##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-Q
  þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    June 30, 2008ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File
    No. 001-33902
  FX Real Estate and
    Entertainment Inc.
 (Exact name of Registrant as
    specified in its charter)
  Delaware

36-4612924(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification Number)   650
    Madison Avenue
    New York, New York 10022 (Address
    of Principal Executive Offices and Zip Code)
  Registrants Telephone Number, Including Area Code:
 (212) 838-3100
  þ o
  12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer o
    Non-accelerated
    filer þ
    Smaller
    reporting
    company o   Rule 12b-2 o þ




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##### 





TABLE OF
    CONTENTS
   
 PART I. FINANCIAL INFORMATIONItem 1.


Financial StatementsConsolidated Balance Sheets as of June 30,
    2008 (Unaudited) and December 31, 2007


3Consolidated Statements of Operations for the
    three months ended June 30, 2008 (Unaudited) and for the
    period from May 11, 2007 through June 30, 2007 and
    Combined Statement of Operations for the period from
    April 1, 2007 through May 10, 2007 (Unaudited)
    (Predecessor)


4Consolidated Statement of Operations for the six
    months ended June 30, 2008 (Unaudited) and for the period
    from May 11, 2007 through June 30, 2007 and Combined
    Statement of Operations for the period from January 1, 2007
    through May 10, 2007 (Predecessor)


5Consolidated Statements of Cash Flows for the six
    months ended June 30, 2008 (Unaudited) and for the period
    from May 11, 2007 through June 30, 2007 and Combined
    Statement of Cash Flows for the period from January 1, 2007
    through May 10, 2007 (Predecessor)


6Notes to Consolidated and Combined Financial
    Statements (Unaudited)


7Item 2.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


25Item 3.


Quantitative and Qualitative Disclosures About
    Market Risk


35Item 4T.


Controls and Procedures


35PART II. OTHER INFORMATIONItem 1.


Legal Proceedings


36Item 6.


Exhibits


36EX-10.1: SECOND AMENDMENT TO THE INVESTMENT AGREEMENTEX-10.2: REGISTRATION RIGHTS AGREEMENTEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION   2




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##### Table of Contents



FX Real
    Estate and Entertainment Inc.
  CONSOLIDATED
    BALANCE SHEETS
 (amounts
    in thousands, except share data)
  June 30,


December 31,2008


2007(Unaudited)ASSETSCurrent assets:Cash and cash equivalents

$
21,901


$
2,559Restricted cash


36,661



60,350Marketable securities


14,315



43,439Rent and other receivables, net of allowance for doubtful
    accounts of $774 at June 30, 2008 and $368 at
    December 31, 2007


134



1,016Deferred financing costs, net


364



6,714Prepaid expenses and other current assets


1,080



1,031Total current assets


74,455



115,109Investment in real estate, at cost:Land


533,336



533,336Building and improvements


32,710



32,710Furniture, fixtures and equipment


636



565Capitalized development costs


11,146



6,026Less: accumulated depreciation


(21,794
)


(10,984
)Net investment in real estate


556,034



561,653Acquired lease intangible assets, net


1,142



1,222Total assets

$
631,631


$
677,984LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued expenses

$
8,585


$
10,809Accrued license fees


5,000



10,000Debt


475,000



475,000Notes payable


6,641



30,674Due to related parties


1,583



3,022Related party debt






1,020Other current liabilities


1,088



1,075Acquired lease intangible liabilities, net


26



39Unearned rent and related revenue


197



Total current liabilities


498,120



531,639Related party debt






6,000Other long-term liabilities


10



191Total liabilities


498,130



537,830Contingently redeemable stockholders equity






180Stockholders equity:Preferred stock, $0.01 par value: authorized
    75,000,000 shares, 1 share issued and outstanding at
    June 30, 2008 and none issued and outstanding at
    December 31, 2007






Common stock, $0.01 par value: authorized
    300,000,000 shares, 49,665,407 and 39,290,247 shares
    issued and outstanding at June 30, 2008 and
    December 31, 2007, respectively


497



393Additional
    paid-in-capital


289,726



219,781Accumulated deficit


(156,722
)


(77,739
)Accumulated other comprehensive loss






(2,461
)Total stockholders equity


133,501



139,974Total liabilities and stockholders equity

$
631,631


$
677,984    3




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##### Table of Contents



FX Real
    Estate and Entertainment Inc.
 STATEMENTS OF OPERATIONS
    (amounts in thousands, except share and per share data)  PredecessorConsolidated



Combined PeriodConsolidated


Period from



fromThree Months


May 11, 2007



April 1, 2007Ended


Through



ThroughJune 30, 2008


June 30, 2007



May 10, 2007(Unaudited)






(Unaudited)Revenue

$
486


$




$
732Operating expenses:License fees


2,500



1,429




Selling, general and administrative expenses


3,269



409




129Depreciation and amortization expense


7








39Operating and maintenance


6








77Real estate taxes


55








48Total operating expenses


5,837



1,838




292Income (loss) from operations


(5,351
)


(1,838
)



439Interest income


135



426




40Interest expense


(12,191
)


(237
)



(3,571
)Other expense


(31,585
)


(377
)



Loss before equity in loss of an unconsolidated affiliate,
    minority interest, early retirement of debt and incidental
    operations


(48,992
)


(2,026
)



(3,092
)Equity in loss of an unconsolidated affiliate






(4,455
)



Minority interest


10



244




Loss from early retirement of debt











(3,507
)Loss from incidental operations


(4,968
)







(3,371
)Net loss

$
(53,950
)

$
(6,237
)


$
(9,970
)Basic and diluted loss per share

$
(1.14
)Basic and diluted average number of common shares outstanding


47,186,090    4




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##### Table of Contents



FX Real
    Estate and Entertainment Inc.
  STATEMENTS
    OF OPERATIONS
 (amounts
    in thousands, except share and per share data)
  PredecessorConsolidated



Combined PeriodConsolidated


Period from



fromSix Months


May 11, 2007



January 1, 2007Ended


Through



ThroughJune 30, 2008


June 30, 2007



May 10, 2007(Unaudited)Revenue

$
971


$




$
2,079Operating expenses:License fees


5,000



1,429




Selling, general and administrative expenses


7,944



409




421Depreciation and amortization expense


13








128Operating and maintenance


17








265Real estate taxes


109








153Total operating expenses


13,083



1,838




967Income (loss) from operations


(12,112
)


(1,838
)



1,112Interest income


241



426




113Interest expense


(26,518
)


(237
)



(14,557
)Other expense


(31,585
)


(377
)



Loss before equity in loss of an unconsolidated affiliate,
    minority interest, retirement of debt and incidental operations


(69,974
)


(2,026
)



(13,332
)Equity in loss of an unconsolidated affiliate






(4,455
)



Minority interest


12



244




Loss from early retirement of debt











(3,507
)Loss from incidental operations


(9,021
)







(7,790
)Net loss

$
(78,983
)

$
(6,237
)


$
(24,629
)Basic and diluted loss per share

$
(1.81
)Basic and diluted average number of common shares outstanding


43,754,838    5




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##### Table of Contents



FX Real
    Estate and Entertainment Inc.
  STATEMENTS
    OF CASH FLOWS
 (amounts
    in thousands)
  Consolidated



PredecessorPeriod from



CombinedConsolidated


May 11,



Period fromSix Months


2007



January 1,Ended


through



2007 ThroughJune 30, 2008


June, 30 2007



May 10, 2007(Unaudited)Cash flows from operating activities:Net loss

$
(78,983
)

$
(6,237
)


$
(24,629
)Adjustments to reconcile net loss to cash provided by (used in)
    operating activities:Loss on exercise of derivative






377




Impairment of available-for-sale securities


31,585








Equity in loss of an unconsolidated affiliate






4,455




36Depreciation and amortization


10,810








8,472Deferred financing cost amortization


6,520








41Share-based payments


1,658








Minority interest


(12
)


(244
)



Provision for accounts receivable allowance


406








Changes in operating assets and liabilities:Receivables


(192
)







(171
)Other current and non-current assets


31



(173
)



(933
)Accounts payable and accrued expenses


(2,163
)


65




(2,486
)Accrued license fees


(5,000
)


1,429




Due to related parties


(1,545
)


366




22Unearned revenue


197








991Other


(22
)







27Net cash provided by (used in) operating activities


(36,710
)


38




(18,630
)Cash flows from investing activities:Restricted cash


23,689



(1,000
)



11,541Purchase of property and equipment


(71
)







Capitalized development costs


(5,120
)







Purchase of Riviera interests






(21,842
)



Development of real estate including land acquired











(45
)Net cash provided by (used in) investing activities


18,498



(22,842
)



11,496Cash flows from financing activities:Repayment of related party debt


(7,054
)







Repayment of notes


(24,033
)







Proceeds from sale of common stock


2,570








Proceeds from rights offering and investment agreements, net


96,613








Preferred distribution to related party


(31,039
)







Deferred financing and leasing costs


(171
)







(10,536
)Contribution from minority interest


668



187




Proceeds from members loans











5,972Members capital contributions






100,000




Borrowings under loan agreement and notes payable






23,000




306,543Retirement of mortgage loans











(295,000
)Net cash provided by financing activities


37,554



123,187




6,979Net increase (decrease) in cash and equivalents


19,342



100,383




(155
)Cash and cash equivalents  beginning of period


2,559








1,643Cash and cash equivalents  end of period

$
21,901


$
100,383



$
1,488Supplemental cash flow data:Cash paid for interest

$
21,317


$
126



$
17,102Supplemental Cash Flow InformationThe Company had the following non-cash operating and financing
    activities in the six months ended June 30, 2008 (in
    thousands):Capitalized but unpaid development costs

$
1,067Accrued but unpaid stock issuance costs


30The Company had the following non-cash operating and financing
    activities for the period from May 11, 2007 through
    June 30, 2007 (in thousands):Contributions of assets for membership interests

$
103,421    6




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##### Table of Contents



FX Real
    Estate and Entertainment Inc.
  NOTES TO
    UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS
  1.
    Basis of
    Presentation  General
    Form 10-K, Form 10-K).
                Principles
    of Consolidation
   7




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##### Table of Contents



FX Real
    Estate and Entertainment Inc.
  NOTES TO
    UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Significant
    Accounting Policies
  Form 10-K.
  Impact
    of Recently Issued Accounting Standards
  , Fair Value
    Measurements Investment in
    Riviera
  The
    Fair Value Option for Financial Assets and Financial Liabilities
  Business Combinations Noncontrolling Interests in Consolidated Financial
    Statements an amendment of ARB No. 51
  Disclosure of Certain Loss
    Contingencies, an amendment of FASB Statements No. 5 and
    141(R)
 8




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##### Table of Contents



FX Real
    Estate and Entertainment Inc.
  NOTES TO
    UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
  2.
    Organization
    and Background  Business
    of the Company
        Formation
    of the Company
       9




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##### Table of Contents



FX Real
    Estate and Entertainment Inc.
  NOTES TO
    UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
              CKX
    Investment
        License
    Agreements
   10




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##### Table of Contents



FX Real
    Estate and Entertainment Inc.
  NOTES TO
    UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
  Metroflag
    Acquisition
      The
    Repurchase Agreement and Contingently Redeemable
    Stock
      30-day
  Rights
    Offering and Related Investment Agreements
   11




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##### Table of Contents



FX Real
    Estate and Entertainment Inc.
  NOTES TO
    UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
        and/or
    Form 10-Q
  Conditional
    Option Agreement with 19X
   12




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##### Table of Contents



FX Real
    Estate and Entertainment Inc.
  NOTES TO
    UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
            3.
    Going
    Concern  Form 10-K
 13




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##### Table of Contents



FX Real
    Estate and Entertainment Inc.
  NOTES TO
    UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    4.
    Marketable
    Securities  Accounting for Certain Investments in Debt and Equity
    Securities
  5.
    Loss Per
    Share/Common Shares Outstanding  Earnings Per Share
  6.
    Incidental
    Operations  Accounting for Costs and
    Initial Operations of Real Estate Projects
    Predecessor


PredecessorPeriod from


Period fromThree Months



Six Months



April 1, 2007


January 1, 2007Ended,



Ended,



Through


ThroughJune 30, 2008



June 30, 2008



May 10, 2007


May 10, 2007(Amounts in thousands)Revenue

$
4,460



$
9,029



$
1,776


$
5,326Depreciation


(5,401
)



(10,797
)



(2,592
)


(8,343
)Operating & other expenses


(4,027
)



(7,253
)



(2,555
)


(4,773
)Loss from incidental operations

$
(4,968
)


$
(9,021
)


$
(3,371
)

$
(7,790
)   7.
    Debt and
    Notes Payable   14




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##### Table of Contents



FX Real
    Estate and Entertainment Inc.
  NOTES TO
    UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
  and/or
        8.
    Related
    Party Debt     15




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##### Table of Contents



FX Real
    Estate and Entertainment Inc.
  NOTES TO
    UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
  9.
    License
    Agreements with Related Parties  Elvis
    Presley License Agreement
  Grant of
    Rights
  and/or
  Hotel at
    Graceland
    Royalty
    Payments and Minimum Guarantees
        Termination
    Rights
   16




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##### Table of Contents



FX Real
    Estate and Entertainment Inc.
  NOTES TO
    UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Conditional
    Amendment to Elvis Presley Enterprises License
    Agreement
    1 2
    Muhammad
    Ali License Agreement
  Grant of
    Rights
    Royalty
    Payments and Minimum Guarantees
       17




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##### Table of Contents



FX Real
    Estate and Entertainment Inc.
  NOTES TO
    UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Termination
    Rights
    Accounting
    for Minimum Guaranteed License Payments
    10.
    Acquired
    Lease Intangibles      June 30, 2008


December 31, 2007AssetsAbove-market leases

$
582


$
582In-place leases


1,320



1,320Accumulated amortization


(760
)


(680
)Net

$
1,142


$
1,222LiabilitiesBelow-market leases

$
111


$
111Accumulated accretion


(85
)


(72
)Net

$
26


$
39  18




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##### Table of Contents



FX Real
    Estate and Entertainment Inc.
  NOTES TO
    UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
  11.
    Derivative
    Financial Instruments    12.
    Commitments
    and Contingencies  Operating
    Leases
    13.
    Share-Based
    Payments  Stock
    Option Grants
  Share-Based Payment No. 96-18, Accounting for Equity Instruments That are Issued to Other
    Than Employees for Acquiring, or in Conjunction with Selling,
    Goods or Services
 19




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##### Table of Contents



FX Real
    Estate and Entertainment Inc.
  NOTES TO
    UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Risk-free rate


3.47%Volatility


40.0%Weighted average expected life remaining at June 30, 2008


6.02 yearsDividend yield


0.0%       Risk-free rate


3.28%Volatility


40.0%Weighted average expected life


6.25 yearsDividend yield


0.0%         14.
    Income
    Taxes         20




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##### Table of Contents



FX Real
    Estate and Entertainment Inc.
  NOTES TO
    UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
  15.
    Litigation        16.
    Related
    Party Transactions  Shared
    Services Agreement and Arrangements
       21




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##### Table of Contents



FX Real
    Estate and Entertainment Inc.
  NOTES TO
    UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    and/or
        and/or
  Preferred
    Priority Distribution
       22




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##### Table of Contents



FX Real
    Estate and Entertainment Inc.
  NOTES TO
    UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    17.
    Subsequent
    Events  Extension
    of Mortgage Loans Maturity Date
  and/or
  Private
    Placement of Units
      Form 8-K
   23




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##### Table of Contents



FORWARD
    LOOKING STATEMENTS
    Form 10-K,
  
    Our current cash flow is not sufficient to meet either our
    current or long-term obligations.
    We will need to raise substantial additional debt
    and/or
    equity financing to implement our business plans.
    We are highly leveraged and we may have difficulty obtaining
    additional financing.
    We have no operating history with respect to our proposed
    business and we may not be able to successfully implement our
    business strategy.
    Our business plan is not expected to generate meaningful revenue
    for the foreseeable future.
    The audit opinion from our independent registered public
    accounting firm dated March 3, 2008 included in the
    Form 10-K
    includes an explanatory paragraph expressing substantial doubt
    about our ability to continue as a going concern due to our need
    to secure additional financing to implement our proposed
    development projects.
    We have entered into a number of related party transactions with
    CKX, Inc., 19X, Inc. and Flag Luxury Properties, LLC and their
    affiliates and may do so in the future, on terms that some
    stockholders may consider not to be in their best interests.
    Our hotel development, including our proposed Park Central site
    redevelopment and the Graceland hotel(s), are subject to timing,
    budgeting and other risks which could materially adversely
    affect our business. 24




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##### Table of Contents



ITEM 2.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  In this Managements Discussion and Analysis of
    Financial Condition and Results of Operations, the words
    we, us, our,
    FXRE, and the Company collectively refer
    to FX Real Estate and Entertainment Inc., and its consolidated
    subsidiaries, FX Luxury Realty, LLC, BP Parent, LLC, Metroflag
    BP, LLC and Metroflag Cable, LLC. The words
    Metroflag or Metroflag entities refer to
    FX Luxury Realty and its predecessors, including BP Parent, LLC,
    Metroflag BP, LLC, Metroflag Cable, LLC, Metroflag Polo, LLC,
    CAP/TOR, LLC, Metroflag SW, LLC, Metroflag HD, LLC and Metroflag
    Management, LLC, the predecessor entities through which our
    historical business was conducted prior to September 27,
    2007. The word Park Central site refers to the 17.72
    contiguous acres of land located at the southeast corner of Las
    Vegas Boulevard and Harmon Avenue in Las Vegas, Nevada and owned
    by us. The word CKX Distribution refers to the
    distribution of 19,743,349 shares of our common stock to
    CKX, Inc.s stockholders of record as of December 31,
    2007 as a result of which we became a publicly traded company on
    January 10, 2008.
  This Managements Discussion and Analysis of Financial
    Condition and Results of Operations should be read in
    conjunction with the historical financial statements and notes
    thereto and financial information of the Company and Metroflag,
    as predecessor, included in the Companys Annual Report on
    Form 10-K,
    as amended, for the year ended December 31, 2007. However,
    this Managements Discussion and Analysis of Financial
    Condition and Results of Operations and such historical
    financial statements and information should not be relied upon
    by you to evaluate our business and financial condition going
    forward because they are not representative of our planned
    business going forward or indicative of our future operating and
    financial results. For example, as described below and in the
    historical financial statements, our predecessor Metroflag
    derived revenue primarily from commercial leasing activities on
    the properties comprising the Park Central site. We intend to
    cease engaging in these commercial leasing activities as we
    implement our redevelopment of the Park Central site.
       25




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##### Table of Contents



FX Real
    Estate and Entertainment Consolidated Operating
    Results
              Metroflag
    Operating Results
     26




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##### Table of Contents



Metroflag
    Results for the Three Months Ended June 30, 2008 and
    2007
  Period from


Period fromThree Months



April 1, 2007


May 11, 2007



Three MonthsEnded



Through


Through



EndedJune 30, 2008



May 10, 2007


June 30, 2007



June 30, 2007


Variance(Amounts in thousands)Revenue

$
486



$
732


$
847



$
1,579


$
(1,093
)Operating expenses


1,113




254



188




442



671Depreciation and amortization


7




39



48




87



(80
)Income (loss) from operations


(634
)



439



611




1,050



(1,684
)Interest expense, net


(11,989
)



(3,531
)


(6,826
)



(10,357
)


(1,632
)Loss from early retirement of debt







(3,507
)







(3,507
)


3,507Loss from incidental operations


(4,968
)



(3,371
)


(2,694
)



(6,065
)


1,097Net loss

$
(17,591
)


$
(9,970
)

$
(8,909
)


$
(18,879
)

$
1,288   Revenue
    Operating
    Expenses
    Depreciation
    and Amortization Expense
    Interest
    Income/Expense
    Loss
    from Early Retirement of Debt
   27




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##### Table of Contents



Loss
    from Incidental Operations
    Metroflag
    Results for the Six Months Ended June 30, 2008 and
    2007
  Period from


Period fromSix Months



January 1, 2007


May 11, 2007



Six MonthsEnded



Through


Through



EndedJune 30, 2008



May 10, 2007


June 30, 2007



June 30, 2007


Variance(Amounts in thousands)Revenue

$
971



$
2,079


$
847



$
2,926


$
(1,955
)Operating expenses


2,149




839



188




1,027



1,122Depreciation and amortization


13




128



48




176



(163
)Income (loss) from operations


(1,191
)



1,112



611




1,723



(2,914
)Interest expense, net


(25,277
)



(14,444
)


(6,826
)



(21,270
)


(4,007
)Loss from early retirement of debt







(3,507
)







(3,507
)


3,507Loss from incidental operations


(9,021
)



(7,790
)


(2,694
)



(10,484
)


1,463Net loss

$
(35,489
)


$
(24,629
)

$
(8,909
)


$
(33,538
)

$
(1,951
)   Revenue
    Operating
    Expenses
    Depreciation
    and Amortization Expense
    Interest
    Income/Expense
    Loss
    from Early Retirement of Debt
   28




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##### Table of Contents



Loss
    from Incidental Operations
    Liquidity
    and Capital Resources
  Introduction
      Rights Offering 
  Shier Stock Purchase 
  Private Placement of Units 
 29




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##### Table of Contents



Form 8-K,
  Riv Loan
  CKX Line of Credit
        Mortgage Loan 
 30




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##### Table of Contents



and/or
  Bear Stearns Margin Loan
  Debt Covenants
  Preferred Priority Distribution
 31




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##### Table of Contents



Cash Flow
    for the Six Months Ended June 30, 2008
  Operating
    Activities
    Investing
    Activities
    Financing
    Activities
    Cash Flow
    for the Period from May 11, 2007 to June 30,
    2007
      Metroflag 
    Historical Cash Flow for the Period from January 1, 2007
    through May 10, 2007
  Operating
    Activities
   32




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##### Table of Contents



Investing
    Activities
    Financing
    Activities
    Uses of
    Capital
      and/or
  Capital
    Expenditures
     33




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##### Table of Contents



Dividends
    Commitments
    and Contingencies
    Inflation
    Application
    of Critical Accounting Policies
  Form 10-K,
  Impact
    of Recently Issued Accounting Standards
  , Fair Value
    Measurements Investment in
    Riviera
  The
    Fair Value Option for Financial Assets and Financial Liabilities
  Business Combinations Noncontrolling Interests in Consolidated Financial
    Statements, an amendment of ARB No. 51
 34




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##### Table of Contents



Disclosure of Certain Loss
    Contingencies, an amendment of FASB Statements No. 5 and
    141(R)
  Off
    Balance Sheet Arrangements
    Seasonality
    ITEM 3.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK    Interest
    Rate Risk
      Foreign
    Exchange Risk
    ITEM 4T.
    CONTROLS
    AND PROCEDURES  Evaluation
    of Disclosure Controls and Procedures
  Managements
    Annual Report on Internal Control Over Financial
    Reporting
  Form 10-Q
 35




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##### Table of Contents



Rules 13a-15(e) 15d-15(e)) Rules 13a-15 15d-15,
  Changes
    in Internal Control over Financial Reporting
   PART II 
    OTHER INFORMATION  ITEM 1.
    LEGAL
    PROCEEDINGS    ITEM 6.
    EXHIBITS  Exhibits
    ExhibitNumber

Description10
.1

Second Amendment, dated as of May 13, 2008, to Investment
    Agreement by and between the Registrant and The Huff Alternative
    Fund, L.P. and The Huff Alternative Parallel Fund, L.P., dated
    as of January 9, 200810
.2

Registration Rights Agreement, dated as of May 13, 2008, by and
    between the Registrant and The Huff Alternative Fund, L.P. and
    The Huff Alternative Parallel Fund, L.P.31
.1

Certification of Principal Executive Officer31
.2

Certification of Principal Financial Officer32
.1

Section 1350 Certification of Principal Executive Officer32
.2

Section 1350 Certification of Principal Financial Officer     
    
    Filed herewith 36




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##### Table of Contents



SIGNATURES
    FX Real Estate and Entertainment Inc.
  By:
    /s/  ROBERT
    F.X. SILLERMAN  Robert F.X. Sillerman
 Chief Executive Officer and Chairman of the Board
  By:
    /s/  THOMAS
    P. BENSON  Thomas P. Benson
 Chief Financial Officer, Executive Vice President
 and Treasurer
   37




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##### Table of Contents



INDEX TO
    EXHIBITS
    ExhibitNumber

Description10
.1

Second Amendment, dated as of May 13, 2008, to Investment
    Agreement by and between the Registrant and The Huff Alternative
    Fund, L.P. and The Huff Alternative Parallel Fund, L.P., dated
    as of January 9, 200810
.2

Registration Rights Agreement, dated as of May 13, 2008, by and
    between the Registrant and The Huff Alternative Fund, L.P. and
    The Huff Alternative Parallel Fund, L.P.31
.1

Certification of Principal Executive Officer.31
.2

Certification of Principal Financial Officer32
.1

Section 1350 Certification of Principal Executive Officer32
.2

Section 1350 Certification of Principal Financial Officer  38