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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 September 30, 2010.

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 of incorporation 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 the registrants have submitted electronically and
posted on their corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrants were required to submit and post such files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers, or smaller
reporting companies. See definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                            |  |                       |  |                                            |  |                             
|--------------------------- |  | --------------------- |  | ------------------------------------------ |  | ----------------------------
|Large accelerated filers   ̈ |  | Accelerated filers   ̈ |  | Non-accelerated filers  x                  |  | Smaller reporting company   ̈
|                            |  |                       |  | (Do not check if smallerreporting company) |  |                             

Indicate by check mark whether either of the registrants is a shell company (as defined in Rule
12b-2 of the Exchange Act).



| |  |                                   |  |                 |  | 
| |  | --------------------------------- |  | --------------- |  | 
| |  | Circus and Eldorado Joint Venture |  | Yes   ̈    No  x |  | 
| |  | Silver Legacy Capital Corp.       |  | Yes  x    No   ̈ |  | 

The number of shares of Silver Legacy Capital Corp.s common stock outstanding at
November 15, 2010 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:                                                                                             |    |          |    | 
|                              |  | Consolidated Balance Sheets as of September 30, 2010 (Unaudited) and December 31, 2009                            |    |          | 1  | 
|                              |  | Consolidated Statements of Operations (Unaudited) for the Three and Nine Months Ended September 30, 2010 and 2009 |    |          | 2  | 
|                              |  | Condensed Consolidated Statement of Partners Equity (Unaudited) for the Nine Months Ended September 30, 2010     |    |          | 3  | 
|                              |  | Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2010 and 2009           |    |          | 4  | 
|                              |  | Condensed Notes to Consolidated Financial Statements (Unaudited)                                                  |    |          | 5  | 
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                             |    |          | 8  | 
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                                                        |    |          | 16 | 
|Item 4.                       |  | Controls and Procedures                                                                                           |    |          | 16 | 
|PART II. OTHER INFORMATION    |  |                                                                                                                   |    |         
|Item 6.                       |  | Exhibits                                                                                                          |    |          | 17 | 
|SIGNATURES                    |  |                                                                                                                   | 18 |         



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PART I. FINANCIAL INFORMATION

Item 
1. Financial Statements

CIRCUS AND ELDORADO JOINT VENTURE

(doing business as Silver Legacy Resort Casino)

CONSOLIDATED BALANCE SHEETS

(In thousands)



|                                       |  |                   |         |  |                  |   |         | 
|-------------------------------------- |  | ----------------- | ------- |  | ---------------- | - | ------- | 
|                                       |  | September 30,2010 |         |  | December 31,2009 |  
|                                       |  | (Unaudited)       |         |  |                  |  
|ASSETS                                 |  |                   |         |  |                  |   |         | 
|CURRENT ASSETS:                        |  |                   |         |  |                  |   |         | 
|Cash and cash equivalents              |  | $                 | 31,835  |  |                  | $ | 35,042  | 
|Accounts receivable, net               |  |                   | 2,680   |  |                  |   | 2,583   | 
|Inventories                            |  |                   | 1,950   |  |                  |   | 1,947   | 
|Prepaid expenses and other             |  |                   | 3,593   |  |                  |   | 2,638   | 
|                                       |  |                   |         |  |                  |   |         | 
|Total current assets                   |  |                   | 40,058  |  |                  |   | 42,210  | 
|PROPERTY AND EQUIPMENT, NET            |  |                   | 230,930 |  |                  |   | 234,886 | 
|OTHER ASSETS, NET                      |  |                   | 7,165   |  |                  |   | 7,170   | 
|                                       |  |                   |         |  |                  |   |         | 
|Total Assets                           |  | $                 | 278,153 |  |                  | $ | 284,266 | 
|                                       |  |                   |         |  |                  |   |         | 
|LIABILITIES AND PARTNERS EQUITY       |  |                   |         |  |                  |   |         | 
|CURRENT LIABILITIES:                   |  |                   |         |  |                  |   |         | 
|Accounts payable                       |  | $                 | 4,308   |  |                  | $ | 4,520   | 
|Accrued interest                       |  |                   | 1,204   |  |                  |   | 4,820   | 
|Accrued and other liabilities          |  |                   | 9,937   |  |                  |   | 9,079   | 
|                                       |  |                   |         |  |                  |   |         | 
|Total current liabilities              |  |                   | 15,449  |  |                  |   | 18,419  | 
|LONG-TERM DEBT                         |  |                   | 142,721 |  |                  |   | 142,679 | 
|OTHER LONG-TERM LIABILITIES            |  |                   | 8,135   |  |                  |   | 7,630   | 
|                                       |  |                   |         |  |                  |   |         | 
|Total liabilities                      |  |                   | 166,305 |  |                  |   | 168,728 | 
|COMMITMENTS AND CONTINGENCIES (Note 7) |  |                   |         |  |                  |   |         | 
|PARTNERS EQUITY                       |  |                   | 111,848 |  |                  |   | 115,538 | 
|                                       |  |                   |         |  |                  |   |         | 
|Total Liabilities and Partners Equity |  | $                 | 278,153 |  |                  | $ | 284,266 | 
|                                       |  |                   |         |  |                  |   |         | 

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



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CIRCUS AND ELDORADO JOINT VENTURE

(doing business as Silver Legacy Resort Casino)

CONSOLIDATED STATEMENTS OF
OPERATIONS

(In thousands)

(Unaudited)



|                                                 |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|------------------------------------------------ |  | ------------------------------- | ------ | - | ------------------------------ | - | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                                 |  | Three MonthsEnded
September 30, |        |   | Nine MonthsEnded
September 30, |  
|                                                 |  | 2010                            |        |   | 2009                           |   |        | 2010 |  |   | 2009    |  
|OPERATING REVENUES:                              |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|Casino                                           |  | $                               | 18,314 |   |                                | $ | 18,601 |      |  | $ | 52,139  |   |  | $ | 53,669  |  
|Rooms                                            |  |                                 | 8,782  |   |                                |   | 8,723  |      |  |   | 25,240  |   |  |   | 24,320  |  
|Food and beverage                                |  |                                 | 8,121  |   |                                |   | 8,082  |      |  |   | 23,991  |   |  |   | 24,362  |  
|Other                                            |  |                                 | 2,046  |   |                                |   | 2,087  |      |  |   | 5,433   |   |  |   | 5,687   |  
|                                                 |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|                                                 |  |                                 | 37,263 |   |                                |   | 37,493 |      |  |   | 106,803 |   |  |   | 108,038 |  
|Less: promotional allowances                     |  |                                 | (4,750 | ) |                                |   | (4,870 | )    |  |   | (12,352 | ) |  |   | (13,769 | )
|                                                 |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|Net operating revenues                           |  |                                 | 32,513 |   |                                |   | 32,623 |      |  |   | 94,451  |   |  |   | 94,269  |  
|                                                 |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|OPERATING EXPENSES:                              |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|Casino                                           |  |                                 | 9,664  |   |                                |   | 9,725  |      |  |   | 26,699  |   |  |   | 28,673  |  
|Rooms                                            |  |                                 | 2,489  |   |                                |   | 2,355  |      |  |   | 7,416   |   |  |   | 7,273   |  
|Food and beverage                                |  |                                 | 5,430  |   |                                |   | 5,184  |      |  |   | 16,149  |   |  |   | 15,588  |  
|Other                                            |  |                                 | 1,503  |   |                                |   | 1,340  |      |  |   | 4,014   |   |  |   | 3,654   |  
|Selling, general and administrative              |  |                                 | 7,179  |   |                                |   | 7,446  |      |  |   | 20,947  |   |  |   | 22,099  |  
|Depreciation                                     |  |                                 | 3,584  |   |                                |   | 4,106  |      |  |   | 11,748  |   |  |   | 12,279  |  
|Change in fair value of life insurance contracts |  |                                 | (476   | ) |                                |   | (486   | )    |  |   | (295    | ) |  |   | (561    | )
|Loss on disposition of assets                    |  |                                 | 130    |   |                                |   | 8      |      |  |   | 210     |   |  |   | 62      |  
|                                                 |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|Total operating expenses                         |  |                                 | 29,503 |   |                                |   | 29,678 |      |  |   | 86,888  |   |  |   | 89,067  |  
|                                                 |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|OPERATING INCOME                                 |  |                                 | 3,010  |   |                                |   | 2,945  |      |  |   | 7,563   |   |  |   | 5,202   |  
|                                                 |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|OTHER (INCOME) EXPENSE:                          |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|Interest expense                                 |  |                                 | 3,730  |   |                                |   | 3,767  |      |  |   | 11,261  |   |  |   | 11,570  |  
|Interest income                                  |  |                                 | (4     | ) |                                |   | (4     | )    |  |   | (8      | ) |  |   | (58     | )
|Gain on early retirement of debt                 |  |                                 |       |   |                                |   |       |      |  |   |        |   |  |   | (5,546  | )
|                                                 |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|Total other expense                              |  |                                 | 3,726  |   |                                |   | 3,763  |      |  |   | 11,253  |   |  |   | 5,966   |  
|                                                 |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|NET LOSS                                         |  | $                               | (716   | ) |                                | $ | (818   | )    |  | $ | (3,690  | ) |  | $ | (764    | )
|                                                 |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  

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



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CIRCUS AND ELDORADO JOINT VENTURE

(doing business as Silver Legacy Resort Casino)

CONDENSED CONSOLIDATED STATEMENT
OF PARTNERS EQUITY

(In thousands)

(Unaudited)



|                                |  |               |        |   |                       |   |        |       |  |   |         |  
|------------------------------- |  | ------------- | ------ | - | --------------------- | - | ------ | ----- |  | - | ------- | -
|                                |  | Galleon, Inc. |        |   | Eldorado Resorts, LLC |   |        | Total | 
|BALANCE, January 1, 2010 (1)    |  | $             | 52,769 |   |                       | $ | 62,769 |       |  | $ | 115,538 |  
|Net loss                        |  |               | (1,845 | ) |                       |   | (1,845 | )     |  |   | (3,690  | )
|                                |  |               |        |   |                       |   |        |       |  |   |         |  
|BALANCE, September 30, 2010 (1) |  | $             | 50,924 |   |                       | $ | 60,924 |       |  | $ | 111,848 |  
|                                |  |               |        |   |                       |   |        |       |  |   |         |  



|(1) | Balances include Accumulated Other Comprehensive Income totaling ($648,000) comprised of ($324,000) each for Galleon, Inc. and Eldorado Resorts, LLC.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------

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



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CIRCUS AND ELDORADO JOINT VENTURE

(doing business as Silver Legacy Resort Casino)

CONSOLIDATED STATEMENTS OF CASH
FLOWS

(In thousands)

(Unaudited)



|                                                                                |  |                                |        |   |      |   |         |  
|------------------------------------------------------------------------------- |  | ------------------------------ | ------ | - | ---- | - | ------- | -
|                                                                                |  | Nine Months EndedSeptember 30, |       
|                                                                                |  | 2010                           |        |   | 2009 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                           |  |                                |        |   |      |   |         |  
|Net loss                                                                        |  | $                              | (3,690 | ) |      | $ | (764    | )
|Adjustments to reconcile net loss to net cash provided by operating activities: |  |                                |        |   |      |   |         |  
|Depreciation                                                                    |  |                                | 11,748 |   |      |   | 12,279  |  
|Amortization of debt discounts and issuance costs                               |  |                                | 450    |   |      |   | 467     |  
|Loss on disposition of assets                                                   |  |                                | 210    |   |      |   | 62      |  
|Gain on early retirement of debt                                                |  |                                |       |   |      |   | (5,546  | )
|Increase in accrued pension cost                                                |  |                                | 505    |   |      |   | 681     |  
|Increase (decrease) in provision for doubtful accounts                          |  |                                | (252   | ) |      |   | 397     |  
|Increase in cash value of insurance policies in excess of premiums paid         |  |                                | (295   | ) |      |   | (561    | )
|Changes in current assets and current liabilities:                              |  |                                |        |   |      |   |         |  
|Accounts receivable                                                             |  |                                | 155    |   |      |   | 315     |  
|Inventories                                                                     |  |                                | (3     | ) |      |   | 51      |  
|Prepaid expenses and other                                                      |  |                                | (966   | ) |      |   | 212     |  
|Accounts payable                                                                |  |                                | 179    |   |      |   | (881    | )
|Accrued interest                                                                |  |                                | (3,616 | ) |      |   | (4,195  | )
|Accrued and other liabilities                                                   |  |                                | 858    |   |      |   | 463     |  
|                                                                                |  |                                |        |   |      |   |         |  
|Net cash provided by operating activities                                       |  |                                | 5,283  |   |      |   | 2,980   |  
|                                                                                |  |                                |        |   |      |   |         |  
|                                                                                |  |                               
|CASH FLOWS FROM INVESTING ACTIVITIES:                                           |  |                                |        |   |      |   |         |  
|Proceeds from sale of assets                                                    |  |                                | 56     |   |      |   | 9       |  
|Increase (decrease) in other assets                                             |  |                                | (188   | ) |      |   | 11      |  
|Purchase of property and equipment                                              |  |                                | (8,358 | ) |      |   | (2,298  | )
|                                                                                |  |                                |        |   |      |   |         |  
|Net cash used in investing activities                                           |  |                                | (8,490 | ) |      |   | (2,278  | )
|                                                                                |  |                                |        |   |      |   |         |  
|                                                                                |  |                               
|CASH FLOWS FROM FINANCING ACTIVITIES:                                           |  |                                |        |   |      |   |         |  
|Debt issuance costs                                                             |  |                                |       |   |      |   | (10     | )
|Payments on retirement of long-term debt                                        |  |                                |       |   |      |   | (11,438 | )
|                                                                                |  |                                |        |   |      |   |         |  
|Net cash used in financing activities                                           |  |                                |       |   |      |   | (11,448 | )
|                                                                                |  |                                |        |   |      |   |         |  
|                                                                                |  |                               
|CASH AND CASH EQUIVALENTS:                                                      |  |                                |        |   |      |   |         |  
|Net decrease for the period                                                     |  |                                | (3,207 | ) |      |   | (10,746 | )
|Balance, beginning of period                                                    |  |                                | 35,042 |   |      |   | 43,765  |  
|                                                                                |  |                                |        |   |      |   |         |  
|Balance, end of period                                                          |  | $                              | 31,835 |   |      | $ | 33,019  |  
|                                                                                |  |                                |        |   |      |   |         |  
|SUPPLEMENTAL CASH FLOW INFORMATION:                                             |  |                                |        |   |      |   |         |  
|Cash paid during period for interest                                            |  | $                              | 14,461 |   |      | $ | 15,299  |  
|                                                                                |  |                                |        |   |      |   |         |  
|SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES:                         |  |                                |        |   |      |   |         |  
|Payables for purchase of property and equipment                                 |  | $                              | 189    |   |      | $ | 69      |  
|                                                                                |  |                                |        |   |      |   |         |  

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



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CIRCUS AND ELDORADO JOINT VENTURE

(doing business as Silver Legacy Resort Casino)

CONDENSED NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (Unaudited)

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 MGM Resorts International, formerly known as MGM Mirage, and previously owned and controlled by Mandalay Resort Group (Mandalay) (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 $25.0 million and cash of $26.9 million for a total equity investment of $51.9 million. Galleon contributed cash
to the Partnership of $51.9 million 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 Resorts International (MGM) was merged with and into Mandalay as a result of which Mandalay became a wholly owned subsidiary of MGM.
With the consummation of the merger, Galleon, Inc. became an indirect wholly-owned subsidiary of MGM.

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
$160.0 million principal amount of 101/8% mortgage
notes due 2012 co-issued by the Partnership and Capital and, as such, Capital does not have any operations, assets, or revenues. All 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 September 30, 2010, and the results of operations for the three and nine months ended September 30, 2010 and 2009 and cash flows
for the nine months ended September 30, 2010 and 2009. 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 unaudited 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, 2009.

Use of Estimates

The unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted
in the United States of America. Those principles require the Partnerships 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. Significant estimates incorporated into our consolidated financial statements include estimated useful lives for depreciable and amortizable
assets, the estimated allowance for doubtful accounts receivable, estimated cash flows in assessing the recoverability of long-lived assets, our self-insured liability reserves, players club liabilities, contingencies and litigation, claims
and assessments, and fair value measurements related to the Partnerships mortgage notes and the Supplemental Executive Retirement Plan. Actual results could differ from these estimates.



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Recently Issued Accounting
Pronouncements

Certain amendments to Accounting Standards Codification (ASC) Topic 810
Consolidation became effective for us beginning January 1, 2010. Such amendments include changes to the quantitative approach to determine the primary beneficiary of a variable interest entity (VIE). An enterprise must
determine if its variable interest or interests give it a controlling financial interest in a VIE by evaluating whether 1) the enterprise has the power to direct activities of the VIE that have a significant effect on economic performance, and
2) the enterprise has an obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the VIE. The amendments to ASC 810 also require ongoing reassessments of whether an enterprise is the
primary beneficiary of a VIE. The adoption of these amendments did not have a material effect on the Partnerships consolidated financial statements.

In April 2010, the FASB issued ASU No. 2010-16, Accruals for Casino Jackpot Liabilities. Specifically, the guidance clarifies that an entity should not accrue jackpot liabilities, or
portions thereof, before a jackpot is won if the entity can avoid paying the jackpot. Jackpots should be accrued and charged to revenue when an entity has the obligation to pay the jackpot. The guidance applies to both base and progressive jackpots.
The new guidance is effective for fiscal years beginning on or after December 15, 2010. The new guidance will be applied by recording a cumulative-effect adjustment to opening retained earnings in the period of adoption. The Partnership expects
to adopt the guidance in fiscal year 2011 and estimates the adjustment to retained earnings to be approximately $0.8 million.

Note 2. Fair
Value Measurements

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants. Accordingly, fair value is a market based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. As a basis
for considering such assumptions, there is a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair values as follows:

Level 1: Inputs are based upon quoted prices (unadjusted) in active markets for identical assets or liabilities which are accessible as of the measurement date.

Level 2: Inputs are based upon quoted prices for similar assets or liabilities in active markets, quoted prices for identical or
similar assets or liabilities in markets that are not active, and model-derived valuations for the asset or liability that are derived principally from or corroborated by market data for which the primary inputs are observable, including forward
interest rates, yield curves, credit risk and exchange rates.

Level 3: Inputs for the valuations are unobservable and
are based on managements estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques such as option pricing models and discounted cash
flow models.

The Partnerships financial instruments consist primarily of cash and cash equivalents,
accounts receivable, accounts payable and debt. Management believes that the carrying value of cash and cash equivalents, accounts receivable, and accounts payable are representative of their respective fair values due to the short maturities of
these instruments. We determined the fair value of the Partnerships 101/8% mortgage notes using Level 1 inputs. The fair value of the Partnerships
101/8% mortgage notes, based on quoted market
prices, was approximately $132.4 million as of September 30, 2010.



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Note 3. Long-Term Debt

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



|                                                                                           |  |                   |         |  |                  |   |         | 
|------------------------------------------------------------------------------------------ |  | ----------------- | ------- |  | ---------------- | - | ------- | 
|                                                                                           |  | September 30,2010 |         |  | December 31,2009 |  
|101/8% Mortgage Notes due 2012 (net of unamortized discount of $79 and $121, respectively) |  | $                 | 142,721 |  |                  | $ | 142,679 | 
|                                                                                           |  |                   |         |  |                  |   |         | 

On March 5, 2002, the Partnership and Capital (collectively, the Issuers) co-issued $160.0
million principal amount of senior secured mortgage notes due 2012 (the Notes). Concurrent with issuing the Notes, the Partnership entered into a senior secured credit facility (the Credit Facility) for $40.0 million. The
Credit Facility originally provided for a $20.0 million senior secured revolving credit facility and a $20.0 million five-year term loan facility, each of which provided for the payment of interest at floating rates based on LIBOR plus a spread. The
proceeds from the Notes, together with $26.0 million in borrowings under the Credit Facility, were used to repay $150.2 million representing all of the indebtedness outstanding under a prior bank credit facility and to fund $30.0 million of
distributions to the Partners. In addition, the remaining proceeds along with operating cash flows were used to pay $6.3 million in related fees and expenses of the transactions. These fees were capitalized and are included in other assets. On
November 4, 2003, the Partnership, U.S. Bank, N.A. and Bank of America, N.A., executed an amendment to the Credit Facility which reduced the revolving facility to $10.0 million. On March 28, 2008, the Partnership and Bank of America, N.A.
executed an amendment reducing the revolving facility to $1.0 million. On January 28, 2009, the Partnership executed an amendment to extend the Credit Facilitys maturity date for an additional year to March 30, 2010. The Partnership
had not utilized its borrowing capacity under the Credit Facility since 2003. As a result, the Credit Facility was not extended beyond its March 30, 2010 maturity date.

The Notes are senior secured obligations which rank equally with all of the Partnerships outstanding senior
debt and are senior to any subordinated debt. The Notes are secured by a security interest in the Issuers existing and future assets and a pledge by each of the Partners of all of its partnership interest in the Partnership. 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 indenture relating to the Notes contains various restrictive covenants. The covenants require, and/or any covenants in any new credit
facility we may secure may require, the maintenance of certain financial ratios and impose limitations on the ability of the Partnership, among other things, to incur additional debt or liens, engage in transactions with affiliates, dispose of
property, make distributions to its partners or merge, consolidate or sell assets. As of September 30, 2010, the Partnership was in compliance with the covenants in the indenture relating to the Notes.

In February 2009, the Partnership repurchased and retired $17.2 million principal amount of the Notes. The total purchase price of the
Notes was approximately $11.4 million, resulting in a gain of approximately $5.5 million, net of unamortized debt issuance costs. The repurchase of the Notes reduced the amount of Notes outstanding to $142.8 million. The transaction was funded by
available invested cash reserves. The Partnerships executive committee has authorized the Partnership to spend up to an additional $8.6 million for the repurchase of Notes. It is anticipated that any additional Notes acquired prior to maturity
will be acquired through open market purchases.

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.

As of September 30, 2010, the Partnerships related parties receivable and payable were $0.3 million
and $0.2 million, respectively. As of December 31, 2009, the Partnerships related parties receivable and payable were $0.1 million and $0.2 million, respectively.



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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 a
portion of the plan through life insurance contracts on the participants. The Partnership anticipates that its periodic pension cost for the year ending December 31, 2010 will be approximately $0.7 million, of which $0.5 million had been
accrued as of September 30, 2010.

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.

Note 7. Commitments and Contingencies

In March 2008, the Nevada Supreme Court ruled, in a case involving another casino company, that food and non-alcoholic beverages purchased for the use in providing complimentary meals to customers and to
employees were exempt from sales and use tax. The Partnership had previously paid use tax on these items and has generally filed for refunds for the periods from February 2000 to February 2008 related to this matter. The aggregate amount for which a
refund claim is pending is approximately $1.5 million.

The Nevada Department of Taxation (the Department) filed a
petition for rehearing, which the Nevada Supreme Court announced in July 2008 it would not grant. Hearings before the Nevada Administrative Law Judge are currently being scheduled; however, the date of the Partnerships hearing is
uncertain at this time. Due to uncertainty surrounding the potential arguments that may be raised in the administrative process, the Partnership will not record any gain until the tax refund is realized.

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 now owned and controlled by MGM Resorts International, formerly known as MGM Mirage, entered into a joint venture agreement to establish the Partnership for the purpose of constructing, owning and
operating Silver Legacy. Capital, a wholly owned subsidiary of the Partnership, was incorporated for the sole purpose of serving as a co-issuer of the $160.0 million principal amount of 101/8% mortgage notes due 2012 co-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 the second largest number of slot machines and hotel rooms of any property in the Reno
market. Silver Legacys net operating revenues and results of operations are derived largely from 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 significantly to our net revenues.

Our operating results are highly dependent on the volume of customers visiting and staying at our resort, which in turn impacts the price
we can charge for our hotel rooms and other amenities. 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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Significant Factors Affecting
Results of Operations

National Economic Condition

The economic recession and the slow pace of recovery continue to adversely influence consumers confidence, discretionary spending levels and travel patterns. We believe the weak demand, high
unemployment, record number of home foreclosures, increased competition and volatility of the economy have had a significant negative impact on the gaming and tourism industries, and, as a result, our operating performance during 2010 and 2009
compared to previous years. In response to the difficult economic environment, our management has implemented cost savings measures and will continue to review our operations to look for opportunities to further reduce expenses and maximize cash
flows. We believe the current economic recession will continue to negatively affect our operating results for some period of time; however, we are uncertain as to the duration and magnitude of the recessions impact on our operations.

Expansion of Native American Gaming

A significant portion of Silver Legacys revenues and results of operations 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, a number of Native American tribes have
established large-scale gaming facilities in California and many 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. As northern California Native American gaming operations have expanded, we believe the increasing competition generated by these gaming operations has negatively impacted principally drive-in, day-trip visitor traffic from our main
feeder markets in northern California.

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 one reservation. However, under action taken by the National Indian Gaming Commission, gaming devices similar in appearance to slot machines, but which are deemed to be
technological enhancements to bingo style gaming, are not subject to such limits and may be used by tribes without state permission. The number of slot 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.

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

Bowling Tournaments Within the Reno Market

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 out of every three years through 2018, including 2010. Through a one-time agreement, the
National Bowling Stadium will also host the United States Bowling Congress (USBC) Open Tournament in Reno in 2011, usually an off-year for Reno. Historically, these multi-month bowling tournaments have attracted a significant number of
visitors to the Reno market and have benefited business in the downtown area, including Silver Legacy. In 2007, the USBC Open Tournament began in mid-February and continued through June. Both men and women bowlers participated in the USBC Open
Tournament which attracted approximately 80,000 bowlers to the Reno market during the tournament period. There was not a major bowling tournament in Reno in 2008. As a result, the absence of the incremental visitation had an adverse effect on our
operations during the first half of 2008. The USBC Womens Tournament, which attracted approximately 55,000 women bowlers to the Reno market in 2006, returned in late March 2009. This tournament continued through the end of June 2009 and
brought approximately 40,500 women bowlers during the 2009 period. While the traffic generated by this tournament benefited the Reno market during the second quarter of 2009, the positive impact was not as significant as in previous years due to a
decline in bowler attendance combined with general decreases in consumers discretionary spending. In 2010, the USBC Open Tournament returned to the Reno market and attracted approximately 68,500 men and women bowlers to the Reno area during
the period from late-February through the end of June. The increase in the number of bowlers visiting downtown Reno contributed to our improved operating results during the first half of 2010 compared to the same period in 2009.



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Summary Financial Results

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



|                   |  |                                    |        |   |                                    |   |        |               |  |  |                                   |    |  |                                   |        |   |               |   |        |   |  |  |       |  
|------------------ |  | ---------------------------------- | ------ | - | ---------------------------------- | - | ------ | ------------- |  |  | --------------------------------- | -- |  | --------------------------------- | ------ | - | ------------- | - | ------ | - |  |  | ----- | -
|                   |  | Three monthsendedSeptember 30,2010 |        |   | Three monthsendedSeptember 30,2009 |   |        | PercentChange |  |  | Nine monthsendedSeptember 30,2010 |    |  | Nine monthsendedSeptember 30,2009 |        |   | PercentChange |  
|Net revenues       |  | $                                  | 32,513 |   |                                    | $ | 32,623 |               |  |  | (0.3                              | )% |  | $                                 | 94,451 |   |               | $ | 94,269 |   |  |  | 0.2   | %
|Operating expenses |  |                                    | 29,503 |   |                                    |   | 29,678 |               |  |  | (0.6                              | )  |  |                                   | 86,888 |   |               |   | 89,067 |   |  |  | (2.4  | )
|Operating income   |  |                                    | 3,010  |   |                                    |   | 2,945  |               |  |  | 2.2                               |    |  |                                   | 7,563  |   |               |   | 5,202  |   |  |  | 45.4  |  
|Net loss           |  |                                    | (716   | ) |                                    |   | (818   | )             |  |  | (12.5                             | )  |  |                                   | (3,690 | ) |               |   | (764   | ) |  |  | 383.0 |  

Net Revenues.
During the three and nine months ended September 30, 2010 compared to the same prior year periods, net revenues remained flat. Increases in rooms revenues and declines in promotional allowances were partially offset by decreased casino and
other revenues. The challenging economic environment and more intense competition for a reduced number of visitors, both from Native American gaming and within the Reno market, continued to be negative factors impacting business levels throughout
2010 and 2009. However, the first half of 2010 benefited from the return of the USBC Open Tournament which drove room nights and brought approximately 28,000 more bowlers to the Reno market in 2010 compared to the USBC Womens Tournament in
2009.

Operating Income and Net Loss. Despite the lack of growth in net revenues, we were able to achieve higher
operating income during the three and nine months ended September 30, 2010 compared to the same prior year periods. Changes were implemented in 2009 resulting from initiatives to identify opportunities for operational efficiencies, reduce costs
and maximize operating income. These savings programs, along with further successful efforts to lower total operating expenses, continued throughout 2010. As a result, our profit margins were flat during the current quarter compared to the same
prior year period and significantly improved during the nine months ended September 30, 2010 compared to the same prior year period.

Our net loss declined as a result of the aforementioned factors in addition to a decrease in depreciation expense during the three months ended September 30, 2010 compared to the same prior year
period. A $5.5 million gain, net of unamortized debt issuance costs and discounts, on the early retirement of $17.2 million principal amount of our
101/8% mortgage notes was recorded in February
2009. As a result, our net loss increased to $3.7 million during the nine months ended September 30, 2010 from $0.8 million during the same prior year period.

Revenues

The following table highlights the components of operating
revenues (dollars in thousands):



|                       |  |                                    |        |   |                                    |   |        |               |  |  |                                   |    |  |                                   |         |   |               |   |         |   |  |  |       |   
|---------------------- |  | ---------------------------------- | ------ | - | ---------------------------------- | - | ------ | ------------- |  |  | --------------------------------- | -- |  | --------------------------------- | ------- | - | ------------- | - | ------- | - |  |  | ----- | --
|                       |  | Three monthsendedSeptember 30,2010 |        |   | Three monthsendedSeptember 30,2009 |   |        | PercentChange |  |  | Nine monthsendedSeptember 30,2010 |    |  | Nine monthsendedSeptember 30,2009 |         |   | PercentChange |  
|Casino                 |  | $                                  | 18,314 |   |                                    | $ | 18,601 |               |  |  | (1.5                              | )% |  | $                                 | 52,139  |   |               | $ | 53,669  |   |  |  | (2.9  | )%
|Rooms                  |  |                                    | 8,782  |   |                                    |   | 8,723  |               |  |  | 0.7                               |    |  |                                   | 25,240  |   |               |   | 24,320  |   |  |  | 3.8   |   
|Food and beverage      |  |                                    | 8,121  |   |                                    |   | 8,082  |               |  |  | 0.5                               |    |  |                                   | 23,991  |   |               |   | 24,362  |   |  |  | (1.5  | ) 
|Other                  |  |                                    | 2,046  |   |                                    |   | 2,087  |               |  |  | (2.0                              | )  |  |                                   | 5,433   |   |               |   | 5,687   |   |  |  | (4.5  | ) 
|Promotional allowances |  |                                    | (4,750 | ) |                                    |   | (4,870 | )             |  |  | (2.5                              | )  |  |                                   | (12,352 | ) |               |   | (13,769 | ) |  |  | (10.3 | ) 



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Casino Revenues.Table games drop and slot handle decreased 1.9% and 3.7%, respectively, during the three months ended September 30, 2010 compared to the same prior year period. A higher hold percentage during the current quarter produced increased table
games revenues in 2010 compared to the same prior year period. However, this growth was offset by decreased slot revenues and increased promotional slot free play expense which resulted in a slight decrease in casino revenues during the third
quarter of 2010 compared to the same prior year period.

During the nine months ended September 30, 2010 compared to the
same prior year period, table games drop increased 0.3% while slot handle declined 8.1%. An increase in our table games hold percentage during the nine months ended September 30, 2010 compared to the same prior year period contributed to higher
table games revenues. Table games drop benefited from the increased visitation generated by the USBC Open Tournament from late February through June of 2010. Historically, the USBC Open Tournament has attracted table games players, as compared to
the USBC Womens Tournament, and has typically had a greater positive impact on table games volume during associated tournament periods. While table games cash play benefited from the traffic generated by the bowlers during the first half of
the year, table games credit play and high end slot volume declined during the nine months ended September 30, 2010 compared to the same prior year period. We believe the decreases in slot volume and high end play during 2010 compared to 2009
were associated with the previously discussed economic factors which continue to negatively influence the spending levels of our customers combined with the overall negative impact of increased competition.

Rooms Revenues. Despite a decline in hotel room rates during the third quarter of 2010 compared to the same prior year period, our
rooms revenues increased as a result of higher occupancy. During the three months ended September 30, 2010, our ADR and occupancy were $69.37 and 73.3%, respectively, compared to $70.57 and 72.0%, respectively, for the three months ended
September 30, 2009. Total occupied room nights rose 1.7% during the three months ended September 30, 2010 compared to the same prior year period. Our ADR decreased during the current quarter compared to the same prior year period primarily
due to declines in our convention and leisure room rates, which typically yield the highest room rates, in an effort to maximize occupancy levels amidst intensified competition. Additionally, our room remodel project impacted our ability to achieve
100% occupancy on weekends, which also typically yields the highest room rates. Our room remodel project began on July 5, 2010 and will continue through mid-December 2010. In addition to impacting room rates, the room remodel project had a
moderate adverse effect on occupancy during the current quarter in comparison to the same prior year period as a result of rooms being out of service during peak periods.

During the nine months ended September 30, 2010 compared to the same prior year period, our room revenues rose due to increases in our room rate and occupancy. Our ADR and occupancy percentages were
$69.06 and 71.5%, respectively, for the nine months ended September 30, 2010 compared to $67.66 and 70.3%, respectively, for the nine months ended September 30, 2009. Total occupied room nights rose 1.7% during the nine months ended
September 30, 2010 compared to the same prior year period. These increases in ADR and occupancy were primarily driven by growth in our convention segment attributable to the USBC Open Tournament along with several other large convention groups
during the first half of 2010 compared to the same prior year period. Despite strong competition, both locally and within our feeder markets, we were able to sustain a higher ADR during the nine months ended September 30, 2010 compared to the
same prior year period as a result of efforts to elevate room rates via effective rate yield management, demand created by the additional bowler room nights and aggressive email offer campaigns targeted at slower booking periods.

Food and Beverage Revenues. Restaurant customer counts increased 1.3% during the three months ended September 30, 2010
compared to the same prior year period resulting in increased food revenues. However, decreases in beverage revenues combined with a reduction in our average restaurant check partially offset the growth in food revenues during the three months ended
September 30, 2010 compared to the same prior year period. As a result, food and beverage revenues remained flat during the current quarter compared to the same prior year period.

During the nine months ended September 30, 2010 compared to the same prior year period, food revenues declined among the majority of
our restaurants due a 0.9% decrease in restaurant customer counts. Our average restaurant check decreased due to selective menu price revisions and special offers in an effort to promote our restaurants and incentivize customers and also contributed
to the decrease in revenues during the current year. Additionally, reductions in customer spending levels and a significant decline in food complimentaries also adversely impacted food revenues during the nine months ended September 30, 2010 as
compared to the same prior year period. Beverage revenues remained flat during the nine months ended September 30, 2010 compared to the same prior year period.



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Other Revenues.
Other revenues are comprised of revenues generated by our retail outlets, entertainment, other miscellaneous items, and our share of ballroom revenues. During the three and nine months ended September 30, 2010 compared to the same prior year
periods, other revenues decreased mainly due to declines in retail revenues as a result of decreased retail complimentary revenues. The declines in retail revenues were partially offset by increases in ballroom revenues due to several new large
convention groups during the first half of 2010 compared to the same prior year period. Additionally, entertainment revenues increased due to an increase in scheduled concert dates throughout the three and nine months ended September 30, 2010
compared to the same prior year periods.

Promotional Allowances. Promotional allowances, expressed as a percentage of
gross revenues, decreased to 12.8% and 11.6%, respectively, during the three and nine months ended September 30, 2010 compared to 13.0% and 12.7%, respectively, during the three and nine months ended September 30, 2009. These decreases
were primarily attributable to declines in rooms, food, concert ticket and retail complimentaries redeemed by our casino customers during both periods in 2010 compared to 2009 as a result of efforts to eliminate less profitable direct mail offers
and promotions. Additionally, revisions to our players club were implemented in January of 2010 with the introduction of downloadable free slot play which reduced complimentaries redeemed by our customers during the three and nine months ended
September 30, 2010 compared to the same prior year periods.

Operating Expenses

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



|                                                 |  |                                    |       |   |                                    |   |       |               |  |  |                                   |    |  |                                   |        |   |               |   |        |   |  |  |       |   
|------------------------------------------------ |  | ---------------------------------- | ----- | - | ---------------------------------- | - | ----- | ------------- |  |  | --------------------------------- | -- |  | --------------------------------- | ------ | - | ------------- | - | ------ | - |  |  | ----- | --
|                                                 |  | Three monthsendedSeptember 30,2010 |       |   | Three monthsendedSeptember 30,2009 |   |       | PercentChange |  |  | Nine monthsendedSeptember 30,2010 |    |  | Nine monthsendedSeptember 30,2009 |        |   | PercentChange |  
|Casino                                           |  | $                                  | 9,664 |   |                                    | $ | 9,725 |               |  |  | (0.6                              | )% |  | $                                 | 26,699 |   |               | $ | 28,673 |   |  |  | (6.9  | )%
|Rooms                                            |  |                                    | 2,489 |   |                                    |   | 2,355 |               |  |  | 5.7                               |    |  |                                   | 7,416  |   |               |   | 7,273  |   |  |  | 2.0   |   
|Food and beverage                                |  |                                    | 5,430 |   |                                    |   | 5,184 |               |  |  | 4.7                               |    |  |                                   | 16,149 |   |               |   | 15,588 |   |  |  | 3.6   |   
|Other                                            |  |                                    | 1,503 |   |                                    |   | 1,340 |               |  |  | 12.2                              |    |  |                                   | 4,014  |   |               |   | 3,654  |   |  |  | 9.9   |   
|Selling, general and
administrative              |  |                                    | 7,179 |   |                                    |   | 7,446 |               |  |  | (3.6                              | )  |  |                                   | 20,947 |   |               |   | 22,099 |   |  |  | (5.2  | ) 
|Depreciation                                     |  |                                    | 3,584 |   |                                    |   | 4,106 |               |  |  | (12.7                             | )  |  |                                   | 11,748 |   |               |   | 12,279 |   |  |  | (4.3  | ) 
|Change in fair value of life insurance contracts |  |                                    | (476  | ) |                                    |   | (486  | )             |  |  | (2.1                              | )  |  |                                   | (295   | ) |               |   | (561   | ) |  |  | (47.4 | ) 
|Loss on disposition of assets                    |  |                                    | 130   |   |                                    |   | 8     |               |  |  | 1,525.0                           |    |  |                                   | 210    |   |               |   | 62     |   |  |  | 238.7 |   

Casino Expenses.During the three and nine months ended September 30, 2010 compared to the same prior year periods, casino expenses declined as a result of lower departmental payroll and benefits along with decreases in other variable costs including taxes
and licenses and bad debt expense. Reductions in special event and promotional expenditures resulting from efforts to lower costs associated with less profitable promotional offers and special events also contributed to the overall decrease in
casino expenses. Additionally, a decline in promotional allowances related to the cost of rooms, food, concert tickets and retail complimentaries allocated to the casino department was a primary contributor to the declines during the three and nine
months ended September 30, 2010 compared to the same prior year periods.

Rooms Expenses. Rooms expenses increased
during the three and nine months ended September 30, 2010 compared to the same prior year periods in conjunction with higher hotel occupancy. Increased costs, including payroll and laundry, associated with placing newly remodeled rooms into
service resulted in increased rooms expenses during the current quarter compared to the same prior year period. The increase in expenses associated with the room remodel project combined with a lower average daily rate negatively impacted the hotel
departments profit margin during the third quarter compared to the same prior year period. Conversely, higher average daily rates during the first half of the year along with efforts to reduce costs on a per occupied room basis produced an
increase in the hotel departments profit margin during the nine months ended September 30, 2010 in comparison to the same prior year period.



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Food and Beverage
Expenses. During the three and nine months ended September 30, 2010 compared to the same prior year periods, food and beverage expenses rose primarily due to higher food and beverage costs of sales, both in absolute dollars and as a
percentage of revenues, which were not passed on to our customers via increased prices. The food and beverage departments profit margins were negatively impacted by these increases in costs and were further adversely affected by the reduction
in our average restaurant check.

Other Operating Expenses. Other operating expenses are comprised of expenses
associated with the operation of our retail outlets and the ballroom along with the entertainment departments production costs and professional fees. Other operating expenses increased during the three and nine months ended September 30,
2010 compared to the same prior year periods primarily as a result of higher ballroom expenses associated with increased ballroom usage in 2010 compared to 2009. Additionally, entertainment expenses increased, principally for professional
entertainer fees and equipment rentals, as a result of an increase in the number of concert dates during the three and nine months ended September 30, 2010 compared to the same prior year periods. These increases were partially offset by
declines in retail cost of sales associated with decreased retail revenues during the three and nine months ended September 30, 2010 compared to the same prior year periods.

Selling, General and Administrative Expenses. During the three and nine months ended September 30, 2010 compared to the same
prior year periods, selling, general and administrative expenses decreased mainly due to substantial reductions in payroll and benefits among our administrative departments and lower utility costs resulting from declines in usage and operational
efficiencies. Another primary contributor to the declines in expenses was a reduction in property taxes during the three and nine months ended September 30, 2010 compared to the same prior year periods.

Depreciation Expense. Depreciation expense decreased during the three and nine months ended September 30, 2010 compared to
the same prior year periods principally due to assets becoming fully depreciated during the 2010 periods.

Change in Fair
Value of Life Insurance Contracts. These amounts relate to the change in fair value of life insurance contracts that informally fund a portion of our supplemental executive retirement plan. During the three and nine months ended
September 30, 2010 and 2009, the fair value of these life insurance contracts increased based on market prices.

Other (Income)
Expense

Other (income) expense is comprised of interest expense, interest income and the gain on the
early retirement of debt. In February 2009, we purchased and retired $17.2 million principal amount of our
101/8% mortgage notes. The total purchase price of
the notes was approximately $11.4 million, resulting in a gain of approximately $5.5 million, net of unamortized offering costs and discounts. As a result of this transaction, which reduced the principal amount of notes outstanding to $142.8 million
and lowered unamortized bond costs, interest expense decreased during the three and nine months ended September 30, 2010 compared to the same prior year periods.

Liquidity and Capital Resources

During the nine months ended
September 30, 2010, cash flows provided by operating activities was $5.3 million compared to $3.0 million during the same prior year period. This increase in cash flows provided by operating activities was primarily due to the increase in
our operating income. As of September 30, 2010, cash and cash equivalents were $31.8 million, sufficient for normal operating requirements.

Cash used in investing activities for the nine months ended September 30, 2010 was $8.5 million compared to $2.3 million for the nine months ended September 30, 2009, and related primarily to
capital expenditures for various renovation projects and equipment purchases. The increase during the current year was primarily due to purchases of furniture and fixtures for our hotel room remodel project which began in July 2010. Our executive
committee has approved $10.6 million in capital expenditures for 2010 of which $7.5 million is budgeted for the hotel room remodel project. During the nine months ended September 30, 2010, $8.4 million was spent on capital expenditures,
including $6.0 million for our hotel room remodel project.



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There was no cash used in financing activities during the nine months ended September 30, 2010. Cash used in
financing activities during the nine months ended September 30, 2009 was $11.4 million which represented a payment for the purchase and retirement of $17.2 million principal amount of our 101/8% mortgage notes. Additionally, $10,000 was paid in the 2009 period
representing costs associated with extension of the maturity date of our credit facility to March 30, 2010 when it expired by its terms.

In July 2010, we renewed our property and liability insurance policies each covering a 12-month period. Under these policies, the Partnership and the owner of the adjacent Eldorado property, Eldorado
Resorts LLC (which is an affiliate of ELLC), have combined per occurrence earthquake coverage of $186 million and combined aggregate flood coverage of $250 million. In the event that an earthquake causes damage to the Partnerships property,
the Partnership is eligible to receive up to the entire $186 million in coverage, depending on the replacement cost, regardless of the damage, if any, to the Eldorado property. In the event that a flood causes damage only to the Partnerships
property, the Partnership is eligible to receive up to $250 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 $141 million of the coverage amount (based on our percentage of the total reported property values) and the portion of the other $109 million, if any, remaining after satisfaction of the claim of Eldorado Resorts LLC with respect to
its adjoining property.

Our insurance policy also includes combined terrorism coverage for Silver Legacy and the adjoining
Eldorado property up to $800 million. In the event that an act of terrorism causes damage only to the Partnerships property, the Partnership is eligible to receive up to $800 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 $450 million of the coverage amount (based on our percentage of the total reported property values) and the
portion of the other $350 million, if any, remaining after satisfaction of the claim of Eldorado Resorts LLC with respect to its adjoining property. This policy also covers an additional property located in Shreveport, LA which is owned by an
affiliate of Eldorado Resorts LLC. In the event that an 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 $351 million of the coverage amount (based
on our percentage of the total reported property values) and the portion of the other $449 million, if any, remaining after satisfaction of the claims with respect to the other two properties.

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 are 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).



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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 will have sufficient resources to meet all of our obligations up to
the March 2012 maturity date of our 101/8% mortgage
notes. 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 cash reserves. We expect to refinance our 101/8% mortgage notes prior to their March 1, 2012
maturity, but can provide no assurance that we will be successful in such refinancing effort.

101/8% Mortgage Notes

On March 5, 2002, the Partnership and Capital co-issued $160.0 million principal amount of 101/8% senior secured mortgage notes due 2012. The notes are senior
secured obligations which rank equally with all of the Partnerships other outstanding senior debt and senior to any subordinated debt. The notes are secured by a security interest in the Issuers existing and future assets, other than
certain licenses which may not be pledged under applicable law. Each of the Partnerships partners has executed a pledge of all of its partnership interest in the Partnership to secure 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. At September 30, 2010, we were in compliance with all of the covenants in the indenture related to the notes.

In February 2009, the Partnership purchased and retired $17.2 million principal amount of
its 101/8% mortgage notes. The total purchase price
of the notes was approximately $11.4 million, resulting in a gain of approximately $5.5 million, net of unamortized debt issuance costs and discounts. The repurchase of the notes reduced the amount of notes outstanding to $142.8 million. The
transaction was funded by available invested cash reserves. The Partnerships executive committee has authorized the Partnership to spend up to an additional $8.6 million for the repurchase of notes. It is anticipated that any additional notes
acquired prior to their maturity will be through open market purchases.

Senior Secured Credit Facility

On March 30, 2010, our senior secured credit facility (the Credit Facility) that provided a $1.0
million revolving facility, which had been reduced from $10.0 million during the first quarter of 2008, expired. Under the Credit Facility, as in effect at the time it expired, we were required to maintain a maximum ratio of total debt to EBITDA of
4.75 to 1.00 and were also required to maintain a minimum ratio of EBITDA to fixed charges of 1.10 to 1.00 at all times. In addition, the Credit Facility limited capital expenditures to an aggregate of $15.0 million in any twelve-month period. The
Credit Facility was 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
in all of the partnership interests in the Partnership held by its partners. The Credit Facility ranked equal in right of payment to our other existing and future senior indebtedness, including our 101/8% mortgage notes, but the security interests securing our
obligations under the Credit Facility were senior to the security interests securing our obligations on the notes. The Credit Facility contained customary covenants, including covenants that limited or restricted 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 August 12, 2008, the Partnership and Bank of America, N.A. executed
an amendment to the Credit Facility which retroactively waived compliance with the Credit Facilitys financial covenants in respect of the quarters ended March 31, 2008 and June 30, 2008 and prospectively waived compliance with the
Credit Facilitys financial covenants for each subsequent quarter through 2009, provided that no additional credit was extended under the Credit Facility during a quarter for which the waiver was relied upon. Our inability to satisfy the
covenant ratios in the Credit Facility did not constitute a default under the indenture relating to the notes.

On
January 28, 2009, the Partnership executed an amendment to extend the Credit Facilitys maturity date for an additional year to March 30, 2010. This amendment also allowed for the unconditional expenditure of up to $20.0 million to
purchase outstanding notes, provided that no proceeds of loans under the Credit Facility were used for this purpose. Of the permitted $20.0 million of expenditures, the Partnership spent $11.4 million for the repurchase of notes.



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Our Credit Facility
was not extended beyond its March 30, 2010 maturity date since we had not utilized our borrowing capacity under the Credit Facility since 2003 and did not anticipate utilizing the Credit Facility in the foreseeable future.

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, 2009. There have been no material changes to these
policies during the nine months ended September 30, 2010.

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) contain or may contain 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 and our ability to refinance
our outstanding indebtedness), 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
in Item 1A of our annual report on Form 10-K for the fiscal year ended December 31, 2009. 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 Risk

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. 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
although we did not utilize any financial instruments during the nine months ended September 30, 2010. As of September 30, 2010, we had no variable rate debt outstanding.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures. As required by Rule 15d-15(b) under the Securities Exchange Act of 1934, as
amended (the Exchange Act), our management, including our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and proceures as of the end of the period covered by this
report. Based on that evaluation, our principal executive officer and our principal financial officer have concluded that as of the end of the period covered by this report our disclosure controls and procedures (as defined in Rule 15d-15(e) under
the Exchange Act) were effective.



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Changes in internal
control over financial reporting. As required by Rule 15d-15(d) under the Exchange Act, our management, including our principal executive officer and principal financial officer, has evaluated our internal control over financial reporting to
determine whether any changes to our internal control over financial reporting occurred during the quarter ended September 30, 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting. Based on that evaluation, no such changes to our internal control over financial reporting occurred during the quarter ended September 30, 2010.

Part II. OTHER INFORMATION

Item 6. Exhibits



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



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



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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: November 15, 2010 |  |  |  | By: |  | /s/ Gary L. Carano                                                                                     
|                        |  |  |  |     |  | Gary L. Carano Chief
Executive Officer (Principal Executive Officer)                                   
|                        |  |  | 
|Date: November 15, 2010 |  |  |  | By: |  | /s/ Stephanie D. Lepori                                                                                
|                        |  |  |  |     |  | Stephanie D. Lepori
Chief Accounting and Financial Officer (Principal
Financial and Accounting Officer)







|                        |  |  |  |     |  |                                                                           
|----------------------- |  |  |  | --- |  | --------------------------------------------------------------------------
|                        |  |  |  |     |  | SILVER LEGACY CAPITAL CORP.                                               
|                        |  |  | 
|Date: November 15, 2010 |  |  |  | By: |  | /s/ Gary L. Carano                                                        
|                        |  |  |  |     |  | Gary L. Carano Chief
Executive Officer (Principal Executive Officer)      
|                        |  |  | 
|Date: November 15, 2010 |  |  |  | By: |  | /s/ Stephanie D. Lepori                                                   
|                        |  |  |  |     |  | Stephanie D. Lepori
Treasurer (Principal Financial and Accounting Officer)



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