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 1934For
      the quarterly period ended March 31, 2009.oro
                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: 333-88829
  DIAMOND
      JO, LLC
                
                PENINSULA
      GAMING, LLC
                
                PENINSULA
      GAMING CORP.(Exact
      name of registrants
                  as
      specified in their charter)
                
                (Exact
      name of registrants
                  as
      specified in their charter)
                
                (Exact
      name of registrants
                  as
      specified in their charter)DELAWARE
                
                DELAWARE
                
                DELAWARE(State
      or other jurisdiction of
                  incorporation
      or organization)
                
                (State
      or other jurisdiction of
                  incorporation
      or organization)
                
                (State
      or other jurisdiction of
                  incorporation
      or organization)42-1483875
                
                20-0800583
                
                25-1902805(I.R.S.
      Employer
                  Identification
      No.)
                
                (I.R.S.
      Employer
                  Identification
      No.)
                
                (I.R.S.
      Employer
                  Identification
      No.)
 
 301
Bell Street
 Dubuque,
Iowa 52001
 (563)
690-4975
 (Address,
including zip code, and telephone number, including area code, of principal
executive offices)
  Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding twelve months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes o  No x
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer," "accelerated
filer" and "smaller reporting company" in Rule 12b-2 of the Exchange
Act.:
 
 Large Accelerated Filer o        Accelerated
Filer o        Non-Accelerated
Filer    x    Smaller
reporting company o
 
 Indicate
by check mark if the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes o  No x
  All of
the common equity interests of Peninsula Gaming, LLC (the “Company”) are held by
Peninsula Gaming Partners, LLC. All of the common equity interests of Diamond
Jo, LLC, The Old Evangeline Downs, L.L.C., Diamond Jo Worth Holdings, LLC and
Peninsula Gaming Corp. are held by the Company. All of the common equity
interests of Diamond Jo Worth, LLC and Diamond Jo Worth Corp. are held by
Diamond Jo Worth Holdings, LLC.
 
 
 
 PENINSULA
GAMING, LLC
  INDEX
TO FORM 10-Q
  Part I
      - Financial Information
                            PageItem 1 -
      Financial Statements
                            3Peninsula Gaming, LLC:Condensed
      Consolidated Balance Sheets (Unaudited) as of March 31, 2009 and December
      31, 2008
                            3Condensed
      Consolidated Statements of Operations (Unaudited) for the Three Months
      Ended March 31, 2009 and 2008
                            4Condensed Consolidated Statements of Changes in
      Member's Deficit and Comprehensive Income (Unaudited) for the Three Months
                              Ended March 31,
      2009
                            5Condensed
      Consolidated Statements of Cash Flows (Unaudited) for the Three Months
      Ended March 31, 2009 and 2008
                            6Notes to
      Condensed Consolidated Financial Statements
      (Unaudited)
                            7Item 2 -
      Management’s Discussion and Analysis of Financial Condition and Results of
      Operations
                            21Item 3 -
      Quantitative and Qualitative Disclosures About Market
      Risk
                            25Item 4 -
      Controls and Procedures
                            26Part II - Other Information
                            27Item 1 -
      Legal Proceedings
                            27Item 6 -
      Exhibits
                            27Signatures
                            28
 
 
 2
 
 PARTI.FINANCIAL
      INFORMATION
 ITEM 1. FINANCIAL
  STATEMENTS
  PENINSULA
GAMING, LLC
 CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 (in
thousands)
  March 31,
                    2009
                  
                  
                  December 31,
                    2008ASSETSCURRENT
      ASSETS:Cash
      and cash equivalents
                  
                  $
                  39,222
                  
                  
                  $
                  38,705Restricted
      cash—purse settlements
                  
                  
                  9,920
                  
                  
                  
                  5,013Accounts
      receivable, net
                  
                  
                  4,991
                  
                  
                  
                  5,038Receivables
      from affiliates
                  
                  
                  234
                  
                  
                  
                  271Inventories
                  
                  
                  1,264
                  
                  
                  
                  1,199Prepaid
      expenses and other assets
                  
                  
                  1,822
                  
                  
                  
                  1,920Total
      current assets
                  
                  
                  57,453
                  
                  
                  
                  52,146PROPERTY
      AND EQUIPMENT, NET
                  
                  
                  259,877
                  
                  
                  
                  263,154OTHER
      ASSETS:Deferred
      financing costs, net of amortization of $14,880 and $14,021,
      respectively
                  
                  
                  18,315
                  
                  
                  
                  19,174Goodwill
                  
                  
                  53,083
                  
                  
                  
                  53,083Licenses
      and other intangibles
                  
                  
                  38,615
                  
                  
                  
                  38,506Deposits
      and other assets
                  
                  
                  2,900
                  
                  
                  
                  3,385Investment
      available for sale
                  
                  
                  11,973
                  
                  
                  
                  7,828Total
      other assets
                  
                  
                  124,886
                  
                  
                  
                  121,976TOTAL
                  
                  $
                  442,216
                  
                  
                  $
                  437,276LIABILITIES
      AND MEMBER’S DEFICITCURRENT
      LIABILITIES:Accounts
      payable
                  
                  $
                  4,260
                  
                  
                  $
                  4,608Construction
      payable
                  
                  
                  6,024
                  
                  
                  
                  12,324Purse
      settlement payable
                  
                  
                  11,708
                  
                  
                  
                  6,804Accrued
      payroll and payroll taxes
                  
                  
                  5,091
                  
                  
                  
                  5,104Accrued
      interest
                  
                  
                  16,206
                  
                  
                  
                  7,815Other
      accrued expenses
                  
                  
                  12,818
                  
                  
                  
                  10,387Payable
      to affiliates
                  
                  
                  3,733
                  
                  
                  
                  3,575Current
      maturities of long-term debt and leases
                  
                  
                  7,029
                  
                  
                  
                  8,492Total
      current liabilities
                  
                  
                  66,869
                  
                  
                  
                  59,109LONG-TERM
      LIABILITIES:8
      3/4% senior secured notes, net of discount
                  
                  
                  253,354
                  
                  
                  
                  253,23711%
      senior secured notes, net of discount
                  
                  
                  109,497
                  
                  
                  
                  111,25813%
      senior notes, net of discount
                  
                  
                  6,884
                  
                  
                  
                  6,877Senior
      secured credit facilities
                  
                  
                  22,000
                  
                  
                  
                  28,500Term
      loan
                  
                  
                  6,326
                  
                  
                  
                  6,697Notes
      and leases payable, net of discount
                  
                  
                  998
                  
                  
                  
                  1,229Obligation
      under Minimum Assessment Agreement
                  
                  
                  18,717
                  
                  
                  
                  16,394Other
      liabilities
                  
                  
                  1,853
                  
                  
                  
                  5,958Total
      long-term liabilities
                  
                  
                  419,629
                  
                  
                  
                  430,150Total
      liabilities
                  
                  
                  486,498
                  
                  
                  
                  489,259COMMITMENTS
      AND CONTINGENCIESMEMBER’S
      DEFICIT:Common
      member’s interest
                  
                  
                  9,000
                  
                  
                  
                  9,000Accumulated
      deficit
                  
                  
                  (50,373
                  )
                  
                  
                  (53,971
                  )Accumulated
      other comprehensive loss
                  
                  
                  (2,909
                  )
                  
                  
                  (7,012
                  )Total
      member’s deficit
                  
                  
                  (44,282
                  )
                  
                  
                  (51,983
                  )TOTAL
                  
                  $
                  442,216
                  
                  
                  $
                  437,276
 See notes
to condensed consolidated financial statements (unaudited).
  
 3
 PENINSULA
GAMING, LLC
 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
 (in
thousands)
  Three Months
                    Ended
                    March 31,
                    2009
                  
                  
                  Three Months
                    Ended
                    March 31,
                    2008REVENUES:Casino
                  
                  $
                  65,757
                  
                  
                  $
                  56,420Racing
                  
                  
                  3,026
                  
                  
                  
                  3,317Video
      poker
                  
                  
                  1,584
                  
                  
                  
                  1,558Food
      and beverage
                  
                  
                  5,778
                  
                  
                  
                  3,756Other
                  
                  
                  2,341
                  
                  
                  
                  2,692Less
      promotional allowances
                  
                  
                  (6,516
                  )
                  
                  
                  (4,666
                  )Total
      net revenues
                  
                  
                  71,970
                  
                  
                  
                  63,077EXPENSES:Casino
                  
                  
                  27,390
                  
                  
                  
                  24,180Racing
                  
                  
                  2,884
                  
                  
                  
                  2,909Video
      poker
                  
                  
                  1,062
                  
                  
                  
                  1,126Food
      and beverage
                  
                  
                  4,301
                  
                  
                  
                  2,897Other
                  
                  
                  1,484
                  
                  
                  
                  1,422Selling,
      general and administrative
                  
                  
                  12,762
                  
                  
                  
                  11,994Depreciation
      and amortization
                  
                  
                  6,065
                  
                  
                  
                  4,863Pre-opening
      expense
                  
                  
                  -
                  
                  
                  
                  96Development
      expense
                  
                  
                  82
                  
                  
                  
                  39Affiliate
      management fees
                  
                  
                  1,318
                  
                  
                  
                  1,370Loss
      on disposal of assets
                  
                  
                  81
                  
                  
                  
                  103Total
      expenses
                  
                  
                  57,429
                  
                  
                  
                  50,999INCOME
      FROM OPERATIONS
                  
                  
                  14,541
                  
                  
                  
                  12,078OTHER
      INCOME (EXPENSE):Interest
      income
                  
                  
                  508
                  
                  
                  
                  744Interest
      expense, net of amounts capitalized
                  
                  
                  (11,250
                  )
                  
                  
                  (10,264
                  )Total
      other expense
                  
                  
                  (10,742
                  )
                  
                  
                  (9,520
                  )NET
      INCOME
                  
                  $
                  3,799
                  
                  
                  $
                  2,558
 
   See notes
to condensed consolidated financial statements (unaudited).
  
 4
 PENINSULA GAMING, LLC
 CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN MEMBER’S DEFICIT
 AND
COMPREHENSIVE INCOME (UNAUDITED)
 (in
thousands)
   COMMON
                                              MEMBER’S
                                              INTEREST
                                            
                                            
                                            ACCUMULATED
                                              DEFICIT
                                            
                                            
                                            ACCUMULATED
      OTHER COMPREHENSIVE LOSS
                                            
                                            
                                            TOTAL
                                              MEMBER’S
                                              DEFICIT
                                            
                                            
                                            COMPREHENSIVE
      INCOMEBALANCE,
      DECEMBER 31, 2008
                                            
                                            $
                                            9,000
                                            
                                            
                                            $
                                            (53,971
                                            )
                                            
                                            $
                                            (7,012
                                            )
                                            
                                            $
                                            (51,983
                                            )Net
      income
                                            
                                            
                                            —
                                            
                                            
                                            
                                            3,799
                                            
                                            
                                            
                                            —
                                            
                                            
                                            
                                            3,799
                                            
                                            
                                            $
                                            3,799Unrealized
      gain on available for sale investment
                                            
                                            
                                            —
                                            
                                            
                                            
                                            —
                                            
                                            
                                            
                                            4,103
                                            
                                            
                                            
                                            4,103
                                            
                                            
                                            
                                            4,103Member
      distributions
                                            
                                            
                                            —
                                            
                                            
                                            
                                            (201
                                            )
                                            
                                            
                                            —
                                            
                                            
                                            
                                            (201
                                            )
                                            
                                            
                                            —Comprehensive
      income
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            $
                                            7,902BALANCE,
      MARCH 31, 2009
                                            
                                            $
                                            9,000
                                            
                                            
                                            $
                                            (50,373
                                            )
                                            
                                            $
                                            (2,909
                                            )
                                            
                                            $
                                            (44,282
                                            )
 
  See
notes to condensed consolidated financial statements
(unaudited).
 
 5
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 (in thousands)
  Three Months
                    Ended
                    March 31,
                    2009
                  
                  
                  Three Months
                    Ended
                    March 31,
                    2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income
                  
                  $
                  3,799
                  
                  
                  $
                  2,558Adjustments
      to reconcile net income to net cash flows from operating
      activities:Depreciation
      and amortization
                  
                  
                  6,065
                  
                  
                  
                  4,863Non-cash
      interest
                  
                  
                  1,313
                  
                  
                  
                  1,262Non-cash
      equity based and other compensation
                  
                  
                  516
                  
                  
                  
                  2,035Loss
      on disposal of assets
                  
                  
                  81
                  
                  
                  
                  103Changes
      in operating assets and liabilities:Restricted
      cash — purse settlements
                  
                  
                  (4,907
                  )
                  
                  
                  (5,289
                  )Receivables
                  
                  
                  (13
                  )
                  
                  
                  654Inventories
                  
                  
                  (65
                  )
                  
                  
                  (66
                  )Prepaid
      expenses and other assets
                  
                  
                  400
                  
                  
                  
                  (664
                  )Accounts
      payable
                  
                  
                  4,107
                  
                  
                  
                  5,538Accrued
      expenses
                  
                  
                  10,200
                  
                  
                  
                  7,189Payable
      to affiliates
                  
                  
                  195
                  
                  
                  
                  (837
                  )Net
      cash flows from operating activities
                  
                  
                  21,691
                  
                  
                  
                  17,346CASH
      FLOWS FROM INVESTING ACTIVITIES:Increase
      in cash value of life insurance for premiums paid
                  
                  
                  (95
                  )
                  
                  
                  (78
                  )Business
      acquisition and licensing costs
                  
                  
                  (127
                  )
                  
                  
                  (130
                  )Construction
      project development costs
                  
                  
                  (8,311
                  )
                  
                  
                  (7,371
                  )Purchase
      of property and equipment
                  
                  
                  (2,054
                  )
                  
                  
                  (2,284
                  )Proceeds
      from sale of property and equipment
                  
                  
                  502
                  
                  
                  
                  -Net
      cash flows from investing activities
                  
                  
                  (10,085
                  )
                  
                  
                  (9,863
                  )CASH
      FLOWS FROM FINANCING ACTIVITIES:Deferred
      financing costs
                  
                  
                  (9
                  )
                  
                  
                  (137
                  )Principal
      payments on debt
                  
                  
                  (1,862
                  )
                  
                  
                  (920
                  )Proceeds
      from senior credit facilities
                  
                  
                  4,000
                  
                  
                  
                  -Payments
      on senior credit facilities
                  
                  
                  (12,500
                  )
                  
                  
                  -Member
      distributions
                  
                  
                  (718
                  )
                  
                  
                  (841
                  )Net
      cash flows from financing activities
                  
                  
                  (11,089
                  )
                  
                  
                  (1,898
                  )NET
      INCREASE IN CASH AND CASH EQUIVALENTS
                  
                  
                  517
                  
                  
                  
                  5,585CASH
      AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
                  
                  
                  38,705
                  
                  
                  
                  42,100CASH
      AND CASH EQUIVALENTS AT END OF PERIOD
                  
                  $
                  39,222
                  
                  
                  $
                  47,685SUPPLEMENTAL
      DISCLOSURES OF CASH FLOW INFORMATION:Cash
      paid during the period for interest
                  
                  $
                  1,314
                  
                  
                  $
                  720SUPPLEMENTAL
      SCHEDULE OF NON-CASH INVESTING AND FINANCING
    ACTIVITIES:Property
      and equipment acquired, but not paid
                  
                  $
                  2,192
                  
                  
                  $
                  7,920Property
      and equipment acquired in exchange for obligation under Minimum Assessment
      Agreement
                  
                  
                  1,989
                  
                  
                  
                  1,417Unrealized
      gain on available for sale investment
                  
                  
                  4,103
                  
                  
                  
                  -Liability
      settled in exchange for property and equipment
                  
                  
                  4,104
                  
                  
                  
                  -
 
  See notes
to condensed consolidated financial statements (unaudited).
  
 6
 PENINSULA
GAMING, LLC
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  1.
      Organization and Basis of
Presentation
  Peninsula
Gaming, LLC (“PGL” or the “Company”), a Delaware limited liability company
organized in 1999, is a holding company with no independent operations whose
primary assets are its equity interests in its wholly owned subsidiaries. PGL’s
operating subsidiaries consist of: (i) Diamond Jo, LLC, a Delaware limited
liability company (“DJL”), that owns and operates the Diamond Jo casino in
Dubuque, Iowa; (ii) The Old Evangeline Downs, L.L.C., a Louisiana limited
liability company (“EVD”), that owns and operates the Evangeline Downs Racetrack
and Casino, or racino, in St. Landry Parish, Louisiana and four off-track
betting (“OTB”) parlors in Louisiana; and (iii) Diamond Jo Worth, LLC, a
Delaware limited liability company (“DJW”), that owns and operates the Diamond
Jo casino in Worth County, Iowa. Other subsidiaries of PGL include
(i) Peninsula Gaming Corp. (“PGC”), a Delaware corporation with no assets
or operations formed solely to facilitate the offering of the Company’s 8 3/4%
senior secured notes due 2012 (the “Peninsula Gaming Notes”) and (ii) DJW
Corp. (“DJWC”), a Delaware corporation with no assets or operations formed
solely to facilitate the offering by DJW of its 11% senior secured notes due
2012 (the “DJW Notes”). The Company is a wholly owned subsidiary of Peninsula
Gaming Partners, LLC (“PGP”), a Delaware limited liability company.
  In the
opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments, consisting only of normal recurring entries
unless otherwise disclosed, necessary to present fairly the financial
information of the Company for the interim periods presented and have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The interim results reflected in the financial
statements are not necessarily indicative of results expected for the full year
or other periods.
  The
financial statements contained herein should be read in conjunction with the
audited financial statements and accompanying notes to the financial statements
included in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2008. Accordingly, footnote disclosure which would
substantially duplicate the disclosure in the audited financial statements has
been omitted in the accompanying unaudited financial statements.
  2. Summary of
      Significant Accounting
Policies
  Obligation Under
Minimum Assessment Agreement— On October 1, 2007, DJL entered into
the Amended and Restated Port of Dubuque Public Parking Facility Development
Agreement (“Development Agreement”) with the City of Dubuque, Iowa (“City”)
regarding, among other things, the design, development, construction and
financing of the public parking facility located adjacent to DJL’s new casino
development. The City issued $23 million principal amount of 7.5% Urban Renewal
Tax Increment Revenue Bonds, Taxable Series 2007 (“City Bonds”) to fund, in
part, the construction of the facility. Due to DJL’s expected use of the public
parking facility and its obligations under a Minimum Assessment Agreement with
the City, combined with the Company’s guarantee of DJL’s obligation under the
Minimum Assessment Agreement, DJL will record an obligation to the City to the
extent proceeds from the City Bonds are used to construct the parking
facility.  As of March 31, 2009 and December 31, 2008, approximately
$18.7 million and $16.4 million, respectively, of proceeds from the City Bonds
had been used related to the construction of the parking facility which amount
was recorded as a long-term obligation of DJL on the balance sheet. The
obligation, along with related interest costs, are expected to be paid off over
the life of the City Bonds through payments from DJL under the Minimum
Assessment Agreement.
 
 Licenses—The
Company’s gaming licenses require renewals in the State of Iowa annually and
every five years in the State of Louisiana.  EVD’s horse racing
license requires renewal annually.  Renewal costs are expensed as
incurred.  The Company’s renewal experience is that renewals will be
granted except under extraordinary circumstances.
 
 Use of
Estimates—The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. Actual results could differ
from those estimates. Significant estimates involve the intrinsic values of
equity based compensation, the fair values of an embedded derivative and the DJW
investment in City Bonds, the periodic review of the carrying value of assets
for impairment, the estimated useful lives for depreciable assets, and the
estimated liabilities for the EVD sales tax contingency, slot club awards and
customer legal disputes.
  7
 In
addition, an estimated loss from a loss contingency is recorded when information
available prior to issuance of the financial statements indicates that it is
probable that a liability has been incurred at the date of the financial
statements and the amount of the loss can be reasonably estimated. Accounting
for contingencies such as legal matters requires the use of judgment. Many of these
legal contingencies can take years to be resolved. An adverse outcome could have
a material impact on financial condition, results of operations, and cash
flows.
 
 Recently Issued
Accounting Standards— In May 2008, the Financial Accounting
Standards Board (“FASB”) issued Statement of Financial Accounting Standards
(“SFAS”) No. 162, The
Hierarchy of Generally Accepted Accounting Principles(“GAAP”) (“SFAS
162”). The purpose of the new standard is to provide a consistent framework for
determining what accounting principles should be used when preparing U.S. GAAP
financial statements. Previous guidance did not properly rank the accounting
literature. The new standard is effective 60 days following the Securities and
Exchange Commission’s approval of the Public Company Accounting Oversight Board
amendments to AU Section 411, The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles. The adoption of
SFAS 162 is not expected to have a material effect on the Company’s financial
statements.
 
 In April
2008, the FASB released staff position (“FSP”) No. 142-3, Determination of the Useful Life of
Intangible Assets.  The FSP requires entities to disclose
information for recognized intangible assets that enable users of financial
statements to understand the extent to which expected future cash flows
associated with intangible assets are affected by the entity’s intent or ability
to renew or extend the arrangement associated with the intangible
asset.  The FSP also amends the factors an entity should consider in
developing the renewal or extension assumptions used in determining the useful
life of recognized intangible assets under SFAS No. 142, Goodwill and Other Intangible
Assets.  The FSP will be applied prospectively to intangible
assets acquired after the FSP’s effective date, but the disclosure requirements
will be applied prospectively to all intangible assets recognized as of, and
after, the FSP’s effective date.  The FSP is effective for fiscal
years beginning after December 15, 2008, with early adoption
prohibited.  The Company adopted FSP No. 142-3 on January 1, 2009 and
the adoption did not have a material effect on the Company’s financial
statements.
 
 In March
2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No.
133 (“SFAS 161”). SFAS 161 requires, among other things, enhanced
disclosure about the volume and nature of derivative and hedging activities and
a tabular summary showing the fair value of derivative instruments included in
the balance sheet and statement of operations. SFAS 161 also requires expanded
disclosure of contingencies included in derivative instruments related to
credit-risk. SFAS 161 is effective for fiscal years and interim periods
beginning after November 15, 2008. The Company adopted SFAS 161 on January 1,
2009 and the adoption did not have a material effect on the Company’s financial
statements.
 
 In
December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (“SFAS
141R”). SFAS 141R significantly changes the way companies account for business
combinations and will generally require more assets acquired and liabilities
assumed to be measured at their acquisition-date fair value. Under SFAS 141R,
legal fees and other transaction-related costs are expensed as incurred and are
no longer included as a cost of acquiring the business. SFAS 141R also requires,
among other things, acquirers to estimate the acquisition-date fair value of any
contingent consideration and to recognize any subsequent changes in the fair
value of contingent consideration in earnings. In addition, restructuring costs
the acquirer expected, but was not obligated to incur, will be recognized
separately from the business acquisition. SFAS 141R applies to the Company
prospectively for business combinations occurring on or after January 1, 2009.
The Company expects SFAS 141R will have an impact on accounting for business
combinations, but the effect will be dependent upon any potential future
acquisition.
 
 In
February 2008, the FASB issued FSP No. 157-2, Effective Date of FASB Statement No. 157,
which amends SFAS No. 157 by delaying its effective date by one year for
non-financial assets and non-financial liabilities, except for items that are
recognized or disclosed at fair value in the financial statements on a recurring
basis. Therefore, beginning on January 1, 2009, this standard applies
prospectively to fair value measurements of non-financial assets and
non-financial liabilities. The Company adopted FSP No. 157-2 on January 1,
2009 and the adoption did not have a material effect on the Company’s financial
statements.
 
 3.
Property and Equipment
  Property
and equipment at March 31, 2009 and December 31, 2008 is summarized as
follows (in thousands):
  March 31,
                    2009
                  
                  
                  December 31,
                    2008Land
      and land improvements
                  
                  $
                  18,485
                  
                  
                  $
                  18,118Buildings
      and improvements
                  
                  
                  220,463
                  
                  
                  
                  201,421Furniture,
      fixtures and equipment
                  
                  
                  83,418
                  
                  
                  
                  81,449Computer
      equipment
                  
                  
                  10,670
                  
                  
                  
                  11,009Vehicles
                  
                  
                  561
                  
                  
                  
                  404Construction
      in progress
                  
                  
                  2,038
                  
                  
                  
                  26,582Subtotal
                  
                  
                  335,635
                  
                  
                  
                  338,983Accumulated
      depreciation
                  
                  
                  (75,758
                  )
                  
                  
                  (75,829
                  )Property
      and equipment, net
                  
                  $
                  259,877
                  
                  
                  $
                  263,154
 
 Depreciation
and amortization expense during the three months ended March 31, 2009 and 2008
was $6.1 million and $4.9 million, respectively.
  The
Company capitalizes interest costs associated with debt incurred in connection
with significant construction projects.  There was no capitalized interest
during the three months ended March 31, 2009.  The amount capitalized
during the three months ended March 31, 2008 was $0.3 million.
 
 8
 In
connection with DJL’s casino development, DJL began accelerating depreciation on
long-lived assets with a net book value of approximately $4.5 million that were
either contributed to the Historical Society in January 2009 or were not
utilized at its new casino facility and were disposed in January
2009.  Accelerated depreciation on these assets began during the
fourth quarter of 2006, and DJL continued to depreciate the remaining net book
value of those assets, less their estimated fair market value at the date of
contribution or estimated net realizable value, through the period that DJL
commenced operations at the new facility.  Depreciation expense for
the quarter ended March 31, 2008 increased by approximately $0.3 million as a
result of accelerated depreciation on these assets.
  In April
2009, EVD entered into a ground lease with a third party to design, develop,
construct and operate a hotel with a minimum of 100 rooms adjacent to the racino
on land owned by EVD (“Ground Lease”).  The hotel is expected to include at
least 25 suites, five meeting rooms and an indoor pool.  Under the
terms of the Ground Lease, EVD will lease the land on which the hotel will be
located for a lease fee of 2% of gross revenue of the hotel. The agreement
also contains a purchase option which allows EVD to purchase the hotel from the
third party operator.  The Ground Lease is conditioned upon the third party
operator obtaining financing for the project.  If the financing
contingency is satisfied, EVD will impair $1.4 million of capitalized
design and development costs already incurred related to the hotel project which
will not be utilized by the third party operator.  If the financing
contingency is not satisfied, EVD will continue with its own existing design and
development of the hotel and no impairment would be
necessary.  EVD expects a resolution to the financing contingency in
the second quarter of 2009.
 
 4.
Debt
  Long-term
debt consists of the following (in thousands):
  March 31,
                    2009
                  
                  
                  December 31,
                    20088
      3/4% senior secured notes due April 15, 2012, net of discount of
      $1,646 and $1,763, respectively, secured by substantially all the assets
      of PGL, DJL and EVD and the equity of DJL and EVD
                  
                  $
                  253,354
                  
                  
                  $
                  253,23711%
      senior secured notes of DJW due April 15, 2012, net of discount of
      $532 and $568, respectively, secured by substantially all the assets of
      DJW and the equity of DJW and DJWC
                  
                  
                  111,294
                  
                  
                  
                  111,25813%
      senior notes of EVD due March 1, 2010 with contingent interest, net
      of discount of $26 and $33, respectively
                  
                  
                  6,884
                  
                  
                  
                  6,877$65,000
      revolving line of credit under a loan and security agreement of DJL and
      EVD with Wells Fargo Foothill, Inc., interest rate at prime plus a margin
      of 2.5% with a floor of 6.0% (current rate of 6.0% at March 31, 2009),
      maturing January 15, 2012, secured by substantially all assets of DJL and
      EVD
                  
                  
                  22,000
                  
                  
                  
                  28,500$5,000
      revolving line of credit under a loan and security agreement of DJW with a
      bank, interest rate at prime less a margin of 1.0% with a floor of 5.0%
      (current rate of 5.0% at March 31, 2009), maturing March 31, 2010,
      secured by substantially all the assets of DJW and guaranteed by the
      Company’s Chief Executive Officer
                  
                  
                  -
                  
                  
                  
                  2,000Term
      loan under a loan and security agreement of PGL, DJL and EVD with American
      Trust & Savings Bank, interest rate 6.5%, due in installments through
      December 1, 2013, secured by certain assets of DJL
                  
                  
                  7,766
                  
                  
                  
                  8,000Notes
      payable and capital lease obligations, net of discount of $103 and $170,
      respectively, interest rates at 6% - 8 3/4%, due 2009 –
      2011
                  
                  
                  4,790
                  
                  
                  
                  6,418Total
      debt
                  
                  
                  406,088
                  
                  
                  
                  416,290Less
      current portion
                  
                  
                  (7,029
                  )
                  
                  
                  (8,492
                  )Total
      long term debt
                  
                  $
                  399,059
                  
                  
                  $
                  407,798
 
 Pursuant
to the indenture governing the DJW Notes, DJW is required to offer to buy back a
portion of the DJW Notes on a semi-annual basis at a premium of 7.5%, beginning
March 31, 2007, with 50% of Excess Cash Flow (as defined therein) (“Excess Cash Flow
Amount”).  The Excess Cash Flow Amount for the six month period ended
March 31, 2009 was $1.9 million, which includes $1.8 million in
principal included in current maturities of long-term debt and leases in
the Company’s balance sheet, and $0.1 million in related premiums. DJW
intends to make an offer to repurchase a portion of the DJW Notes in an amount
equal to the Excess Cash Flow Amount in accordance with the terms of the
governing indenture.
  As of
March 31, 2009, the Company had $22.0 million of outstanding advances under its
$65.0 million senior secured credit facility (“PGL Credit Facility”). As of
March 31, 2009, DJW had no outstanding advances under its $5.0 million senior
secured credit facility (“DJW Credit Facility”). In addition, as of March 31,
2009, the Company had outstanding letters of credit under the PGL Credit
Facility and the DJW Credit Facility of approximately $0.9 million and $0.7
million, respectively, resulting in available borrowings thereunder of $42.1
million and $4.3 million, respectively.
  As of
March 31, 2009, the Company was in compliance with the terms of the agreements
governing its outstanding indebtedness.
  9
 5. Fair Value
      Measurements
  Under
generally accepted accounting principles, certain assets and liabilities must be
measured at fair value. Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date (an exit price). The Company has two
financial instruments that must be measured at fair value in the financial
statements: (i) an available for sale investment and (ii) a derivative. The
Company currently does not have non-financial assets and non-financial
liabilities that are required to be measured at fair value.
 
 SFAS 157,
Fair Value Measurements, establishes a valuation hierarchy for disclosure of the
inputs to valuation used to measure fair value.  This hierarchy
prioritizes these inputs into three broad levels.  The three levels
are as follows:
 
 Level
1-Inputs are unadjusted quoted prices in active markets for identical assets or
liabilities that the Company has the ability to access at the measurement
date;
 
 Level
2-Inputs include quoted prices for similar assets and liabilities in active
markets, quoted prices for identical or similar assets or liabilities in markets
that are not active, inputs other than quoted prices that are observable for the
asset or liability (i.e., interest rates, yield curves, etc.), and inputs that
are derived principally from or corroborated by observable market data by
correlation or other means (market corroborated inputs); and
 
 Level
3-Unobservable inputs that reflect the Company’s estimate about the assumptions
that market participants would use in pricing the asset or liability. The
Company develops these inputs based on the best information available, including
its own data.
 
 The
Company had no Level 1 or Level 2 financial instruments at March 31, 2009 and
December 31, 2008. The Company had two Level 3 financial instruments at March
31, 2009 and December 31, 2008.  In accordance with the fair value
hierarchy described above, the following table shows the fair value of the
Company’s Level 3 financial assets and liabilities that are required to be
measured at fair value as of March 31, 2009 and December 31, 2008, which
are classified as “Investment available for sale” and “Other long-term
liabilities/Other accrued liabilities (short-term portion)” (in
thousands):
 
 Total
      Carrying Value at March 31, 2009
                      
                      
                      Fair
      Value Measurements at March 31, 2009
                      
                      
                      Total
      Carrying Value at December 31, 2008
                      
                      
                      Fair
      Value Measurements at December 31, 2008Investment
      available for sale
                      
                      $
                      11,973
                      
                      
                      $
                      11,973
                      
                      
                      $
                      7,828
                      
                      
                      $
                      7,828Derivative
      liability, not designated as a hedging instrument
                      
                      
                      (929
                      )
                      
                      
                      (929
                      )
                      
                      
                      (790
                      )
                      
                      
                      (790
                      )
 
 
 The
following table summarizes the changes in fair value of the Company’s Level 3
assets and liabilities for the three months ended March 31, 2009 and 2008 (in
thousands):
 Three
      Months Ended March 31, 2009
                                          
                                          Three
      Months Ended March 31, 2008Investment
      available for sale
                                          
                                          Derivative
                                            liability,
      not designated as a hedging instrument
                                          
                                          Investment
      available
                                            for
      sale
                                          
                                          Derivative liability,
      not designated as a hedging instrumentBalance
      at beginning of the year
                                          
                                          $
                                          7,828
                                          
                                          
                                          $
                                          (790
                                          )
                                          
                                          $
                                          12,491
                                          
                                          
                                          $
                                          (1,252
                                          )Total
      gains (losses) (realized or unrealized):Included
      in earnings
                                          
                                          
                                          42
                                          
                                          
                                          
                                          (139
                                          )
                                          
                                          
                                          36
                                          
                                          
                                          
                                          53Included
      in other comprehensive income
                                          
                                          
                                          4,103
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -Transfers
      in or out of Level 3
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -Purchases,
      sales, issuances and settlements
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -Ending
      balance at March 31, 2009 and 2008
                                          
                                          $
                                          11,973
                                          
                                          
                                          $
                                          (929
                                          )
                                          
                                          $
                                          12,527
                                          
                                          
                                          $
                                          (1,199
                                          )Gains
      (losses) included in earnings attributable to the
    change
                                          Included
      in interest income
                                          
                                          Included
      in interest expense
                                          
                                          Included
      in interest income
                                          
                                          Included
      in interest expensein
      unrealized gains or losses relating to
      assets/liabilitiesstill
      held at the reporting date
                                          
                                          $
                                          42
                                          
                                          
                                          $
                                          (139
                                          )
                                          
                                          $
                                          36
                                          
                                          
                                          $
                                          53
  10
 DJW holds
an investment in a single municipal bond issuance that is classified as
available for sale and is recorded at fair value.  DJW is the only
holder of this instrument and there is no quoted market price for this
instrument.  The estimate of the fair value of such investment was
determined using a combination of current market rates and estimates of market
conditions for instruments with similar terms, maturities, and degrees of risk
and the fair value of the Peninsula Gaming Notes at March 31,
2009.  Unrealized gains and losses on this instrument resulting from
changes in the fair value of the instrument are not charged to earnings, but
rather are recorded as other comprehensive income (loss) in the member’s deficit
section of the Company’s balance sheet.  The discount associated
with this investment is netted with the investment on the balance sheet and is
being accreted over the life of the investment using the effective interest
method. The accretion of such discount is included in interest income on the
statement of operations.
  Under the
indenture governing the DJW Notes, DJW must offer to buy back a portion of the
DJW Notes on a semi-annual basis with 50% of Excess Cash Flow (as defined
therein) at a premium of 7.5%. Such obligation was determined to be an embedded
derivative and was fair valued and separated from the DJW Notes at date of
issuance since it was not clearly and closely related to the DJW
Notes.  The fair value of the put option was determined to be the
present value of the estimated premium payments through the maturity date of the
DJW Notes. The fair value is calculated using estimated future cash flows
developed by the Company to estimate the portion of the DJW Notes that would be
subject to the contingent put option, yields of comparable financial
instruments, the remaining date to maturity of the DJW Notes and based on
historical experience that the holders of the notes will elect to be paid the
contingent put option. The fair value of the put option is revalued at the end
of each reporting period with a corresponding charge (benefit) to interest
expense.
  6. Commitments
      and Contingencies
  Under the
Company’s and PGP’s operating agreements, the Company and PGP have agreed,
subject to a few exceptions, to indemnify and hold harmless PGP and PGP’s
members from liabilities incurred as a result of their positions as sole manager
of the Company and as members of PGP, respectively.
  In
October 2003, EVD filed a Petition for Declaratory Judgment in St. Landry
Parish, Louisiana, naming as opposing parties the St. Landry Parish School Board
and the City of Opelousas regarding the payment of sales and use tax by
EVD.   The sales and use tax dispute with St. Landry Parish
and the City of Opelousas remains open.  EVD has accrued management's best
estimate of all sales and use taxes that may be due to St. Landry Parish or the
City of Opelousas as of March 31, 2009.
  Other
than as described above, neither the Company nor its subsidiaries are parties to
any pending legal proceedings other than litigation arising in the normal course
of business.  Management does not believe that adverse determinations
in any or all such other litigation would have a material adverse effect on the
Company’s financial condition, results of operations or cash flows.
  7. Related
      Party Transactions  During
the three months ended March 31, 2009 and 2008, the Company recorded
distributions of $0.7 million and $0.8 million, respectively, to PGP primarily
for (i) certain consulting and financial advisory services related to PGP’s
development expenses, (ii) board fees and actual out-of-pocket expenses
incurred by members of the board of managers of PGP and (iii) tax,
accounting, legal and administrative costs and
expenses related to PGP. These amounts were recorded as member
distributions.
  During
each of the three months ended March 31, 2009 and 2008, the Company expensed
$0.1 million as affiliate management fees related to other compensation and
board fees payable to board members of PGP representing services provided to
PGL.
  In
accordance with a management services agreement between OED Acquisition LLC
(“OEDA”), a wholly owned subsidiary of PGP, and EVD, under which EVD pays to
OEDA a base management fee of 0.44% of net revenue (less net food and beverage
revenue) plus an incentive fee ranging from 3% to 5% based on earnings before
interest, taxes, depreciation, amortization and non-recurring charges, EVD
expensed $0.2 million in affiliate management fees payable to OEDA during each
of the three months ended March 31, 2009 and 2008.
  In
accordance with a management services agreement between DJW and PGP under which
DJW pays to PGP a base management fee of 1.75% of net revenue (less net food and
beverage revenue) plus an incentive fee ranging from 3% to 5% based on earnings
before interest, taxes, depreciation, amortization and non-recurring charges,
DJW expensed management fees of $0.6 million during each of the three months
ended March 31, 2009 and 2008.
  EVD and
PGP are parties to a consulting agreement with a board member of PGP. Under such
consulting agreement, the board member is entitled to a fee equal to 2.5% of
EVD’s and DJW’s earnings before interest, taxes, depreciation, amortization and
non-recurring charges during the preceding calendar year. In connection with
this agreement, (i) EVD expensed $0.2 million and $0.3 million of affiliate
management fees during the three months ended March 31, 2009 and 2008,
respectively, and (ii) DJW expensed $0.2 million of affiliate management fees
during each of the three months ended March 31, 2009 and 2008.
  On a
quarterly basis, the Company estimates the fair value of all incentive units
granted under PGP’s Amended and Restated 2004 Incentive Unit Plan (the “IUP”)
that have a put option and compares that value to the value of such incentive
units at the date of grant. Any appreciation in the value of the incentive units
is expensed based on the percentage of the grant vested. The Company expensed
$0.4 million and $1.9 million during the three months ended March 31, 2009 and
2008, respectively, with respect to these incentive
units.
 11
 
  8.
Segment Information
  The
Company is organized around geographical areas and operates three reportable
segments: (1) Diamond Jo operations, which comprise the Diamond Jo casino
operations in Dubuque, Iowa, (2) Diamond Jo Worth operations, which
comprise the Diamond Jo Worth casino operations in Worth County, Iowa, and
(3) Evangeline Downs operations, which comprise the casino, racetrack and
OTBs operated by EVD in Louisiana.
  The
accounting policies for each segment are the same as those described in Note 2
above and in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2008. The Company evaluates performance and allocates
resources based upon, among other considerations, segment operating earnings (as
defined below).
  The
tables below present information about reported segments as of and for the three
months ended March 31, 2009 and 2008 (in thousands):
  Net Revenues
      From External Customers
                      Three Months Ended March 31,2009
                    
                    
                    2008Diamond
      Jo Dubuque
                    
                    $
                    19,733
                    
                    
                    $
                    9,625Diamond
      Jo Worth
                    
                    
                    20,065
                    
                    
                    
                    20,159Evangeline
      Downs
                    
                    
                    32,172
                    
                    
                    
                    33,293Total
                    
                    $
                    71,970
                    
                    
                    $
                    63,077
 
  Segment Operating Earnings
                      Three Months Ended March 31, (1)2009
                    
                    
                    2008General
      corporate
                    
                    $
                    (2,034
                    )
                    
                    $
                    (2,981
                    )Diamond
      Jo Dubuque
                    
                    
                    6,536
                    
                    
                    
                    2,848Diamond
      Jo Worth
                    
                    
                    7,800
                    
                    
                    
                    7,784Evangeline
      Downs
                    
                    
                    9,785
                    
                    
                    
                    10,898Total
      Segment Operating Earnings (1)
                    
                    
                    22,087
                    
                    
                    
                    18,549General
      corporate:Depreciation
      and amortization
                    
                    
                    (27
                    )
                    
                    
                    (12
                    )Affiliate
      management fees
                    
                    
                    (97
                    )
                    
                    
                    (85
                    )Interest
      income
                    
                    
                    -
                    
                    
                    
                    64Diamond
      Jo Dubuque:Depreciation
      and amortization
                    
                    
                    (2,054
                    )
                    
                    
                    (795
                    )Pre-opening
      expense
                    
                    
                    -
                    
                    
                    
                    (55
                    )Development
      expense
                    
                    
                    -
                    
                    
                    
                    (8
                    )Gain
      on disposal of assets
                    
                    
                    9
                    
                    
                    
                    7Interest
      expense, net
                    
                    
                    (3,598
                    )
                    
                    
                    (2,518
                    )Diamond
      Jo Worth:Depreciation
      and amortization
                    
                    
                    (2,185
                    )
                    
                    
                    (2,128
                    )Pre-opening
      expense
                    
                    
                    -
                    
                    
                    
                    (32
                    )Affiliate
      management fees
                    
                    
                    (764
                    )
                    
                    
                    (782
                    )Loss
      on disposal of assets
                    
                    
                    (55
                    )
                    
                    
                    (27
                    )Interest
      expense, net
                    
                    
                    (3,013
                    )
                    
                    
                    (2,959
                    )Evangeline
      Downs:Depreciation
      and amortization
                    
                    
                    (1,799
                    )
                    
                    
                    (1,928
                    )Pre-opening
      expense
                    
                    
                    -
                    
                    
                    
                    (9
                    )Development
      expense
                    
                    
                    (82
                    )
                    
                    
                    (31
                    )Affiliate
      management fees
                    
                    
                    (457
                    )
                    
                    
                    (503
                    )Loss
      on disposal of assets
                    
                    
                    (35
                    )
                    
                    
                    (83
                    )Interest
      expense, net
                    
                    
                    (4,131
                    )
                    
                    
                    (4,107
                    )Net
      income
                    
                    $
                    3,799
                    
                    
                    $
                    2,558
  (1)
                  Segment operating earnings is
      defined as net income plus depreciation and amortization, pre-opening
      expense, development expense, affiliate management fees, loss on disposal
      of assets, and interest expense, net, less gain on disposal of
      assets.
     12
   Total AssetsMarch 31,
                    2009
                  
                  
                  December 31,
                    2008General
      corporate
                  
                  $
                  1,098
                  
                  
                  $
                  969Diamond
      Jo Dubuque
                  
                  
                  185,566
                  
                  
                  
                  192,999Diamond
      Jo Worth
                  
                  
                  103,035
                  
                  
                  
                  97,017Evangeline
      Downs
                  
                  
                  152,517
                  
                  
                  
                  146,291Total
                  
                  $
                  442,216
                  
                  
                  $
                  437,276
 
  Cash Expenditures for Additions to
                    Long-Lived AssetsThree
      Months Ended March 31, 2009
                  
                  
                  Three
      Months Ended March 31, 2008General
      corporate
                  
                  $
                  131
                  
                  
                  $
                  7Diamond
      Jo Dubuque
                  
                  
                  8,130
                  
                  
                  
                  6,666Diamond
      Jo Worth
                  
                  
                  679
                  
                  
                  
                  667Evangeline
      Downs
                  
                  
                  1,552
                  
                  
                  
                  2,445Total
                  
                  $
                  10,492
                  
                  
                  $
                  9,785
 
 13
 
 9.             Fair
Value of Financial Instruments
  The fair
value of the Company’s financial instruments consisting of cash and cash
equivalents, restricted cash, receivables, and payables approximate their
recorded amounts due to the short term nature of the instruments. The fair value
and recorded amounts for the Company’s investment and debt instruments at March
31, 2009 and December 31, 2008 are as follows (in thousands):
  March 31, 2009
                        
                        
                        December 31, 2008Fair Value
                        
                        
                        Recorded
                          Amount
                        
                        
                        Fair Value
                        
                        
                        Recorded
                          AmountAvailable
      for sale investment
                        
                        $
                        11,973
                        
                        
                        $
                        11,973
                        
                        
                        $
                        7,828
                        
                        
                        $
                        7,8288
      3/4% senior secured notes
                        
                        
                        204,000
                        
                        
                        
                        253,354
                        
                        
                        
                        163,200
                        
                        
                        
                        253,23711%
      senior secured notes
                        
                        
                        106,235
                        
                        
                        
                        111,294
                        
                        
                        
                        105,116
                        
                        
                        
                        111,25813%
      senior notes
                        
                        
                        5,874
                        
                        
                        
                        6,884
                        
                        
                        
                        6,219
                        
                        
                        
                        6,877Senior
      secured credit facilities
                        
                        
                        22,000
                        
                        
                        
                        22,000
                        
                        
                        
                        30,500
                        
                        
                        
                        30,500Term
      loan
                        
                        
                        7,212
                        
                        
                        
                        7,766
                        
                        
                        
                        7,429
                        
                        
                        
                        8,000Notes
      payable, capital lease obligations and other financial
      instruments
                        
                        
                        5,538
                        
                        
                        
                        5,435
                        
                        
                        
                        7,128
                        
                        
                        
                        6,958Derivative
      liability
                        
                        
                        929
                        
                        
                        
                        929
                        
                        
                        
                        790
                        
                        
                        
                        790Obligation
      under Minimum Assessment Agreement
                        
                        
                        15,059
                        
                        
                        
                        18,717
                        
                        
                        
                        8,648
                        
                        
                        
                        16,394
  Fair
value information is based on current market interest rates and estimates of
market conditions for instruments with similar terms, maturities, and degrees of
risk and, for the investment available for sale, the fair value of the Peninsula
Gaming Notes at March 31, 2009 and December 31, 2008.
  10.           Consolidating
Financial Statements
  The
Company, DJL and PGC (which has no assets or operations) are co-issuers of the
Peninsula Gaming Notes. EVD is a guarantor of the Peninsula Gaming Notes, and
the equity of DJL and EVD is pledged as collateral securing obligations under
the Peninsula Gaming Notes. In July 2005, in connection with the offering
of the DJW Notes, DJW was designated as an “unrestricted subsidiary” under the
indenture governing the Peninsula Gaming Notes and the liens on the assets and
equity of DJW under the Peninsula Gaming Notes were released. Consolidating
financial information of the co-issuers, the guarantor and the non-guarantor is
presented on the following pages.
  
 14
 CONSOLIDATING
BALANCE SHEETS
  At March 31, 2009(in thousands)
                  
                  Parent
                    Co-Issuer -
                    PGL
                  
                  
                  Subsidiary
                    Co-Issuer -
                    DJL
                  
                  
                  Subsidiary
                    Guarantor -
                    EVD
                  
                  
                  Subsidiary
                    Non-
                    Guarantor -
                    DJW
                  
                  
                  Consolidating
                    Adjustments
                  
                  
                  ConsolidatedASSETSCURRENT
      ASSETS:Cash
      and cash equivalents
                  
                  $
                  (5
                  )
                  
                  $
                  5,502
                  
                  
                  $
                  8,903
                  
                  
                  $
                  24,822
                  
                  
                  
                  
                  
                  $
                  39,222Restricted
      cash-purse settlements
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  9,920
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  9,920Accounts
      receivable
                  
                  
                  
                  
                  
                  
                  3,405
                  
                  
                  
                  574
                  
                  
                  
                  1,012
                  
                  
                  
                  
                  
                  
                  4,991Receivables
      from affiliates
                  
                  
                  
                  
                  
                  
                  1,235
                  
                  
                  
                  118
                  
                  
                  
                  117
                  
                  
                  $
                  (1,236
                  )
                  
                  
                  234Inventories
                  
                  
                  
                  
                  
                  
                  416
                  
                  
                  
                  461
                  
                  
                  
                  387
                  
                  
                  
                  
                  
                  
                  
                  1,264Prepaid
      expenses and other assets
                  
                  
                  56
                  
                  
                  
                  507
                  
                  
                  
                  789
                  
                  
                  
                  470
                  
                  
                  
                  
                  
                  
                  
                  1,822Total
      current assets
                  
                  
                  51
                  
                  
                  
                  11,065
                  
                  
                  
                  20,765
                  
                  
                  
                  26,808
                  
                  
                  
                  (1,236
                  )
                  
                  
                  57,453PROPERTY
      AND EQUIPMENT, NET
                  
                  
                  496
                  
                  
                  
                  108,875
                  
                  
                  
                  93,179
                  
                  
                  
                  57,327
                  
                  
                  
                  
                  
                  
                  
                  259,877OTHER
      ASSETS:Investment
      in subsidiaries
                  
                  
                  (43,848
                  )
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  43,848Deferred
      financing costs
                  
                  
                  
                  
                  
                  
                  11,554
                  
                  
                  
                  3,860
                  
                  
                  
                  2,901
                  
                  
                  
                  
                  
                  
                  
                  18,315Goodwill
                  
                  
                  
                  
                  
                  
                  53,083
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  53,083Licenses
      and other intangibles
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  34,615
                  
                  
                  
                  4,000
                  
                  
                  
                  
                  
                  
                  
                  38,615Deposits
      and other assets
                  
                  
                  551
                  
                  
                  
                  2,224
                  
                  
                  
                  98
                  
                  
                  
                  27
                  
                  
                  
                  
                  
                  
                  
                  2,900Investment
      available for sale
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  11,973
                  
                  
                  
                  
                  
                  
                  
                  11,973Total
      other assets
                  
                  
                  (43,297
                  )
                  
                  
                  66,861
                  
                  
                  
                  38,573
                  
                  
                  
                  18,901
                  
                  
                  
                  43,848
                  
                  
                  
                  124,886TOTAL
                  
                  $
                  (42,750
                  )
                  
                  $
                  186,801
                  
                  
                  $
                  152,517
                  
                  
                  $
                  103,036
                  
                  
                  $
                  42,612
                  
                  
                  $
                  442,216LIABILITIES
      AND MEMBER’S DEFICITCURRENT
      LIABILITIES:Accounts
      payable
                  
                  $
                  86
                  
                  
                  $
                  806
                  
                  
                  $
                  2,814
                  
                  
                  $
                  554
                  
                  
                  
                  
                  
                  
                  $
                  4,260Construction
      payable
                  
                  
                  1
                  
                  
                  
                  5,365
                  
                  
                  
                  480
                  
                  
                  
                  178
                  
                  
                  
                  
                  
                  
                  
                  6,024Purse
      settlement payable
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  11,708
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  11,708Accrued
      payroll and payroll taxes
                  
                  
                  1,255
                  
                  
                  
                  1,267
                  
                  
                  
                  1,587
                  
                  
                  
                  982
                  
                  
                  
                  
                  
                  
                  
                  5,091Accrued
      interest
                  
                  
                  
                  
                  
                  
                  4,308
                  
                  
                  
                  6,254
                  
                  
                  
                  5,644
                  
                  
                  
                  
                  
                  
                  
                  16,206Other
      accrued expenses
                  
                  
                  116
                  
                  
                  
                  3,729
                  
                  
                  
                  6,112
                  
                  
                  
                  2,861
                  
                  
                  
                  
                  
                  
                  
                  12,818Payable
      to affiliates
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  3,175
                  
                  
                  
                  1,794
                  
                  
                  $
                  (1,236
                  )
                  
                  
                  3,733Current
      maturities of long-term debt and leases
                  
                  
                  
                  
                  
                  
                  4,440
                  
                  
                  
                  572
                  
                  
                  
                  2,017
                  
                  
                  
                  
                  
                  
                  
                  7,029Total
      current liabilities
                  
                  
                  1,458
                  
                  
                  
                  19,915
                  
                  
                  
                  32,702
                  
                  
                  
                  14,030
                  
                  
                  
                  (1,236
                  )
                  
                  
                  66,869LONG-TERM
      LIABILITIES8
      3/4% senior secured notes, net of discount
                  
                  
                  
                  
                  
                  
                  101,898
                  
                  
                  
                  151,456
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  253,35411%
      senior secured notes, net of discount
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  109,497
                  
                  
                  
                  
                  
                  
                  
                  109,49713%
      senior notes, net of discount
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  6,884
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  6,884Senior
      secured credit facilities
                  
                  
                  
                  
                  
                  
                  22,000
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  22,000Term
      loan
                  
                  
                  
                  
                  
                  
                  6,326
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  6,326Notes
      and leases payable, net of discount
                  
                  
                  
                  
                  
                  
                  409
                  
                  
                  
                  589
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  998Obligation
      under Minimum Assessment Agreement
                  
                  
                  
                  
                  
                  
                  18,717
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  18,717Other
      liabilities
                  
                  
                  74
                  
                  
                  
                  553
                  
                  
                  
                  
                  
                  
                  
                  1,226
                  
                  
                  
                  
                  
                  
                  
                  1,853Total
      long-term liabilities
                  
                  
                  74
                  
                  
                  
                  149,903
                  
                  
                  
                  158,929
                  
                  
                  
                  110,723
                  
                  
                  
                  
                  
                  
                  
                  419,629Total
      liabilities
                  
                  
                  1,532
                  
                  
                  
                  169,818
                  
                  
                  
                  191,631
                  
                  
                  
                  124,753
                  
                  
                  
                  (1,236
                  )
                  
                  
                  486,498MEMBER’S
      EQUITY (DEFICIT)
                  
                  
                  (44,282
                  )
                  
                  
                  16,983
                  
                  
                  
                  (39,114
                  )
                  
                  
                  (21,717
                  )
                  
                  
                  43,848
                  
                  
                  
                  (44,282
                  )TOTAL
                  
                  $
                  (42,750
                  )
                  
                  $
                  186,801
                  
                  
                  $
                  152,517
                  
                  
                  $
                  103,036
                  
                  
                  $
                  42,612
                  
                  
                  $
                  442,216
 
 15
  At December 31, 2008Parent
                    Co-Issuer —
                    PGL
                  
                  
                  Subsidiary
                    Co-Issuer —
                    DJL
                  
                  
                  Subsidiary
                    Guarantor —
                    EVD
                  
                  
                  Subsidiary
                    Non-Guarantor —DJW
                  
                  
                  Consolidating
      Adjustments
                  
                  
                  ConsolidatedASSETSCURRENT
      ASSETS:Cash
      and cash equivalents
                  
                  $
                  (38
                  )
                  
                  $
                  9,704
                  
                  
                  $
                  7,418
                  
                  
                  $
                  21,621
                  
                  
                  
                  
                  
                  $
                  38,705Restricted
      cash-purse settlements
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  5,013
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  5,013Accounts
      receivable
                  
                  
                  1
                  
                  
                  
                  3,487
                  
                  
                  
                  1,113
                  
                  
                  
                  437
                  
                  
                  
                  
                  
                  
                  5,038Receivables
      from affiliates
                  
                  
                  5
                  
                  
                  
                  1,585
                  
                  
                  
                  138
                  
                  
                  
                  133
                  
                  
                  $
                  (1,590
                  )
                  
                  
                  271Inventories
                  
                  
                  
                  
                  
                  
                  449
                  
                  
                  
                  330
                  
                  
                  
                  420
                  
                  
                  
                  
                  
                  
                  
                  1,199Prepaid
      expenses and other assets
                  
                  
                  39
                  
                  
                  
                  710
                  
                  
                  
                  753
                  
                  
                  
                  418
                  
                  
                  
                  
                  
                  
                  
                  1,920Total
      current assets
                  
                  
                  7
                  
                  
                  
                  15,935
                  
                  
                  
                  14,765
                  
                  
                  
                  23,029
                  
                  
                  
                  (1,590
                  )
                  
                  
                  52,146PROPERTY
      AND EQUIPMENT, NET
                  
                  
                  511
                  
                  
                  
                  110,934
                  
                  
                  
                  92,740
                  
                  
                  
                  58,969
                  
                  
                  
                  
                  
                  
                  
                  263,154OTHER
      ASSETS:Investment
      in subsidiaries
                  
                  
                  (50,908
                  )
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  50,908Deferred
      financing costs
                  
                  
                  
                  
                  
                  
                  11,837
                  
                  
                  
                  4,195
                  
                  
                  
                  3,142
                  
                  
                  
                  
                  
                  
                  
                  19,174Goodwill
                  
                  
                  
                  
                  
                  
                  53,083
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  53,083Licenses
      and other intangibles
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  34,488
                  
                  
                  
                  4,018
                  
                  
                  
                  
                  
                  
                  
                  38,506Deposits
      and other assets
                  
                  
                  456
                  
                  
                  
                  2,795
                  
                  
                  
                  103
                  
                  
                  
                  31
                  
                  
                  
                  
                  
                  
                  
                  3,385Investment
      available for sale
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  7,828
                  
                  
                  
                  
                  
                  
                  
                  7,828Total
      other assets
                  
                  
                  (50,452
                  )
                  
                  
                  67,715
                  
                  
                  
                  38,786
                  
                  
                  
                  15,019
                  
                  
                  
                  50,908
                  
                  
                  
                  121,976TOTAL
                  
                  $
                  (49,934
                  )
                  
                  $
                  194,584
                  
                  
                  $
                  146,291
                  
                  
                  $
                  97,017
                  
                  
                  $
                  49,318
                  
                  
                  $
                  437,276LIABILITIES
      AND MEMBER’S DEFICITCURRENT
      LIABILITIES:Accounts
      payable
                  
                  $
                  71
                  
                  
                  $
                  805
                  
                  
                  $
                  2,988
                  
                  
                  $
                  744
                  
                  
                  
                  
                  
                  
                  $
                  4,608Construction
      payable
                  
                  
                  120
                  
                  
                  
                  11,980
                  
                  
                  
                  105
                  
                  
                  
                  119
                  
                  
                  
                  
                  
                  
                  
                  12,324Purse
      settlement payable
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  6,804
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  6,804Accrued
      payroll and payroll taxes
                  
                  
                  1,700
                  
                  
                  
                  1,263
                  
                  
                  
                  1,289
                  
                  
                  
                  852
                  
                  
                  
                  
                  
                  
                  
                  5,104Accrued
      interest
                  
                  
                  
                  
                  
                  
                  2,077
                  
                  
                  
                  3,168
                  
                  
                  
                  2,570
                  
                  
                  
                  
                  
                  
                  
                  7,815Other
      accrued expenses
                  
                  
                  82
                  
                  
                  
                  2,945
                  
                  
                  
                  5,105
                  
                  
                  
                  2,255
                  
                  
                  
                  
                  
                  
                  
                  10,387Payable
      to affiliates
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  3,201
                  
                  
                  
                  1,964
                  
                  
                  $
                  (1,590
                  )
                  
                  
                  3,575Current
      maturity of long-term debt and leases
                  
                  
                  
                  
                  
                  
                  5,266
                  
                  
                  
                  572
                  
                  
                  
                  2,654
                  
                  
                  
                  
                  
                  
                  
                  8,492Total
      current liabilities
                  
                  
                  1,973
                  
                  
                  
                  24,336
                  
                  
                  
                  23,232
                  
                  
                  
                  11,158
                  
                  
                  
                  (1,590
                  )
                  
                  
                  59,109LONG-TERM
      LIABILITIES:8
      ѕ% senior secured notes, net of discount
                  
                  
                  
                  
                  
                  
                  101,851
                  
                  
                  
                  151,386
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  253,23711%
      senior secured notes, net of discount
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  111,258
                  
                  
                  
                  
                  
                  
                  
                  111,25813%
      senior notes, net of discount
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  6,877
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  6,877Senior
      secured credit facilities
                  
                  
                  
                  
                  
                  
                  28,500
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  28,500Term
      loan
                  
                  
                  
                  
                  
                  
                  6,697
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  6,697Notes
      and leases payable, net of discount
                  
                  
                  
                  
                  
                  
                  580
                  
                  
                  
                  594
                  
                  
                  
                  55
                  
                  
                  
                  
                  
                  
                  
                  1,229Obligation
      under Minimum Assessment Agreement
                  
                  
                  
                  
                  
                  
                  16,394
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  16,394Other
      liabilities
                  
                  
                  76
                  
                  
                  
                  4,695
                  
                  
                  
                  
                  
                  
                  
                  1,187
                  
                  
                  
                  
                  
                  
                  
                  5,958Total
      long-term liabilities
                  
                  
                  76
                  
                  
                  
                  158,717
                  
                  
                  
                  158,857
                  
                  
                  
                  112,500
                  
                  
                  
                  
                  
                  
                  
                  430,150Total
      liabilities
                  
                  
                  2,049
                  
                  
                  
                  183,053
                  
                  
                  
                  182,089
                  
                  
                  
                  123,658
                  
                  
                  
                  (1,590
                  )
                  
                  
                  489,259MEMBER’S
      EQUITY (DEFICIT)
                  
                  
                  (51,983
                  )
                  
                  
                  11,531
                  
                  
                  
                  (35,798
                  )
                  
                  
                  (26,641
                  )
                  
                  
                  50,908
                  
                  
                  
                  (51,983
                  )TOTAL
                  
                  $
                  (49,934
                  )
                  
                  $
                  194,584
                  
                  
                  $
                  146,291
                  
                  
                  $
                  97,017
                  
                  
                  $
                  49,318
                  
                  
                  $
                  437,276
 
  
 16
 
 CONSOLIDATING
STATEMENTS OF OPERATIONS
 
 Three Months Ended March 31, 2009Parent
                  
                  
                  Subsidiary
                  
                  
                  Subsidiary
                  
                  
                  Subsidiary
                    Non-Co-Issuer -
                  
                  
                  Co-Issuer -
                  
                  
                  Guarantor -
                  
                  
                  Guarantor -
                  
                  
                  Consolidating(in thousands)
                  
                  PGL
                  
                  
                  DJL
                  
                  
                  EVD
                  
                  
                  DJW
                  
                  
                  Adjustments
                  
                  
                  ConsolidatedREVENUES:Casino
                  
                  
                  
                  
                  $
                  19,196
                  
                  
                  $
                  27,323
                  
                  
                  $
                  19,238
                  
                  
                  
                  
                  
                  $
                  65,757Racing
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  3,026
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  3,026Video
      poker
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  1,584
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  1,584Food
      and beverage
                  
                  
                  
                  
                  
                  2,237
                  
                  
                  
                  2,394
                  
                  
                  
                  1,147
                  
                  
                  
                  
                  
                  
                  5,778Affiliate
      management fee income
                  
                  
                  
                  
                  
                  636
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  $
                  (636
                  )Other
                  
                  
                  
                  
                  
                  681
                  
                  
                  
                  399
                  
                  
                  
                  1,261
                  
                  
                  
                  
                  
                  
                  
                  2,341Less
      promotional allowances
                  
                  
                  
                  
                  
                  (2,381
                  )
                  
                  
                  (2,554
                  )
                  
                  
                  (1,581
                  )
                  
                  
                  
                  
                  
                  
                  (6,516
                  )Total
      net revenues
                  
                  
                  
                  
                  
                  20,369
                  
                  
                  
                  32,172
                  
                  
                  
                  20,065
                  
                  
                  
                  (636
                  )
                  
                  
                  71,970EXPENSES:Casino
                  
                  
                  
                  
                  
                  7,521
                  
                  
                  
                  12,995
                  
                  
                  
                  6,874
                  
                  
                  
                  
                  
                  
                  
                  27,390Racing
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  2,884
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  2,884Video
      poker
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  1,062
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  1,062Food
      and beverage
                  
                  
                  
                  
                  
                  1,659
                  
                  
                  
                  1,690
                  
                  
                  
                  952
                  
                  
                  
                  
                  
                  
                  
                  4,301Other
                  
                  
                  
                  
                  
                  386
                  
                  
                  
                  64
                  
                  
                  
                  1,034
                  
                  
                  
                  
                  
                  
                  
                  1,484Selling,
      general and administrative
                  
                  $
                  788
                  
                  
                  
                  3,631
                  
                  
                  
                  3,692
                  
                  
                  
                  3,405
                  
                  
                  
                  1,246
                  
                  
                  
                  12,762Depreciation
      and amortization
                  
                  
                  27
                  
                  
                  
                  2,054
                  
                  
                  
                  1,799
                  
                  
                  
                  2,185
                  
                  
                  
                  
                  
                  
                  
                  6,065Development
      expense
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  82
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  82Affiliate
      management fees
                  
                  
                  97
                  
                  
                  
                  
                  
                  
                  
                  1,093
                  
                  
                  
                  764
                  
                  
                  
                  (636
                  )
                  
                  
                  1,318Loss
      (gain) on disposal of assets
                  
                  
                  
                  
                  
                  
                  (9
                  )
                  
                  
                  35
                  
                  
                  
                  55
                  
                  
                  
                  
                  
                  
                  
                  81Corporate
      expense allocation
                  
                  
                  
                  
                  
                  
                  418
                  
                  
                  
                  410
                  
                  
                  
                  418
                  
                  
                  
                  (1,246
                  )Total
      expenses
                  
                  
                  912
                  
                  
                  
                  15,660
                  
                  
                  
                  25,806
                  
                  
                  
                  15,687
                  
                  
                  
                  (636
                  )
                  
                  
                  57,429INCOME
      (LOSS) FROM OPERATIONS
                  
                  
                  (912
                  )
                  
                  
                  4,709
                  
                  
                  
                  6,366
                  
                  
                  
                  4,378
                  
                  
                  
                  
                  
                  
                  
                  14,541OTHER
      INCOME (EXPENSE):Interest
      income
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  5
                  
                  
                  
                  503
                  
                  
                  
                  
                  
                  
                  
                  508Interest
      expense, net of amounts capitalized
                  
                  
                  
                  
                  
                  
                  (3,598
                  )
                  
                  
                  (4,136
                  )
                  
                  
                  (3,516
                  )
                  
                  
                  
                  
                  
                  
                  (11,250
                  )Income
      from equity investment in subsidiaries
                  
                  
                  4,711
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (4,711
                  )Total
      other expense
                  
                  
                  4,711
                  
                  
                  
                  (3,598
                  )
                  
                  
                  (4,131
                  )
                  
                  
                  (3,013
                  )
                  
                  
                  (4,711
                  )
                  
                  
                  (10,742
                  )NET
      INCOME
                  
                  $
                  3,799
                  
                  
                  $
                  1,111
                  
                  
                  $
                  2,235
                  
                  
                  $
                  1,365
                  
                  
                  $
                  (4,711
                  )
                  
                  $
                  3,799
 
 
  
 17
  
 
 Three Months Ended March 31, 2008Parent
                  
                  
                  Subsidiary
                  
                  
                  Subsidiary
                  
                  
                  Subsidiary
                    Non-Co-Issuer -
                  
                  
                  Co-Issuer -
                  
                  
                  Guarantor -
                  
                  
                  Guarantor -
                  
                  
                  Consolidating(in thousands)
                  
                  PGL
                  
                  
                  DJL
                  
                  
                  EVD
                  
                  
                  DJW
                  
                  
                  Adjustments
                  
                  
                  ConsolidatedREVENUES:Casino
                  
                  
                  
                  
                  $
                  9,461
                  
                  
                  $
                  28,066
                  
                  
                  $
                  18,893
                  
                  
                  
                  
                  
                  $
                  56,420Racing
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  3,317
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  3,317Video
      poker
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  1,558
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  1,558Food
      and beverage
                  
                  
                  
                  
                  
                  568
                  
                  
                  
                  2,232
                  
                  
                  
                  956
                  
                  
                  
                  
                  
                  
                  3,756Affiliate
      management fee income
                  
                  
                  
                  
                  
                  687
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  $
                  (687
                  )Other
                  
                  
                  
                  
                  
                  677
                  
                  
                  
                  414
                  
                  
                  
                  1,601
                  
                  
                  
                  
                  
                  
                  
                  2,692Less
      promotional allowances
                  
                  
                  
                  
                  
                  (1,081
                  )
                  
                  
                  (2,294
                  )
                  
                  
                  (1,291
                  )
                  
                  
                  
                  
                  
                  
                  (4,666
                  )Total
      net revenues
                  
                  
                  
                  
                  
                  10,312
                  
                  
                  
                  33,293
                  
                  
                  
                  20,159
                  
                  
                  
                  (687
                  )
                  
                  
                  63,077EXPENSES:Casino
                  
                  
                  
                  
                  
                  4,439
                  
                  
                  
                  12,875
                  
                  
                  
                  6,866
                  
                  
                  
                  
                  
                  
                  
                  24,180Racing
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  2,909
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  2,909Video
      poker
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  1,126
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  1,126Food
      and beverage
                  
                  
                  
                  
                  
                  552
                  
                  
                  
                  1,579
                  
                  
                  
                  766
                  
                  
                  
                  
                  
                  
                  
                  2,897Other
                  
                  
                  
                  
                  
                  4
                  
                  
                  
                  60
                  
                  
                  
                  1,358
                  
                  
                  
                  
                  
                  
                  
                  1,422Selling,
      general and administrative
                  
                  $
                  854
                  
                  
                  
                  1,782
                  
                  
                  
                  3,846
                  
                  
                  
                  3,385
                  
                  
                  
                  2,127
                  
                  
                  
                  11,994Depreciation
      and amortization
                  
                  
                  12
                  
                  
                  
                  795
                  
                  
                  
                  1,928
                  
                  
                  
                  2,128
                  
                  
                  
                  
                  
                  
                  
                  4,863Pre-opening
      expense
                  
                  
                  
                  
                  
                  
                  55
                  
                  
                  
                  9
                  
                  
                  
                  32
                  
                  
                  
                  
                  
                  
                  
                  96Development
      expense
                  
                  
                  
                  
                  
                  
                  8
                  
                  
                  
                  31
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  39Affiliate
      management fees
                  
                  
                  85
                  
                  
                  
                  
                  
                  
                  
                  1,190
                  
                  
                  
                  782
                  
                  
                  
                  (687
                  )
                  
                  
                  1,370Loss
      (gain) on disposal of assets
                  
                  
                  
                  
                  
                  
                  (7
                  )
                  
                  
                  83
                  
                  
                  
                  27
                  
                  
                  
                  
                  
                  
                  
                  103Corporate
      expense allocation
                  
                  
                  
                  
                  
                  
                  707
                  
                  
                  
                  713
                  
                  
                  
                  707
                  
                  
                  
                  (2,127
                  )Total
      expenses
                  
                  
                  951
                  
                  
                  
                  8,335
                  
                  
                  
                  26,349
                  
                  
                  
                  16,051
                  
                  
                  
                  (687
                  )
                  
                  
                  50,999INCOME
      (LOSS) FROM OPERATIONS
                  
                  
                  (951
                  )
                  
                  
                  1,977
                  
                  
                  
                  6,944
                  
                  
                  
                  4,108
                  
                  
                  
                  
                  
                  
                  
                  12,078OTHER
      INCOME (EXPENSE):Interest
      income
                  
                  
                  64
                  
                  
                  
                  38
                  
                  
                  
                  74
                  
                  
                  
                  568
                  
                  
                  
                  
                  
                  
                  
                  744Interest
      expense, net of amounts capitalized
                  
                  
                  
                  
                  
                  
                  (2,556
                  )
                  
                  
                  (4,181
                  )
                  
                  
                  (3,527
                  )
                  
                  
                  
                  
                  
                  
                  (10,264
                  )Income
      from equity investment in subsidiaries
                  
                  
                  3,445
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (3,445
                  )Total
      other expense
                  
                  
                  3,509
                  
                  
                  
                  (2,518
                  )
                  
                  
                  (4,107
                  )
                  
                  
                  (2,959
                  )
                  
                  
                  (3,445
                  )
                  
                  
                  (9,520
                  )NET
      INCOME (LOSS)
                  
                  $
                  2,558
                  
                  
                  $
                  (541
                  )
                  
                  $
                  2,837
                  
                  
                  $
                  1,149
                  
                  
                  $
                  (3,445
                  )
                  
                  $
                  2,558
  
 18
 CONSOLIDATING
STATEMENTS OF CASH FLOWS
  Three Months Ended March 31, 2009(in thousands)
                    
                    Parent
                      Co-Issuer -
                      PGL
                    
                    
                    Subsidiary
                      Co-Issuer -
                      DJL
                    
                    
                    Subsidiary
                      Guarantor -
                      EVD
                    
                    
                    Subsidiary
                      Non-
                      Guarantor -
                      DJW
                    
                    
                    Consolidating
                      Adjustments
                    
                    
                    ConsolidatedCASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income
                    
                    $
                    3,799
                    
                    
                    $
                    1,111
                    
                    
                    $
                    2,235
                    
                    
                    $
                    1,365
                    
                    
                    $
                    (4,711
                    )
                    
                    $
                    3,799Adjustments
      to reconcile net income (loss) to net cash flows from operating
      activities:Depreciation
      and amortization
                    
                    
                    27
                    
                    
                    
                    2,054
                    
                    
                    
                    1,799
                    
                    
                    
                    2,185
                    
                    
                    
                    
                    
                    
                    
                    6,065Non-cash
      interest
                    
                    
                    
                    
                    
                    
                    665
                    
                    
                    
                    413
                    
                    
                    
                    235
                    
                    
                    
                    
                    
                    
                    
                    1,313Non-cash
      equity based and other compensation
                    
                    
                    516
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    516Corporate
      expense allocation
                    
                    
                    (1,246
                    )
                    
                    
                    418
                    
                    
                    
                    410
                    
                    
                    
                    418(Gain)
      loss on disposal of assets
                    
                    
                    
                    
                    
                    
                    (9
                    )
                    
                    
                    35
                    
                    
                    
                    55
                    
                    
                    
                    
                    
                    
                    
                    81Income
      from equity investment in subsidiaries
                    
                    
                    (4,711
                    )
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    4,711Changes
      in operating assets and liabilities:Restricted
      cash — purse settlements
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (4,907
                    )
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (4,907
                    )Receivables
                    
                    
                    1
                    
                    
                    
                    4
                    
                    
                    
                    557
                    
                    
                    
                    (575
                    )
                    
                    
                    
                    
                    
                    
                    (13
                    )Receivables
      from affiliates
                    
                    
                    5
                    
                    
                    
                    (12
                    )
                    
                    
                    20
                    
                    
                    
                    16
                    
                    
                    
                    (29
                    )Payable
      to affiliates
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    71
                    
                    
                    
                    95
                    
                    
                    
                    29
                    
                    
                    
                    195Inventories
                    
                    
                    
                    
                    
                    
                    33
                    
                    
                    
                    (131
                    )
                    
                    
                    33
                    
                    
                    
                    
                    
                    
                    
                    (65
                    )Prepaid
      expenses and other assets
                    
                    
                    (17
                    )
                    
                    
                    496
                    
                    
                    
                    (31
                    )
                    
                    
                    (48
                    )
                    
                    
                    
                    
                    
                    
                    400Accounts
      payable
                    
                    
                    15
                    
                    
                    
                    (196
                    )
                    
                    
                    4,320
                    
                    
                    
                    (32
                    )
                    
                    
                    
                    
                    
                    
                    4,107Accrued
      expenses
                    
                    
                    (413
                    )
                    
                    
                    2,460
                    
                    
                    
                    4,304
                    
                    
                    
                    3,849
                    
                    
                    
                    
                    
                    
                    
                    10,200Net
      cash flows from operating activities
                    
                    
                    (2,024
                    )
                    
                    
                    7,024
                    
                    
                    
                    9,095
                    
                    
                    
                    7,596
                    
                    
                    
                    
                    
                    
                    
                    21,691CASH
      FLOWS FROM INVESTING ACTIVITIES:Increase
      in cash value of life insurance for premiums paid
                    
                    
                    (95
                    )
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (95
                    )Business
      acquisition and licensing costs
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (127
                    )
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (127
                    )Construction
      project development costs
                    
                    
                    
                    
                    
                    
                    (7,524
                    )
                    
                    
                    (787
                    )
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (8,311
                    )Purchase
      of property and equipment
                    
                    
                    (131
                    )
                    
                    
                    (606
                    )
                    
                    
                    (638
                    )
                    
                    
                    (679
                    )
                    
                    
                    
                    
                    
                    
                    (2,054
                    )Proceeds
      from sale of property and equipment
                    
                    
                    
                    
                    
                    
                    496
                    
                    
                    
                    6
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    502Net
      cash flows from investing activities
                    
                    
                    (226
                    )
                    
                    
                    (7,634
                    )
                    
                    
                    (1,546
                    )
                    
                    
                    (679
                    )
                    
                    
                    
                    
                    
                    
                    (10,085
                    )CASH
      FLOWS FROM FINANCING ACTIVITIES:Deferred
      financing costs
                    
                    
                    
                    
                    
                    
                    (9
                    )
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (9
                    )Principal
      payments on debt
                    
                    
                    
                    
                    
                    
                    (1,368
                    )
                    
                    
                    (5
                    )
                    
                    
                    (489
                    )
                    
                    
                    
                    
                    
                    
                    (1,862
                    )Proceeds
      from senior secured credit facilities
                    
                    
                    
                    
                    
                    
                    4,000
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    4,000Payments
      on senior secured credit facilities
                    
                    
                    
                    
                    
                    
                    (10,500
                    )
                    
                    
                    
                    
                    
                    
                    (2,000
                    )
                    
                    
                    
                    
                    
                    
                    (12,500
                    )Member
      contributions (distributions)
                    
                    
                    2,283
                    
                    
                    
                    4,285
                    
                    
                    
                    (6,059
                    )
                    
                    
                    (1,227
                    )
                    
                    
                    
                    
                    
                    
                    (718
                    )Net
      cash flows from financing activities
                    
                    
                    2,283
                    
                    
                    
                    (3,592
                    )
                    
                    
                    (6,064
                    )
                    
                    
                    (3,716
                    )
                    
                    
                    
                    
                    
                    
                    (11,089
                    )NET
      INCREASE IN CASH AND CASH EQUIVALENTS
                    
                    
                    33
                    
                    
                    
                    (4,202
                    )
                    
                    
                    1,485
                    
                    
                    
                    3,201
                    
                    
                    
                    
                    
                    
                    
                    517CASH
      AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
                    
                    
                    (38
                    )
                    
                    
                    9,704
                    
                    
                    
                    7,418
                    
                    
                    
                    21,621
                    
                    
                    
                    
                    
                    
                    
                    38,705CASH
      AND CASH EQUIVALENTS AT END OF PERIOD
                    
                    $
                    (5
                    )
                    
                    $
                    5,502
                    
                    
                    $
                    8,903
                    
                    
                    $
                    24,822
                    
                    
                    $
                    
                    
                    
                    $
                    39,222
 
  19
 
 Three Months Ended March 31, 2008(in thousands)
                  
                  Parent
                    Co-Issuer -
                    PGL
                  
                  
                  Subsidiary
                    Co-Issuer -
                    DJL
                  
                  
                  Subsidiary
                    Guarantor -
                    EVD
                  
                  
                  Subsidiary
                    Non-
                    Guarantor -
                    DJW
                  
                  
                  Consolidating
                    Adjustments
                  
                  
                  ConsolidatedCASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income (loss)
                  
                  $
                  2,558
                  
                  
                  $
                  (541
                  )
                  
                  $
                  2,837
                  
                  
                  $
                  1,149
                  
                  
                  $
                  (3,445
                  )
                  
                  $
                  2,558Adjustments
      to reconcile net income (loss) to net cash flows from operating
      activities:Depreciation
      and amortization
                  
                  
                  12
                  
                  
                  
                  795
                  
                  
                  
                  1,928
                  
                  
                  
                  2,128
                  
                  
                  
                  
                  
                  
                  
                  4,863Non-cash
      interest
                  
                  
                  
                  
                  
                  
                  513
                  
                  
                  
                  482
                  
                  
                  
                  267
                  
                  
                  
                  
                  
                  
                  
                  1,262Non-cash
      equity based and other compensation
                  
                  
                  2,035
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  2,035Corporate
      expense allocation
                  
                  
                  (2,127
                  )
                  
                  
                  707
                  
                  
                  
                  713
                  
                  
                  
                  707Loss
      on disposal of assets
                  
                  
                  
                  
                  
                  
                  (7
                  )
                  
                  
                  83
                  
                  
                  
                  27
                  
                  
                  
                  
                  
                  
                  
                  103Income
      from equity investment in subsidiaries
                  
                  
                  (3,445
                  )
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  3,445Changes
      in operating assets and liabilities:Restricted
      cash — purse settlements
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (5,289
                  )
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (5,289
                  )Receivables
                  
                  
                  
                  
                  
                  
                  65
                  
                  
                  
                  1,050
                  
                  
                  
                  (461
                  )
                  
                  
                  
                  
                  
                  
                  654Receivables
      from affiliates
                  
                  
                  
                  
                  
                  
                  (587
                  )
                  
                  
                  (72
                  )
                  
                  
                  (89
                  )
                  
                  
                  748Payables
      to affiliates
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  474
                  
                  
                  
                  (563
                  )
                  
                  
                  (748
                  )
                  
                  
                  (837
                  )Inventories
                  
                  
                  
                  
                  
                  
                  25
                  
                  
                  
                  (47
                  )
                  
                  
                  (44
                  )
                  
                  
                  
                  
                  
                  
                  (66
                  )Prepaid
      expenses and other assets
                  
                  
                  10
                  
                  
                  
                  (535
                  )
                  
                  
                  (125
                  )
                  
                  
                  (14
                  )
                  
                  
                  
                  
                  
                  
                  (664
                  )Accounts
      payable
                  
                  
                  (5
                  )
                  
                  
                  312
                  
                  
                  
                  5,189
                  
                  
                  
                  42
                  
                  
                  
                  
                  
                  
                  
                  5,538Accrued
      expenses
                  
                  
                  (586
                  )
                  
                  
                  1,675
                  
                  
                  
                  3,138
                  
                  
                  
                  2,962
                  
                  
                  
                  
                  
                  
                  
                  7,189Net
      cash flows from operating activities
                  
                  
                  (1,548
                  )
                  
                  
                  2,422
                  
                  
                  
                  10,361
                  
                  
                  
                  6,111
                  
                  
                  
                  
                  
                  
                  
                  17,346CASH
      FLOWS FROM INVESTING ACTIVITIES:Increase
      in cash value of life insurance for premiums paid
                  
                  
                  (78
                  )
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (78
                  )Business
      acquisition and licensing costs
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (130
                  )
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (130
                  )Construction
      project development costs
                  
                  
                  
                  
                  
                  
                  (6,450
                  )
                  
                  
                  (921
                  )
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (7,371
                  )Purchase
      of property and equipment
                  
                  
                  (7
                  )
                  
                  
                  (216
                  )
                  
                  
                  (1,394
                  )
                  
                  
                  (667
                  )
                  
                  
                  
                  
                  
                  
                  (2,284
                  )Net
      cash flows from investing activities
                  
                  
                  (85
                  )
                  
                  
                  (6,666
                  )
                  
                  
                  (2,445
                  )
                  
                  
                  (667
                  )
                  
                  
                  
                  
                  
                  
                  (9,863
                  )CASH
      FLOWS FROM FINANCING ACTIVITIES:Deferred
      financing costs
                  
                  
                  
                  
                  
                  
                  (65
                  )
                  
                  
                  (32
                  )
                  
                  
                  (40
                  )
                  
                  
                  
                  
                  
                  
                  (137
                  )Principal
      payments on debt
                  
                  
                  
                  
                  
                  
                  (4
                  )
                  
                  
                  (5
                  )
                  
                  
                  (911
                  )
                  
                  
                  
                  
                  
                  
                  (920
                  )Member
      contributions (distributions)
                  
                  
                  (4,300
                  )
                  
                  
                  5,091
                  
                  
                  
                  (816
                  )
                  
                  
                  (816
                  )
                  
                  
                  
                  
                  
                  
                  (841
                  )Net
      cash flows from financing activities
                  
                  
                  (4,300
                  )
                  
                  
                  5,022
                  
                  
                  
                  (853
                  )
                  
                  
                  (1,767
                  )
                  
                  
                  
                  
                  
                  
                  (1,898
                  )NET
      INCREASE IN CASH AND CASH EQUIVALENTS
                  
                  
                  (5,933
                  )
                  
                  
                  778
                  
                  
                  
                  7,063
                  
                  
                  
                  3,677
                  
                  
                  
                  
                  
                  
                  
                  5,585CASH
      AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
                  
                  
                  11,908
                  
                  
                  
                  4,606
                  
                  
                  
                  11,834
                  
                  
                  
                  13,752
                  
                  
                  
                  
                  
                  
                  
                  42,100CASH
      AND CASH EQUIVALENTS AT END OF PERIOD
                  
                  $
                  5,975
                  
                  
                  $
                  5,384
                  
                  
                  $
                  18,897
                  
                  
                  $
                  17,429
                  
                  
                  $
                  -
                  
                  
                  $
                  47,685
   20
 ITEM2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  The
following discussion and analysis should be read in conjunction with the
condensed consolidated financial statements and the related notes thereto
appearing elsewhere in this report.
  Forward
      Looking Statements
  Some
statements contained in “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” constitute “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include the words “may,” “estimate,” “intend,”
“continue,” “believe,” “expect,” or “anticipate” and other similar words. These
forward-looking statements generally relate to plans and objectives for future
operations and are based upon management’s reasonable estimates of future
results or trends. Although we believe that the plans and objectives reflected
in or suggested by such forward-looking statements are reasonable, such plans or
objectives may not be achieved. Actual results may differ from projected results
due to, but not limited to, unforeseen developments, including developments
relating to the following:
  ·
                the availability and adequacy of
      our cash flows to satisfy our obligations, including payment obligations
      under the Peninsula Gaming Notes, the DJW Notes, the PGL Credit Facility
      and the DJW Credit Facility and additional funds required to support
      capital improvements and
development;
  ·
                economic, competitive,
      demographic, business and other conditions in our local and regional
      markets;
  ·
                changes or developments in the
      laws, regulations or taxes in the gaming and horse racing
      industry;
  ·
                actions taken or omitted to be
      taken by third parties, including customers, suppliers, competitors,
      members and shareholders, as well as legislative, regulatory, judicial and
      other governmental
authorities;
  ·
                changes in business strategy,
      capital improvements, development plans, including those due to
      environmental remediation concerns, or changes in personnel or their
      compensation, including federal, state and local minimum wage
      requirements;
  ·
                the loss of any license or
      permit, including the failure to obtain an unconditional renewal of a
      required gaming license on a timely
  basis;
  ·
                the termination of our operating
      agreement with the DRA and/or the WCDA or the failure of the DRA and/or
      the WCDA to continue as our “qualified sponsoring
      organization;”
  ·
                the loss of our facilities due to
      casualty, weather, mechanical failure or any extended or extraordinary
      maintenance or inspection that may be
  required;
  ·
                changes in federal or state tax
      obligations;
  ·
                potential exposure to
      environmental liabilities, changes or developments in the laws,
      regulations or taxes in the gaming or horse racing industry or a decline
      in the public acceptance of gaming or horse racing and other unforeseen
      difficulties associated with a new
  venture;
  ·
                adverse circumstances, changes,
      developments or events relating to or resulting from our ownership and
      control of DJL, EVD and DJW;
and
  ·
                other factors discussed in our
      other filings with the SEC.
  
 21
 Overview
  We own
and operate (i) the Diamond Jo riverboat casino in Dubuque, Iowa with 986
slot machines and 17 table games and 5 poker tables, which commenced operations
at its new facility in December 2008, (ii) the Evangeline Downs racino in
Opelousas, Louisiana with 1,424 slot machines and a one-mile dirt and 7/8 mile
turf horse racetrack and four OTBs located throughout south central Louisiana
and (iii) the Diamond Jo Worth casino in Worth County, Iowa with 920 slot
machines, 25 table games and 7 poker tables which opened to the public in April
2006 and subsequently expanded in April 2007.
  Results of
      Operations
  Our
results of operations discussed below include the consolidated results of
operations of the Company, DJL, EVD and DJW for the three months ended March 31,
2009 and 2008.
  Statement
of Operations Data
  INCOME(LOSS) FROM OPERATIONS:
                  
                  Three Months Ended
                    March 31,(in thousands)
                  
                  2009
                  
                  
                  2008General
      corporate
                  
                  $
                  (2,158
                  )
                  
                  $
                  (3,078
                  )Diamond
      Jo
                  
                  
                  4,491
                  
                  
                  
                  1,997Evangeline
      Downs
                  
                  
                  7,412
                  
                  
                  
                  8,344Diamond
      Jo Worth
                  
                  
                  4,796
                  
                  
                  
                  4,815Income
      from operations
                  
                  $
                  14,541
                  
                  
                  $
                  12,078
 
 Diamond Jo
                    Three Months Ended
                    March 31,
                  
                  
                  Evangeline Downs
                    Three Months Ended
                    March 31,
                  
                  
                  Diamond Jo Worth
                    Three Months
                    Ended March 31,(in thousands)
                  
                  2009
                  
                  
                  2008
                  
                  
                  2009
                  
                  
                  2008
                  
                  
                  2009
                  
                  
                  2008REVENUES:Casino
                  
                  $
                  19,196
                  
                  
                  $
                  9,461
                  
                  
                  $
                  27,323
                  
                  
                  $
                  28,066
                  
                  
                  $
                  19,238
                  
                  
                  $
                  18,893Racing
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  3,026
                  
                  
                  
                  3,317Video
      poker
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  1,584
                  
                  
                  
                  1,558Food
      and beverage
                  
                  
                  2,237
                  
                  
                  
                  568
                  
                  
                  
                  2,394
                  
                  
                  
                  2,232
                  
                  
                  
                  1,147
                  
                  
                  
                  956Other
                  
                  
                  681
                  
                  
                  
                  677
                  
                  
                  
                  399
                  
                  
                  
                  414
                  
                  
                  
                  1,261
                  
                  
                  
                  1,601Less
      promotional allowances
                  
                  
                  (2,381
                  )
                  
                  
                  (1,081
                  )
                  
                  
                  (2,554
                  )
                  
                  
                  (2,294
                  )
                  
                  
                  (1,581
                  )
                  
                  
                  (1,291
                  )Net
      revenues
                  
                  
                  19,733
                  
                  
                  
                  9,625
                  
                  
                  
                  32,172
                  
                  
                  
                  33,293
                  
                  
                  
                  20,065
                  
                  
                  
                  20,159EXPENSES:Casino
                  
                  
                  7,521
                  
                  
                  
                  4,439
                  
                  
                  
                  12,995
                  
                  
                  
                  12,875
                  
                  
                  
                  6,874
                  
                  
                  
                  6,866Racing
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  2,884
                  
                  
                  
                  2,909Video
      poker
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  1,062
                  
                  
                  
                  1,126Food
      and beverage
                  
                  
                  1,659
                  
                  
                  
                  552
                  
                  
                  
                  1,690
                  
                  
                  
                  1,579
                  
                  
                  
                  952
                  
                  
                  
                  766Other
                  
                  
                  386
                  
                  
                  
                  4
                  
                  
                  
                  64
                  
                  
                  
                  60
                  
                  
                  
                  1,034
                  
                  
                  
                  1,358Selling,
      general and administrative
                  
                  
                  3,631
                  
                  
                  
                  1,782
                  
                  
                  
                  3,692
                  
                  
                  
                  3,846
                  
                  
                  
                  3,405
                  
                  
                  
                  3,385Depreciation
      and amortization
                  
                  
                  2,054
                  
                  
                  
                  795
                  
                  
                  
                  1,799
                  
                  
                  
                  1,928
                  
                  
                  
                  2,185
                  
                  
                  
                  2,128Pre-opening
      expense
                  
                  
                  
                  
                  
                  
                  55
                  
                  
                  
                  
                  
                  
                  
                  9
                  
                  
                  
                  
                  
                  
                  
                  32Development
      expense
                  
                  
                  
                  
                  
                  
                  8
                  
                  
                  
                  82
                  
                  
                  
                  31Loss
      (gain) on disposal of assets
                  
                  
                  (9
                  )
                  
                  
                  (7
                  )
                  
                  
                  35
                  
                  
                  
                  83
                  
                  
                  
                  55
                  
                  
                  
                  27Affiliate
      management fees
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  457
                  
                  
                  
                  503
                  
                  
                  
                  764
                  
                  
                  
                  782Total
      expenses
                  
                  
                  15,242
                  
                  
                  
                  7,628
                  
                  
                  
                  24,760
                  
                  
                  
                  24,949
                  
                  
                  
                  15,269
                  
                  
                  
                  15,344Income
      from operations
                  
                  $
                  4,491
                  
                  
                  $
                  1,997
                  
                  
                  $
                  7,412
                  
                  
                  $
                  8,344
                  
                  
                  $
                  4,796
                  
                  
                  $
                  4,815
 
 Three
      months ended March 31, 2009 compared to three months ended March 31,
      2008
  Net
revenues increased $8.9 million, or 14%, to $72.0 million for the three months
ended March 31, 2009 from $63.1 million for the three months ended March 31,
2008. This increase was primarily due to a $10.1 million increase in net
revenues at DJL directly related to the opening of DJL’s new casino in December
2008.  This increase was partially offset by decreases in net revenues
at EVD of $1.1 million.
  22
 DJL’s
casino revenues increased by $9.7 million, or 102%, to $19.2 million for the
three months ended March 31, 2009 from $9.5 million for the three months ended
March 31, 2008 due to the opening of the new casino as discussed above. DJL’s
slot revenue increased to $17.5 million for the three months ended March 31,
2009 from $8.8 million for the three months ended March 31, 2008 and DJL’s table
game revenue increased to $1.7 million for the three months ended March 31, 2009
compared to $0.7 million for the three months ended March 31, 2008.  In
April 2009, the Dubuque Racing Association ("DRA") completed the renovation of
its Mystique casino (formerly the Dubuque Greyhound Park and Casino).  The
renovation includes a remodeled buffet, a new steakhouse restaurant, an
entertainment facility and additional gaming space.
  EVD’s
casino revenues declined slightly to $27.3 million for the three months ended
March 31, 2009 from $28.1 million for the three months ended March 31,
2008.  This decrease is primarily attributed to disruptions on the
casino gaming floor as a result of EVD’s $3.7 million casino floor renovation
which began at the end of 2008 and was completed in April 2009.  This
renovation included, among other things, the purchase of 100 new slot machines,
new slot signage and new casino carpeting as well as an overall redesign of the
casino floor layout to provide more space for patrons.
  DJW’s
casino revenues increased $0.3 million to $19.2 million for the three months
ended March 31, 2009 from $18.9 million for the three months ended March 31,
2008.  DJW’s slot revenue increased $0.6 million to $17.8 million for
the three months ended March 31, 2009 from $17.2 million for the three months
ended March 31, 2008 and DJW’s table game revenue decreased $0.3 million to $1.4
million for the three months ended March 31, 2009 compared to $1.7 million for
the three months ended March 31, 2008.
  Promotional
allowances as a percentage of casino revenues increased to 9.9% for the three
months ended March 31, 2009 from 8.3% for the three months ended March 31, 2008,
which is primarily due to new direct mail programs designed to stimulate
increased business.
 
 Casino
operating expenses increased $3.2 million to $27.4 million for the three months
ended March 31, 2009 from $24.2 million for the three months ended March 31,
2008 due primarily to a $3.1 million increase at DJL related to the opening
of the new casino.  Casino operating expenses as a percentage of
casino revenues declined due to a more efficient casino floor layout at
DJL’s new casino and certain fixed costs on a larger volume at DJL.
  Racing
revenues at EVD for the three months ended March 31, 2009 decreased 9% to $3.0
million compared to $3.3 million for the three months ended March 31, 2008. The
Company believes this decrease is consistent with an industry trend of decreased
wagering on horse racing throughout the United States.
 
 Food and
beverage revenues increased $2.0 million during the three months ended March 31,
2009 compared to the three months ended March 31, 2008 due primarily to a 294%,
or $1.7 million, increase in food and beverage revenues at DJL related to the
opening of the new casino.
  Other
revenues decreased $0.4 million during the three months ended March 31, 2009
compared to the three months ended March 31, 2008 due primarily to a decrease in
convenience store revenues due to a decrease in gallons of fuel sold and a
decrease in fuel prices over the first quarter of 2008.  Consistent
with this decrease in gasoline sales, DJW realized a decrease in other
expenses.  In addition, during the three months ended March 31, 2009,
DJL had other revenues of approximately $0.5 million related to the opening of
its new 30-lane bowling center and event center in December 2008.  DJL
also incurred approximately $0.3 million of other expenses related to these
amenities.  During the three months ended March 31, 2008, DJL recorded
approximately $0.6 million in other revenue associated with the DRA contractual
obligation under its operating agreement to pay DJL $0.33 for each $1.00
reduction in DJL’s adjusted gross receipts.  The income associated
with the DRA agreement terminated in December 2008 upon the opening of the new
casino.
 
 Selling,
general and administrative expenses increased $0.8 million to $12.8 million for
the three months ended March 31, 2009 from $12.0 million for the three months
ended March 31, 2008. This increase was due primarily to an increase of $1.8
million in expenses associated with operations at DJL directly related to costs
associated with the operation of its new, larger casino
facility.  This increase includes approximately $0.9 million related
to DJL’s obligation under its operating agreement with the DRA to pay the DRA
4.5% of its adjusted gross gaming receipts from the opening date of the new
casino.  This increase was partially offset by a $0.9 million decrease
in corporate selling, general and administrative expenses primarily due to lower
non-cash expense associated with the PGP incentive units granted to certain
executive officers of the Company offset by a $0.6 million increase in salaries
and other general corporate expenses.
  Depreciation
and amortization expenses at DJL increased $1.3 million due primarily to the
impact of the depreciation on the assets associated with the new
casino.
  Affiliate
management fees of $1.3 million and $1.4 million for the three months ended
March 31, 2009 and 2008, respectively, relate to management fees paid or accrued
to related parties under various management services and consulting agreements
at EVD and DJW.  Interest
expense, net of amounts capitalized, increased $1.0 million primarily due to an
increase in interest expense at DJL in connection with additional debt incurred
related to the financing of the new casino of approximately $0.6
million.  In addition,
interest expense of approximately $0.3 million was capitalized as part of the
casino development and other construction projects during the three months ended
March 31, 2008.
 23
 SEASONALITY
AND INFLATION
  Our
operations are subject to seasonal fluctuations. Our Iowa operations are
typically weaker from November through February as a result of adverse
weather conditions, and are typically stronger from March through October.
Our Louisiana horse racing operations are also subject to seasonal fluctuations.
Our horse racing operations are usually stronger during live racing season,
which generally runs from April through November. In general, our payroll
and general and administrative expenses are affected by inflation. Although
inflation has not had a material effect on our business to date, we could
experience more significant effects of inflation in future periods.
  LIQUIDITY AND
      CAPITAL RESOURCES
  Cash Flows
      from Operating, Investing and Financing
  Activities
  Our cash
balance increased $0.5 million to $39.2 million at March 31, 2009 from $38.7
million at December 31, 2008.
  Cash
flows from operating activities were $21.7 million during the three months ended
March 31, 2009, an increase of $4.4 million when compared to $17.3 million
during the three months ended March 31, 2008.  This increase is
primarily attributed to improved cash flow from operations at DJL as a result of
the opening of the new casino in December 2008.
  Cash
flows used in investing activities during the three months ended March 31, 2009
was $10.1 million consisting primarily of (i) payments of $7.5 million for
construction and other development costs associated with the DJL casino
development project, (ii) cash outflows of $0.8 million related to the
remodeling of the casino floor at EVD and (iii) cash outflows of $2.1 million
primarily related to the acquisition of slot machines and slot machine
conversions and general maintenance capital expenditures.  In
addition, DJL received proceeds from the sale of the Diamond Jo vessel and other
obsolete assets which were not utilized at its new casino.
  Cash
flows used in financing activities during the three months ended March 31, 2009
of $11.1 million reflects net payments under the Company’s senior secured
credit facilities of $8.5 million, principal payments on debt of $1.9 million
and member distributions of $0.7 million.
  As of
March 31, 2009, the Company had $22.0 million outstanding advances under the
revolver portion of the PGL Credit Facility and outstanding letters of credit of
approximately $0.9 million. The available borrowing amount under the PGL Credit
Facility at March 31, 2009, after reductions for amounts borrowed and letters of
credit outstanding at DJL and EVD, was $42.1 million. As of March 31, 2009, DJW
had no outstanding advances under the DJW Credit Facility and outstanding
letters of credit of approximately $0.7 million.  The available
borrowing amount under the DJW Credit Facility at March 31, 2009, after
reductions for letters of credit outstanding, was $4.3 million.
  Financing
Activities
  Our
financing activities will have several important effects on our future
operations and are described in “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2008. There have been no
significant changes to our financing activities during the three months ended
March 31, 2009.
  General
  In
addition to our cash on hand, we currently have the following sources of funds
for our business: (i) cash flows from operations, (ii) available borrowings
under the PGL Credit Facility and (iii) available borrowings under the DJW
Credit Facility. The available borrowing amount at March 31, 2009, after
reductions for letters of credit outstanding under the PGL Credit Facility and
the DJW Credit Facility was $42.1 million and $4.3 million, respectively.
Contractual restrictions and other provisions contained in the agreements
governing our consolidated indebtedness, including our senior credit facilities
and the indentures governing the Peninsula Gaming Notes and the DJW Notes, limit
or restrict our ability to use the funds available to us at each of our gaming
properties.
 
 Remaining cash outflows related to the development of DJL’s new casino project
are expected to be approximately $5.4 million. Our capital expenditures for the
next twelve months related to EVD’s planned development of an event
center is expected to be approximately $4.5 million.  Remaining
capital expenditures for DJL and EVD for the next twelve months, excluding
amounts discussed above, are expected to be approximately
$5.5 million. DJL and EVD’s debt maturities for the next twelve months are
expected to be approximately $5.1 million.  DJL and EVD’s member
distributions to PGP for the next twelve months are expected to be approximately
$2.4 million.  The Company plans to finance these expected cash
requirements with: (i) a portion of the available cash on hand at DJL and EVD of
$14.4 million at March 31, 2009, excluding amounts needed for normal operations,
(ii) cash generated from operations and (iii) available borrowings under the PGL
Credit Facility. There can be no assurances that such projects will be completed
in the estimated time frames or at the estimated costs.
  24
 For DJW, we expect our capital expenditures for the next twelve months to be
approximately $3.0 million, including the $1.0 million payment due in May 2009
related to DJW’s gaming license. DJW’s debt maturities for the next twelve
months are expected to be approximately $2.0 million, including $1.8 million
related to DJW’s requirement to offer to repurchase a portion of the DJW Notes
in an amount equal to the Excess Cash Flow Amount as discussed further in Note 4
to the condensed consolidated financial statements. DJW’s member distributions
to PGP for the next twelve months are expected to be approximately $1.0
million.  The Company plans to finance these expected cash
requirements with: (i) a portion of the available cash on hand at DJW of $24.8
million at March 31, 2009, excluding amounts needed for normal operations and
(ii) cash generated from operations.
 
 Based on
our cash on hand, expected cash flows from operations and our available sources
of financing, we believe we will have adequate liquidity to satisfy our current
operating needs at each of our gaming properties and to service our outstanding
indebtedness for the next twelve months.
 
 Our level
of indebtedness will have several important effects on our future operations
including, but not limited to, the following: (i) a significant portion of
our cash flow from operations will be required to pay interest on our
indebtedness and the indebtedness of our subsidiaries; (ii) the financial
covenants contained in the agreements governing such indebtedness will require
us and/or our subsidiaries to meet certain financial tests and may limit our
respective abilities to borrow additional funds or to transfer or dispose of
assets; (iii) our ability to obtain additional financing in the future for
working capital, capital expenditures, acquisitions or general corporate
purposes may be impaired; and (iv) our ability to adapt to changes in the
gaming or horse racing industries which affect the markets in which we operate
could be limited.
  CONTRACTUAL
OBLIGATIONS
  A table of our contractual
obligations as of December 31, 2008 was included in Item 7,
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations” of our Annual Report on Form 10-K for the fiscal year ended
December 31, 2008. There have been no significant changes to our
contractual obligations during the three months ended March 31,
2009.
 
 OFF-BALANCE
SHEET TRANSACTIONS
  Other
than as described in Item 7, “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” of our Annual Report on Form 10-K
for the fiscal year ended December 31, 2008, we do not maintain any
off-balance sheet transactions, arrangements, obligations or other relationships
with unconsolidated entities or others that are reasonably likely to have a
material current or future effect on our financial condition, cash flows,
revenues or expenses, results of operations, liquidity, capital expenditures or
capital resources.
 
 
 CRITICAL
      ACCOUNTING POLICIES
  The
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amount 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 periods. We periodically evaluate our policies and the
estimates and assumptions related to these policies.
 
 Understanding
our critical accounting policies and related risks is important in evaluating
our financial condition and results of operations. The critical accounting
policies used in preparation of the Company’s financial statements involve a
significant use of management judgment on matters that are inherently uncertain
and are described in “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2008. If actual results
differ significantly from management’s estimates, there could be a material
effect on our financial condition, results of operations and cash flows.
Management regularly discusses the identification and development of these
critical accounting policies with the Audit Committee of the Board of Managers.
There have been no significant changes to our critical accounting policies
during the three months ended March 31, 2009.
 
 ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  We are
exposed to certain market risks which are inherent in our financial instruments
which arise from transactions entered into in the normal course of business.
Market risk is the risk of loss from adverse changes in market prices and
interest rates. We do not currently utilize derivative financial instruments to
hedge market risk. We also do not hold or issue derivative financial instruments
for trading purposes.
  We are
exposed to interest rate risk due to changes in interest rates with respect to
our long-term variable interest rate debt borrowing under the PGL Credit
Facility and DJW Credit Facility. As of March 31, 2009, the Company had
outstanding borrowings under the PGL Credit Facility of $22.0 million and no
outstanding borrowings under the DJW Credit Facility. We have estimated our
market risk exposure using sensitivity analysis. We have defined our market risk
exposure as the potential loss in future earnings and cash flows with respect to
interest rate exposure of our market risk sensitive instruments assuming a
hypothetical increase in market rates of interest of 100 basis points. Assuming
we borrow the maximum amount allowed under the PGL Credit Facility and DJW
Credit Facility (currently an aggregate amount of $70.0 million) and if market
rates of interest on our variable rate debt increase by 100 basis points, the
estimated additional annual interest expense would be approximately $0.7
million.
  25
 We are
also exposed to fair value risk due to changes in interest rates with respect to
our long-term fixed interest rate available for sale investment and debt
borrowings. Our fixed rate available for sale investment is recorded at fair
value, and therefore, is directly impacted by changes in interest rates and
market risks. Our fixed rate debt instruments are not generally affected by a
change in the market rates of interest, and therefore, such changes generally do
not have an impact on future earnings. However, future earnings and cash flows
may be impacted by changes in interest rates related to indebtedness incurred to
fund repayments as such fixed rate debt matures. The following table contains
information relating to our fixed rate available for sale investment and debt
borrowings as of March 31, 2009 (dollars in thousands):
  Description
                  
                  Maturity
                  
                  Interest
                    Rate
                  
                  Carrying
                    Value
                  
                  Fair
                    ValueAvailable
      for sale investment
                  
                  2011
      - 2037
                  
                  7
      1⁄2
                  %
                  $ 11,973
                  
                  $ 11,973
                  (1)8
      3⁄4% senior secured notes
                  
                  April 15,
      2012
                  
                  8
      3⁄4
                  %
                  253,354
                  
                  204,000
                  (2)11%
      senior secured notes
                  
                  April
      15, 2012
                  
                  11
                  %
                  111,294
                  
                  106,235
                  (2)13%
      senior notes with contingent interest of EVD
                  
                  March 1,
      2010
                  
                  13
                  %
                  6,884
                  
                  5,874
                  (2)Senior
      credit facility
                  
                  January
      15, 2012
                  
                  6
                  %
      (3)
                  22,000
                  
                  22,000Term
      loan
                  
                  December
      1, 2013
                  
                  6
      1⁄2
                  %
                  7,766
                  
                  7,212
                  (2)Notes
      payable, capital lease obligations and other financial
      instruments
                  
                  2009—2011
                  
                  6 %
      - 8 3⁄4
                  %
                  5,435
                  
                  5,538
                  (2)Derivative
      liability
                  
                  April
      15, 2012
                  
                  N/A
                  
                  929
                  
                  929
                  (2)Obligation
      under Minimum Assessment Agreement
                  
                  2011
      - 2037
                  
                  N/A
                  
                  18,717
                  
                  15,059
                  (2)
 
 (1)           Our
available for sale investment is not traded.  Fair value is based on
considerable judgment using a combination of current market rates and estimates
of market conditions for similar instruments and the fair value of the Peninsula
Notes at March 31, 2009.  Due to the illiquid nature of the
investment, changes in market risks could have a significant impact on the fair
value.
 
 (2)           Represents
fair value as of March 31, 2009 based on current market interest rates and
estimates of market conditions for instruments with similar terms, maturities,
and degrees of risk.
 
 (3)           Such
borrowings are made under variable interest rates.  The interest rate
listed is as of March 31, 2009.
 
 ITEM 4. CONTROLS AND
  PROCEDURES
  Disclosure Controls and
Procedures. We maintain disclosure controls and procedures (as defined
in Rule 13a-l 5(e) under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) that are designed to ensure that information required to be
disclosed in our reports filed or submitted under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
SEC’s rules and forms, including controls and procedures designed to ensure that
such information is accumulated and communicated to our management, including
our Chief Executive Officer and Chief Financial Officer, as appropriate, to
allow timely decisions regarding required disclosure. Management necessarily
applied its judgment in assessing the costs and benefits of such controls and
procedures, which, by their nature, can provide only reasonable assurance
regarding management’s disclosure control objectives. Under the supervision and
with the participation of our management, we evaluated the effectiveness of our
disclosure controls and procedures as of March 31, 2009. Based on that
evaluation, our Chief Executive Officer and our Chief Financial Officer
concluded that our disclosure controls and procedures were effective as of March
31, 2009.
 
 Changes in Internal Control Over
Financial Reporting.  There were no significant changes in our
internal control over financial reporting (as defined in Exchange Act Rule
13a-15(f)) that occurred during our first quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
 
 
 26
 PART II. OTHER
  INFORMATION
  ITEM 1. LEGAL PROCEEDINGS
  Information
in response to this Item 1 is incorporated by reference to the information set
forth in Note 6 “Commitments and Contingencies” in the Notes to the condensed
consolidated financial statements in Part I of this Quarterly Report on
Form 10-Q.
 
 ITEM 6. EXHIBITS
  (a)
                Exhibits
  Exhibit
                  Number
                
                Description31.1
                
                Certification
      of M. Brent Stevens, Chief Executive Officer, pursuant to Section 302
      of the Sarbanes-Oxley Act of 2002 and Rule 15d-l4 of the Securities
      Exchange Act, as amended.31.2
                
                Certification
      of Natalie A. Schramm, Chief Financial Officer, pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 15d-14 of
      the Securities Exchange Act, as
amended.
 
 27
 
 SIGNATURES
  Pursuant
to the requirements of the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dubuque, State of Iowa on May 13,
2009.
  PENINSULA
      GAMING, LLCBy:
                /s/
      M. BRENT STEVENSM.
      Brent StevensChief
      Executive OfficerBy:
                /s/
      JONATHAN SWAINJonathan
      SwainChief
      Operating OfficerBy:
                /s/
      NATALIE A. SCHRAMMNatalie
      A. SchrammChief
      Financial OfficerPENINSULA
      GAMING CORP.By:
                /s/
      M. BRENT STEVENSM.
      Brent StevensChief
      Executive OfficerBy:
                /s/
      NATALIE A. SCHRAMMNatalie
      A. SchrammChief
      Financial OfficerDIAMOND
      JO, LLCBy:
                /s/
      M. BRENT STEVENSM.
      Brent StevensChief
      Executive OfficerBy:
                /s/
      JONATHAN SWAINJonathan
      SwainChief
      Operating OfficerBy:
                /s/
      NATALIE A. SCHRAMMNatalie
      A. SchrammChief
      Financial OfficerTHE
      OLD EVANGELINE DOWNS, L.L.C.By:
                /s/
      M. BRENT STEVENSM.
      Brent StevensChief
      Executive OfficerBy:
                /s/
      JONATHAN SWAINJonathan
      SwainChief
      Operating OfficerBy:
                /s/
      NATALIE A. SCHRAMMNatalie
      A. SchrammChief
      Financial Officer
 
  28