##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-Q


|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934 
|          
|           |  | For the quarterly period ended June 30, 2006                                                
|          
|or        
|          
|o          |  | 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:
333-118149


American Casino & Entertainment Properties LLC


(Exact name of registrant as specified in its charter)


|                                                                   |  |                                         
|------------------------------------------------------------------ |  | ----------------------------------------
|Delaware                                                           |  | 20-0573058                              
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification No.)
|                                                                  
|2000 Las Vegas Boulevard South
    Las Vegas, NV                   |  | 89104(Zip Code)                         
|(Address of principal executive offices)                           |  |                                         

(702) 380-7777


(Registrants telephone number, including area code)







þ o


12b-2


o o þ


12b-2 o þ










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TABLE OF CONTENTS


|                       |  |                                                                                                                              |  |      |    | 
|---------------------- |  | ---------------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                       |  |                                                                                                                              |  | Page |   
|                       |  |                                                                                                                              |  |      |   
|PART I                 |  | FINANCIAL INFORMATION                                                                                                        |  |      | 2  | 
|                       |  | Item 1.  Unaudited
    Condensed Consolidated Financial Statements                                                           |  |      | 2  | 
|                       |  | Condensed Consolidated Balance Sheets as of
    June 30, 2006 (unaudited) and December 31,
    2005                          |  |      | 2  | 
|                       |  | Condensed Consolidated Statements of Income
    for the three months ended June 30, 2006 and June 30,
    2005 (unaudited)   |  |      | 3  | 
|                       |  | Condensed Consolidated Statements of Income
    for the six months ended June 30, 2006 and June 30,
    2005 (unaudited)     |  |      | 4  | 
|                       |  | Condensed Consolidated Statements of Cash
    Flows for the six months ended June 30, 2006 and
    June 30, 2005 (unaudited) |  |      | 5  | 
|                       |  | Notes to Condensed Consolidated Financial
    Statements (unaudited)                                                         |  |      | 6  | 
|                       |  | Item 2.  Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations                       |  |      | 10 | 
|                       |  | Item 3.  Quantitative and
    Qualitative Disclosures About Market Risk                                                      |  |      | 17 | 
|                       |  | Item 4.  Controls and
    Procedures                                                                                         |  |      | 17 | 
|PART II                |  | OTHER INFORMATION                                                                                                            |  |      | 18 | 
|                       |  | Item 1A.  Risk
    Factors                                                                                                   |  |      | 18 | 
|                       |  | Item 6.  Exhibits                                                                                                            |  |      | 18 | 
|EX-31.1: CERTIFICATION
|EX-31.2: CERTIFICATION
|EX-32.1: CERTIFICATION
|EX-32.2: CERTIFICATION



1



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##### Table of Contents






PART I.  FINANCIAL INFORMATION







|        |                                                          
|------- | ---------------------------------------------------------
|ITEM 1. | Unaudited Condensed Consolidated Financial
    Statements

AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC





CONDENSED CONSOLIDATED BALANCE SHEETS


|                                      |                                                 |                |         |         |                   |   |         |         | 
|------------------------------------- | ----------------------------------------------- | -------------- | ------- | ------- | ----------------- | - | ------- | ------- | 
|                                      |                                                 | As of          |         |         | As of             |  
|                                      |                                                 | June 30, 2006  |         |         | December 31, 2005 |  
|                                      |                                                 |                |         |         |                   |  
|                                      |                                                 | (Unaudited)    |         |         |                  
|                                      |                                                 | (In thousands) |        
|ASSETS                               
|Current Assets:                       |                                                 |                |         |         |                   |   |         |        
|                                      | Cash and cash equivalents                       |                | $       | 77,953  |                   |   | $       | 108,316 | 
|                                      | Cash and cash equivalents  restricted          |                |         | 267     |                   |   |         | 504     | 
|                                      | Investments  restricted                        |                |         | 3,430   |                   |   |         | 2,828   | 
|                                      | Accounts receivable, net                        |                |         | 5,963   |                   |   |         | 4,167   | 
|                                      | Related party receivables                       |                |         | 139     |                   |   |         | 971     | 
|                                      | Deferred income taxes                           |                |         | 2,305   |                   |   |         | 2,305   | 
|                                      | Other current assets                            |                |         | 14,905  |                   |   |         | 12,092  | 
|                                      |                                                 |                |         |         |                   |  
|Total Current Assets                  |                                                 |                | 104,962 |         |                   |   | 131,183 |        
|                                      |                                                 |                |         |         |                   |  
|Property and equipment, net           |                                                 |                | 431,620 |         |                   |   | 319,505 |        
|                                      |                                                 |                |         |         |                   |  
|Deferred financing costs, net         |                                                 |                | 6,319   |         |                   |   | 6,397   |        
|Deferred income taxes                 |                                                 |                | 37,013  |         |                   |   | 37,172  |        
|Customer list, net                    |                                                 |                | 3,312   |         |                   |   |        |        
|                                      |                                                 |                |         |         |                   |  
|Total Other Assets                    |                                                 |                | 46,644  |         |                   |   | 43,569  |        
|                                      |                                                 |                |         |         |                   |  
|Total Assets                          |                                                 | $              | 583,226 |         |                   | $ | 494,257 |        
|                                      |                                                 |                |         |         |                   |  
|                                     
|LIABILITIES AND MEMBERS EQUITY      
|Current Liabilities:                  |                                                 |                |         |         |                   |   |         |        
|                                      | Accounts payable                                |                | $       | 7,843   |                   |   | $       | 4,352   | 
|                                      | Accrued expenses                                |                |         | 29,673  |                   |   |         | 22,582  | 
|                                      | Accrued payroll and related expenses            |                |         | 13,391  |                   |   |         | 11,042  | 
|                                      | Current portion of capital lease obligation     |                |         | 484     |                   |   |         | 473     | 
|                                      |                                                 |                |         |         |                   |  
|Total Current Liabilities             |                                                 |                | 51,391  |         |                   |   | 38,449  |        
|                                      |                                                 |                |         |         |                   |  
|Long-Term Liabilities:                |                                                 |                |         |         |                   |   |         |        
|                                      | Long-term debt, less current portion            |                |         | 275,000 |                   |   |         | 215,000 | 
|                                      | Capital lease obligations, less current portion |                |         | 2,581   |                   |   |         | 2,825   | 
|                                      | Other                                           |                |         | 6,152   |                   |   |         | 5,885   | 
|                                      |                                                 |                |         |         |                   |  
|Total Long-Term Liabilities           |                                                 |                | 283,733 |         |                   |   | 223,710 |        
|                                      |                                                 |                |         |         |                   |  
|Total Liabilities                     |                                                 |                | 335,124 |         |                   |   | 262,159 |        
|                                      |                                                 |                |         |         |                   |  
|Commitments and Contingencies         |                                                 |                |         |         |                   |   |         |        
|Members Equity:                      |                                                 |                |         |         |                   |   |         |        
|Members equity                       |                                                 |                | 248,102 |         |                   |   | 232,098 |        
|                                      |                                                 |                |         |         |                   |  
|                                      | Total Members Equity                           |                |         | 248,102 |                   |   |         | 232,098 | 
|                                      |                                                 |                |         |         |                   |  
|Total Liabilities and Members Equity |                                                 | $              | 583,226 |         |                   | $ | 494,257 |        
|                                      |                                                 |                |         |         |                   |  



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AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC





CONDENSED CONSOLIDATED STATEMENTS OF INCOME


|                           |                                     |                          |        |        |               |   |        |        |        |  
|-------------------------- | ----------------------------------- | ------------------------ | ------ | ------ | ------------- | - | ------ | ------ | ------ | -
|                           |                                     | Three Months Ended       |       
|                           |                                     |                          |       
|                           |                                     | June 30, 2006            |        |        | June 30, 2005 |  
|                           |                                     |                          |        |        |               |  
|                           |                                     | (Unaudited)              |       
|                           |                                     | (In thousands)           |       
|Revenues:                  |                                     |                          |        |        |               |   |        |       
|                           | Casino                              |                          | $      | 51,586 |               |   | $      | 43,791 |       
|                           | Hotel                               |                          |        | 18,628 |               |   |        | 15,712 |       
|                           | Food and beverage                   |                          |        | 20,278 |               |   |        | 17,892 |       
|                           | Tower, retail and other             |                          |        | 9,400  |               |   |        | 9,219  |       
|                           |                                     |                          |        |        |               |  
|                           |                                     | Gross Revenues           |        |        | 99,892        |   |        |        | 86,614 |  
|                           | Less promotional allowances         |                          |        | 6,768  |               |   |        | 5,105  |       
|                           |                                     |                          |        |        |               |  
|                           |                                     | Net Revenues             |        |        | 93,124        |   |        |        | 81,509 |  
|                           |                                     |                          |        |        |               |  
|Costs and Expenses:        |                                     |                          |        |        |               |   |        |       
|                           | Casino                              |                          |        | 19,035 |               |   |        | 15,400 |       
|                           | Hotel                               |                          |        | 7,908  |               |   |        | 6,844  |       
|                           | Food and beverage                   |                          |        | 14,864 |               |   |        | 12,958 |       
|                           | Other operating expenses            |                          |        | 4,283  |               |   |        | 4,074  |       
|                           | Selling, general and administrative |                          |        | 24,820 |               |   |        | 18,998 |       
|                           | Depreciation and amortization       |                          |        | 6,848  |               |   |        | 5,730  |       
|                           | Pre-opening costs                   |                          |        | 931    |               |   |        |       |       
|                           | Loss (gain) on sale of assets       |                          |        | 2      |               |   |        | (2     | )     
|                           |                                     |                          |        |        |               |  
|                           |                                     | Total Costs and Expenses |        |        | 78,691        |   |        |        | 64,002 |  
|                           |                                     |                          |        |        |               |  
|Income From Operations     |                                     |                          | 14,433 |        |               |   | 17,507 |       
|                           |                                     |                          |        |        |               |  
|Other Income (Expense):    |                                     |                          |        |        |               |   |        |       
|                           | Interest income                     |                          |        | 717    |               |   |        | 356    |       
|                           | Interest expense                    |                          |        | (5,164 | )             |   |        | (4,561 | )     
|                           |                                     |                          |        |        |               |  
|                           |                                     | Total Other Expense, net |        |        | (4,447        | ) |        |        | (4,205 | )
|                           |                                     |                          |        |        |               |  
|Income Before Income Taxes |                                     |                          | 9,986  |        |               |   | 13,302 |       
|Provision for income taxes |                                     |                          | 3,311  |        |               |   | 4,621  |       
|                           |                                     |                          |        |        |               |  
|Net Income                 |                                     | $                        | 6,675  |        |               | $ | 8,681  |       
|                           |                                     |                          |        |        |               |  



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AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC





CONDENSED CONSOLIDATED STATEMENTS OF INCOME


|                           |                                     |                          |        |        |               |   |        |        |         |  
|-------------------------- | ----------------------------------- | ------------------------ | ------ | ------ | ------------- | - | ------ | ------ | ------- | -
|                           |                                     | Six Months Ended         |       
|                           |                                     |                          |       
|                           |                                     | June 30, 2006            |        |        | June 30, 2005 |  
|                           |                                     |                          |        |        |               |  
|                           |                                     | (Unaudited)              |       
|                           |                                     | (In thousands)           |       
|Revenues:                  |                                     |                          |        |        |               |   |        |       
|                           | Casino                              |                          | $      | 99,608 |               |   | $      | 91,520 |        
|                           | Hotel                               |                          |        | 36,061 |               |   |        | 31,505 |        
|                           | Food and beverage                   |                          |        | 38,348 |               |   |        | 34,968 |        
|                           | Tower, retail and other             |                          |        | 17,619 |               |   |        | 17,425 |        
|                           |                                     |                          |        |        |               |  
|                           |                                     | Gross Revenues           |        |        | 191,636       |   |        |        | 175,418 |  
|                           | Less promotional allowances         |                          |        | 12,567 |               |   |        | 11,071 |        
|                           |                                     |                          |        |        |               |  
|                           |                                     | Net Revenues             |        |        | 179,069       |   |        |        | 164,347 |  
|                           |                                     |                          |        |        |               |  
|Costs and Expenses:        |                                     |                          |        |        |               |   |        |       
|                           | Casino                              |                          |        | 35,523 |               |   |        | 31,300 |        
|                           | Hotel                               |                          |        | 14,751 |               |   |        | 12,867 |        
|                           | Food and beverage                   |                          |        | 28,065 |               |   |        | 25,334 |        
|                           | Other operating expenses            |                          |        | 8,013  |               |   |        | 7,712  |        
|                           | Selling, general and administrative |                          |        | 45,606 |               |   |        | 38,685 |        
|                           | Depreciation and amortization       |                          |        | 12,858 |               |   |        | 11,173 |        
|                           | Pre-opening costs                   |                          |        | 1,449  |               |   |        |       |        
|                           | Loss (gain) on sale of assets       |                          |        |       |               |   |        | (21    | )      
|                           |                                     |                          |        |        |               |  
|                           |                                     | Total Costs and Expenses |        |        | 146,265       |   |        |        | 127,050 |  
|                           |                                     |                          |        |        |               |  
|Income From Operations     |                                     |                          | 32,804 |        |               |   | 37,297 |       
|                           |                                     |                          |        |        |               |  
|Other Income (Expense):    |                                     |                          |        |        |               |   |        |       
|                           | Interest income                     |                          |        | 1,567  |               |   |        | 523    |        
|                           | Interest expense                    |                          |        | (9,846 | )             |   |        | (9,100 | )      
|                           |                                     |                          |        |        |               |  
|                           |                                     | Total Other Expense, net |        |        | (8,279        | ) |        |        | (8,577  | )
|                           |                                     |                          |        |        |               |  
|Income Before Income Taxes |                                     |                          | 24,525 |        |               |   | 28,720 |       
|Provision for income taxes |                                     |                          | 8,521  |        |               |   | 9,948  |       
|                           |                                     |                          |        |        |               |  
|Net Income                 |                                     | $                        | 16,004 |        |               | $ | 18,772 |       
|                           |                                     |                          |        |        |               |  



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AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC





CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                    |                                                                                       |                                              |                                       |          |               |        |         |         |        |        |  
|--------------------------------------------------- | ------------------------------------------------------------------------------------- | -------------------------------------------- | ------------------------------------- | -------- | ------------- | ------ | ------- | ------- | ------ | ------ | -
|                                                    |                                                                                       | Six Months Ended                             |                                      
|                                                    |                                                                                       |                                              |                                      
|                                                    |                                                                                       | June 30, 2006                                |                                       |          | June 30, 2005 |       
|                                                    |                                                                                       |                                              |                                       |          |               |       
|                                                    |                                                                                       | (Unaudited)                                  |                                      
|                                                    |                                                                                       | (In thousands)                               |                                      
|Cash Flows From Operating Activities:               |                                                                                       |                                              |                                       |          |               |        |         |        
|                                                    | Net income                                                                            |                                              | $                                     | 16,004   |               |        | $       | 18,772  |       
|                                                    | Adjustments to reconcile net income to net cash provided by
    operating activities: |                                              |                                       |          |               |        |         |         |       
|                                                    |                                                                                       | Depreciation and amortization                |                                       |          | 12,858        |        |         |         | 11,173 |       
|                                                    |                                                                                       | Gain on sale or disposal of assets           |                                       |          |              |        |         |         | (21    | )     
|                                                    |                                                                                       | Provision for deferred income taxes          |                                       |          | 159           |        |         |         | 6,610  |       
|                                                    |                                                                                       | Changes in operating assets and liabilities: |                                       |          |               |        |         |         |        |       
|                                                    |                                                                                       |                                              | Restricted cash                       |          |               | 237    |         |         |        | (53    | )
|                                                    |                                                                                       |                                              | Accounts receivable, net              |          |               | 103    |         |         |        | 528    |  
|                                                    |                                                                                       |                                              | Other assets                          |          |               | (1,132 | )       |         |        | 917    |  
|                                                    |                                                                                       |                                              | Accounts payable and accrued expenses |          |               | 8,057  |         |         |        | (3,492 | )
|                                                    |                                                                                       |                                              | Other                                 |          |               | 267    |         |         |        |       |  
|                                                    |                                                                                       |                                              |                                       |          |               |       
|Net Cash Provided By Operating Activities           |                                                                                       |                                              | 36,553                                |          |               |        | 34,434  |        
|                                                    |                                                                                       |                                              |                                       |          |               |       
|Cash Flows From Investing Activities:               |                                                                                       |                                              |                                       |          |               |        |         |        
|                                                    | Increase in investments  restricted                                                  |                                              |                                       | (602     | )             |        |         | (280    | )     
|                                                    | Acquisition of property and equipment                                                 |                                              |                                       | (16,558  | )             |        |         | (11,590 | )     
|                                                    | Acquisition of Flamingo Laughlin, net of cash acquired                                |                                              |                                       | (109,897 | )             |        |         |        |       
|                                                    | Related party receivables                                                             |                                              |                                       | 832      |               |        |         | (470    | )     
|                                                    | Proceeds from sale of property and equipment                                          |                                              |                                       | 6        |               |        |         | 38      |       
|                                                    |                                                                                       |                                              |                                       |          |               |       
|Net Cash Used in Investing Activities               |                                                                                       |                                              | (126,219                              | )        |               |        | (12,302 | )      
|                                                    |                                                                                       |                                              |                                       |          |               |       
|Cash Flows From Financing Activities:               |                                                                                       |                                              |                                       |          |               |        |         |        
|                                                    | Debt issuance and deferred financing costs                                            |                                              |                                       | (464     | )             |        |         |        |       
|                                                    | Proceeds from notes payable                                                           |                                              |                                       | 60,000   |               |        |         |        |       
|                                                    | Payments on capital lease obligation                                                  |                                              |                                       | (233     | )             |        |         | (222    | )     
|                                                    |                                                                                       |                                              |                                       |          |               |       
|Net Cash Provided By (Used in) Financing Activities |                                                                                       |                                              | 59,303                                |          |               |        | (222    | )      
|                                                    |                                                                                       |                                              |                                       |          |               |       
|                                                    | Net increase (decrease) in cash and cash equivalents                                  |                                              |                                       | (30,363  | )             |        |         | 21,910  |       
|                                                    | Cash and cash equivalents  beginning of period                                       |                                              |                                       | 108,316  |               |        |         | 75,161  |       
|                                                    |                                                                                       |                                              |                                       |          |               |       
|Cash and Cash Equivalents  end of period           |                                                                                       | $                                            | 77,953                                |          |               | $      | 97,071  |        
|                                                    |                                                                                       |                                              |                                       |          |               |       
|Supplemental Disclosure of Cash Flow Information:   |                                                                                       |                                              |                                       |          |               |        |         |        
|                                                    | Cash paid during the period for interest                                              |                                              | $                                     | 8,939    |               |        | $       | 8,596   |       
|                                                    |                                                                                       |                                              |                                       |          |               |       
|                                                    | Cash paid during the period for income taxes                                          |                                              | $                                     | 8,050    |               |        | $       | 2,500   |       
|                                                    |                                                                                       |                                              |                                       |          |               |       



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AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC





NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




|        |            
|------- | -----------
|Note 1. | The Company









|        |                      
|------- | ---------------------
|Note 2. | Basis of Presentation

10-K 333-118149).




Principles of Consolidation




Recently Issued Accounting Pronouncements




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)








|        |                           
|------- | --------------------------
|Note 3. | Related Party Transactions

out-of








|        |               
|------- | --------------
|Note 4. | Long-term Debt





|        |                           
|------- | --------------------------
|Note 5. | Non-guarantor Subsidiaries

co-issuer


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)




|        |                  
|------- | -----------------
|Note 6. | Legal Proceedings





|        |             
|------- | ------------
|Note 7. | Acquisitions



|                         |  |   |         |  
|------------------------ |  | - | ------- | -
|Land                     |  | $ | 13,000  |  
|Building                 |  |   | 92,615  |  
|Equipment                |  |   | 2,685   |  
|Customer list            |  |   | 3,397   |  
|Deposits                 |  |   | 18      |  
|Accrued vacation expense |  |   | (1,809  | )
|                         |  |   |        
|                         |  | $ | 109,906 |  
|                         |  |   |        





|                     |  |   |        |  
|-------------------- |  | - | ------ | -
|Cash                 |  | $ | 6,028  |  
|Accounts receivable  |  |   | 5      |  
|Other current assets |  |   | 1,121  |  
|Equipment            |  |   | 36     |  
|Accrued liabilities  |  |   | (3,065 | )
|                     |  |   |       
|                     |  | $ | 4,125  |  
|                     |  |   |       



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)




|             |  |                    |         |  |      |   |         | 
|------------ |  | ------------------ | ------- |  | ---- | - | ------- | 
|             |  | Three Months Ended |        
|             |  | June 30,           |        
|             |  |                    |        
|             |  | 2006               |         |  | 2005 |  
|             |  |                    |         |  |      |  
|             |  | (In thousands)     |        
|Net revenues |  | $                  | 108,102 |  |      | $ | 109,370 | 
|Net income   |  | $                  | 7,495   |  |      | $ | 10,645  | 

|             |  |                  |         |  |      |   |         | 
|------------ |  | ---------------- | ------- |  | ---- | - | ------- | 
|             |  | Six Months Ended |        
|             |  | June 30,         |        
|             |  |                  |        
|             |  | 2006             |         |  | 2005 |  
|             |  |                  |         |  |      |  
|             |  | (In thousands)   |        
|Net revenues |  | $                | 221,862 |  |      | $ | 219,191 | 
|Net income   |  | $                | 19,504  |  |      | $ | 22,689  | 



9



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

10-K


Overview








|                          |  |         |        |  |           |  |       |        |  |  |             |  |  |  |    | 
|------------------------- |  | ------- | ------ |  | --------- |  | ----- | ------ |  |  | ----------- |  |  |  | -- | 
|                          |  | Casino  |        |  | Number of |  |       | Number |  |  | Number      | 
|                          |  | Square  |        |  | Hotel     |  |       | of     |  |  | of          | 
|                          |  | Footage |        |  | Rooms     |  |       | Slots  |  |  | Table Games | 
|                          |  |         |        |  |           |  |       |        |  |  |             | 
|Stratosphere              |  |         | 80,000 |  |           |  | 2,444 |        |  |  | 1,343       |  |  |  | 49 | 
|Arizona Charlies Decatur |  |         | 52,000 |  |           |  | 258   |        |  |  | 1,486       |  |  |  | 15 | 
|Arizona Charlies Boulder |  |         | 47,000 |  |           |  | 303   |        |  |  | 1,027       |  |  |  | 14 | 
|Flamingo Laughlin         |  |         | 57,000 |  |           |  | 1,907 |        |  |  | 1,324       |  |  |  | 44 | 



10



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##### Table of Contents



Results of Operations




| |                                                                                  
| | ---------------------------------------------------------------------------------
| | Three Months Ended June 30, 2006 Compared to Three
    Months Ended June 30, 2005

|                            |                                     |                          |      |      |      |   |      |          |      |  |       |      |      |  
|--------------------------- | ----------------------------------- | ------------------------ | ---- | ---- | ---- | - | ---- | -------- | ---- |  | ----- | ---- | ---- | -
|                            |                                     | Three Months             |      |      |     
|                            |                                     | Ended                    |      |      |     
|                            |                                     | June 30,                 |      |      |     
|                            |                                     |                          |      |      |     
|                            |                                     | 2006                     |      |      | 2005 |   |      | % Change |     
|                            |                                     |                          |      |      |      |   |      |          |     
|                            |                                     | (In millions)            |      |      |     
|INCOME STATEMENT DATA:      |                                     |                          |      |      |      |   |      |          |      |  |       |     
|Revenues:                   |                                     |                          |      |      |      |   |      |          |      |  |       |     
|                            | Casino                              |                          | $    | 51.6 |      |   | $    | 43.8     |      |  |       | 17.8 | %   
|                            | Hotel                               |                          |      | 18.6 |      |   |      | 15.7     |      |  |       | 18.5 | %   
|                            | Food and beverage                   |                          |      | 20.3 |      |   |      | 17.9     |      |  |       | 13.4 | %   
|                            | Tower, retail and other             |                          |      | 9.4  |      |   |      | 9.2      |      |  |       | 2.2  | %   
|                            |                                     |                          |      |      |      |   |      |          |     
|                            |                                     | Gross revenues           |      |      | 99.9 |   |      |          | 86.6 |  |       |      | 15.4 | %
|Less promotional allowances |                                     |                          | 6.8  |      |      |   | 5.1  |          |      |  | 33.3  | %   
|                            |                                     |                          |      |      |      |   |      |          |     
|                            |                                     | Net revenues             |      |      | 93.1 |   |      |          | 81.5 |  |       |      | 14.2 | %
|                            |                                     |                          |      |      |      |   |      |          |     
|Costs and expenses:         |                                     |                          |      |      |      |   |      |          |      |  |       |     
|                            | Casino                              |                          |      | 19.0 |      |   |      | 15.4     |      |  |       | 23.4 | %   
|                            | Hotel                               |                          |      | 7.9  |      |   |      | 6.8      |      |  |       | 16.2 | %   
|                            | Food and beverage                   |                          |      | 14.9 |      |   |      | 13.0     |      |  |       | 14.6 | %   
|                            | Other operating expenses            |                          |      | 4.3  |      |   |      | 4.1      |      |  |       | 4.9  | %   
|                            | Selling, general and administrative |                          |      | 24.8 |      |   |      | 19.0     |      |  |       | 30.5 | %   
|                            | Pre-opening costs                   |                          |      | 0.9  |      |   |      |         |      |  |       |      |     
|                            | Depreciation and amortization       |                          |      | 6.9  |      |   |      | 5.7      |      |  |       | 21.1 | %   
|                            |                                     |                          |      |      |      |   |      |          |     
|                            |                                     | Total costs and expenses |      |      | 78.7 |   |      |          | 64.0 |  |       |      | 23.0 | %
|                            |                                     |                          |      |      |      |   |      |          |     
|Income from operations      |                                     | $                        | 14.4 |      |      | $ | 17.5 |          |      |  | (17.7 | )%  
|                            |                                     |                          |      |      |      |   |      |          |     





| |               
| | --------------
| | Gross Revenues





| |                
| | ---------------
| | Casino Revenues



11



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##### Table of Contents





| |                    
| | -------------------
| | Non-Casino Revenues









| |                       
| | ----------------------
| | Promotional Allowances





| |                   
| | ------------------
| | Operating Expenses













| |                 
| | ----------------
| | Interest Expense



12



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##### Table of Contents





| |                                                                              
| | -----------------------------------------------------------------------------
| | Six Months Ended June 30, 2006 Compared to Six Months
    Ended June 30, 2005

|                            |                                     |                          |      |      |       |   |      |          |       |  |       |      |      |  
|--------------------------- | ----------------------------------- | ------------------------ | ---- | ---- | ----- | - | ---- | -------- | ----- |  | ----- | ---- | ---- | -
|                            |                                     | Six Months               |      |      |      
|                            |                                     | Ended                    |      |      |      
|                            |                                     | June 30,                 |      |      |      
|                            |                                     |                          |      |      |      
|                            |                                     | 2006                     |      |      | 2005  |   |      | % Change |      
|                            |                                     |                          |      |      |       |   |      |          |      
|                            |                                     | (In millions)            |      |      |      
|INCOME STATEMENT DATA:      |                                     |                          |      |      |       |   |      |          |       |  |       |     
|Revenues:                   |                                     |                          |      |      |       |   |      |          |       |  |       |     
|                            | Casino                              |                          | $    | 99.6 |       |   | $    | 91.5     |       |  |       | 8.9  | %   
|                            | Hotel                               |                          |      | 36.1 |       |   |      | 31.5     |       |  |       | 14.6 | %   
|                            | Food and beverage                   |                          |      | 38.4 |       |   |      | 35.0     |       |  |       | 9.7  | %   
|                            | Tower, retail and other             |                          |      | 17.6 |       |   |      | 17.4     |       |  |       | 1.1  | %   
|                            |                                     |                          |      |      |       |   |      |          |      
|                            |                                     | Gross revenues           |      |      | 191.7 |   |      |          | 175.4 |  |       |      | 9.3  | %
|Less promotional allowances |                                     |                          | 12.6 |      |       |   | 11.1 |          |       |  | 13.5  | %   
|                            |                                     |                          |      |      |       |   |      |          |      
|                            |                                     | Net revenues             |      |      | 179.1 |   |      |          | 164.3 |  |       |      | 9.0  | %
|                            |                                     |                          |      |      |       |   |      |          |      
|Costs and expenses:         |                                     |                          |      |      |       |   |      |          |       |  |       |     
|                            | Casino                              |                          |      | 35.5 |       |   |      | 31.3     |       |  |       | 13.4 | %   
|                            | Hotel                               |                          |      | 14.8 |       |   |      | 12.9     |       |  |       | 14.7 | %   
|                            | Food and beverage                   |                          |      | 28.1 |       |   |      | 25.3     |       |  |       | 11.1 | %   
|                            | Other operating expenses            |                          |      | 8.0  |       |   |      | 7.7      |       |  |       | 3.9  | %   
|                            | Selling, general and administrative |                          |      | 45.6 |       |   |      | 38.6     |       |  |       | 18.1 | %   
|                            | Pre-opening costs                   |                          |      | 1.4  |       |   |      |         |       |  |       |      |     
|                            | Depreciation and amortization       |                          |      | 12.9 |       |   |      | 11.2     |       |  |       | 15.2 | %   
|                            |                                     |                          |      |      |       |   |      |          |      
|                            |                                     | Total costs and expenses |      |      | 146.3 |   |      |          | 127.0 |  |       |      | 15.2 | %
|                            |                                     |                          |      |      |       |   |      |          |      
|Income from operations      |                                     | $                        | 32.8 |      |       | $ | 37.3 |          |       |  | (12.1 | )%  
|                            |                                     |                          |      |      |       |   |      |          |      





| |               
| | --------------
| | Gross Revenues





| |                
| | ---------------
| | Casino Revenues



13



---



##### Table of Contents





| |                    
| | -------------------
| | Non-Casino Revenues









| |                       
| | ----------------------
| | Promotional Allowances





| |                   
| | ------------------
| | Operating Expenses













| |                 
| | ----------------
| | Interest Expense



14



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##### Table of Contents



Financial Condition


Liquidity and Capital Resources












15



---



##### Table of Contents







Contractual Commitments


10-K


Recently Issued Accounting Pronouncements






Forward-Looking Statements


10-K


16



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##### Table of Contents





We warn you that forward-looking statements are only
predictions. Actual events or results may differ as a result of
risks that we face. Forward-looking statements speak only as of
the date they were made and we undertake no obligation to update
them.







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












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

13a-15(e) 15d-15(e).






17



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##### Table of Contents






PART II.  OTHER INFORMATION







|         |             
|-------- | ------------
|Item 1A. | Risk Factors

10-K


We cannot guarantee that we will be able to recover our
investment made in connection with the acquisition of the
Flamingo Laughlin, and we may have difficulties combining the
operations of the Flamingo Laughlin with our existing
operations.













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

S-K


18



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##### Table of Contents



SIGNATURES






| |                                                   
| | --------------------------------------------------
| | American Casino &
    Entertainment Properties LLC



| |     |                  
| | --- | -----------------
| | By: | /s/ Denise Barton

| |                                                
| | -----------------------------------------------
| |                                                
| | Denise Barton                                  
| | Senior Vice President, Chief Financial Officer,
| | Treasurer and Secretary                        
| | (Principal Financial and Accounting Officer)   



19



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##### Table of Contents



Exhibits Index


|        |      |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|------- | ---- | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |            
|No.     |      | Description
|        |      |            
|        | 10.1 |             |  | Amended and Restated Credit Agreement, dated as of May 9,
    2006, among American Casino & Entertainment Properties
    LLC, as the Borrower, Certain Subsidiaries of the Borrower from
    time to time party thereto, as Guarantors, the Several Lenders
    from time to time parties thereto, Wells Fargo Bank N.A., as
    Syndication Agent, CIT Lending Services Corporation,
    U.S. Bank, NA and Comerica West Incorporated, as
    Co-Documentation Agents, Bear Stearns Corporate Lending Inc., as
    Administrative Agent, and Bear Stearns & Co. Inc., as
    Sole Lead Arranger and Sole Bookrunner (incorporated by
    reference to Exhibit 10.1 to American Casino &
    Entertainment Properties LLCs Form 8-K (SEC File
    No. 333-118149), filed on May 17, 2006).
|       
|        | 10.2 |             |  | Reaffirmation Agreement, dated as of May 9, 2006, among the
    Grantors thereto with Bear Sterns Corporate Lending Inc., as
    Administrative Agent (incorporated by reference to
    Exhibit 10.2 to American Casino & Entertainment
    Properties LLCs Form 8-K (SEC File
    No. 333-118149), filed on May 17, 2006).                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
|        | 10.3 |             |  | First Modification to Deed of Trust, Assignment of Rents and
    Leases, Security Agreement and Fixture Filing made by
    Stratosphere Corporation, as Trustor, to Lawyers Title of
    Nevada, as Trustee, for the benefit of Wilmington Trust Company,
    in its capacity as Indenture Trustee, for the benefit of the
    Secured Parties, as Beneficiary, dated as of May 9, 2006
    (incorporated by reference to Exhibit 10.3 to American
    Casino & Entertainment Properties LLCs
    Form 8-K (SEC File No. 333-118149), filed on
    May 17, 2006).                                                                                                                                                                                                                         
|       
|        | 10.4 |             |  | First Modification to Deed of Trust, Assignment of Rents and
    Leases, Security Agreement and Fixture Filing made by
    Stratosphere Corporation, as Trustor, to Lawyers Title of
    Nevada, as Trustee, for the benefit of Bear Stearns Corporate
    Lending Inc., in its capacity as Administrative Agent, for the
    benefit of the Secured Parties, as Beneficiary, dated as of
    May 9, 2006 (incorporated by reference to Exhibit 10.4
    to American Casino & Entertainment Properties
    LLCs Form 8-K (SEC File No. 333-118149), filed
    on May 17, 2006).                                                                                                                                                                                                           
|       
|        | 10.5 |             |  | First Modification to Deed of Trust, Assignment of Rents and
    Leases, Security Agreement and Fixture Filing made by
    Stratosphere Land Corporation, as Trustor, to Lawyers Title of
    Nevada, as Trustee, for the benefit of Bear Stearns Corporate
    Lending Inc., in its capacity as Administrative Agent, for the
    benefit of the Secured Parties, as Beneficiary, dated as of
    May 9, 2006 (incorporated by reference to Exhibit 10.5
    to American Casino & Entertainment Properties
    LLCs Form 8-K (SEC File No. 333-118149), filed
    on May 17, 2006).                                                                                                                                                                                                      
|       
|        | 10.6 |             |  | First Modification to Deed of Trust, Assignment of Rents and
    Leases, Security Agreement and Fixture Filing made by Fresca,
    LLC, as Trustor, to Lawyers Title of Nevada, as Trustee, for the
    benefit of Bear Stearns Corporate Lending Inc., in its capacity
    as Administrative Agent, for the benefit of the Secured Parties,
    as Beneficiary, dated as of May 9, 2006 (incorporated by
    reference to Exhibit 10.6 to American Casino &
    Entertainment Properties LLCs Form 8-K (SEC File
    No. 333-118149), filed on May 17, 2006).                                                                                                                                                                                                                            
|       
|        | 10.7 |             |  | First Modification to Deed of Trust, Assignment of Rents and
    Leases, Security Agreement and Fixture Filing made by Arizona
    Charlies, LLC, as Trustor, to Lawyers Title of Nevada, as
    Trustee, for the benefit of Bear Stearns Corporate Lending Inc.,
    in its capacity as Administrative Agent, for the benefit of the
    Secured Parties, as Beneficiary, dated as of May 9, 2006
    (incorporated by reference to Exhibit 10.7 to American
    Casino & Entertainment Properties LLCs
    Form 8-K (SEC File No. 333-118149), filed on
    May 17, 2006).                                                                                                                                                                                                             
|       
|        | 10.8 |             |  | Asset Purchase Agreement, dated as of November 28, 2005 by
    and among Harrahs Operating Company, Inc.,
    Flamingo-Laughlin, Inc., Boardwalk Regency Corporation, Martial
    Development Corporation, AREP Boardwalk LLC and AREP Laughlin
    Corporation. (incorporated by reference to Exhibit 10.1 to
    American Casino & Entertainment Properties LLCs
    Form 8-K (SEC File No. 333-118149), filed on
    May 25, 2006).                                                                                                                                                                                                                                                                                                                                                   



---



##### Table of Contents



|        |      |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|------- | ---- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |            
|No.     |      | Description
|        |      |            
|       
|        | 10.9 |             |  | Supplemental Indenture, dated as of May 19, 2006, made by
    AREP Laughlin Corporation, American Casino &
    Entertainment Properties LLC, as Issuer, American
    Casino & Entertainment Properties Finance Corp., as
    co-issuer, the other Guarantors thereto and Wilmington Trust
    Company, as trustee (incorporated by reference to
    Exhibit 10.2 to American Casino & Entertainment
    Properties LLCs Form 8-K (SEC File
    No. 333-118149), filed on May 25, 2006).
|       
|        | 31.1 |             |  | Certification of Principal Executive Officer pursuant to
    Section 302(a) of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                          
|       
|        | 31.2 |             |  | Certification of Principal Financial Officer pursuant to
    Section 302(a) of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                          
|       
|        | 32.1 |             |  | Certification of Chief Executive Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                 
|       
|        | 32.2 |             |  | Certification of Chief Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.