riverboat Gaming
Application Form is comprised of comprehensive questions regarding the
nature and suitability of the applicant. 
Applicants who submit the Riverboat Gaming Application Form requesting
either a Class A or Class B license undergo an extensive background
investigation by the Missouri Gaming Commission. In addition, each key person
associated with the applicant (including directors, officers, managers and
owners of a significant direct or indirect interest in the Class A or Class B
applicant) must complete a Key Person and Level I Application Form I and
undergo a substantial background investigation. Certain key business entities
closely related to the applicant or key person business entities must undergo
a similar application process and background check. An applicant for a Class A
or Class B license will not receive a license if the applicant and its key
persons, including key person business entities, have not established good
repute and moral character and no licensee shall either employ or contract with
any person who has pled guilty to, or been convicted of, a felony, to perform
any duties directly connected with the licensees privileges under a license
granted by the Missouri Gaming Commission.  Each Class B license
granted entitles a licensee to conduct gambling activities on an excursion
gambling boat or to operate an excursion gambling boat and the equipment
thereon from a specific location. Each Class A license granted entitles
the licensee to develop and operate a Class B licensee or, if authorized,
multiple Class B licensees.  The
duration of both the Class A and Class B license initially runs for
two one-year terms; thereafter, two-year terms. In conjunction with the renewal
of each license, the Missouri Gaming Commission requires an updated Riverboat
Gaming Application Form and renewal fees. 
In conjunction with each renewal, the Commission may conduct an
additional investigation of the licensee with specific emphasis on new
information provided in the updated Riverboat Gaming Application Form. Each
sixth year from the date of the original license a comprehensive investigation
for the period since the last comprehensive investigation is conducted on the Class A,
Class B, supplier and key person licensees in  18


the same manner as the
initial investigation. The Commission also licenses the serving of alcoholic
beverages on riverboats and related facilities.  In determining whether to
grant a license, the Commission considers the following factors, among others: (i) the
integrity of the applicants; (ii) the types and variety of games the
applicant may offer; (iii) the quality of the physical facility, together
with improvements and equipment, and how soon the project will be completed; (iv) the
financial ability of the applicant to develop and operate the facility
successfully; (v) the status of governmental actions required by the
facility; (vi) management ability of the applicant; (vii) compliance
with applicable statutes, rules, charters and ordinances; (viii) the
economic, ecological and social impact of the facility as well as the cost of
public improvements; (ix) the extent of public support or opposition; (x) the
plan adopted by the home dock city or county; and (xi) effects on competition.  A licensee is subject to
the imposition of penalties, suspension or revocation of its license for any
act that is injurious to the public health, safety, morals, good order, and
general welfare of the people of the State of Missouri, or that would discredit
or tend to discredit the Missouri gaming industry or the State of Missouri,
including without limitation: (i) failing to comply with or make provision
for compliance with the legislation, the rules promulgated thereunder or
any federal, state or local law or regulation; (ii) failing to comply with
any rules, order or ruling of the Missouri Gaming Commission or its agents
pertaining to gaming; (iii) receiving goods or services from a person or
business entity who does not hold a suppliers license but who is required to
hold such license by the legislation or the rules; (iv) being suspended or
ruled ineligible or having a license revoked or suspended in any state or
gaming jurisdiction; (v) associating with, either socially or in business
affairs, or employing persons of notorious or unsavory reputation or who have
extensive police records, or who have failed to cooperate with any officially
constituted investigatory or administrative body and would adversely affect
public confidence and trust in gaming; (vi) employing in any Missouri
gaming operation any person known to have been found guilty of cheating or
using any improper device in connection with any gambling game; (vii) use
of fraud, deception, misrepresentation or bribery in securing any license or
permit issued pursuant to the legislation; (viii) obtaining any fee,
charge, or other compensation by fraud, deception or misrepresentation; and (ix) incompetence,
misconduct, gross negligence, fraud, misrepresentation or dishonesty in the
performance of the functions or duties regulated by the Missouri Riverboat
Gambling Act.  Any transfer or issuance
of ownership interest in a publicly held gaming licensee or its holding company
that results in an entity owning, directly or indirectly, an aggregate
ownership interest of 5% or more in the gaming licensee must be reported to the
Missouri Gaming Commission within seven days. Further, any pledge or
hypothecation of 5% or more of the ownership interest in a publicly held gaming
licensee or its holding company must be reported to the Missouri Gaming
Commission within seven days.  The
Missouri Gaming Commission will impose certain licensing requirements upon a
holder of an aggregate ownership interest of 5% or more in a publicly-traded
Missouri Class A or Class B licensee, unless such holder applies for
and obtains an institutional investor exemption in accordance with the Missouri
gaming regulations.  The Executive
Director of the Missouri Gaming Commission may grant a waiver to an
institutional investor that holds up to 10% of the outstanding equity of the
Missouri licensee.  The Missouri Gaming
Commission itself may grant a waiver to an institutional investor that holds up
to 20% of the outstanding equity of the Missouri licensee.  Every employee
participating in a riverboat gaming operation must hold an occupational
license. In addition, the Missouri Gaming Commission issues suppliers
licenses, which authorize the supplier licensee to sell or lease gaming
equipment and supplies to any licensee involved in the operation of gaming
activities. Class A and Class B licensees may not be licensed as
suppliers.  Riverboat gaming
activities may only be conducted on, or within 1,000 feet of the main channel
of, the Missouri River or Mississippi River. 
Minimum and maximum wagers on games are set by the licensee and wagering
may be conducted only with a cashless wagering system, whereby money is
converted to tokens, electronic cards or chips that can only be used for
wagering. No person under the age of 21 is permitted to wager, and wagers may
only be taken from a person present on a licensed excursion gambling boat.  19


The Missouri Riverboat
Gambling Act imposes a 21% wagering tax on adjusted gross receipts (generally
defined as gross receipts less winnings paid to wagerers) from gambling games.
The tax imposed is to be paid by the licensee to the Commission on the day
after the day when the wagers were made. Of the proceeds of the wagering tax,
10% of such proceeds goes to the local government where the home dock is
located, and the remainder goes to the State of Missouri.  The Missouri Riverboat
Gambling Act also requires that licensees pay a $2.00 admission tax to the
Missouri Gaming Commission for each person admitted to a gaming cruise. One
dollar of the admission fee goes to the state and one dollar goes to the home
dock city in which the licensee operates. The licensee is required to maintain
public books and records clearly showing amounts received from admission fees,
the total amount of gross receipts and the total amount of adjusted gross
receipts. In addition, all local income, earnings, use, property and sales
taxes are applicable to licensees. There have been from time to time pending
before the Missouri General Assembly several proposed bills which individually
or in combination would, if adopted, (1) legislation to allow gaming
credits to be used in food and beverage purchase, (2) adjust the amount of
wagering tax imposed on adjusted gross receipts of licensees and/or (3) adjust
the amount of admission tax paid by the licensee for each person admitted for a
gaming cruise.  Non-Gaming Regulation  We are subject to certain
federal, state and local safety and health, employment and environmental laws,
regulations and ordinances that apply to non-gaming businesses generally, such
as the Clean Air Act, Clean Water Act, Occupational Safety and Health Act, Resource
Conservation Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act and the Oil Pollution Act of 1990. We have not
made, and do not anticipate making, material expenditures with respect to such
environmental laws and regulations. However, the coverage and attendant
compliance costs associated with such laws, regulations and ordinances may
result in future additional costs to our operations. For example, the
Department of Transportation has promulgated regulations under the Oil
Pollution Act of 1990 requiring owners and operators of certain vessels to
establish through the Coast Guard evidence of financial responsibility for
clean up of oil pollution. This requirement has been satisfied by proof of
adequate insurance.  Several of our riverboats
must comply with U.S. Coast Guard requirements as to boat design, on-board
facilities, equipment, personnel and safety and must hold U.S. Coast Guard
Certificates of Documentation and Inspection. The U.S. Coast Guard requirements
also set limits on the operation of the riverboats and mandate licensing of
certain personnel involved with the operation of the riverboats. Loss of a
riverboats Certificate of Documentation and Inspection could preclude its use
as a riverboat casino.The U.S. Coast Guard has shifted inspection duties related to
permanently moored casino vessels to the individual states. Louisiana and
Missouri have elected to utilize the services of the American Bureau of
Shipping (ABS) to undertake the inspections. Iowa has elected to handle the
inspections through the Iowa Department of Natural Resources. The states will
continue the same inspection criteria as the U.S. Coast Guard in regard to
annual and five year inspections. Depending on the outcome of these inspections
a vessel could become subject to dry-docking for inspection of its hull, which
could result in a temporary loss of service. This shift in responsibility
could, in the future, impact design, on-board facilities, equipment, personnel
and safety requirements.  The barges are inspected
by third parties and certified with respect to stability and single compartment
flooding integrity. Our casino barges must also meet local fire safety
standards. We would incur additional costs if any of our gaming facilities were
not in compliance with one or more of these regulations.  Regulations adopted by
the Financial Crimes Enforcement Network of the U.S. Treasury Department
require us to report currency transactions in excess of $10,000 occurring
within a gaming day, including identification of the patron by name and social
security number. U.S. Treasury Department regulations also require us to report
certain suspicious activity, including any transaction that exceeds $5,000 if
we know, suspect or have reason to believe that the transaction involves funds from
illegal activity or is designed to evade federal regulations or reporting
requirements. Substantial penalties can be imposed against us if we fail to
comply with these regulations.  20


All of our shipboard
employees, even those who have nothing to do with our operation as a vessel,
such as dealers, waiters and security personnel, may be subject to the Jones
Act which, among other things, exempts those employees from state limits on
workers compensation awards.  21