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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



Form 10-Q



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



FOR THE QUARTERLY PERIOD ENDED June 30, 2005.



OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



FOR THE TRANSITION PERIOD FROM

TO
.



Commission file number 333-87202



CIRCUS AND ELDORADO JOINT VENTURE

SILVER LEGACY CAPITAL CORP.

(Exact
names of registrants as specified in their charters)



|                                                              |  |                                     
|------------------------------------------------------------- |  | ------------------------------------
|Nevada                                                        |  | 88-0310787                          
|Nevada                                                        |  | 71-0868362                          
|(State or other jurisdiction ofincorporation or organization) |  | (I.R.S. Employer Identification No.)



407 North Virginia
Street, Reno, Nevada 89501

(Address of principal executive offices, including zip code)



(800) 687-7733

(Registrants telephone number, including area code)



Not Applicable

(Former name, former
address and former fiscal year, if changed since last report)



Indicate by
check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file
such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes x No ̈



Indicate by check mark whether either of the registrants is an accelerated
filer (as defined in Rule 12b-2 of the Exchange Act). Yes ̈No x



The number of shares of Silver Legacy Capital Corp.s Common Stock outstanding at August
12, 2005 was 2,500. All of these shares are owned by Circus and Eldorado Joint Venture.



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CIRCUS AND ELDORADO JOINT
VENTURE

SILVER LEGACY CAPITAL CORP.



FORM 10-Q



INDEX



|                              |  |                                                                                                                     |  |         
|----------------------------- |  | ------------------------------------------------------------------------------------------------------------------- |  | --------
|                              |  |                                                                                                                     |  | Page No.
|PART I. FINANCIAL INFORMATION |  |                                                                                                                    
|                              |  |                                                                                                                    
|Item 1.                       |  | Financial Statements:                                                                                               |  |         
|                              |  |                                                                                                                    
|                              |  | Unaudited Condensed Consolidated Balance Sheets as of June 30, 2005 and December 31, 2004                           |  | 3       
|                              |  |                                                                                                                    
|                              |  | Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2005 and 2004 |  | 4       
|                              |  |                                                                                                                    
|                              |  | Unaudited Condensed Consolidated Statements of Partners Equity for the Six Months Ended June 30, 2005              |  | 5       
|                              |  |                                                                                                                    
|                              |  | Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2005 and 2004           |  | 6       
|                              |  |                                                                                                                    
|                              |  | Notes to Unaudited Condensed Consolidated Financial Statements                                                      |  | 7       
|                              |  |                                                                                                                    
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                               |  | 9       
|                              |  |                                                                                                                    
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risks                                                         |  | 15      
|                              |  |                                                                                                                    
|Item 4.                       |  | Controls and Procedures                                                                                             |  | 16      
|                              | 
|PART II. OTHER INFORMATION    |  |                                                                                                                    
|                              |  |                                                                                                                    
|Item 6.                       |  | Exhibits                                                                                                            |  | 16      
|                              |  |                                                                                                                    
|SIGNATURES                    |  |                                                                                                                     |  | 17      



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PART I. FINANCIAL
INFORMATION



|Item 1. | Financial Statements
|------- | --------------------



CIRCUS AND ELDORADO JOINT VENTURE



(doing business as Silver Legacy Resort Casino)



UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS



(In
thousands)



|                                       |  |              |         |                  |   |        
|-------------------------------------- |  | ------------ | ------- | ---------------- | - | -------
|                                       |  | June 30,2005 |         | December 31,2004
|ASSETS                                 |  |              |         |                  |   |        
|CURRENT ASSETS:                        |  |              |         |                  |   |        
|Cash and cash equivalents              |  | $            | 30,385  |                  | $ | 30,239 
|Accounts receivable, net               |  |              | 3,909   |                  |   | 4,532  
|Inventories                            |  |              | 2,173   |                  |   | 2,111  
|Prepaid expenses and other             |  |              | 3,483   |                  |   | 3,993  
|                                       |  |              |         |                  |   |        
|Total current assets                   |  |              | 39,950  |                  |   | 40,875 
|PROPERTY AND EQUIPMENT, NET            |  |              | 261,791 |                  |   | 260,289
|OTHER ASSETS, NET                      |  |              | 7,756   |                  |   | 8,168  
|                                       |  |              |         |                  |   |        
|Total Assets                           |  | $            | 309,497 |                  | $ | 309,332
|                                       |  |              |         |                  |   |        
|LIABILITIES AND PARTNERS EQUITY       |  |              |         |                  |   |        
|CURRENT LIABILITIES:                   |  |              |         |                  |   |        
|Accounts payable                       |  | $            | 4,701   |                  | $ | 4,336  
|Accrued interest                       |  |              | 5,400   |                  |   | 5,400  
|Accrued and other liabilities          |  |              | 9,538   |                  |   | 9,041  
|                                       |  |              |         |                  |   |        
|Total current liabilities              |  |              | 19,639  |                  |   | 18,777 
|LONG-TERM DEBT                         |  |              | 159,585 |                  |   | 159,554
|OTHER LONG-TERM LIABILITIES            |  |              | 3,669   |                  |   | 3,213  
|                                       |  |              |         |                  |   |        
|Total liabilities                      |  |              | 182,893 |                  |   | 181,544
|PARTNERS EQUITY                       |  |              | 126,604 |                  |   | 127,788
|                                       |  |              |         |                  |   |        
|Total Liabilities and Partners Equity |  | $            | 309,497 |                  | $ | 309,332
|                                       |  |              |         |                  |   |        



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



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CIRCUS AND ELDORADO JOINT VENTURE

(doing business as Silver Legacy Resort Casino)



UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands)



|                                     |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|------------------------------------ |  | -------------------------- | ------ | - | ------------------------ | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                     |  | Three MonthsEnded June 30, |        |   | Six MonthsEnded June 30, |  
|                                     |  | 2005                       |        |   | 2004                     |   |        | 2005 |  |   | 2004   |  
|OPERATING REVENUES:                  |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Casino                               |  | $                          | 20,277 |   |                          | $ | 23,165 |      |  | $ | 37,417 |   |  | $ | 43,061 |  
|Rooms                                |  |                            | 9,442  |   |                          |   | 11,011 |      |  |   | 17,118 |   |  |   | 19,652 |  
|Food and beverage                    |  |                            | 8,390  |   |                          |   | 9,364  |      |  |   | 16,205 |   |  |   | 17,789 |  
|Other                                |  |                            | 2,261  |   |                          |   | 1,942  |      |  |   | 4,210  |   |  |   | 4,032  |  
|                                     |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|                                     |  |                            | 40,370 |   |                          |   | 45,482 |      |  |   | 74,950 |   |  |   | 84,534 |  
|Less: promotional allowances         |  |                            | (3,621 | ) |                          |   | (3,620 | )    |  |   | (6,721 | ) |  |   | (7,069 | )
|                                     |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Net operating revenues               |  |                            | 36,749 |   |                          |   | 41,862 |      |  |   | 68,229 |   |  |   | 77,465 |  
|                                     |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|OPERATING EXPENSES:                  |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Casino                               |  |                            | 10,680 |   |                          |   | 10,669 |      |  |   | 20,099 |   |  |   | 20,745 |  
|Rooms                                |  |                            | 2,912  |   |                          |   | 3,199  |      |  |   | 5,700  |   |  |   | 6,055  |  
|Food and beverage                    |  |                            | 5,806  |   |                          |   | 6,297  |      |  |   | 11,544 |   |  |   | 12,022 |  
|Other                                |  |                            | 1,712  |   |                          |   | 1,546  |      |  |   | 3,321  |   |  |   | 3,137  |  
|Selling, general and administrative  |  |                            | 7,597  |   |                          |   | 7,692  |      |  |   | 14,977 |   |  |   | 14,926 |  
|Depreciation                         |  |                            | 2,766  |   |                          |   | 2,652  |      |  |   | 5,417  |   |  |   | 5,310  |  
|(Gain) loss on disposition of assets |  |                            | (2     | ) |                          |   | (4     | )    |  |   | (2     | ) |  |   | 14     |  
|                                     |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Total operating expenses             |  |                            | 31,471 |   |                          |   | 32,051 |      |  |   | 61,056 |   |  |   | 62,209 |  
|                                     |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|OPERATING INCOME                     |  |                            | 5,278  |   |                          |   | 9,811  |      |  |   | 7,173  |   |  |   | 15,256 |  
|                                     |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|OTHER (INCOME) EXPENSE:              |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Interest expense, net                |  |                            | 4,162  |   |                          |   | 4,243  |      |  |   | 8,357  |   |  |   | 8,502  |  
|Other, net                           |  |                            | (34    | ) |                          |   | 32     |      |  |   |       |   |  |   | (4     | )
|                                     |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Total other (income) expense         |  |                            | 4,128  |   |                          |   | 4,275  |      |  |   | 8,357  |   |  |   | 8,498  |  
|                                     |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|NET INCOME (LOSS)                    |  | $                          | 1,150  |   |                          | $ | 5,536  |      |  | $ | (1,184 | ) |  | $ | 6,758  |  
|                                     |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  



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



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CIRCUS AND ELDORADO JOINT VENTURE

(doing business as Silver Legacy Resort Casino)



UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS EQUITY

(In thousands)



|                         |  |               |        |   |                       |   |        |       |  |   |         |  
|------------------------ |  | ------------- | ------ | - | --------------------- | - | ------ | ----- |  | - | ------- | -
|                         |  | Galleon, Inc. |        |   | Eldorado Resorts, LLC |   |        | Total | 
|BALANCE, January 1, 2005 |  | $             | 58,894 |   |                       | $ | 68,894 |       |  | $ | 127,788 |  
|Net loss                 |  |               | (592   | ) |                       |   | (592   | )     |  |   | (1,184  | )
|                         |  |               |        |   |                       |   |        |       |  |   |         |  
|BALANCE, June 30, 2005   |  | $             | 58,302 |   |                       | $ | 68,302 |       |  | $ | 126,604 |  
|                         |  |               |        |   |                       |   |        |       |  |   |         |  



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



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CIRCUS AND ELDORADO JOINT VENTURE

(doing business as Silver Legacy Resort Casino)



UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



|                                                                                         |  |                          |        |   |      |   |        |  
|---------------------------------------------------------------------------------------- |  | ------------------------ | ------ | - | ---- | - | ------ | -
|                                                                                         |  | Six Months EndedJune 30, |       
|                                                                                         |  | 2005                     |        |   | 2004 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |  |                          |        |   |      |   |        |  
|Net income (loss)                                                                        |  | $                        | (1,184 | ) |      | $ | 6,758  |  
|                                                                                         |  |                          |        |   |      |   |        |  
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                          |        |   |      |   |        |  
|Depreciation and amortization                                                            |  |                          | 5,778  |   |      |   | 5,671  |  
|(Gain) loss on disposition of assets                                                     |  |                          | (2     | ) |      |   | 14     |  
|Increase in accrued pension cost                                                         |  |                          | 457    |   |      |   | 438    |  
|Changes in current assets and current liabilities:                                       |  |                          |        |   |      |   |        |  
|Accounts receivable, net                                                                 |  |                          | 622    |   |      |   | (262   | )
|Inventories                                                                              |  |                          | (62    | ) |      |   | (134   | )
|Prepaid expenses and other                                                               |  |                          | 501    |   |      |   | 446    |  
|Accounts payable                                                                         |  |                          | 365    |   |      |   | 702    |  
|Accrued interest                                                                         |  |                          |       |   |      |   | 13     |  
|Accrued and other liabilities                                                            |  |                          | 497    |   |      |   | 1,214  |  
|                                                                                         |  |                          |        |   |      |   |        |  
|Total adjustments                                                                        |  |                          | 8,156  |   |      |   | 8,102  |  
|                                                                                         |  |                          |        |   |      |   |        |  
|Net cash provided by operating activities                                                |  |                          | 6,972  |   |      |   | 14,860 |  
|                                                                                         |  |                          |        |   |      |   |        |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |  |                          |        |   |      |   |        |  
|Proceeds from sale of assets                                                             |  |                          | 16     |   |      |   | 4      |  
|Decrease in other assets                                                                 |  |                          | 82     |   |      |   | 95     |  
|Purchase of property and equipment                                                       |  |                          | (6,924 | ) |      |   | (2,535 | )
|                                                                                         |  |                          |        |   |      |   |        |  
|Net cash used in investing activities                                                    |  |                          | (6,826 | ) |      |   | (2,436 | )
|                                                                                         |  |                          |        |   |      |   |        |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |  |                          |        |   |      |   |        |  
|Distributions to partners                                                                |  |                          |       |   |      |   | (4,318 | )
|                                                                                         |  |                          |        |   |      |   |        |  
|Net cash used in financing activities                                                    |  |                          |       |   |      |   | (4,318 | )
|                                                                                         |  |                          |        |   |      |   |        |  
|Net increase in cash and cash equivalents                                                |  |                          | 146    |   |      |   | 8,106  |  
|Cash and cash equivalents at beginning of period                                         |  |                          | 30,239 |   |      |   | 19,405 |  
|                                                                                         |  |                          |        |   |      |   |        |  
|Cash and cash equivalents at end of period                                               |  | $                        | 30,385 |   |      | $ | 27,511 |  
|                                                                                         |  |                          |        |   |      |   |        |  
|SUPPLEMENTAL CASH FLOW INFORMATION:                                                      |  |                          |        |   |      |   |        |  
|Cash paid during period for interest                                                     |  | $                        | 8,140  |   |      | $ | 8,129  |  
|                                                                                         |  |                          |        |   |      |   |        |  



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



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CIRCUS AND ELDORADO JOINT
VENTURE

(doing business as Silver Legacy Resort Casino)



NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Note 1. Summary of Significant Accounting Policies and Basis of Presentation



Principles of Consolidation/Operations



Effective March 1, 1994, Eldorado Limited Liability Company (a Nevada limited liability company owned and controlled by Eldorado Resorts, LLC) (ELLC) and Galleon, Inc. (a Nevada corporation owned and
controlled by Mandalay Resort Group) (Galleon and, collectively with ELLC, the Partners), entered into a joint venture agreement to establish Circus and Eldorado Joint Venture (the Partnership), a Nevada general
partnership. The Partnership owns and operates a casino and hotel located in Reno, Nevada (Silver Legacy), which began operations on July 28, 1995. ELLC contributed land to the Partnership with a fair value of $25,000,000 and cash of
$26,900,000 for a total equity investment of $51,900,000. Galleon contributed cash to the Partnership of $51,900,000 to comprise their total equity investment. Each partner has a 50% interest in the Partnership.



On April 25, 2005, a wholly owned subsidiary of MGM MIRAGE (MGM)
was merged with and into Mandalay Resort Group (Mandalay) as a result of which Mandalay became a wholly owned subsidiary of MGM MIRAGE. With the consummation of the merger, MGM MIRAGE acquired Mandalays ownership of Galleon, Inc.



The condensed consolidated financial statements include the
accounts of the Partnership and its wholly owned subsidiary, Silver Legacy Capital Corp. (Capital). Capital was established solely for the purpose of serving as a co-issuer of $160,000,000 principal amount of 101/8% mortgage notes due 2012 issued by the Partnership and Capital and, as such, Capital does not have any operations,
assets, or revenues. All significant intercompany accounts and transactions have been eliminated in consolidation.



In the opinion of Management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, all of which are normal and
recurring, necessary to present fairly the financial position of the Partnership as of June 30, 2005, and the results of operations for the three and six months ended June 30, 2005 and 2004 and cash flows for the six months ended June 30, 2005 and
2004. The results of operations for such periods are not necessarily indicative of the results to be expected for a full year.



Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Partnerships
annual report on Form 10-K for the year ended December 31, 2004.



Use of
Estimates



The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.



Note 2. Certain Risks and Uncertainties



A significant portion of the Partnerships revenues and operating income are generated from patrons who are residents of northern California. A
change in general economic conditions or the extent and nature of casino gaming in California, Washington or Oregon could adversely affect the Partnerships operating results. In March 2000, California voters approved the constitutional
amendment which legalized Nevada-style gaming on Native American reservations. Many existing Native American gaming facilities in northern California are modest compared to Silver Legacy. However, some Native American tribes have
established large-scale gaming facilities in California and numerous Native American tribes have announced that they are in the process of expanding, developing, or are considering establishing large-scale hotel and gaming facilities in northern
California. In particular, a significant new Native American casino located approximately 21 miles northeast of Sacramento opened in June 2003. While this new casino does not currently have hotel rooms, it presently has approximately 2,700 slot
machines and 100 table games which exceeds the number of gaming units at Silver Legacy.



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Under their current compacts, most Native American tribes in California may operate up to 2,000 slot
machines, and up to two gaming facilities may be operated on any reservation. The number of machines the tribes are allowed to operate may increase as a result of any new or amended compacts the tribes may enter into with the State of California
that receive the requisite approvals, such as has been the case with respect to a number of new or amended compacts which have been executed and approved, including the aforementioned Sacramento-area casino which received approval of amendments to
its compact in September 2004 allowing for an increase in the number of slot machines at this property to approximately 2,700.



We believe the continued growth of Native American gaming establishments could continue to place additional competitive pressure on our operations. While
we cannot predict the extent of any future impact, it could be significant.



Note 3. Long-Term Debt



Long-term debt
consisted of the following (in thousands):



|                                                                                            |  |              |         |                  |   |        
|------------------------------------------------------------------------------------------- |  | ------------ | ------- | ---------------- | - | -------
|                                                                                            |  | June 30,2005 |         | December 31,2004
|101/8% Mortgage Notes due 2012 (net of unamortized discount of $415 and $446, respectively) |  | $            | 159,585 |                  | $ | 159,554



On March 5, 2002, the
Partnership and Capital (the Issuers) issued $160,000,000 principal amount of 101/8% Mortgage Notes
due 2012 (Notes). Concurrent with issuing the Notes, the Partnership entered into a new senior secured credit facility (the New Credit Facility) for $40,000,000. The proceeds from the Notes, together with $26,000,000 in
borrowings under the New Credit Facility, were used to repay $150,200,000 representing all of the indebtedness outstanding under the prior bank credit facility (the Bank Credit Facility) and to fund $30,000,000 of distributions to the
Partners. In addition, the remaining proceeds along with operating cash flows were used to pay $6,300,000 in related fees and expenses of the transactions. These fees were capitalized and are included in other assets.



The Notes are senior secured obligations which rank equally with all of the
Partnerships outstanding senior debt and senior to any subordinated debt. The Notes are secured by a security interest in the Issuers existing and future assets, which is junior to a security interest in such assets securing the
Partnerships obligations on the New Credit Facility and any refinancings of such facility that are permitted pursuant to the terms of the Notes. Each of the Partners executed a pledge of all of its partnership interest in the Partnership to
secure the Notes, which is junior to a pledge of such partnership interest to secure the Partnerships obligations on the New Credit Facility and any refinancings of such facility that are permitted pursuant to the terms of the Notes. The Notes
mature on March 1, 2012 and bear interest at the rate of 101/8% per annum, payable semi-annually in arrears on
March 1 and September 1 of each year, commencing on September 1, 2002.



The New Credit Facility originally provided for a $20,000,000 senior secured revolving credit facility and a $20,000,000 five-year term loan facility, each of which provided for the payment of interest at floating
rates based on LIBOR plus a spread. The commitment under the term loan facility originally provided for periodic reductions with the then remaining balance due March 31, 2007. The term loan was paid in full as of December 31, 2003 and the revolving
credit facility was reduced to $10,000,000 in November 2003.



The Notes and New Credit Facility contain various restrictive covenants including the maintenance of certain financial ratios and limitations on additional debt, disposition of property, mergers and similar transactions. On November 4,
2003, the Partnership, U.S. Bank, N.A. and Bank of America, N.A., executed an amendment to the New Credit Facility which reduced the revolving facility to $10,000,000 and revised certain covenant ratios with retroactive effect to September 30, 2003,
including the maximum total debt to EBITDA ratio that the Partnership had exceeded as of September 30, 2003. On June 15, 2005, the parties executed a further amendment to the New Credit Facility (as amended, the Amended Credit Facility)
to provide a conditional waiver of the facilitys financial covenants in respect of the quarter ended June 30, 2005, and each subsequent quarter through and including December 31, 2005, provided that no additional credit is extended under the
Amended Credit Facility during a quarter for which the waiver is relied upon. In addition, as a condition precedent to any draw on the Amended Credit Facility subsequent to June 15, 2005, the Partnership must be in compliance with the Amended Credit
Facilitys financial covenants as to the then most recent fiscal quarter in respect of which the Partnership is required to deliver financial statements pursuant to section 6.1 of the Amended Credit Facility. During the quarter ended June 30,
2005, there was no indebtedness outstanding under the Amended Credit Facility. As of June 30, 2005, the Partnership exceeded the financial covenants in the Amended Credit Facility and, consequently, is precluded from utilizing the Amended Credit
Facility until it has completed a fiscal



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quarter as to which it is in compliance with the facilitys covenants. The entire principal amount, if any, then outstanding under the Amended Credit
Facility becomes due and payable on March 31, 2007, unless the maturity date is extended with the consent of the lenders. As of June 30, 2005, the Partnership was in compliance with the covenants in the indenture relating to the Notes.



Note 4. Related Parties



An affiliate of each of our Partners owns and operates a casino attached and
adjacent to Silver Legacy. Our Partners may be deemed to be in a conflict of interest position with respect to decisions they make relating to the Partnership as a result of the interests their affiliates have in the Eldorado Hotel & Casino and
Circus Circus Hotel & Casino-Reno, respectively.



Note 5. Supplemental
Executive Retirement Plan



Effective January 1, 2002, the
Partnership adopted a Supplemental Executive Retirement Plan (SERP) for a select group of highly compensated management employees. The SERP provides for a lifetime benefit at age 65, based on a formula which takes into account a
participants highest annual compensation, years of service, and executive level. The SERP also provides an early retirement benefit at age 55 with at least four years of service, a disability provision, and a lump sum death benefit. While the
SERP is an unfunded plan, the Partnership is informally funding the plan through life insurance contracts on the participants. The Partnership anticipates that its periodic pension cost for the year ending December 31, 2005 will be approximately
$924,600, of which $457,000 had been accrued as of June 30, 2005.



Note 6.
Partnership Agreement



Concurrent with the issuance of the
Notes on March 5, 2002, the Partnerships partnership agreement was amended and restated in its entirety and was further amended in April 2002 (the Partnership Agreement). The Partnership Agreement provides for, among other things,
profits and losses to be allocated to the Partners in proportion to their percentage interests, separate capital accounts to be maintained for each Partner, provisions for management of the Partnership and payment of distributions and bankruptcy
and/or dissolution of the Partnership. The April 2002 amendments were principally (i) to provide equal voting rights for ELLC and Galleon with respect to approval of the Partnerships annual business plan and the appointment and compensation of
the general manager, and (ii) to give each Partner the right to terminate the general manager.



|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------



Overview



Effective March 1, 1994, Eldorado Limited Liability Company (ELLC), a Nevada limited liability company owned and controlled by Eldorado
Resorts LLC, and Galleon, Inc. (Galleon), a Nevada corporation owned and controlled by Mandalay Resort Group (Mandalay), formerly known as Circus Circus Enterprises, Inc., entered into a joint venture agreement to establish
the Partnership for the purpose of constructing, owning and operating Silver Legacy. On April 25, 2005, a wholly owned subsidiary of MGM MIRAGE (MGM) was merged with and into Mandalay as a result of which Mandalay became a wholly owned
subsidiary of MGM MIRAGE. With the consummation of the merger, MGM MIRAGE acquired Mandalays ownership of Galleon, Inc. Capital, a wholly owned subsidiary of the Partnership, which was incorporated for the sole purpose of serving as a
co-issuer of the $160 million principal amount of 101/8% mortgage notes due 2012 issued by the Partnership and
Capital (the Notes), and does not have any operations, assets or revenues.



On July 28, 1995, Silver Legacy commenced operations as a hotel-casino in downtown Reno, Nevada. Silver Legacy is a leader within the Reno market, offering the largest number of table games and slot machines and the
second largest number of hotel rooms of any property in the Reno market. Silver Legacys net operating revenues and income are derived largely from our gaming activities. In an effort to enhance our gaming revenues, we attempt to maximize the
use of our gaming facilities at Silver Legacy by providing a well-balanced casino environment that contains a mix of games attractive to multiple market segments. Rooms, food and beverage also contribute a large portion of our net revenues.



Our operating results are highly dependent on the volume of
customers visiting and staying at our resort. Key volume indicators include table games drop and slot handle, which refer to amounts wagered by our customers. The amount of volume we retain, which is not fully controllable by us, is recognized as
casino revenues and is referred to as our win or hold. In addition, hotel occupancy and price per room, or average daily rate (ADR), are key indicators for our hotel business.



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##### Table of Contents

Significant Factors Affecting Results of Operations



Expansion of Native American Gaming



A significant portion of Silver Legacys revenues and operating income are generated from patrons who are residents of northern California, and as
such, our results of operations have been adversely impacted by the growth in Native American gaming in northern California. Many existing Native American gaming facilities in northern California are modest compared to Silver Legacy. However, some
Native American tribes have established large-scale gaming facilities in California and numerous Native American tribes have announced that they are in the process of expanding, developing, or are considering establishing, large-scale hotel and
gaming facilities in northern California. In particular, a significant new Native American casino located approximately 21 miles northeast of Sacramento opened in June 2003. While this new casino does not currently have hotel rooms, it presently has
approximately 2,700 slot machines and 100 table games which exceeds the number of gaming units at Silver Legacy. As this facility and other northern California Native American gaming operations have expanded, we believe the increasing competition
generated by these gaming operations has negatively impacted drive-in, day-trip visitor traffic from our main feeder markets in northern California and contributed to declines in our casino revenues during the first half of 2005.



Under their current compacts, most Native American tribes in California may
operate up to 2,000 slot machines, and up to two gaming facilities may be operated on any reservation. The number of machines the tribes are allowed to operate may increase as a result of any new or amended compacts the tribes may enter into with
the State of California that receive the requisite approvals, such as has been the case with respect to a number of new or amended compacts which have been executed and approved, including the aforementioned Sacramento-area casino which received
approval of amendments to its compact in September 2004 allowing for an increase in the number of slot machines at this property to approximately 2,700.



We believe the continued growth of Native American establishments could continue to place additional competitive pressure on our operations. While we
cannot predict the extent of any future impact, it could be significant.



Severe Weather



Silver Legacys
operations are subject to seasonal variation, with the weakest results generally occurring during the winter months. Variations occur when weather conditions make travel to Reno by visitors from northern California, our main feeder market,
difficult. From January through April of 2005, our region experienced extremely poor weather, including 100-year record snowfall. As a result, there was a significant adverse affect on our hotel occupancy and slots, table games, and restaurant
volume during these months.



Absence of a Major Bowling Tournament in the
Reno Market



The absence of a major bowling tournament
during the first half of 2005 negatively impacted our non-gaming revenues, and to a lesser extent our casino revenues. The National Bowling Stadium, located one block from Silver Legacy, is one of the largest bowling complexes in North America and
has been selected to host multi-month tournaments in Reno two of every three years through 2018. Historically, these bowling tournaments have attracted a significant number of visitors to the Reno market and have benefited the downtown area. In
2004, the American Bowling Congress Tournament brought approximately 80,000 bowlers to the downtown Reno area over the period from mid-February through June.



Other Factors Affecting Results of Operations



A public works project is underway in the downtown Reno area which will lower the train tracks that traverse Renos downtown district and separate
the Silver Legacy and the two adjoining properties from the rest of the downtown gaming facilities. Construction on this project began in 2003 and is expected to be completed in 2006. To date, the impact of this project on our operations has been
minimal; however, we cannot determine its impact on our future operations.



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##### Table of Contents

Summary Financial Results



The following table highlights the results of our operations (dollars in thousands):



|                   |  |                                |        |                                |   |               |  |       |                              |  |   |                              |   |               |   |        |  |        |   
|------------------ |  | ------------------------------ | ------ | ------------------------------ | - | ------------- |  | ----- | ---------------------------- |  | - | ---------------------------- | - | ------------- | - | ------ |  | ------ | --
|                   |  | Three monthsended June 30,2005 |        | Three monthsended June 30,2004 |   | PercentChange |  |       | Six monthsended June 30,2005 |  |   | Six monthsended June 30,2004 |   | PercentChange |  
|Net revenues       |  | $                              | 36,749 |                                | $ | 41,862        |  | (12.2 | )%                           |  | $ | 68,229                       |   |               | $ | 77,465 |  | (11.9  | )%
|Operating expenses |  |                                | 31,471 |                                |   | 32,051        |  | (1.8  | )                            |  |   | 61,056                       |   |               |   | 62,209 |  | (1.9   | ) 
|Operating income   |  |                                | 5,278  |                                |   | 9,811         |  | (46.2 | )                            |  |   | 7,173                        |   |               |   | 15,256 |  | (53.0  | ) 
|Net income (loss)  |  |                                | 1,150  |                                |   | 5,536         |  | (79.2 | )                            |  |   | (1,184                       | ) |               |   | 6,758  |  | (118.0 | ) 



Net Revenues.
Net revenues declined during the three and six months ended June 30, 2005 compared to the three and six months ended June 30, 2004 primarily due to decreases in casino, room, and food and beverage revenues. We believe the primary contributors to
these decreases were the aforementioned increased competition generated by growth in Native American gaming, severe weather conditions, and the lack of a major bowling tournament along with rising gasoline prices which also had an impact on drive-in
visitors from northern California. In addition, lower hold percentages in both table games and slots contributed to the declines in net revenues.



Operating Income and Net Income (Loss). During the three and six months ended June 30, 2005 compared to the same prior year periods, operating
income and net income declined as a result of lower departmental revenues combined with increased selling, general and administrative expenditures, as a percentage of net revenues. Moreover, depreciation expense increased over the prior year periods
which also produced a higher percentage decrease in operating income and net income during the three and six months ended June 30, 2005 compared to the three and six months ended June 30, 2004.



Revenues



The following table highlights our sources of net operating revenues (dollars in thousands):



|                       |  |                                |        |                                |   |               |  |       |                              |  |                              |        |               |   |        |  |       |   
|---------------------- |  | ------------------------------ | ------ | ------------------------------ | - | ------------- |  | ----- | ---------------------------- |  | ---------------------------- | ------ | ------------- | - | ------ |  | ----- | --
|                       |  | Three monthsended June 30,2005 |        | Three monthsended June 30,2004 |   | PercentChange |  |       | Six monthsended June 30,2005 |  | Six monthsended June 30,2004 |        | PercentChange |  
|Casino                 |  | $                              | 20,277 |                                | $ | 23,165        |  | (12.5 | )%                           |  | $                            | 37,417 |               | $ | 43,061 |  | (13.1 | )%
|Rooms                  |  |                                | 9,442  |                                |   | 11,011        |  | (14.2 | )                            |  |                              | 17,118 |               |   | 19,652 |  | (12.9 | ) 
|Food and beverage      |  |                                | 8,390  |                                |   | 9,364         |  | (10.4 | )                            |  |                              | 16,205 |               |   | 17,789 |  | (8.9  | ) 
|Other                  |  |                                | 2,261  |                                |   | 1,942         |  | 16.4  |                              |  |                              | 4,210  |               |   | 4,032  |  | 4.4   |   
|Promotional allowances |  |                                | 3,621  |                                |   | 3,620         |  | 0.0   |                              |  |                              | 6,721  |               |   | 7,069  |  | (4.9  | ) 



Casino Revenues.During the three and six months ended June 30, 2005 compared to the same prior year periods, casino revenues fell due to lower hold percentages in both the table games and slots departments. In addition, table games drop and slot handle declined
6.2% and 2.8%, respectively, during the three months ended June 30, 2005 and 8.3% and 8.2%, respectively, during the six months ended June 30, 2005 compared to the same prior year periods. The aforementioned factors affecting net revenues were the
primary contributors to the decreases in casino volume with the majority of the impact occurring in January through April 2005.



Room Revenues.During the three and six months ended June 30, 2005 compared to the same prior year periods, our room revenues decreased as a result
of lower ADR and occupancy percentages in the 2005 periods. Our ADR and occupancy were $68.33 and 80.9%, respectively, for the three months ended June 30, 2005 compared to $70.97 and 91.9%, respectively, for the three months ended June 30, 2004. Our
ADR and occupancy percentages were $65.91 and 76.0%, respectively, for the six months ended June 30, 2005 compared to $67.41 and 85.6%, respectively, for the six months ended June 30, 2004. The primary contributors to these declines in ADR and
occupancy were decreases in our convention and wholesale segments which were adversely impacted by the lack of a major bowling tournament in the Reno market during the first half of 2005. In addition to severe winter weather during January through
April of 2005, our hotel room renovation project removed from service approximately 100 rooms per day throughout the first half of 2005, including holidays and weekends when we generally would have otherwise achieved an occupancy level at or near
100%.



Food and Beverage Revenues. During the three and
six months ended June 30, 2005 compared to the same prior year periods, food and beverage revenues decreased as a result of reduced guest counts attributable to the previously discussed factors affecting overall revenues.



Other Revenues. Other revenues are comprised of revenues generated by
our retail outlets, arcade, entertainment, events pavilion, and other miscellaneous items. The increases in other revenues during the three and six months ended



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June 30, 2005 compared to the same prior year periods were mainly due to increased entertainment and retail revenues. During 2005, Silver Legacy, in
partnership with three other downtown area casinos, produced several concerts in a newly constructed downtown special events center. This new facility offers a larger seating capacity and the opportunity to produce concerts with headliner acts that
command higher professional entertainer fees. As a result, we were able to generate increased entertainment revenues through higher occupancy and additional concert dates. Retail revenues increased primarily due to growth in complimentary retail
revenues associated with our new Club Legacy players club program.



Promotional Allowances. Promotional allowances, expressed as a percentage of gross revenues, increased to 9.0% for the three months ended June 30, 2005 compared to 8.0% for the three months ended June 30, 2004,
and increased to 9.0% for the six months ended June 30, 2005 compared to 8.4% for the six months ended June 30, 2004. These increases were primarily due to increased complimentary rooms and food offered in association with our enhanced Club Legacy
players club which was implemented in January 2005. The new club format is more user-friendly and enables casino players in our database to redeem their complimentaries directly at our restaurants, bars and retail outlets and upon hotel
check-out.



Operating Expenses



The following table highlights our operating expenses (dollars in
thousands):



|                                    |  |                                |        |                                |   |               |  |      |                              |  |                              |        |               |   |        |  |      |   
|----------------------------------- |  | ------------------------------ | ------ | ------------------------------ | - | ------------- |  | ---- | ---------------------------- |  | ---------------------------- | ------ | ------------- | - | ------ |  | ---- | --
|                                    |  | Three monthsended June 30,2005 |        | Three monthsended June 30,2004 |   | PercentChange |  |      | Six monthsended June 30,2005 |  | Six monthsended June 30,2004 |        | PercentChange |  
|Casino                              |  | $                              | 10,680 |                                | $ | 10,669        |  | 0.0  | %                            |  | $                            | 20,099 |               | $ | 20,745 |  | (3.1 | )%
|Rooms                               |  |                                | 2,912  |                                |   | 3,199         |  | (9.0 | )                            |  |                              | 5,700  |               |   | 6,055  |  | (5.9 | ) 
|Food and beverage                   |  |                                | 5,806  |                                |   | 6,297         |  | (7.8 | )                            |  |                              | 11,544 |               |   | 12,022 |  | (4.0 | ) 
|Other                               |  |                                | 1,712  |                                |   | 1,546         |  | 10.7 |                              |  |                              | 3,321  |               |   | 3,137  |  | 5.9  |   
|Selling, general and administrative |  |                                | 7,597  |                                |   | 7,692         |  | (1.2 | )                            |  |                              | 14,977 |               |   | 14,926 |  | 0.3  |   
|Depreciation                        |  |                                | 2,766  |                                |   | 2,652         |  | 4.3  |                              |  |                              | 5,417  |               |   | 5,310  |  | 2.0  |   



Casino Expenses.Casino expenses remained flat during the three months ended June 30, 2005 compared to the same prior year period. Decreases in departmental payroll, gaming taxes and bad debt expense were offset by increases in direct mail costs, promotional
expenses and an expense recorded for unredeemed complimentaries associated with our new players club program put into operation in January 2005.



The same declining expenses affecting the current quarter also decreased during the six months ended June 30, 2005 compared to the same prior year period
and, with promotional expenses remaining consistent during both periods we experienced an overall decrease in casino expenses.



Room Expenses. During the three and six months ended June 30, 2005, room expenses decreased compared to the same prior year periods due to declines
in the number of occupied rooms. Additional costs, including housekeeping labor, amenity supplies and laundry, were incurred with each newly renovated hotel room placed in service during the first half of 2005, which adversely affected departmental
profit in the 2005 periods.



Food and Beverage Expenses.
During the three and six months ended June 30, 2005 compared to the same prior year periods, food and beverage expenses decreased as a result of decreased food and beverage revenues. Increases in food cost of sales and labor, as a percentage of
revenues, resulted in lower departmental profit margins during both periods.



Other Operating Expenses. Other operating expenses are comprised of expenses associated with the operation of our retail outlets, arcade and events pavilion along with the entertainment departments
production costs and professional fees. Other expenses increased during the three and six months ended June 30, 2005 compared to the same prior year periods primarily due to increased entertainment expenses, principally for professional entertainer
fees associated with concerts at the newly constructed downtown special events center.



Selling, General and Administrative Expenses. During the three months ended June 30, 2005 compared to the three months ended June 30, 2004, selling, general and administrative expenses declined primarily due to
decreases in building repairs and maintenance, utilities costs, real property taxes and property insurance premiums. These savings were partially offset by increases in advertising media expenditures, professional services and human resources
employee programs.



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The expenses which increased in the second quarter of 2005 also produced growth in selling, general and
administrative expenses during the six months ended June 30, 2005 compared to the same prior year period, with the primary contributor being advertising media expenditures in an effort to increase awareness in our feeder markets and counteract the
escalation of Native American gaming competition.



Depreciation Expense. Depreciation expense increased during the three and six months ended June 30, 2005 compared to the same prior year periods primarily due to depreciation associated with new capital purchases.



Other (Income) Expense



Other (income) expense is comprised of interest expense, net and other, net. During the three and six months ended June 30,
2005 compared to the same prior year periods, interest expense, net decreased as a result of increased interest income during 2005 which was generated by growth in our invested cash reserves. Other, net in both periods was related to the change in
market value of the funded portion of our supplemental executive retirement plan.



Liquidity and Capital Resources



During the
six months ended June 30, 2005, we generated cash flows from operating activities of $7.0 million compared to $14.9 million during the six months ended June 30, 2004. The $7.9 million decrease in cash provided by operations was primarily due to the
$7.9 million decrease in net income. As of June 30, 2005, cash and cash equivalents were $30.4 million, sufficient for normal operating requirements.



Cash used in investing activities for the six months ended June 30, 2005 was $6.8 million compared to $2.4 million for the six months ended June 30, 2004,
and related primarily to capital expenditures for various renovation projects and equipment purchases. During the third quarter of 2004, we began a hotel room renovation project. The budget for this project is approximately $7.2 million, of which
$1.6 million was incurred in 2004. An additional $3.9 million was spent during the six months ended June 30, 2005, with the remainder to be completed by the end of 2005. Including $5.6 million for the aforementioned room renovation project, our
executive committee has approved $10.0 million in capital expenditures for 2005.



There was no cash used in financing activities during the six months ended June 30, 2005. Cash used in financing activities during the six months ended June 30, 2004 was $4.3 million representing tax distributions to
our partners for 2004 in addition to taxes owed related to our fiscal 1995 and 1996 Internal Revenue Service audits.



In July 2005, we renewed our general and liability insurance policies. Under these policies, the Partnership and the owner of the adjacent property,
Eldorado Resorts LLC (which is an affiliate of ELLC), have combined earthquake coverage of $320 million and combined flood coverage of $245 million. In the event that an earthquake causes damage only to the Partnerships property, the
Partnership is eligible to receive up to $320 million in coverage depending on the replacement cost. However, in the event that both properties are damaged, the Partnership is entitled to receive, to the extent of any replacement cost incurred, up
to $266 million of the coverage amount (based on our percentage of the earthquake coverage) and up to the portion of the other $54 million, if any, remaining after satisfaction of a claim of Eldorado Resorts LLC. In the event that a flood causes
damage only to the Partnerships property, the Partnership is eligible to receive up to $245 million in coverage depending on the replacement cost. However, in the event that both properties are damaged, the Partnership is entitled to receive,
to the extent of any replacement cost incurred, up to $231.5 million of the coverage amount (based on our percentage of the flood coverage) and up to the portion of the other $13.5 million, if any, remaining after satisfaction of a claim of Eldorado
Resorts LLC.



Our insurance policy also includes combined
terrorism coverage up to $425 million for a certified act of terrorism and up to $250 million for a non-certified act of terrorism. In the event that a certified, or a non-certified, act of terrorism causes damage only to the Partnerships
property, the Partnership is eligible to receive up to $425 million, or $250 million, respectively, in coverage depending on the replacement cost. However, in the event that both properties are damaged, the Partnership is entitled to receive, to the
extent of any replacement cost incurred, up to $235 million for a certified act, or up to $138 million for a non-certified act, of the coverage amount (based on our percentage of the total property value) and up to the portion of the other $190
million, or $112 million, respectively, if any, remaining after satisfaction of a claim of Eldorado Resorts LLC. This new policy also covers an additional property located in Shreveport, LA which was recently acquired by Eldorado Resorts LLC. In the
event that a certified, or a non-certified, act of terrorism causes damage to all three properties, the Partnership is entitled to receive, to the extent of any replacement cost incurred, up to $195.5 million for a certified act, or up to $115
million for a non-certified act, of the coverage amount (based on our percentage of the total property value) and up to the portion of the other $229.5 million, or $135 million, respectively, if any remaining after satisfaction of a claim of the
other two properties.



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The Partnerships partnership agreement, as currently in effect, provides that, subject to any
contractual restrictions to which the Partnership is subject, including the indenture relating to the Notes, and prior to the occurrence of a Liquidating Event, the Partnership will be required to make distributions to its partners as
follows:



(i) The estimated taxable income of
the Partnership allocable to each partner multiplied by the greater of the maximum marginal federal income tax rate applicable to individuals for such period or the maximum marginal federal income tax rate applicable to corporations for such period
(as of the date hereof both rates were 35%); provided, however, that if the State of Nevada enacts an income tax (including any franchise tax based on income), the applicable tax rate for any tax distributions subsequent to the effective date of
such income tax shall be increased by the higher of the maximum marginal individual tax rate or corporate income tax rate imposed by such tax (after reduction for the federal tax benefit for the deduction of state taxes, using the maximum marginal
federal individual or corporate rate, respectively).



(ii) Annual distributions of remaining Net Cash From Operations in proportion to the percentage interests of the partners.



(iii) Distributions of Net Cash From Operations in amounts or at times that differ from those described in (i) and (ii) above,
provided in each case that both partners agree in writing to the distribution in advance thereof.



As defined in the partnership agreement, the term Net Cash From Operations means the gross cash proceeds received by the Partnership, less the
following amounts: (i) cash operating expenses and payments of other expenses and obligations of the Partnership, including interest and scheduled principal payments on Partnership indebtedness, including indebtedness owed to the partners, if any,
(ii) all capital expenditures made by the Partnership, and (iii) such reasonable reserves as the partners deem necessary in good faith and in the best interests of the Partnership to meet its anticipated future obligations and liabilities (less any
release of reserves previously established, as similarly determined).



The Partnerships partnership agreement provides that the partners shall not be permitted or required to contribute additional capital to the Partnership without the consent of the partners, which consent may be given or withheld in
each partners sole and absolute discretion.



We believe
we have sufficient capital resources to meet all of our obligations. These obligations include existing cash obligations, funding of capital commitments and servicing our debt. Our future sources of liquidity are anticipated to be from our operating
cash flow and borrowings available under our amended senior secured credit facility. For information concerning limitations on our ability to utilize our credit facility, see Senior Secured Credit Facility below.



The Notes



On March 5, 2002, the Partnership and Capital issued $160,000,000 principal amount of senior secured mortgage notes due 2012
(Notes). The Notes are senior secured obligations which rank equally with all of the Partnerships outstanding senior debt and senior to any subordinated debt. The Notes are secured by a security interest in the Issuers
existing and future assets, which is junior to a security interest in such assets securing the Partnerships obligations under its credit facility and any refinancings of such facility that are permitted pursuant to the terms of the Notes. Each
of the Partners executed a pledge of all of its partnership interest in the Partnership to secure the Notes, which is junior to a pledge of such partnership interest to secure the Partnerships obligations on the credit facility and any
refinancings of such facility that are permitted pursuant to the terms of the Notes. The Notes mature on March 1, 2012 and bear interest at the rate of 10 1/8% per annum, payable semi-annually in arrears on March 1 and September 1 of each year, commencing on September 1, 2002. At June 30, 2005, we were in compliance with all of the covenants in the
indenture related to the Notes.



Senior Secured Credit Facility



On November 4, 2003, we executed an amendment to our
credit facility (as amended, the Credit Facility) that originally included a term facility (which was paid in full in 2003) and a revolving facility. The amendment reduced the revolving facility to $10.0 million and revised certain
covenant ratios with retroactive effect to September 30, 2003, including the maximum total debt to EBITDA ratio which we had exceeded as of September 30, 2003. Under the Credit Facility, we must maintain a maximum ratio of total debt to EBITDA of
5.00 to 1.00 for the quarters ending September 30, 2003 through March 31, 2006 and 4.75 to 1.00 for the quarter ending June 30, 2006 and thereafter. Under the Credit Facility, we are also required to maintain a minimum ratio of EBITDA to fixed
charges of 1.20 to 1.00 at all times. The Credit Facility is secured by a first priority security interest in substantially all of our existing and future assets, other than certain licenses which may not be pledged under applicable law, and a first
priority pledge of and security interest



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in all of the partnership interests in the Partnership held by its partners. The Credit Facility ranks equal in right of payment to our existing and future
senior indebtedness, including the Notes, but the security interests securing our obligations under the Credit Facility are senior to the security interests securing our obligations on the Notes. The Credit Facility contains customary events of
default and covenants, including covenants that limit or restrict our ability to incur additional debt; create liens or other encumbrances; pay dividends or make other restricted payments; prepay subordinated indebtedness; make investments, loans or
other guarantees; sell or otherwise dispose of a portion of our assets; or make acquisitions or merge or consolidate with another entity.



On June 15, 2005, we executed a further amendment to the Credit Facility to provide a conditional waiver of the facilitys financial covenants in
respect of the quarter ended June 30, 2005, and each subsequent quarter through and including December 31, 2005, provided that no additional credit is extended under the Credit Facility during a quarter for which the waiver is relied upon. In
addition, as a condition precedent to any draw on the Credit Facility subsequent to June 15, 2005, we must be in compliance with the Credit Facilitys financial covenants as to the then most recent fiscal quarter in respect of which the we are
required to deliver financial statements pursuant to the Credit Facility. During the quarter ended June 30, 2005, there was no indebtedness outstanding under the Credit Facility. As of June 30, 2005, we exceeded the financial covenants in the Credit
Facility and, consequently, we are precluded from utilizing the Credit Facility until we have completed a fiscal quarter as to which we are in compliance with the facilitys covenants. We currently do not anticipate utilizing our borrowing
capacity under the Credit Facility during the remainder of 2005. The entire principal amount, if any, then outstanding under the Credit Facility becomes due and payable on March 31, 2007, unless the maturity date is extended with the consent of the
lenders.



Critical Accounting Policies



A description of our critical accounting policies can be found in Item 7 of
our Annual Report on Form 10-K for the year ended December 31, 2004. There have been no material changes to these policies during the six months ended June 30, 2005.



Forward-Looking Statements



Certain information included in this report and other materials filed or to be filed by the Partnership and Capital with the Securities and Exchange
Commission (as well as information included in oral statements or written statements made or to be made by them) contains statements that are forward-looking within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. These statements can be identified by the fact that they do not relate strictly to historical or current facts. We have based these forward-looking statements on our current expectations about
future events. These forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, intentions, financial condition, results of operations, future performance and business,
including, current and future operations and statements that include the words may, could, should, would, believe, expect, anticipate, estimate,
intend, plan or similar expressions. Such statements include information relating to capital spending, financing sources and the effects of regulation (including gaming and tax regulation) and competition. Such
forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by us or
on our behalf. These risks and uncertainties include, but are not limited to dependence on existing management, leverage and debt service (including sensitivity to fluctuations in interest rates), domestic or global economic conditions, changes in
Federal or state tax laws or the administration of such laws, changes in gaming laws or regulations (including the legalization of gaming in certain jurisdictions), expansion of gaming on Native American lands (including such lands in California),
risks and uncertainties relating to any applications for licenses and approvals under applicable laws and regulations (including gaming laws and regulations) and any further terrorist attacks similar to those that occurred September 11, 2001.
Additional information concerning potential factors that we think could cause our actual results to differ materially from expected and historical results is included under the caption Factors that May Affect Our Future Results in Item 1
of our annual report on Form 10-K for the fiscal year ended December 31, 2004. If one or more of the assumptions underlying our forward-looking statements proves incorrect, then our actual results, performance or achievements could differ materially
from those expressed in, or implied by, the forward-looking statements contained in this report. Therefore, we caution you not to place undue reliance on our forward-looking statements. This statement is provided as permitted by the Private
Securities Litigation Reform Act of 1995.



|Item 3. | Quantitative and Qualitative Disclosures About Market Risks
|------- | -----------------------------------------------------------



We are potentially exposed to market risk in the form of fluctuations in interest rates and their potential impact upon our variable rate debt
outstanding, if any. We evaluate our exposure to this market risk by monitoring interest rates in the marketplace and we have, on occasion, utilized derivative financial instruments to help manage this risk. To



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manage our exposure to counterparty credit risk in interest rate swaps, we enter into agreements with highly rated institutions. As of June 30, 2005, we had
no variable rate debt outstanding. However, under our $10.0 million revolving credit facility, we may have outstanding from time to time up to $10.0 million of variable rate debt. For information concerning limitations on our ability to utilize our
credit facility, see Item 2 above.



|Item 4. | Controls and Procedures
|------- | -----------------------



An evaluation was performed by management, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2005, our disclosure controls and procedures are effective to
ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms of the
Securities and Exchange Commission.



There have been no changes
in our internal controls over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, these internal controls over financial reporting.



Part II. OTHER INFORMATION



|Item 6. | Exhibits
|------- | --------



| | (a) | Exhibits.
| | --- | ---------



|     |  |                                                                    
|---- |  | -------------------------------------------------------------------
|31.1 |  | Certification of Gary L. Carano                                    
|     | 
|31.2 |  | Certification of Bruce C. Sexton                                   
|     | 
|32.1 |  | Certification of Gary L. Carano pursuant to 18 U.S.C. Section 1350 
|     | 
|32.2 |  | Certification of Bruce C. Sexton pursuant to 18 U.S.C. Section 1350



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##### Table of Contents



SIGNATURES



Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.



|      |  |                 |  |  |  |                                   |  |                                                                                    
|----- |  | --------------- |  |  |  | --------------------------------- |  | -----------------------------------------------------------------------------------
|      |  |                 |  |  |  | CIRCUS AND ELDORADO JOINT VENTURE
|      |  |                 |  | 
|Date: |  | August 12, 2005 |  |  |  | By:                               |  | /s/    GARY L. CARANO                                                              
|      |  |                 |  |  |  |                                   |  | Gary L. Carano                                                                     
|      |  |                 |  |  |  |                                   |  | Chief Executive Officer (Principal Executive Officer)                              
|      |  |                 |  | 
|Date: |  | August 12, 2005 |  |  |  | By:                               |  | /s/  BRUCE C. SEXTON                                                               
|      |  |                 |  |  |  |                                   |  | Bruce C. Sexton                                                                    
|      |  |                 |  |  |  |                                   |  | Chief Accounting and Financial Officer (Principal Financial and Accounting Officer)
|      |  |                 |  | 
|      |  |                 |  |  |  |                                   |  | SILVER LEGACY CAPITAL CORP.                                                        
|      |  |                 |  | 
|Date: |  | August 12, 2005 |  |  |  | By:                               |  | /s/    GARY L. CARANO                                                              
|      |  |                 |  |  |  |                                   |  | Gary L. Carano                                                                     
|      |  |                 |  |  |  |                                   |  | Chief Executive Officer (Principal Executive Officer)                              
|      |  |                 |  | 
|Date: |  | August 12, 2005 |  |  |  | By:                               |  | /s/    BRUCE C. SEXTON                                                             
|      |  |                 |  |  |  |                                   |  | Bruce C. Sexton                                                                    
|      |  |                 |  |  |  |                                   |  | Treasurer (Principal Financial andAccounting Officer)                              



17