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.  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 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;  1


·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.  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.  On March 24, 2009,
the Isle-Lake Charles filed an application for a third five-year renewal of its
two licenses. The two five-year renewal applications are presently pending
approval.  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.  2


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 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  3


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.  In July 2006, the
subsidiary that held the Companys license to operate a riverboat in Bossier
City transferred its license to an unrelated third party.  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,  4


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.  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 more than 5% of a
registered publicly traded corporations stock. However, the Mississippi Gaming
Commission has adopted a regulation that may permit certain  5


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:  ·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.  6


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 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.  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 - 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.  7


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,
the proposed parent company must complete a Riverboat Gaming Application Form requesting
a Class A License.  The Riverboat
Gaming Application Form is comprised of comprehensive application forms,
including corroborating attachments. 
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 the same manner as the
initial investigation. The Commission also licenses the serving of alcoholic
beverages on riverboats and related facilities.  8


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 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.  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. Although, all of the excursion
gambling facilities in Missouri are permanently moored boats or impounded
barges, a two hour simulated cruise is imposed in order to ensure the
enforcement of loss limit restrictions. Missouri law imposes a maximum loss per
person per cruise of $500. 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.  The Missouri Riverboat
Gambling Act imposes a 20% 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  9


proceeds of that tax, 10%
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) remove the loss limit
restriction, (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.  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 pending approval of the Iowa Racing and Gaming
Commission.  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 of $558,789.50 per year  10


(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 5, 2009 Iowa Gaming Commission meeting.
These licenses are not transferable and will need to be renewed in March 2010
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.  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;  11


·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.  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  12


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 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  13


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, 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.  14


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 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  15


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
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.  16


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.  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.  Bahamas  In 1969, the Government
of The Bahamas enacted the Lotteries and Gaming Act. This legislation, together
with its regulations, governs and regulates gaming. The Gaming Board is the
body that regulates the operation of casinos. The gaming license is renewable
annually. All casino workers must be approved by  17


the Board and are issued
certificates, which are also renewable on an annual basis. There is a basic
annual gaming tax of $200,000 payable in six equal shares. In addition a
winnings tax is also imposed and is based on the following scale:  Winnings of:
  $10,000,000
  25
  %$10,000,001 -
  $16,000,000
  20
  %$16,000,001 -
  $20,000,000
  10
  %Amounts exceeding
  $20,000,001
  5
  %  The Minister of Tourism
has responsibility for gaming and acts in consultation with the Gaming Board. A
license can be cancelled if a fraudulent or misleading representation has been
supplied to the Board or if there is a breach of restrictions or conditions
imposed by the Minister. There is however a right to be heard before
cancellation is made final. Citizens, permanent residents and holders of work
permits are prohibited from gambling. Those found doing so are guilty of an
offense punishable by law. The operator may also be liable if it knowingly
allows any such persons to gamble in its establishment.  Currently the Casino has
an agreement to lease the premises housing its operations and a management
agreement. The Casino holds a number of other licenses including one with the
Port Authority of Grand Bahama, a business license and liquor and dining and
dancing licenses.  On the 24thApril, 2007 the
Isle entered into a Supplemental Heads of Agreement with the Government of the
Bahamas and Hutchison Lucaya Ltd., wherein certain concessions were granted to
the Isle with respect to marketing subsidy and a reduction in gaming taxes.
Such taxes were reduced to 7.5% of gross win per annum. The basic tax of
$200,000 remains payable per annum.  In May 2009,
we also entered into an agreement to continue operating the Isle of Capri
Casino in Freeport, Grand Bahama during a transition period, following which we
intend to exit the operation. Under the agreement, we will also continue to
assist the Government of the Bahamas and the owner of the Our Lucaya Resort,
Hutchison Lucaya Ltd, in their efforts to identify and select a new operator
for the casino. The term of the transition period ends on August 31, 2009,
although under certain circumstances, it may be extended for up to two
additional months in order to allow sufficient time for a new operator to
receive necessary approvals.  United Kingdom  Gaming in the UK is
subject to regulation under the Gambling Act (the Act) which  received the Royal assent on April 7,
2005 and which  came  into force in its entirety on September 1,
2007, replacing the Gaming Act 1968. Under the Act, a new Gambling Commission
(the Commission) has been created to oversee license applications and
establish new regulations for gaming (including on-line gaming). It has taken
over responsibilities from the Gaming Board and is working on the transition to
meet this objective. The legislation will provide a significant change in
regulation of the casino industry including:  ·removing the requirement that gaming
facilities operate as private members clubs, including the statutorily
prescribed 24-hour interval between membership and play; this has now occurred;  ·extending the gaming products available;  ·abolishing the demand test and permitted
area rules;  ·allowing casinos specific numbers of gaming
machines with a broader range of stakes and prizes;  ·allowing casinos to offer live
entertainment and to advertise; and  ·allowing new categories of regional,
large and small casinos.  18


The Act is accompanied by
a significant body of detailed regulation, codes of practice, and guidance,
which together with the Act will form the regulatory and compliance backdrop to
gaming in the UK. The Act limited the number of regional casinos to 1 and large
and small to 8 each. The Government appointed a Casino Advisory Panel to make
recommendations to the Government as to location of the 17 proposed new
casinos; however the initial secondary legislation designed to implement the
panels recommendation did not pass. This has now been approved by Parliament
in relation to 8 large and 8 small casinos. 
Currently there are no plans to proceed with a Regional Casino.  The Commission is
primarily responsible for regulating casinos in the UK and is authorized to
enforce strict codes of responsibility and is responsible for granting
operating and personal licenses to commercial gambling operators and personnel
working in the industry. The Commission will share, with local licensing
authorities, responsibility for granting gaming and betting permissions.  Authority to provide
facilities for gambling will be subject to varying degrees of regulation,
depending on:  ·Type of gambling  ·Means by which it is conducted  ·People by whom and to whom it is offered  The Act removes from
licensing justices all responsibility for granting gaming and betting
permissions (except for certain 1968 Act transitional applications). Instead,
the Commission and licensing authorities will between them assume
responsibility for all those matters previously regulated by licensing
justices.  The Act establishes a
minimum size limit for new casinos and a casinos gaming machine entitlement
will depend on its category, and power is provided for licensing authorities to
pass resolutions not to license any new casino premises in their area.  The Act introduces a new
regime for gaming machines. A new definition of gaming machine is provided,
together with power to prescribe categories. The Act provides certain
entitlements for commercial operators to use specified numbers and categories
of machines in consequence of their licenses. It also establishes permit
procedures for authorizing use of lower-stake gaming machines in specific
locations.  The Act makes provision
for the advertising of gambling, creating new offences relating to the
advertising of unlawful gambling and providing reserve powers for the Secretary
of State to make regulations controlling the content of gambling advertisements.
A voluntary code is currently in force covering gambling advertisements.  The
acquisition of a 10% equity stake, or the ability to exercise significant
influence over the management of the operator where there is a lower stake,
will trigger the Controller provisionsunder the Financial Services and Markets Act 2000.
This will require notification and consent by the Commission or Regulator who
will apply a number of tests to ensure that the relevant person is fit and
proper, that the interests of the entity are not threatened and that compliance
conditions are satisfied.  During the fiscal year
ended April 2009, we operated casinos in Coventry, Dudley and
Wolverhampton under the new Gambling Act.  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  19


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.  Our riverboats operated
in Louisiana and Iowa must comply with U.S. Coast Guard requirements as to boat
design, on-board facilities, equipment, personnel and safety and 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 require
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. Each of our riverboats is inspected
annually and, every five years, is subject to dry-docking for inspection of its
hull, which could result in a temporary loss of service.  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.  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.  20