UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                    FORM 10-Q


[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
      EXCHANGE ACT OF 1934

                      FOR THE QUARTER ENDED MARCH 31, 2006

[ ]   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
                                   333-114339


                        PREMIER ENTERTAINMENT BILOXI LLC
                                       AND
                          PREMIER FINANCE BILOXI CORP.
             (Exact Name of Registrant as specified in Its Charter)


            DELAWARE                                  20-0495680/20-0495563
(State or Other Jurisdiction of                 (IRS Employer Identification No)
 Incorporation or Organization)

                               777 BEACH BOULEVARD
                                BILOXI, MS 39530
          (Address, including zip code, or Principal Executive Offices)


                                 (228) 374-7625
              (Registrant's Telephone Number, Including Area Code)


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 12 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 [x]   NO [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):

Large accelerated filer [ ]   Accelerated filer [ ]    Non-accelerated filer [x]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act).
                                                 YES [ ]  NO [x]


<PAGE>
The equity securities of Premier Entertainment Biloxi LLC are not publicly
traded and are all owned by affiliates. The equity securities of Premier Finance
Biloxi Corp. are not publicly traded and are all owned by Premier Entertainment
Biloxi LLC. There is no established public trading market for these securities.
On May 12, 2006, there were 1,000 shares of common stock of Premier Finance
Biloxi Corp. outstanding and held by Premier Entertainment Biloxi LLC.


















                                       2
<PAGE>
                        PREMIER ENTERTAINMENT BILOXI LLC
                                       AND
                          PREMIER FINANCE BILOXI CORP.
                          (A DEVELOPMENT STAGE COMPANY)

                                      INDEX

<TABLE>
<S>                                                                                                  <C>
PART I.       FINANCIAL INFORMATION

Item 1.       Financial Statements
              Condensed Consolidated Balance Sheets as of March 31, 2006 (unaudited)
                 and December 31, 2005..................................................................4
              Condensed Consolidated Statements of Operations for the Three Months ended
                 March 31, 2006 and 2005 (unaudited) and for the period from commencement
                 of operations on March 27, 2003 through March 31, 2006 (unaudited).....................5
              Condensed Consolidated Statements of Cash Flows for the Three Months ended
                 March 31, 2006 and 2005 (unaudited) and for the period from commencement
                 of operations on March 27, 2003 through March 31, 2006 (unaudited).....................6
              Notes to Condensed Consolidated Financial Statements (unaudited)..........................8

Item 2.       Management's Discussion and Analysis of Financial Condition
              and Results of Operations................................................................16

Item 3.       Quantitative and Qualitative Disclosures About Market Risk...............................19

Item 4.       Controls and Procedures..................................................................20


PART II.      OTHER INFORMATION

Item 1.       Legal Proceedings........................................................................20

Item 1A.      Risk Factors.............................................................................21

Item 6.       Exhibits Index...........................................................................22

Signatures
Exhibits

</TABLE>





                                       3
<PAGE>
                        PREMIER ENTERTAINMENT BILOXI LLC
                          (A DEVELOPMENT STAGE COMPANY)

                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                    MARCH 31,          DECEMBER 31,
                                                                      2006                 2005
                                                               -------------------  ------------------
                                                                   (UNAUDITED)
<S>                                                            <C>                  <C>
ASSETS
Current assets:
     Cash                                                       $         452,860    $      1,747,004
     Government securities - restricted                                         -           8,332,711
     Accounts receivable                                                   74,043             163,005
     Prepaid insurance                                                    661,155             932,636
     Prepaid expenses - other                                             884,276             586,944
     Other current assets                                                  23,600              23,600
                                                               -------------------  ------------------
          Total current assets                                          2,095,934          11,785,900

Property and equipment, net of writedown                               95,659,773          95,556,418

Other non-current assets:
     Restricted cash                                                   59,230,831          34,191,301
     Insurance receivable                                              73,973,809          92,877,100
     Other assets, net                                                  6,127,343           6,486,277
                                                               -------------------  ------------------
Total assets                                                    $     237,087,690    $    240,896,996
                                                               ===================  ==================

LIABILITIES AND MEMBERS' EQUITY (DEFICIT)

Current liabilities:
     Accounts payable                                           $       7,688,056    $      7,003,665
     Accounts payable - construction in progress                       10,903,042          10,594,649
     Accrued interest                                                   3,812,081           8,326,097
     Other accrued liabilities                                          3,816,112           3,725,252
     Notes payable                                                    158,292,084         158,240,569
     Current maturities of long-term debt                               3,379,875           2,741,735
                                                               -------------------  ------------------
          Total current liabilities                                   187,891,250         190,631,967

Long-term debt, less current maturities                                24,143,670          23,840,450

Members' contributed capital                                           52,775,215          52,775,215
Deficit accumulated during development stage                          (27,722,445)        (26,350,636)
                                                               -------------------  ------------------
     Total members' equity                                             25,052,770          26,424,579
                                                               -------------------  ------------------
Total liabilities and members' equity                           $     237,087,690    $    240,896,996
                                                               ===================  ==================
</TABLE>

 See the accompanying notes to the condensed consolidated financial statements.


                                       4
<PAGE>
                        PREMIER ENTERTAINMENT BILOXI LLC
                          (A DEVELOPMENT STAGE COMPANY)

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                               Period from
                                                                                             commencement of
                                                                                              operations on
                                                  Three Months Ended March 31,               March 27, 2003
                                                   2006                 2005             through March 31, 2006
                                             ------------------  -------------------  -----------------------------
<S>                                          <C>                 <C>                  <C>

 Preopening expenses                          $        930,956    $       1,008,336       $             10,326,268
 Hurricane-related expenses:
    Preopening expenses - business
       interruption                                  1,703,359                    -                      8,464,827
    Property and equipment writedowns                    3,508                    -                     96,172,782
    Other hurricane-related expenses                   208,758                    -                      9,344,954
                                             ------------------  -------------------  -----------------------------
                                                     1,915,625                    -                    113,982,563
 Insurance recoveries                               (1,915,625)                   -                   (113,793,563)
 Depreciation and amortization                         207,781               30,324                        656,702
                                             ------------------  -------------------  -----------------------------
 Loss from operations                               (1,138,737)          (1,038,660)                   (11,171,970)

 Other income (expense):
 Interest expense                                   (5,334,918)          (2,757,298)                   (31,351,659)
 Interest income                                       116,763              518,447                      3,166,938
 Insurance recoveries - interest                     4,985,084                    -                     11,634,246
                                             ------------------  -------------------  -----------------------------
 Total other income (expense)                         (233,071)          (2,238,851)                   (16,550,475)
                                             ------------------  -------------------  -----------------------------
 Net loss                                     $     (1,371,808)   $      (3,277,511)      $            (27,722,445)
                                             ==================  ===================  =============================

</TABLE>


 See the accompanying notes to the condensed consolidated financial statements.


                                       5
<PAGE>
                        PREMIER ENTERTAINMENT BILOXI LLC
                          (A DEVELOPMENT STAGE COMPANY)

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                                 Period from
                                                                                                               commencement of
                                                                                                                operations on
                                                                     Three Months Ended March 31,              March 27, 2003
                                                                      2006                 2005            through March 31, 2006
                                                                 -----------------------------------       ----------------------
<S>                                                              <C>                 <C>                  <C>
Operating activities
Net loss                                                          $ (1,371,808)        $ (3,277,511)            $ (27,722,445)
      Depreciation and amortization                                    207,781               30,324                   656,702
      Amortization of deferred financing costs, discount                                                                    -
         and repayment premium                                         292,255              285,511                 2,940,745
      Property and equipment writedowns                                  3,508                    -                96,172,782
       Other hurricane-related writedowns                                    -                    -                   638,473
      Insurance recoveries                                          (6,900,709)                   -              (125,427,809)
      Changes in prepaid assets                                        (25,852)             (57,319)               (1,984,694)
      Changes in other operating assets and liabilities             (2,716,111)          (6,020,276)                4,113,822
                                                                 --------------       --------------           ---------------

           Net cash used in operating activities                   (10,510,936)          (9,039,271)              (50,612,424)

Investing activities
      Purchases of property and equipment                                    -          (22,007,277)             (151,245,579)
      Insurance recoveries received                                 25,804,000                    -                51,454,000
      Purchases of government securities                                     -                    -               (32,946,442)
      Sales of government securities                                 8,332,711            8,507,022                33,451,651
      Acquisition of intangibles                                             -                    -                  (965,671)
      Change in restricted cash                                    (25,039,530)          22,723,358               (58,718,496)
                                                                 --------------       --------------           ---------------

           Net cash provided by (used in) investing activities       9,097,181            9,223,103              (158,970,537)

Financing activities
      (Increase) decrease in deferred financing costs                  119,611                    -                (8,091,034)
      Increase in line of credit                                             -                    -                 1,250,000
      Proceeds from long-term debt                                           -                    -               202,713,590
      Capital contribution                                                   -                    -                15,180,810
      Change in restricted cash                                              -                    -                (1,017,545)
                                                                 --------------       --------------           ---------------

           Net cash provided by financing activities                   119,611                    -               210,035,821

Net change in cash                                                  (1,294,144)             183,832                   452,860

Cash at beginning of period                                          1,747,004                5,215                         -
                                                                 --------------       --------------           ---------------

Cash at end of period                                             $    452,860         $    189,047             $     452,860
                                                                 ==============       ==============           ===============

</TABLE>

                                       6
<PAGE>
                        PREMIER ENTERTAINMENT BILOXI LLC
                          (A DEVELOPMENT STAGE COMPANY)

           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
                                   (UNAUDITED)

<TABLE>
<CAPTION>


                                                                                                                  Period from
                                                                                                                commencement of
                                                                                                                 operations on
                                                                           Three Months Ended March 31,           March 27, 2003
                                                                               2006           2005           through March 31, 2006
                                                                           ----------------------------      ----------------------
<S>                                                                        <C>            <C>                <C>
 Supplemental schedule of non-cash investing and financing activities:

       Construction costs funded through accounts payable                   $ 308,393      $ 1,475,332            $ 10,903,042

       Purchase of property and equipment funded
          through notes payable                                             $       -      $         -            $ 14,120,932

</TABLE>



 See the accompanying notes to the condensed consolidated financial statements.


                                       7
<PAGE>
                        PREMIER ENTERTAINMENT BILOXI LLC
                                       AND
                          PREMIER FINANCE BILOXI CORP.
                          (A DEVELOPMENT STAGE COMPANY)

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.  NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements for the year
ended December 31, 2005 and 2004 and the period from the commencement of
operations on March 27, 2003 through December 31, 2005 filed with the Securities
Exchange Commission in April 2006. In the opinion of management, all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation have
been included. The results of operations for the three months ended March 31,
2006 and 2005 and for the period from the commencement of operations on March
27, 2003 through March 31, 2006 do not necessarily indicate the results that may
be expected for the full year through December 31, 2006.

Premier Entertainment Biloxi LLC, a Delaware limited liability company,
("Premier Entertainment" or the "Company") is a development stage company and
was established to own, construct and manage the operations of the Hard Rock
Hotel & Casino Biloxi ( "Hard Rock Biloxi"). The personal liability of the
members and officers of the Company is limited to the maximum amount permitted
under the laws of the state of Delaware.

Premier Finance Biloxi Corp. ("Premier Finance") was incorporated in October
2003 as a Delaware corporation and is a wholly-owned subsidiary of Premier
Entertainment. Under Mississippi law, certain expenditures are exempt from sales
tax if purchased with the proceeds from industrial development revenue bonds
issued by the Mississippi Finance Corporation. Premier Finance was formed to
fund the capital expenditures that qualify for the tax-exempt status.

BASIS OF PRESENTATION

The accompanying consolidated financial statements include the accounts of
Premier Entertainment and its subsidiary, Premier Finance, and have been
prepared by the Company's management in accordance with generally accepted
accounting principles in the United States of America ("GAAP") and with the
rules and regulations of the Securities and Exchange Commission ("SEC").

The Company has incurred a loss from operations of $27.7 million for the period
from the commencement of operations on March 27, 2003 through March 31, 2006.
Construction of the property was completed on-time and on-budget in August 2005.
However, on August 29, 2005, the Company's casino was destroyed and the casino
related facilities, low-rise building, hotel tower and parking garage sustained
significant damage as a result of Hurricane Katrina.

On August 15, 2005, the Company purchased a comprehensive blanket insurance
policy providing up to $181.3 million in coverage for damage to real and
personal property, including business interruption coverage. The insurance is
comprised of a $25.0 million primary layer underwritten by Industrial Risk
Insurers, a $25.0 million first excess layer underwritten by several insurance
carriers, and a second excess layer comprising $131.3 million underwritten by
several insurance carriers. The syndicated coverage is spread over twelve
different insurance carriers. The Company has a 3.0% deductible on its coverage,
but purchased three additional insurance policies to reduce the Company's
liability related to this deductible. The Company believes that total exposure
for its deductible expense is anticipated to be no more than $80,000. The
Company believes all damages sustained at Hard Rock Biloxi, including business
interruption costs, are covered under a "Weather Catastrophe Occurrence"
("WCO"), as defined in the primary coverage policy and that the full $181.3
million limit of the policies is available to restore the property similar to
its condition immediately preceding Hurricane Katrina.

The $25.0 million primary layer of coverage and the $25.0 million first excess
layer have been settled for the full amount of coverage; $46.0 million has been
paid into a restricted account (see Note 3). With respect to the second excess
layer, the Company has successfully negotiated a settlement of $66.1 million for
$72.1 million face amount of coverage; however, the Company is not in a position
to finalize the settlement with the insurance companies without the approval of
the trustee and disbursement agent of the 10 3/4% First Mortgage Notes due 2012
("the Notes"). The trustee and disbursement agent has yet to provide such


                                       8
<PAGE>
approval. Offers have been received from the five carriers in the remainder of
the second excess layer ($59.2 million face amount of coverage) for $27.7
million. The Company has rejected these offers as it believes these carriers are
liable for the full amount of their coverage under a WCO. As a result, the
Company has filed litigation against these five carriers. The Company has also
recovered $5.4 million under certain deductible buy-down policies; these
proceeds have also been deposited with the trustee and disbursement agent.

On September 1, 2005 the Company engaged Roy Anderson Corp. ("Roy Anderson") to
begin clearing the debris from the property and perform substantial remediation;
however, remediation, debris removal and reconstruction efforts were halted as
U.S. Bank National Association, in its capacity as trustee and disbursement
agent for the Notes, denied the Company's disbursement request for payment of
construction expenses incurred prior to Hurricane Katrina, as well as the
request to access insurance proceeds received for the purpose of remediation,
debris removal, and reconstruction. On February 22, 2006, the trustee and
disbursement agent agreed to disburse limited insurance proceeds for the payment
of certain costs and expenses related to protecting and maintaining the Hard
Rock Biloxi and the pursuit of the collection of insurance claims arising from
damages caused by Hurricane Katrina. However, the Company continues to have a
significant working capital deficit and has been unsuccessful in its attempt to
pay various parties, including vendors, the general contractor and
subcontractors, for construction work performed prior to Hurricane Katrina due
to the trustee and disbursement agent's denial of those disbursement requests.

During 2005, the Company commenced litigation against the trustee and
disbursement agent for the Notes for their failure to release the requested
funds. The Company and the trustee and disbursement agent have agreed to defer
all litigation activity including discovery until June 15, 2006.

The Company believes that its insurance coverage is adequate to reconstruct Hard
Rock Biloxi similar to its condition immediately preceding Hurricane Katrina,
and may also be sufficient to cover interest and expenses through the
reconstruction period and settle all outstanding payables arising both prior to
and subsequent to Hurricane Katrina, assuming the insurance proceeds are
received in a favorable and timely manner. However, due to our current inability
to access the insurance proceeds together with the current pace of negotiations
and litigation with the remaining insurance carriers in the second excess layer
of coverage, both the amount and timing of receipt of the insurance proceeds is
uncertain. As a result, the Company may not be able to restore Hard Rock Biloxi
similar to its condition immediately preceding Hurricane Katrina without new
financing.

The Company has estimated that the cost of debris removal and replacing the
property and equipment destroyed by Hurricane Katrina will be approximately
$121.0 million and will take approximately fourteen to sixteen months to fully
reconstruct once reconstruction begins. Interest payments under the Notes during
this reconstruction period are estimated to be approximately $20.0 million to
$22.3 million and preopening expenses are estimated to be approximately $17.0
million to $19.0 million. In the aggregate, these costs range from $158.0
million to $162.3 million.

Management continues to operate at significantly reduced operating costs, pursue
the remediation process in order to mitigate further deterioration of the
property, and seek full settlement of the remaining insurance coverage. However,
there can be no assurance that the amount of insurance proceeds ultimately
received and the timing of their receipt will be sufficient to carry out the
Company's plans or that the Company's plans can be accomplished without other
support. These conditions raise substantial doubt about the Company's ability to
continue as a going concern.

CHANGE OF CONTROL

On April 25, 2006, LUK-Ranch Entertainment, LLC, ("LRE") and an indirect
subsidiary of Leucadia National Corporation ("Leucadia"), indirectly acquired a
controlling interest in the Company by making a capital contribution to GAR,
LLC, ("GAR"), owners of 100% of the class A Common Units of the Company. GAR
used this capital contribution to acquire one-hundred percent (100%) of the
equity interest held by AA Capital Equity Fund, L.P., and AA Capital Biloxi
Co-Investment Fund, L.P., ("AA Investment", with AA Investment and AA Capital,
together, "AA") in the Company. These interests consist of one-hundred percent
(100%) of the issued and outstanding Class A Preferred Units of the Company and
one-hundred percent (100%) of the Class B Common Units of the Company for an
aggregate cash purchase price of $89 million.

The acquisition was made upon receipt of Mississippi Gaming Commission approval
of the acquisition of control, pursuant to a Unit Purchase Agreement by and
among GAR, AA, Leucadia, and HRHC Holdings, LLC dated as of April 6, 2006.
Pursuant to the agreement, GAR acquired all of AA's equity interest in the
Company, which, when added to GAR's existing equity interest in the Company,


                                       9
<PAGE>
represents 98% of the common equity of the Company on a fully diluted basis and
100% of the voting equity of the Company (the "Transaction"). LRE funded GAR's
acquisition of AA's equity interest in the Company by purchasing (i) 100% of the
Class B Common Units of GAR, representing approximately 45% of the total common
units of GAR and (ii) 100% of the Class A Preferred Units of GAR (approximately
$75.7 million at April 25, 2006), representing 100% of the preferred units in
GAR for aggregate cash consideration of $89 million. Under the terms of the GAR
operating agreement, LRE controls the Board of Managers of GAR and, as a result,
under the Company's operating agreement, LRE controls the board of managers of
the Company. The interests in the Company acquired by GAR from AA will continue
to be subject to the Pledge and Security Agreement, dated January 23, 2004,
among the Company, GAR, AA and U.S. Bank National Association, as are the
interests in the Company held by GAR prior to consummation of the acquisition.
As a result of this $89 million investment, LRE has effectively purchased 44% of
the fully diluted common equity of the Company and approximately $75.7 million
principal amount of the Company's 17% preferred equity.

As a result of the consummation of the Transaction, on May 5, 2006, BHR, a
wholly owned indirect subsidiary of Leucadia, commenced a tender offer (the
"Offer") for all of the outstanding $160 million principal amount of the Notes
at a price equal to 101% of the par value of the Notes, plus accrued and unpaid
interest to the date of payment. The tender offer, which is currently scheduled
to expire at noon on June 9, 2006, is intended to satisfy the Company's
obligation under the indenture to make such an offer as a result of the
occurrence of a change of control as defined in the indenture. In connection
with the Offer, GAR has agreed to pay BHR a fee of $2 million, which will be
paid in accordance with the provisions of the indenture and only to the extent
distributions from the Company are available to GAR for such purpose.

The Company is in discussions with the trustee and disbursement agent regarding
the release of the insurance proceeds currently held by the trustee. If
successful, the Company plans to use the insurance proceeds to immediately begin
reconstruction of Hard Rock Biloxi. In addition, Leucadia has agreed to provide
up to $50 million in construction cost financing to Roy Anderson on behalf of
the Company, subject to the receipt of a satisfactory security interest in the
newly created accounts receivable of Roy Anderson, should settlement of the
remainder of the second excess layer of coverage not be accomplished in a timely
manner or be insufficient to cover such costs.

Upon consummation of the Transaction, the AA-designated members of the Company's
Board of Managers, Charles L. Wall, Jr., John A. Orecchio and Matthew R. Friesl,
resigned from their positions with the Company, and Ian M. Cumming, Joseph S.
Steinberg, Lawrence S. Hershfield and Joseph O'Connor, designees of LRE and
Leucadia, were appointed to the Board of Managers by GAR. Ian M. Cumming is the
Chairman of the Board of Leucadia, Joseph S. Steinberg is a Director and
President of Leucadia, Joseph O'Connor is an employee of Leucadia and Lawrence
S. Hershfield is Chief Executive Officer of Ranch Capital, LLC. No determination
has been made as to the committees of the Board of Managers, if any, on which
the new managers will serve.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Significant estimates used in preparing the financial
statements that require management judgment include the estimated amount of
insurance recoveries, the replacement cost of the Company's property damaged by
Hurricane Katrina and the operating costs and interest which will be incurred
during the reconstruction period. Actual results could differ significantly from
those estimates.

RECLASSIFICATIONS

The consolidated financial statements for the prior year reflect certain
reclassifications to conform to the current year presentation. Reclassifications
affecting the consolidated balance sheet as of December 31, 2005 include a
decrease in current maturities of long-term debt and a corresponding increase in
long-term debt of $1.1 million. Such reclassifications consistently present
current maturities of long term debt for all periods presented.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. The Company capitalizes the cost of
purchases of property and equipment and capitalizes the cost of improvements to
property and equipment that increase the value or extend the useful life of the
asset. Maintenance and repairs are charged to expense as incurred. Depreciation
is computed using the straight-line method over the following estimated useful
lives of the assets:

                                       10
<PAGE>
                                  Estimated Useful Life
                                  ---------------------

Building                                35 years
Furniture, fixtures and equipment       5-10 years

The Company has included in the statements of operations depreciation expense
related to office space and equipment that was placed in service after Hurricane
Katrina.

In accordance with SFAS No. 34, Capitalization of Interest Cost ("SFAS No. 34"),
the Company capitalizes the interest cost associated with major development and
construction projects as part of the cost of the project. Interest is typically
capitalized on amounts expended on the project using the weighted-average cost
of outstanding borrowings. Capitalization of interest starts when construction
activities, as defined in SFAS No. 34, begin and ceases when construction is
substantially complete or development activity is suspended for more than a
brief period. Accordingly, the Company suspended the capitalization of interest
after Hurricane Katrina.

LONG-LIVED ASSETS

Long-lived assets to be held and used by the Company are reviewed to determine
whether any events or changes in circumstances indicate the carrying amount of
the asset may not be recoverable. Factors that might indicate a potential
impairment may include, but are not limited to, significant decreases in the
market value of the long-lived asset, a significant change in the long-lived
asset's physical condition, a change in industry conditions or a reduction in
cash flows associated with the use of the long-lived asset. If these or other
factors indicate the carrying amount of the asset may not be recoverable, the
Company determines whether an impairment has occurred through the use of an
undiscounted cash flow analysis of the asset at the lowest level for which
identifiable cash flows exist. If an impairment has occurred, the Company
recognizes a loss for the difference between the carrying amount and the fair
value of the asset. The fair value of the asset is measured using market prices
or, in the absence of market prices, is based on an estimate of discounted cash
flows. The Company has included an impairment charge in its statement of
operations for the year ended December 31, 2005, because of the damage caused by
Hurricane Katrina. (See Note 4.)

INTANGIBLE ASSETS

The Company has a license agreement with Hard Rock Hotel Licensing, Inc., which
provides for an initial term of twenty years and the option to renew for two
successive 10-year terms, under which the Company has the exclusive right to use
and develop the "Hard Rock" brand name in connection with a hotel and casino
resort in Biloxi, Mississippi. As consideration for the licensed rights as
provided in the license agreement, the Company paid a one-time territory fee of
$500,000. This cost was capitalized and is recorded as other assets on the
balance sheet and is being amortized over a 20-year period that began in
September 2005.

DEFERRED FINANCING COSTS AND DEBT DISCOUNT

The costs of issuing long-term debt are capitalized as other assets and, along
with the original issue discount, are amortized over the term of the related
debt. In the event the related debt is redeemed prior to its original term the
unamortized portion of these costs and any remaining unamortized debt discount
will be expensed as of the date of such redemption.

SELF-INSURANCE

The Company is self-insured for employee medical insurance coverage up to an
individual stop loss of $15,000. Self-insurance liabilities are estimated based
on the Company's claims experience and are included in accrued liabilities on
the consolidated balance sheets.

PREOPENING COSTS

Preopening costs are expensed as incurred, consistent with Statement of Position
98-5, Reporting on the Costs of Start-up Activities ("SOP 98-5"). Expenses
incurred include payroll and payroll related expenses, marketing expenses,
office rental, outside services, and other expenses related to the start-up
phase of operations.

INCOME TAXES

The Company was formed as a Delaware limited liability company and has elected
to be treated as a partnership for income tax purposes; accordingly, any tax
related to the Company's income is the obligation of its members and no federal
or state income tax provision has been recorded in the Company's financial
statements.

                                       11
<PAGE>
NEW ACCOUNTING PRONOUNCEMENTS

Effective January 1, 2006, the Company adopted the provision of FASB Statement
No. 123(R), Share-Based Payment, which is a revision of SFAS 123 and supersedes
APB Opinion No. 25. The effect of adopting these new standards had no effect on
the Company's accounting for its 2004 Membership Interest Appreciation Rights
Plan which allow for the receipt of an award based on the increase in value of
the Company. The fair market value of these rights at March 31, 2006 continues
to be zero; therefore no liability has been recognized for the outstanding
awards.


2.  GOVERNMENT SECURITIES - RESTRICTED

In February 2004, the Company invested $32.9 million in U.S. Treasury securities
in accordance with the Disbursement Agreement with U.S. Bank as disbursement
agent. The investment was classified as held to maturity, and was recorded as
government securities at its acquisition cost including accrued interest. The
investment plus the interest earned were designated to be used to pay the first
four interest payments on the Notes as required by the Disbursement Agreement.
The Company used the balance in this account of $8.3 million at December 31,
2005 to pay the February 1, 2006 interest payment on the Notes as required.


3.  RESTRICTED CASH

The net proceeds from the issuance of the Notes, a portion of the equity
investment and the proceeds from the junior subordinated note were deposited
into a construction disbursement account and a tidelands lease reserve account
pursuant to the disbursement agreement. At March 31, 2006, the balance in these
accounts was approximately $8.4 million. The insurance proceeds related to
Hurricane Katrina totaling $51.4 million were also deposited into a restricted
cash account, of which $1.0 million was released to pay professional fees on
behalf of the noteholders and $0.7 was released to pay minimal operating costs
of the Company for the purpose of protecting the asset and pursuing the
insurance recoveries. These accounts are pledged to the trustee and disbursement
agent as security for the Company's obligations under the Notes, and can only be
released to the Company in accordance with the disbursement agreement. The
Company also has a $1.0 million certificate of deposit which is pledged as
security for the Company's obligations under the Hard Rock license agreement. In
the accompanying consolidated balance sheets, restricted cash is classified as
non-current as it is primarily designated for the reconstruction of property and
purchases of equipment. Restricted cash includes the following:


<TABLE>
<CAPTION>
                                                   MARCH 31,            DECEMBER 31,
                                                     2006                  2005
                                               ------------------   -------------------
<S>                                            <C>                  <C>
Construction disbursement                        $     7,396,396      $      7,563,614
Interest reserve                                           8,028                     -
Tidelands lease reserve                                1,038,506             1,035,440
Insurance proceeds                                    49,787,901            24,577,870
                                               ------------------   -------------------
     Cash restricted by the Notes                     58,230,831            33,176,924

Certificate of deposit restricted by
   the Hard Rock license agreement                     1,000,000             1,014,377
                                               ------------------   -------------------
     Total restricted cash                       $    59,230,831      $     34,191,301
                                               ==================   ===================
</TABLE>

On April 7, 2006, the trustee and disbursement agent released $471,844 from the
construction disbursement account which the Company paid to Roy Anderson as a
progress payment on the contract between the Company and Roy Anderson dated
March 2, 2006.

On April 28, 2006, the trustee and disbursement agent advanced to the Company
$361,568 to pay the anticipated monthly costs related to maintaining the
property to mitigate further loss and costs related to the collection and
prosecution of Hurricane Katrina insurance claims.


                                       12
<PAGE>
4.  INSURANCE RECEIVABLE

As more fully discussed in Note 1, the Company believes that all property damage
sustained at the Hard Rock Biloxi including business interruption costs are
covered by its insurance policy. As of March 31, 2006, the Company had incurred
property and equipment losses, other hurricane-related expenses and additional
preopening expenses including interest on the Notes and the Company's other
borrowings totaling $125.6 million. Due to the uncertainties regarding the
amount of the insurance recovery, the Company has limited the recorded insurance
recovery to the costs it has incurred to date less the policy deductible and
non-recoverable costs. The insurance receivable of $74.0 million is made up of
the following components:

<TABLE>
<CAPTION>
                                                        MARCH 31,            DECEMBER 31,
                                                          2006                   2005
                                                   -------------------    ------------------
<S>                                                <C>                    <C>
Property and equipment writedown                     $     96,172,782       $    96,169,274
Other hurricane-related expenses                            9,344,954             9,136,196
Preopening expenses - business
   interruption                                             8,464,827             6,761,468
Interest - business interruption                           11,634,246             6,649,162
                                                          125,616,809           118,716,100
Less:  deductible and nonrecoverable costs                    189,000               189,000
Less:  proceeds received                                   51,454,000            25,650,000
                                                   -------------------    ------------------
     Insurance receivable                            $     73,973,809       $    92,877,100
                                                   ===================    ==================
</TABLE>


5.  LONG-TERM DEBT AND LOAN AND SECURITY AGREEMENT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                          MARCH 31,          DECEMBER 31,
                                                            2006                 2005
                                                     ------------------   ------------------
<S>                                                  <C>                  <C>
10 3/4% First Mortgage Notes due 2012, net            $    158,292,084     $    158,240,569
15% Junior Subordinated Note due 2012, net                  13,402,613           12,461,253
Variable rate IGT note payable                              12,870,932           12,870,932
Variable rate Senior Secured Reducing
   Line of Credit Facility                                   1,250,000            1,250,000
                                                     ------------------   ------------------
                                                           185,815,629          184,822,754
Less:  notes payable current                               158,292,084          158,240,569
Less:  current maturities                                    3,379,875            2,741,735
                                                     ------------------   ------------------
     Long-term debt                                   $     24,143,670     $     23,840,450
                                                     ==================   ==================
</TABLE>

10 3/4% FIRST MORTGAGE NOTES DUE 2012

On January 23, 2004, the Company issued $160.0 million of 10 3/4% First Mortgage
Notes due February 1, 2012 in a private placement offering which were
subsequently exchanged in an exchange offer registered on Form S-4. The debt
outstanding at March 31, 2006 is net of an unamortized discount of $1.7 million,
which is being amortized over the term of the Notes. In the event the Notes are
redeemed prior to their original term the unamortized portion of this discount
will be expensed as of the date of such redemption. The Notes are senior to all
existing and future senior unsecured indebtedness, but are subordinated to $14.1
million of senior secured indebtedness incurred to finance the acquisition and
installation of furniture, fixtures and equipment. The Notes are secured by a
pledge of the Company's membership interests and substantially all of the
existing and future assets, except for assets securing certain other
indebtedness. In addition, the trustee and disbursement agent is named as a loss
payee on behalf of the noteholders under the Company's blanket insurance
policies.

Interest on the Notes is payable semiannually on each February 1 and August 1
through maturity. The Notes may be redeemed, in whole or in part, at any time on
or after February 1, 2008 at the redemption prices (expressed as percentages of


                                       13
<PAGE>
principal amount) set forth below plus accrued and unpaid interest to the
applicable redemption date, if redeemed during the 12-month period beginning on
February 1 of the years indicated below:


                  YEAR                           PERCENTAGE
                 ------------------------      --------------

                 2008                              105.38%
                 2009                              102.69%
                  2010 and thereafter              100.00%


In addition, up to 35% of the Notes may be redeemed at a premium on or prior to
February 1, 2007 with the net cash proceeds of an initial public offering. As of
March 31, 2006, the Company had recorded deferred financing costs totaling $5.5
million, net of accumulated amortization, which were incurred in connection with
the private placement. These deferred financing costs are included in other
assets and are being amortized over the term of the related long-term debt. In
the event the related debt is redeemed prior to its original term the
unamortized portion of these costs will be expensed as of the date of such
redemption.

Under the indenture, in an Event of Loss arising from a storm such as Hurricane
Katrina, the Company is required to make an Event of Loss Offer to the extent it
receives certain net loss proceeds under its insurance policy. Once the Company
receives the specified level of insurance proceeds, it is required under the
terms of the indenture to offer to all holders of the Notes an opportunity to
redeem the maximum principal amount of Notes that may be purchased out of the
Net Loss Proceeds. In the accompanying consolidated balance sheets, the Notes
are classified as current as the Event of Loss Offer will be made in 2006.

As discussed in Note 1, BHR, a wholly owned subsidiary of Leucadia, commenced a
tender offer for the Notes on May 5, 2006. The tender offer, which expires at
noon on June 9, 2006, is intended to satisfy the Company's obligation under the
indenture to make such an offer as a result of the occurrence of a change of
control as defined in the indenture.

The Notes contain certain covenants. As of March 31, 2006, the Company believes
it is in compliance with these covenants; however, on January 6, 2006, the
Company received a notice from the trustee and disbursement agent relating to
its Notes that an Event of Default, as defined in the indenture, has occurred
because of an alleged failure of the Hard Rock Biloxi to be operating by the
time specified in the indenture (December 31, 2005). Further, the trustee and
disbursement agent alleges that an additional Event of Default may also occur
pursuant to the Event of Loss criteria specified in the indenture. On January 6,
2006, the Company responded via a letter to the trustee and disbursement agent
that it disagrees with the trustee and disbursement agent that any Event of
Default has occurred. Further, the letter noted that the trustee and
disbursement agent has no right to declare an Event of Default pursuant to the
Event of Loss criteria. In addition, the Company noted to the trustee and
disbursement agent that certain of its assertions are subject to litigation in
the United States District Court for the Southern District of Mississippi,
Southern Division. In March 2006, the Company signed a litigation deferral
agreement with the trustee and disbursement agent that defers all litigation
activity including discovery with respect to the 2005 lawsuits initiated by the
Company until April 15, 2006. This deferral agreement was subsequently extended
by both parties until June 15, 2006.

15% JUNIOR SUBORDINATED NOTE DUE 2012

Concurrently with the issuance of the Notes, the Company borrowed $10.0 million
in the form of a junior subordinated note due August 1, 2012 from Rank America,
Inc., an affiliate of The Rank Group Plc, which owns Hard Rock Hotel Licensing,
Inc. Interest on the junior subordinated note accrues at a rate of 15% per annum
and will be paid semiannually. If the Company had opened as planned, the first
interest payment would have been due on February 1, 2006. Accrued interest at
each semi annual interest payment date prior to opening is added to the
principal balance. The Company will be required to pay a repayment premium of 3%
of the principal amount of the junior subordinated note when it is repaid; such
premium is being accrued over the term of the junior subordinated note. Under
the change of control event as described in Note 1 or should the Hard Rock
license agreement be terminated and the project become owned, operated or
licensed by a Hard Rock competitor, the Company may be required to repay all
amounts due under the junior subordinated note agreement. In addition, the
Company may be required to make mandatory quarterly prepayments as calculated
under the terms of the junior subordinated note once the Company opens the hotel
and casino after reconstruction. On April 25, 2006, Rank America sold the junior
subordinated note to LRE. As of May 12, 2006, LRE has not required the Company
to prepay the junior subordinated note as a result of the change of control
event. Therefore the note is classified as long term in the accompanying
consolidated balance sheets.

                                       14
<PAGE>
The junior subordinated note contains covenants that are different and, in some
instances, more restrictive than those covenants in the indenture governing the
Company's Notes. If there is a default under the junior subordinated note, then
there will be a default under the Notes. Although the Company entered into an
intercreditor agreement limiting the junior subordinated noteholder's rights to
payment under the junior subordinated note, the Company may not have sufficient
proceeds to pay its debt obligations under the Notes if there is a default under
the junior subordinated note.

IGT NOTE PAYABLE

On January 5, 2005, the Company entered into a Commercial Sales and Security
Agreement with International Game Technology ("IGT") for the financing of
certain gaming devices and gaming systems. Pursuant to the agreement, the
Company purchased approximately 1,100 slot devices from IGT as well as software
licenses and related equipment for the gaming system. Under the IGT agreement,
interest accrues at the "high Wall Street Journal prime lending rate" (7.25% at
March 31, 2006) and payments are based on a 60-month amortization payable in
thirty-six monthly installments of principal and accrued interest with the
balance due on the thirty-seventh month (November, 2008). IGT is named as a loss
payee under the Company's blanket insurance policies.

SENIOR SECURED REDUCING LINE OF CREDIT FACILITY

On April 19, 2005, the Company, entered into a Commitment Letter for a $10.0
million Senior Secured Reducing Line of Credit Facility with Hibernia National
Bank and ORIX Financial Services, Inc. (the "Credit Facility"). The Credit
Facility is secured by a security interest in certain collateral purchased by
the Company and the lenders are named as a loss payee under the Company's
blanket insurance policies. The Credit Facility has a term of sixty-six months
that includes an initial funding period that ended on December 31, 2005 and a
secondary funding period ending on the earlier of twelve months following the
opening of the Hard Rock Biloxi for business to the public or February 26, 2007.
The Company will have an option to choose at the time of the initial draw the
pricing of one, two, three or six month LIBOR plus a margin of 4.25% or the
prime rate plus 1.25%.

As of March 31, 2006, $1.3 million has been drawn against this Credit Facility.
Interest on the Credit Facility accrued at the rate of 9.06% at March 31, 2006.
On December 31, 2005, the outstanding balance of the Credit Facility was
converted into a fully amortizing, five year term loan due December 31, 2010,
that requires quarterly payments of principal and interest. The remaining
undrawn $8.7 million may be available for funding if adequate collateral is
available. During the secondary funding period, the Company will make monthly
payments of accrued interest based on the outstanding balance of the Credit
Facility. Upon the earlier of the expiration of the secondary funding period or
the aggregate funding of the Credit Facility, the outstanding balance will be
converted to a term loan that will amortize over sixteen (16) quarters. The
Company will remit scheduled fixed quarterly principal payments plus accrued
interest.

OTHER

On July 1, 2005, the Company obtained an Irrevocable Letter of Credit from The
Peoples Bank in favor of Hard Rock Hotel Licensing, Inc. in the amount of $1.0
million to comply with the terms and conditions of the Licensing Agreement with
Hard Rock Hotel Licensing, Inc. The Letter of Credit is secured by a certificate
of deposit in the amount of $1.0 million for a term of 90 days and will
automatically renew. The Letter of Credit will be increased to $3.0 million
within 90 days following the opening of the Hard Rock Biloxi after
reconstruction.


6.  RELATED PARTY TRANSACTIONS

A member of GAR is the President and Chief Executive Officer of Roy Anderson,
the Company's general contractor. The Company believes that the terms of the
agreement with the contractor are similar to those that could otherwise be
received from a third party. Total payments pursuant to this agreement for the
period from the commencement of operations on March 27, 2003 through March 31,
2006 were $87.2 million, of which $67.0 million was paid directly to the GAR
member. The work was completed in August 2005, and $1.8 million is outstanding
and reflected in accounts payable - construction in progress in the consolidated
balance sheets.

On September 20, 2005, the Company entered into a new $7.0 million agreement
with Roy Anderson to provide various services required as a result of the
destruction caused by Hurricane Katrina. Total payments under this contract
through March 31, 2006 were $1.2 million; $5.8 million is outstanding and
reflected in accounts payable in the consolidated balance sheets.


                                       15
<PAGE>
On March 2, 2006, the Company entered into an agreement with Roy Anderson to
provide additional services at the property required as a result of the damage
caused by Hurricane Katrina. The services under the March 2, 2006 agreement
include the installation of infill panels and/or temporary walls on the lower
levels of the property, the installation of temporary and/or permanent doors at
all exit stairs, and various mechanical repairs to restore the supply of
conditioned air to the lower levels. These services which also include certain
demolition as needed to allow for the wall construction. These services are
intended to maintain the integrity of the property and to protect the building
from further deterioration. The Company has agreed to pay Roy Anderson the cost
of the work performed plus a contractor's fee in an amount that shall not exceed
the guaranteed maximum price of $1.4 million. The work is expected to be
completed no later than May 31, 2006. At March 31, 2006, $0.5 million is
outstanding and reflected in accounts payable in the March 31, 2006 balance
sheet.


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

OVERVIEW

We were formed on October 18, 2002 and commenced operations on March 27, 2003.
There were no assets, liabilities or operations from inception through the
commencement of operations. Since our formation, we have been in the development
stage. Our activities included applying for certain necessary permits, licenses
and regulatory approvals to enable us to own, construct and manage the
operations of and engage in development activities for the Hard Rock Hotel &
Casino Biloxi. We also purchased approximately 8.5 acres of land on the
Mississippi Gulf Coast in Biloxi, Mississippi to build the Hard Rock Biloxi. In
addition, we have entered into a 20-year licensing agreement with Hard Rock
Hotel Licensing, Inc. under which we were granted the right to use and develop
the Hard Rock brand name for our hotel and casino resort. We began construction
in January 2004.

Construction of Hard Rock Biloxi was completed on-time and on-budget in August
2005. On August 29, 2005, Hurricane Katrina destroyed the casino and damaged
related facilities, the low-rise building, hotel tower and parking garage. We
believe all damage sustained at the property is covered by our insurance. We
believe that our insurance coverage is adequate to reconstruct Hard Rock Biloxi
similar to its condition immediately preceding Hurricane Katrina, and may also
be sufficient to cover interest and expenses through the reconstruction period
and settle all outstanding payables arising both prior to and subsequent
Hurricane Katrina, assuming that the insurance proceeds are received in a
favorable and timely manner. However, due to our current inability to access the
insurance proceeds together with the current pace of negotiations and litigation
with the remaining insurance carriers in the second excess layer of coverage,
both the amount and timing of receipt of the insurance proceeds is uncertain. As
a result, the Company may not be able to restore Hard Rock Biloxi similar to its
condition immediately preceding Hurricane Katrina without new financing.

We have estimated that the cost of debris removal and replacing the property and
equipment destroyed by Hurricane Katrina will be approximately $121.0 million
and will take approximately fourteen to sixteen months to fully reconstruct once
reconstruction begins. Interest payments under the Notes during this
reconstruction period are estimated to be approximately $20.0 million to $22.3
million and preopening expenses are estimated to be approximately $17.0 million
to $19.0 million. In the aggregate, these costs range from $158.0 million to
$162.3 million.


RESULTS OF OPERATIONS

We are in the development stage and do not have any historical operating results
other than costs incurred in designing and developing Hard Rock Biloxi. For the
period from commencement of operations on March 27, 2003 through March 31, 2006,
we incurred a net loss of $27.7 million, which reflects preopening expenses of
$18.8 million, depreciation and amortization expenses of $0.7 million and net
interest expense of $28.2 million, partially offset by recognized insurance
recoveries and related interest of $125.6 million. As a result of Hurricane
Katrina, we recorded an impairment charge of $96.2 million for property and
equipment that was destroyed or damaged as well as 9.3 million in other
hurricane-related expenses. The preopening costs primarily relate to payroll,
utilities, insurance premiums, licensing expenses, transaction fees, legal fees
and organizational costs to prepare us for becoming a gaming enterprise. We
expect these losses to continue until operations commence. Our historical
operating results will not be indicative of future operating results because we
plan to operate a new gaming facility in the future.


                                       16
<PAGE>
For the three months ended March 31, 2006, pre-opening expenses were $2.6
million compared to $1.0 million for the three months ended March 31, 2005. This
$1.6 million increase in pre-opening expenses is related to payroll and other
general administrative expenses, fees associated with the Hard Rock license,
utilities, and professional fees associated with on-going efforts to settle
insurance claims and resolve issues with the trustee and disbursement agent. A
business interruption receivable for $1.7 million for actual expenses incurred
has been recorded. Depreciation and amortization expense for the three months
ended March 31, 2006 increased $0.2 million over the comparable prior year
period as a result of the increased amortization of intangibles and more
depreciable assets placed into service. Total interest expense incurred for the
three months ended March 31, 2006 and 2005 was $5.2 million and $4.5 million,
respectively, of which $0.0 million and $2.3 million, respectively, were
capitalized.


LIQUIDITY AND CAPITAL RESOURCES

For the period from commencement of operations on March 27, 2003 through March
31, 2006, we used cash for operating activities of $50.6 million. We also used
cash for investing activities of $159.0 million, principally to purchase and
develop property and equipment and to purchase government securities. Other cash
resources include $59.2 million of cash; however, such funds along with the
insurance receivable are restricted by the Notes and the Hard Rock license
agreement. We have a significant working capital deficit.

We used the gross proceeds we obtained from the offering of the Notes, the
equity investment from AA Capital of $52.8 million, the junior subordinated note
of $10.0 million from Rank America and $14.1 million in furniture, fixtures and
equipment financing to fund the costs associated with the original construction
of Hard Rock Biloxi. We currently have a $10.0 million Credit Facility, of which
$1.3 million has been drawn as of March 31, 2006. The remaining undrawn $8.7
million may be available to the Company for funding if adequate collateral is
available. The Notes are classified as a current liability on the consolidated
balance sheets as we expect to make an Event of Loss offer to purchase the Notes
as required by the terms of the indenture.

On August 29, 2005, we sustained an estimated $105.5 million in property,
equipment, inventory and other asset losses at Hard Rock Biloxi due to Hurricane
Katrina. The estimate of the damage is a preliminary estimate subject to change
as clean-up and recovery efforts continue and we obtain a better understanding
of the full extent of the damage. We believe that all property damage including
business interruption costs are covered by our insurance policy. The $25.0
million primary layer of coverage and the $25.0 million first excess layer have
been settled for the full amount of coverage; $46.0 million has been paid into a
restricted account. With respect to the second excess layer, we have
successfully negotiated a settlement of $66.1 million for $72.1 million face
amount of coverage; however, the Company is not in a position to finalize the
settlement with the insurance companies without the approval of the trustee and
disbursement agent under the Notes. The trustee and disbursement agent has yet
to provide such approval. Offers have been received from the five carriers in
the remainder of the second excess layer ($59.2 million face amount of coverage)
for $27.7 million. The Company has rejected these offers as it believes these
carriers are liable for the full amount of their coverage under a WCO. As a
result, the Company has filed litigation against these five carriers. The
Company has also recovered $5.4 million under certain deductible buy-down
policies; these proceeds have also been deposited with the trustee and
disbursement agent.

We believe that our insurance coverage is adequate to reconstruct Hard Rock
Biloxi similar to its condition immediately preceding Hurricane Katrina, and may
be sufficient to cover interest and expenses through the reconstruction period
and settle all outstanding payables arising both prior to and subsequent to
Hurricane Katrina, assuming the insurance proceeds are received in a timely
manner. However, due to our current inability to access the insurance proceeds
together with the current pace of negotiations and litigation with the remaining
insurance carriers in the second excess layer of coverage, both the timing and
amount of receipt of the insurance proceeds is uncertain. As a result, the
Company may not be able to restore Hard Rock Biloxi similar to its condition
immediately preceding Hurricane Katrina without new financing.

Under the indenture governing the Notes, in an Event of Loss such as Hurricane
Katrina we are required to make an Event of Loss Offer to the extent we receive
certain net loss proceeds under our insurance policy. What constitutes "net loss
proceeds" is the subject of litigation that we filed against the trustee and
disbursement agent. Under an Event of Loss Offer we will offer to purchase the
Notes from net loss proceeds. To the extent the noteholders choose not to tender
their Notes under an Event of Loss offer, then the net loss proceeds may be used
by us for remediation, reconstruction and any other purpose not otherwise
prohibited by the indenture.

                                       17
<PAGE>
As more fully discussed above, on April 25, 2006 a subsidiary of Leucadia
National Corporation ("Leucadia"), indirectly acquired a controlling interest in
the Company for an aggregate cash purchase price of $89 million. In connection
with that transaction, on May 5, 2006, BHR, a subsidiary of Leucadia, commenced
a tender offer (the "Offer") for all of the outstanding $160 million principal
amount of the Notes at a price equal to 101% of the par value of the Notes plus
accrued and unpaid interest to the date of payment. The tender offer, which is
currently scheduled to expire at noon on June 9, 2006, is intended to satisfy
the Company's obligation under the indenture to make such an offer as a result
of the occurrence of a change of control as defined in the indenture. In
connection with the Offer, GAR has agreed to pay BHR a fee of $2 million, which
will be paid in accordance with the provisions of the indenture and only to the
extent distributions from the Company are available to GAR for such purpose.

The Company is in discussions with the trustee and disbursement agent regarding
the release of the insurance proceeds currently held by the trustee. If
successful, the Company plans to use the insurance proceeds to immediately begin
reconstruction of the Hard Rock Biloxi. In addition, LRE has agreed to provide
up to $50 million in construction cost financing to Roy Anderson on behalf of
the Company, subject to the receipt of a satisfactory security interest in the
newly created accounts receivable of Roy Anderson, should settlement of the
remainder of the second excess layer of coverage not be accomplished in a timely
manner or be insufficient to cover such costs.

Management continues to operate at significantly reduced operating costs, pursue
the remediation process in order to mitigate further deterioration of the
property, and seek full settlement of the remaining insurance coverage. However,
there can be no assurance that the insurance proceeds ultimately received and
the timing of their receipt will be sufficient to carry out the Company's plans
or that the Company's plans can be accomplished with other support. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern

The actions by the trustee and disbursement agent have prevented us from paying
various parties, including vendors, the general contractor and subcontractors
for work performed and goods and services provided prior to Hurricane Katrina.
Our inability to pay these obligations has resulted in liens being placed
against the property. Furthermore, reconstruction efforts may be hindered as a
result of the bad will that the nonpayment may create. Critical suppliers,
vendors, contractors and subcontractors may either increase prices significantly
or choose not to do business with us when we repair and reconstruct the
property.

Following the reconstruction and opening of the Hard Rock Biloxi, we expect to
fund our business from operating cash flows.

Mississippi Bond Financing. Mississippi law provides that certain expenditures
for materials made in connection with certain economic development projects in
the State of Mississippi, including the land-based portion of the Hard Rock
Hotel & Casino Biloxi (which includes the hotel tower, the parking garage, the
low-rise pavilion and the pool area), are exempt from Mississippi's sales tax if
such expenditures are paid for with proceeds from approved industrial
development revenue bonds issued by the Mississippi Business Finance
Corporation, ("MBFC"). At March 31, 2006, Premier Finance Biloxi, Corp. funded
consolidated capital expenditures of approximately $34.4 million to qualify for
the tax-exempt status. We saved $1.7 million in sales tax that we would have
otherwise been required to pay in connection with the purchase of materials used
in the construction of the land-based portion of the Hard Rock Hotel & Casino
Biloxi.

Premier Finance Biloxi Corp. served as the co-issuer of the Notes and will not
have any material assets or operations, other than in connection with the
Mississippi Business Finance Corporation financing.

The sale and issuance of the industrial development revenue bonds to Premier
Finance Biloxi Corp. and the subsequent loan by the MBFC of the proceeds thereof
to us did not result in any additional net indebtedness for us.


CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our consolidated financial statements are prepared in accordance with U.S.
generally accepted accounting principles that require our management to make
estimates and assumptions that affect reported amounts and related disclosures.
Critical accounting policies and estimates discussed in the Form 10-K for the
period ended December 31, 2005, have not changed.


                                       18
<PAGE>
SEASONALITY

We do not have an operating history. We anticipate that activity at the Hard
Rock Hotel & Casino Biloxi may be modestly seasonal, with stronger results
expected during the second and third quarters due in part to the relatively
higher levels of tourism in the Mississippi Gulf Coast market during this time
of the year and weaker results in the fourth quarter. In addition, operations
may be impacted by adverse weather conditions and fluctuations in the tourism
business generally. Accordingly, results of operations may fluctuate from
quarter to quarter and the results for any one quarter may not be indicative of
results for future quarters.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss arising from adverse changes in market rates and
prices, such as interest rates, foreign currency exchange rates and commodity
prices. Through March 31, 2006, we had not invested in derivative or foreign
currency-based financial instruments. We are currently exposed to market risk
from changes in interest rates.

INTEREST RATES

We are subject to interest rate risk on our long-term fixed interest rate debt
and, to a lesser extent, variable-interest rate borrowings. Variable rate debt,
where the interest rate fluctuates periodically, exposes us to short-term
changes in market interest rates. Fixed rate debt, where the interest rate is
fixed over the life of the instrument, exposes us to changes in market interest
rates reflected in the fair value of the debt and to the risk that we may need
to refinance maturing debt with new debt at a higher rate. All other things
being equal, the fair value of our fixed rate debt will increase or decrease as
interest rates change.


                   FORWARD-LOOKING STATEMENTS AND RISK FACTORS

Except for the historical information contained herein, the matters addressed in
this Quarterly Report on Form 10-Q may constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 2IE of the Securities and Exchange Act of 1934, as amended. The Private
Securities Litigation Reform Act of 1995 provides certain "safe harbor"
provisions for forward-looking statements. All forward-looking statements made
in this Quarterly Report on Form 10-Q are made pursuant to the Act. Words such
as, but not limited to, "believes", "expects", "anticipates", "estimates",
"intends", "plans", "could", "may", "should" and similar expressions are
intended to identify forward-looking statements. Such forward-looking
statements, which may include, without limitation, statements regarding
reconstruction plans, cash needs, cash reserves, liquidity, operating and
capital expenses, financing options, expense reductions, operating results and
pending regulatory matters, are subject to a variety of risks and uncertainties
that could cause actual results to differ materially from those anticipated by
us. From time to time, oral or written forward-looking statements are also
included in our other periodic reports on Forms l0-K, l0-Q and 8-K, press
releases and other materials released to the public.

Actual results may differ materially from those that might be anticipated from
forward-looking statements. This can occur as a result of inaccurate assumptions
or as a consequence of known or unknown risks and uncertainties. We undertake no
obligation to publicly update any forward-looking statements, whether as a
result of new information, future events or otherwise. Factors that may cause
our actual performance to differ materially from that contemplated by such
forward-looking statements include, among others: (1) in the aftermath of
destruction to the property and the Mississippi Gulf Coast region caused by
Hurricane Katrina, our ability to recover sufficient insurance proceeds to
rebuild the property, to gain access to the insurance proceeds currently
restricted by U.S. Bank National Association, as trustee and disbursement agent,
and to recruit and retain employees, (2) the gaming industry is very competitive
and a recent change in the gaming law that has allowed shore based gaming along
the Mississippi Gulf Coast could allow for increased competition in the Gulf
Coast gaming market, as would the legalization or expansion of gaming in
Mississippi or Alabama and the development or expansion of Native American
casinos in or near our markets, (3) general construction risks and other
factors, some of which are beyond our control, could prevent us from completing
our reconstruction project as planned, (4) other changes in gaming laws or
regulations, (5) changes in federal or state tax laws, and (6) changes in the
economy. Additional factors that could cause our actual performance to differ
materially from that contemplated by such forward-looking statements are
detailed in our Annual Report on Form 10-K in section 1A entitled "Risk Factors"
that was filed in April 2006.

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<PAGE>
ITEM 4.  CONTROLS AND PROCEDURES

An evaluation of the effectiveness of our disclosure controls and procedures
pursuant to Exchange Act Rule 13a-15(e) and 15d-15(e) was carried out under the
supervision and with the participation of our management, including our chief
operating officer and our chief financial and accounting officer. Based upon the
evaluation, our chief operating officer and our chief financial and accounting
officer have concluded that our disclosure controls and procedures are effective
to ensure that information required to be disclosed by us in our periodic SEC
filings is recorded, processed, summarized and reported within the time periods
specified by the Securities and Exchange Commission.

There have been no changes in our internal control over financial reporting (as
defined in the Securities Exchange Act of 1934 Rules 13a-15(f) and 15d-15(f))
that occurred during the quarter ended March 31, 2006 that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.


PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

U.S. Bank National Association Litigation
-----------------------------------------

In the middle of October 2005, we submitted a construction disbursement request
to U.S. Bank as trustee and disbursement agent, dated August 26, 2005, seeking a
disbursement for payment of construction expenses incurred prior to Hurricane
Katrina in the amount of approximately $11.4 million. The construction
disbursement request, along with the appropriate certifications from the general
contractor, the architect and the independent construction consultant, was
submitted in compliance with the disbursement agreement and in similar form to
eighteen other disbursement requests we submitted dating back to February 2004,
all of which were funded by U.S. Bank per the disbursement agreement.
Nevertheless, on or about October 19, 2005, U.S. Bank denied this August 2005
construction disbursement request. We believe this denial was due, in part, to a
position taken by an ad hoc committee of noteholders. We do not understand the
basis for the denial.

Consequently, due to these actions of U.S. Bank as trustee and disbursement
agent, we have been unsuccessful in our attempt to pay various parties,
including vendors, the general contractor and subcontractors, for work performed
prior to Hurricane Katrina to construct the Hard Rock Biloxi. In order to
protect the Hard Rock Biloxi, our ongoing reconstruction efforts and to prevent
liens from being filed against the property, we filed a Complaint for Injunctive
Relief on October 27, 2005 against U.S. Bank National Association, as trustee
and disbursement agent for the Notes in the United States District Court for the
Southern District of Mississippi Southern Division in Gulfport, Mississippi. We
asked the court to enforce the disbursement agreement and order the trustee and
disbursement agent to disburse funds due under the properly submitted
disbursement request. A hearing was held on November 8, 2005, at which time the
judge suggested the parties meet to resolve their disagreement. The parties met;
however, no solution was reached. On January 3, 2006, the trustee and
disbursement agent filed a counterclaim in this matter alleging that funds
disbursed to us for preopening expenses were used for other purposes. We deny
these allegations and will vigorously defend all actions we took in this matter.

On December 16, 2005, we filed another complaint against U.S. Bank National
Association, as trustee and disbursement agent, in the United States District
Court for the Southern District of Mississippi, Southern Division. We have asked
the court to determine that (1) the trustee and disbursement agent has withheld
to date, in violation of the indenture with respect to the Notes, net loss
proceeds from us for the rebuilding, repair, replacement or construction of
improvements to our property, (2) the trustee and disbursement agent has
improperly withheld from us funds received from business interruption insurance;
(3) that the definition of "net loss proceeds" in the indenture does not include
funds received from the business interruption insurance; and (4) that the 365
day grace period to rebuild the property granted in Section 4.11 of the
indenture tolls or extends the event of default provisions. The matter has been
set for a trial in October 2006. There can be no assurance given as to the
results of this litigation.

On March 3, 2006, we signed a litigation deferral agreement dated March 1, 2006
with the trustee and disbursement agent that defers all litigation activity
including discovery in the October 27, 2005 and December 16, 2005 lawsuits until
April 15, 2006. The agreement has been extended by both parties until June 15,
2006.

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<PAGE>
In connection with the agreement deferring litigation activity in the civil
action involving the trustee and disbursement agent, the Company agreed to
dismiss its claims for money damages against U.S. Bank National Association,
however such dismissal did not affect, limit or impair any claims and rights of
the Company in or to the assets now or hereafter held in trust by the trustee
and disbursement agent under the indenture or collateral documents.

Insurance Litigation
--------------------

On January 10, 2006, we filed complaints in the United States District Court for
the Southern District of Mississippi, Southern Division against SRI and James
River, two of the insurers that have provided property insurance coverage for
Hard Rock Biloxi. We, via the complaints, seek declaratory judgments against the
respective insurers that their insurance policies provide coverage for the water
damage to the hotel-casino property resulting from Hurricane Katrina. We are
seeking compensatory and punitive damages as well as attorney's fees from the
insurers. SRI's policy covers a $4.0 million part of the first excess layer of
coverage ($25.0 million in excess of the $25.0 million primary layer) and a
$21.0 million part of the second excess layer of coverage ($131.2 million in
excess of $50.0 million). The complaint against SRI alleges that the water
damage caused to the hotel-casino property as a result of Hurricane Katrina is
covered under the SRI policy because such water damage was a part of a Weather
Catastrophe Occurrence, as defined under the terms of the coverage, and that the
water damage is also covered under the terms of the flood endorsement to the SRI
policy. Prior to filing our complaint against SRI, we were advised by letter
from SRI's counsel that SRI believes that its policy does not cover water damage
to the hotel-casino property, but that the policy does cover the wind damage
caused by Hurricane Katrina.

We are currently under a "standstill" agreement with SRI and intend to dismiss
the litigation as a settlement has been reached.

The policy issued by James River covers $13.8 million of the second excess layer
of coverage. The complaint against James River alleges that water damage caused
to the hotel-casino property by Hurricane Katrina is covered under the James
River policy because such water damage was part of a Weather Catastrophe
Occurrence. Prior to filing our complaint against James River, we were advised
by letter from counsel to James River that all flood coverage is excluded from
the James River policy, including water damage that is part of a Weather
Catastrophe Occurrence, by reason of the flood exclusion in the policy. Counsel
acknowledged, however, that the wind damage is covered by the policy.

On January 30, 2006, we filed an amended complaint against James River alleging,
in addition to initial allegations, that the carrier's flood exclusion language,
in any event, does not exclude flood damage to the casino because the casino
floated on water. The applicable definition of flood in their policy describes
an inundation of normally dry land. James River has moved to dismiss both the
complaint and amended complaint. We believe the motion to be without merit and
have filed appropriate responsive pleadings.

On May 5, 2006 we filed a Motion for Leave to file a Second Amendment Complaint
in the United States District Court for The Southern Division of Mississippi,
Southern Division, seeking to add a count for declaratory relief against James
River for wind damage sustained to the property during Hurricane Katrina.

On April 28, 2006, the Company filed a Complaint in the Circuit Court of
Harrison County, Mississippi, Second Judicial District, against Homeland
Insurance Company of New York, Clarendon America Insurance Company, RSUI
Indemnity Corporation and Great American E & S Insurance Company, four of the
insurers that have provided property insurance coverage for the Company's Hard
Rock Hotel & Casino in Biloxi, Mississippi. The Company, via the complaint,
seeks declaratory relief, compensatory damages and punitive damages against the
respective insurers for their failure to pay insurance proceeds under their
respective policies following Hurricane Katrina in the total amount of $45.4
million.

We intend to vigorously pursue these actions; however, no assurance can be given
as to the results of this litigation.

ITEM 1A.  RISK FACTORS

There have been no material changes from the risk factors previously disclosed
in our Form 10-K for the year ended December 31, 2005.


                                       21
<PAGE>
ITEM 6. EXHIBITS

                                  EXHIBIT INDEX

Exhibit
Number                         Description of Exhibit
------                         ----------------------

31.1       Chief Operating Officer Certification Pursuant to Section 13a-14 of
           the Securities Exchange Act, as amended

31.2       Chief Financial Officer Certification Pursuant to Section 13a-14 of
           the Securities Exchange Act, as amended

32.1       Section 906 of the Sarbanes-Oxley Act of 2002 Certifications for
           Premier Entertainment Biloxi LLC

32.2       Section 906 of the Sarbanes-Oxley Act of 2002 Certifications for
           Premier Finance Biloxi Corp.

















                                       22
<PAGE>
                                    SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                               PREMIER ENTERTAINMENT BILOXI LLC
                               PREMIER FINANCE BILOXI CORP.
                               (Registrant)

Date: May 12, 2006             /s/ Todd J. Raziano
                               -------------------------------------------------
                               Todd J. Raziano
                               Senior Vice President and Chief Financial Officer
                               (Principal Financial and Accounting Officer)



















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