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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





Form 10-K







|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Act)
|- | --------------------------------------------------------------------------------------------

For the fiscal year ended December 31, 2010



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

Commission File No. 333-88242





JACOBS
ENTERTAINMENT, INC.

(Exact name of Registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 34-1959351                          
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer Identification No.)

17301 West Colfax, Suite 250, Golden, Colorado 80401

(Address of
principal executive offices) (Zip code)

(303) 215-5200

(Registrants telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None.

Securities registered pursuant to Section 12(g) of the Act: None.





Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities
Act.    Yes   ̈    No   x

Indicate by check mark if the issuer is not required to file reports pursuant to Section 13 or 15(d) of the
Act.    Yes  x    No   ̈

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Act 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 has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is
not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  x

Indicate by check mark whether the registrant is
a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in
Rule 12b-2 of the Exchange Act.



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  |  ̈
|                        |  |                                                  | 
|Non-accelerated filer   |  | x  (Do not check if a smaller reporting company) |  | Smaller reporting company |  |  ̈

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

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at
which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrants most recently completed second fiscal quarter: No market exists for the common stock of the
registrant; as of March 29, 2011 all of its outstanding shares of common stock are held by its parent corporation.

Indicate the number of shares outstanding of each of the registrants classes of common stock, as of the latest practicable date:



|                                      |  |                              
|------------------------------------- |  | -----------------------------
|Class                                 |  | Outstanding at March
29, 2011
|Class A Common Stock, $0.01 par value |  | 1,320 shares                 
|Class B Common Stock, $0.01 par value |  | 180 shares                   





DOCUMENTS
INCORPORATED BY REFERENCE:

See the exhibit index which appears on page E-1 which is incorporated by reference
into Item 15 of Part IV hereof.









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JACOBS ENTERTAINMENT, INC.

2010 ANNUAL REPORT ON FORM 10-K

Table of Contents



|         |  |                                                                                                               |  |      |    | 
|-------- |  | ------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|Item     |  | Description                                                                                                   |  | Page |   
|Item 1.  |  | Business.                                                                                                     |  |      | 1  | 
|Item 1A. |  | Risk Factors.                                                                                                 |  |      | 24 | 
|Item 1B. |  | Unresolved Staff Comments.                                                                                    |  |      | 34 | 
|Item 2.  |  | Properties.                                                                                                   |  |      | 34 | 
|Item 3.  |  | Legal Proceedings.                                                                                            |  |      | 34 | 
|Item 4.  |  | [Reserved.]                                                                                                   |  |      | 34 | 
|Item 5.  |  | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |  |      | 34 | 
|Item 6.  |  | Selected Financial Data.                                                                                      |  |      | 35 | 
|Item 7.  |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations.                        |  |      | 36 | 
|Item 7A. |  | Quantitative and Qualitative Disclosure about Market Risk.                                                    |  |      | 53 | 
|Item 8.  |  | Financial Statements and Supplementary Data.                                                                  |  |      | 54 | 
|Item 9.  |  | Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure.                         |  |      | 54 | 
|Item 9A. |  | Controls and Procedures.                                                                                      |  |      | 54 | 
|Item 9B. |  | Other Information.                                                                                            |  |      | 55 | 
|Item 10. |  | Directors, Executive Officers and Corporate Governance.                                                       |  |      | 55 | 
|Item 11. |  | Executive Compensation.                                                                                       |  |      | 57 | 
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.               |  |      | 60 | 
|Item 13. |  | Certain Relationships and Related Transactions, and Director Independence.                                    |  |      | 60 | 
|Item 14. |  | Principal Accounting Fees and Services.                                                                       |  |      | 63 | 
|Item 15. |  | Exhibits, Financial Statement Schedules.                                                                      |  |      | 63 | 



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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

We make statements in this report that relate to matters that are not historical facts that we refer to as forward-looking
statements regarding, among other things, our business strategy, our prospects and our financial results and financial position. These statements may be identified by the use of forward-looking terminology such as believes,
estimates, expects, intends, may, should or anticipates or the negative or other variation of these or similar words, or by discussion of strategy or risks and uncertainties.
Forward-looking statements in this report include, among other things, statements concerning:



| |  |  | projections of future results of operations or financial condition;
| | - |  | -------------------------------------------------------------------



| |  |  | expectations for our casino, truck plaza and horse racing properties; and
| | - |  | -------------------------------------------------------------------------



| |  |  | expectations of the availability of capital resources.
| | - |  | ------------------------------------------------------

Any forward-looking statement made by us necessarily is based upon a number of estimates and assumptions that, while considered reasonable by us, are inherently subject to significant business, economic,
regulatory and competitive uncertainties and contingencies, many of which are beyond our control, and are subject to change. Actual results of our operations may vary materially from any forward-looking statement made by us or on our behalf.
Forward-looking statements should not be regarded as representations by us or any other person that the forward-looking statements will be achieved. Undue reliance should not be placed on any forward-looking statements. The contingencies and
uncertainties to which any forward-looking statement contained herein is subject to include, but are not limited to, the following:



| |  |  | Our substantial indebtedness could adversely affect our financial results and prevent us from fulfilling our debt obligations.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



| |  |  | We will require a significant amount of cash to service our indebtedness. Our ability to generate cash depends on many factors beyond our control.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our indebtedness imposes restrictive covenants on us and our ability to refinance our debt in the foreseeable future may be problematic given the
recent and continuing turmoil in the credit markets.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We may experience a loss of market share due to intense competition in all venues in which we operate and the possible introduction of slot
machines at one or more Colorado racetracks.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We face extensive regulation from gaming and other government authorities and the possibility that legislative changes may prohibit or limit our
gaming activities.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Changes to applicable tax laws could have a material adverse effect on our operations and financial condition.
| | - |  | --------------------------------------------------------------------------------------------------------------



| |  |  | Our operations could continue to be adversely affected due to the adoption of anti-smoking regulations in Colorado and their possible adoption in
Nevada and Louisiana.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We depend upon the services of our key employees and certain members of our management.
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | The single member of our board of directors and his family trusts indirectly own or control the issued and outstanding shares of Jacobs
Entertainment, Inc. and could have interests that conflict with creditors and others.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We rely on the maintenance of agreements with horsemen at our horse racing facility in Virginia.
| | - |  | ------------------------------------------------------------------------------------------------



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| |  |  | Our business relies heavily on certain markets and an economic downturn in these markets as has been experienced in the last three years could have a
material adverse effect on our future results of operations.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Seasonality and weather conditions have and may in the future adversely affect our results of operations.
| | - |  | ---------------------------------------------------------------------------------------------------------

All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in
their entirety by the cautionary statements included in this report. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed in this report might not occur.

NON-GAAP FINANCIAL
MEASURES

Consolidated and property level EBITDA and the related ratios presented in this report are supplemental measures
of our performance that are not required by, or presented in accordance with, generally accepted accounting principles. EBITDA is not a measurement of our financial performance under generally accepted accounting principles and should not be
considered as an alternative to net income, operating income or any other performance measures derived in accordance with generally accepted accounting principles, or as an alternative to cash flow from operating activities as a measure of our
liquidity.

EBITDA consists of net income or loss plus depreciation and amortization, interest, net of capitalized interest,
and income taxes. EBITDA is presented because it is used by our management as a supplemental performance measure to analyze the performance of our business and because it is frequently used by securities analysts, investors and others in their
evaluation of companies in our industry, substantially all of whom present EBITDA when reporting their results.

Our bank
credit agreement and our indenture use EBITDA, subject to certain adjustments, to measure our compliance with debt covenants. We also use EBITDA to evaluate and price potential acquisition candidates. We believe EBITDA facilitates operating
performance comparisons from period to period and company to company by removing potential differences caused by variations in capital structures (affecting relative interest expense), tax positions (such as the impact on periods or type of
companies of changes in effective tax rates or net operating losses) and the age and book depreciation of facilities and equipment (affecting relative depreciation expense).

EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under generally accepted accounting principles. Some
of these limitations are:



| |  |  | EBITDA does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;
| | - |  | --------------------------------------------------------------------------------------------------------------------------



| |  |  | EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | EBITDA does not reflect the cash requirements necessary to service interest or principal payments, on our debts;
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future,
and EBITDA does not reflect any cash requirements for such replacements; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



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Because of these limitations, EBITDA should not be considered as a measure of discretionary
cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our results under generally accepted accounting principles and using EBITDA only supplementally. See our consolidated financial
statements and the notes to those statements included elsewhere in this report.

INDUSTRY AND MARKET DATA

This report includes market and industry data that we obtained from our own research, studies conducted by third party sources that we
believe to be reliable and industry and general publications by third parties and, in some cases, management estimates based on industry and other knowledge. We have not independently verified any of the data from third party sources, and we make no
representation as to the accuracy of such information. While we believe internal company estimates are reliable and market definitions are appropriate, they have not been verified by any independent sources. Actual results could differ from those
estimates.



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PART I



|Item 1. | Business.
|------- | ---------

Introduction

Jacobs
Entertainment, Inc. (Jacobs Entertainment, JEI, the Company, us, our or we) was formed as a Delaware corporation on April 17, 2001. We are a developer, owner and
operator of gaming and pari-mutuel wagering facilities throughout the United States, with properties located in Colorado, Nevada, Louisiana and Virginia. As of March 29, 2011, we own and operate five land-based casinos, 20 video gaming truck
plazas (six of which are leased) and a horse racing track with ten satellite wagering facilities (five of which are leased). In addition, we are party to an agreement that entitles us to a portion of the gaming revenue from an additional truck plaza
video gaming facility.

All of our gaming facilities target local customers and emphasize revenues from slot machine play or
video gaming, or both. For the year ended December 31, 2010, our net revenues and EBITDA were approximately $329.9 million and $50.0 million, respectively. See Note 14 to our consolidated financial statements for information concerning the
operational performance of the segments of our business.

The following table sets forth certain information and property
level EBITDA (excluding corporate overhead) of our properties:



|                                                           |  |                                  |  |                                       |  |                                |        |  |                            |  |       |            |  |  |            |  |  |                          |     |  |  |   |        |  
|---------------------------------------------------------- |  | -------------------------------- |  | ------------------------------------- |  | ------------------------------ | ------ |  | -------------------------- |  | ----- | ---------- |  |  | ---------- |  |  | ------------------------ | --- |  |  | - | ------ | -
|                                                           |  |                                  |  |                                       |  | As of December 31, 2010        |        |  | Year EndedDecember 31,2010 | 
|Property                                                   |  | Location                         |  | Facility Type                         |  | ApproximateGamingSquareFootage |        |  | GamingMachines             |  |       | TableGames |  |  | HotelRooms |  |  | Property LevelEBITDA (1) |    
|                                                           |  |                                  |  |                                       |  |                                |        |  |                            |  |       |            |  |  |            |  |  | (in thousands)           |    
|The Lodge Casino                                           |  | Black Hawk, Colorado             |  | Land-based casino                     |  |                                | 28,000 |  |                            |  | 970   |            |  |  | 35         |  |  |                          | 50  |  |  | $ | 26,858 |  
|Gilpin Casino                                              |  | Black Hawk, Colorado             |  | Land-based casino                     |  |                                | 11,000 |  |                            |  | 398   |            |  |  | 6          |  |  |                          | 0   |  |  |   | 4,363  |  
|Gold Dust West- Reno                                       |  | Reno, Nevada                     |  | Land-based casino                     |  |                                | 17,500 |  |                            |  | 475   |            |  |  | 0          |  |  |                          | 27  |  |  |   | 5,514  |  
|Gold Dust West - Carson City                               |  | Carson City, Nevada              |  | Land-based casino                     |  |                                | 12,000 |  |                            |  | 397   |            |  |  | 6          |  |  |                          | 146 |  |  |   | (278   | )
|Gold Dust West- Elko                                       |  | Elko, Nevada                     |  | Land-based casino                     |  |                                | 13,000 |  |                            |  | 342   |            |  |  | 6          |  |  |                          | 0   |  |  |   | 1,883  |  
|Louisiana Truck Plazas (2)                                 |  | Louisiana (19 various locations) |  | Video gaming                          |  |                                | 12,000 |  |                            |  | 944   |            |  |  | 0          |  |  |                          | 0   |  |  |   | 19,255 |  
|Colonial Downs Racetrack and satellite wagering facilities |  | Virginia (11 various
locations)  |  | Horse racing and pari-mutuel wagering |  |                                | N/A    |  |                            |  | N/A   |            |  |  | N/A        |  |  |                          | N/A |  |  |   | 1,483  |  
|                                                           |  |                                  |  |                                       |  |                                |        |  |                            |  |       |            |  |  |            |  |  |                          |     |  |  |   |        |  
|Total                                                      |  |                                  |  |                                       |  |                                | 93,500 |  |                            |  | 3,526 |            |  |  | 53         |  |  |                          | 223 |  |  | $ | 59,078 |  
|                                                           |  |                                  |  |                                       |  |                                |        |  |                            |  |       |            |  |  |            |  |  |                          |     |  |  |   |        |  



|(1) | Property Level EBITDA excludes corporate overhead expense of $9.1 million.
|--- | --------------------------------------------------------------------------

|(2) | Two additional video gaming truck plazas were acquired on January 31, 2011.
|--- | ---------------------------------------------------------------------------



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The following is a reconciliation of our property level EBITDA to our net income (in
thousands):



|                              |  |                              |         |  
|----------------------------- |  | ---------------------------- | ------- | -
|                              |  | Year EndedDecember 31, 
2010 |        
|Total Property Level EBITDA   |  | $                            | 59,078  |  
|Corporate overhead            |  |                              | (9,058  | )
|                              |  |                              |         |  
|Total EBITDA                  |  |                              | 50,020  |  
|Depreciation and amortization |  |                              | (21,331 | )
|Interest expense, net         |  |                              | (25,556 | )
|                              |  |                              |         |  
|Net Income                    |  | $                            | 3,133   |  
|                              |  |                              |         |  

Business Strategy and Competitive Strengths

Our business strategy is to continue to operate a broad, geographically diversified base of gaming and pari-mutuel wagering properties that seek to provide our customers with an enjoyable entertainment
experience, and in turn, to generate significant customer loyalty and repeat business. We believe that there are opportunities for growth and operational efficiencies in the markets in which we operate.

Black Hawk, Colorado was one of the fastest growing gaming markets in the country, having experienced a 26.3% compound annual growth in
gaming revenue from 1998 through 2000. Revenues in 2001 through 2003 stabilized at approximately $500 million annually and rose to $524 million in 2004, $535 million in 2005, $554 million in 2006, and $581 million in 2007. However, in 2008, revenues
fell to $509 million due to a statewide smoking ban and a nationwide economic recession, combined with a pronounced slowdown in the gaming industry. In 2009 and 2010, revenues rose to $530 million and $559 million, respectively, primarily due to the
new gaming regulations allowed under Colorado Amendment 50 which became effective on July 2, 2009.

We may acquire
or develop additional gaming properties in different jurisdictions catering to local gaming patrons in the future, further expanding our geographic diversity.

In November 2003 and 2004, referendums were passed in four localities in Virginia that allowed us to expand our off-track wagering facilities and we currently operate ten. Our strategy for our horse
racing operations is to be a competitive participant in the industry by capitalizing on our unique dirt and turf track facilities for live racing, hosting marquee racing events, and expanding our off-track wagering facility network under appropriate
circumstances. Advanced deposit account wagering, primarily over the internet, is the fastest growing segment of the pari-mutuel wagering industry. Colonial operates its own account wagering platform called EZ Horseplay. Colonial is seeking to
expand EZ Horseplay wagering handle with both traditional customers and customers in non-traditional venues using technology specifically developed for EZ Horseplay.

Our competitive strategies and strengths include:

Generate Repeat Business
by Catering to Local Gaming Patrons. We focus on attracting and fostering repeat business from local gaming patrons at all of our properties. Our strategy for establishing a strong presence with local residents or patrons is to provide a
user-friendly gaming environment featuring convenient locations, high quality food at affordable prices and promotional incentives that reward frequent play. In order to maximize exposure to the local and surrounding communities in the most
cost-effective manner, we utilize computerized slot data tracking systems that allow us to track individual play and payouts and develop mailing lists for special events, contest play and promotions. We also participate in busing programs with
unaffiliated transportation companies to bring patrons from the greater Denver metropolitan area and surrounding communities to our two properties located in Black Hawk, Colorado.

Expand Louisiana Truck Plaza Business. Our strategy of expanding our presence in the Louisiana truck plaza market is driven
by: (i) the consistent revenue each facility generates, (ii) the high return on investment associated with operating the truck plazas, and (iii) the relatively low capital expenditures necessary to maintain the facilities.



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Enter Additional Locals-Oriented Markets. Our management team has a proven
track record of successfully operating casinos that cater to local residents or day trip patrons who reside in close proximity to the properties. In an effort to leverage this operating experience and enter two additional locals-oriented markets, we
acquired Piñon Plaza (subsequently renamed Gold Dust West-Carson City), located in Carson City, Nevada, in June 2006. This facility has 397 slot machines and six table games on its 12,000 square foot gaming floor. We opened a new
casino in Elko, Nevada (Gold Dust West-Elko) on March 5, 2007 that features a 13,000 square-foot casino floor with 342 slot machines and six table games.

Broad Geographic and Asset Diversification. We believe that because of our geographic and asset diversification, we are less dependent on results at a specific property or in a
specific market to generate our cash flow. This geographic diversity helps mitigate our susceptibility to regional economic downturns or weather conditions.

Strong Emphasis on Slot and Video Gaming Revenues. All of our gaming facilities emphasize slot machine or video gaming play, or both. We believe slot machine play to be the fastest
growing, most consistently profitable and lowest risk segment of the gaming entertainment business. We offer a wide variety of games to attract customers and encourage them to play for longer periods of time, thereby promoting the stability of our
gaming revenue. We intend to maximize slot and video gaming revenue by continuing to invest in state-of-the art equipment and systems and replacing older models with the most current product offerings in appropriate markets. In addition, we believe
that the introduction in 2009 of new table games, higher bet limits and 24-hour gaming in our Colorado casinos has helped us to maintain our competitive edge in that market.

Significant Barriers to Entry. There are significant regulatory and other barriers to entry in each of the markets in which we operate. The gaming industry in each of our markets is
governed by a state gaming commission. In order to enter the gaming industry in any of our markets, a potential new entrant must work through a costly and lengthy regulatory process, which could last anywhere from 12 to 18 months depending on
jurisdiction and type of gaming. Beyond the regulatory barriers, the need for significant investments of time and capital also restricts potential new entrants. The discussion that follows provides a sample of the specific barriers to entry in each
of our markets.

In the Black Hawk, Colorado market, barriers to entry include: (i) the scarcity of land available for
development within the approved gaming district, which is defined in the state constitution, the Gaming Commissions regulations and the City of Black Hawks ordinances, and (ii) the high cost of acquiring land and constructing new
gaming facilities.

There are stringent licensing requirements and substantial licensing and compliance expenses attendant to
commencing and conducting gaming operations in Nevada.

In Louisiana, the barriers to entry include restrictions that require
truck plaza video gaming facilities to meet specified minimum levels of diesel and total fuel sales, have a specified minimum site acreage and conduct restaurant operations not fewer than 12 hours per day and to keep a convenience store open 24
hours per day. These restrictions also prohibit the operation of more than 50 video gaming machines at any location and require truck plaza video gaming facilities to be located only in those parishes that voted to continue video gaming during a
one-time statewide referendum in 1996. Additional barriers to entry are disclosed below in Gaming Regulation and LicensingLouisiana.

In Virginia, in all but the county in which we operate and one additional county, any potential operator of any competing horse racing track would need to secure passage of a referendum in the locale in
which the track is to be operated. In addition, an unlimited racetrack owners and operators license is required in order to have off-track wagering facilities. Off-track wagering facilities can be opened only in the current jurisdictions
in which we operate without passage of additional referendums. The number of off-track wagering facilities is limited by statute to a statewide total of 10 and we currently operate 10. The high cost of building a new racetrack in Virginia presents
an additional barrier in that state.



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Strong, Experienced Management Team.Our senior management team is an
experienced group of industry veterans. Jeffrey P. Jacobs, our Chairman and Chief Executive Officer, has been Black Hawk Gamings Chief Executive Officer since November 1996 and the Chief Executive Officer of Colonial Holdings, Inc.
(Colonial), our wholly owned subsidiary, since March 1997. Stephen R. Roark, our President, has been Black Hawk Gamings President since September 1995 and was its Chief Financial Officer from 1993 to 2006. Ian M. Stewart,
our President of Pari-Mutuel Wagering Operations, has been President of Colonial since November 1998 and its Chief Financial Officer since June 1997. Michael T. Shubic, our Chief Operating Officer, has over 35 years of experience in the
gaming industry and has been with us since 2002. Brett A. Kramer, our Chief Financial Officer, has over 15 years experience with us in various financial capacities. Stanley Politano, our Executive Vice President, also has over 15 years of experience
in the gaming industry. The five general managers of our casinos have numerous years of casino management experience and report to Mr. Shubic. The Vice President of Louisiana Operations oversees our truck plaza video gaming operations, has over
15 years of experience in the truck plaza video gaming business and also reports directly to Mr. Shubic. We believe the expertise and experience of our management team enables us to enhance the operation of our existing properties and any
properties we may acquire in the future.

Our Properties and Operations

The Lodge CasinoBlack Hawk, Colorado. The Lodge Casino in Black Hawk, Colorado, which commenced operations in
June 1998, is one of 17 casinos located in the gaming district of Black Hawk. The Lodge serves the greater Denver metropolitan area, which is located 40 miles east of Black Hawk and has a population of approximately 2.4 million, as well as
customers from nearby communities such as Boulder and Fort Collins, Colorado and Cheyenne, Wyoming. As of December 31, 2010, the Black Hawk market had approximately 8,200 slot machines and approximately 200 table games generating $559 million
in revenues for the year then ended. The Lodge is one of the largest gaming facilities in the market.

The Lodge is located on
a 2.5 acre site that abuts State Highway 119, with approximately 28,000 square feet of gaming space on three floors containing 970 slot machines and 35 table games (including 19 poker tables, 12 black jack tables, 2 roulette tables and 2 craps
tables), 50 hotel rooms, four restaurants, three bars and on-site parking for approximately 600 vehicles. Our property includes The White Buffalo Grille, Seasons Buffet, Jakes Deli and Java and Crèmes.

We utilize computerized slot data tracking systems that allow us to track individual play and payouts and develop mailing lists for
special events, contest play and promotions. The Lodge participates in busing programs with unaffiliated transportation companies who transport patrons to Black Hawk/Central City from the market areas described above. Black Hawk Gaming has obtained
an exemption as a common carrier from the Colorado Public Utilities Commission and may elect to operate its own busing program in the future.

During 2008, we provided financial support for a proposed constitutional amendment (Colorado Amendment 50) to increase the types of table games, wagering limits and hours of operation at
Colorado casinos. For the year ended December 31, 2008, we funded a total of $1.4 million in support of this amendment. Colorado residents approved the proposed constitutional amendment on November 4, 2008. The amendment was subsequently
voted upon and approved by the residents of each of the three gaming towns in Colorado (Black Hawk, Central City and Cripple Creek). The new gaming regulation, which became effective on July 2, 2009 at Colorado casinos, allows for the
introduction of craps and roulette, increases the maximum wager limit to one hundred dollars, allows 24-hour gaming operations, and set a maximum gaming tax rate of 20%. For further discussion, see Item 7 Managements Discussion and
Analysis of Financial Condition and Results of Operations.

The Gilpin CasinoBlack Hawk, Colorado.
The Gilpin Casino, which commenced operations in October 1992, is located on a one-acre site in the central Black Hawk gaming district. We expanded our facility through the acquisition of an adjacent casino in early 1994 and we further expanded
the casino in 2005. We were one of the first casinos opened in Colorado following the legalization of casino gaming in 1991. We offer 398 slot machines and 6 table games, including 4 black jack tables, 1 roulette table and 1 craps table. On
March 15, 2010, we closed the Gilpin poker room. The Gilpin has one restaurant, Lucilles, two bars and a slot club. The Gilpin utilizes busing and other promotional programs, similar to those of The Lodge. We have available to our
customers approximately 200 surface parking spaces in the heart of historic Black Hawk.



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Gold Dust West-RenoReno, Nevada. Gold Dust West-Reno, which we acquired
in 2001, is located on 4.6 owned and leased acres in Renos central downtown gaming district and has been operating since 1978. Gold Dust West-Reno caters to residents of Reno and surrounding areas and has approximately 17,500 square feet of
gaming space, which offers 475 slot machines. Gold Dust West-Reno also features The Grille Restaurant and has parking for 365 vehicles. The property currently offers 27 hotel rooms.

Gold Dust West-Carson CityCarson City, Nevada. On June 25, 2006, we closed an agreement with Capital City
Entertainment, Inc. (CCI), an unaffiliated party, under which we acquired all of the assets of Piñon Plaza, a division of CCI which we have now re-branded as Gold Dust West-Carson City. The assets included all of the personal
property, buildings and improvements used by Piñon Plaza in the operation of its casino, hotel, bowling alley and RV park in Carson City, Nevada. Contemporaneously, we entered into a triple net ground lease covering land underlying the assets
which began upon closing of the asset purchase agreement.

Gold Dust West-Carson City, which commenced operations in 1995, is
a 146,000 square foot facility located on approximately 18 acres covered by the land lease mentioned above. Gold Dust West-Carson City offers 397 slot machines and six table games, two restaurants, a snack bar and three bars. It has a slot club and
offers various promotional packages, many associated with its 32 bowling lanes. Gold Dust West-Carson City has 146 hotel rooms. It also owns and operates a 48 space RV park as part of the resort. There are approximately 875 parking spaces for Gold
Dust West-Carson Citys casino patrons and hotel guests. On April 1, 2010, we opened a new Mexican restaurant, Olé Olé.

Gold Dust West-ElkoElko, Nevada. On November 14, 2005, we entered into a triple net lease with an unaffiliated party for the lease of a 37,000 square foot building and
approximately six acres of land in Elko, Nevada. Effective November 1, 2010, we entered into the first of three possible five-year renewals of our lease. Annual rent expense is approximately $500,000. We have the right to buy the land and the
building any time through October 2015 for $5.4 million.

We renovated and upgraded the building and installed slot
machines, table games and appropriate food and beverage offerings. We commenced renovation during the third quarter of 2006 and opened the casino on March 5, 2007. Gold Dust West-Elko has approximately 13,000 square feet of gaming space, and
offers 342 slot machines and six table games. Gold Dust West-Elko also has two restaurants, one bar and has parking for 400 vehicles.

Louisiana Gaming Properties.As of March 29, 2011, our truck plaza properties consist of 20 truck plaza video gaming facilities located in Louisiana (of which six are leased). We are
also party to an agreement that entitles us to a portion of the gaming revenues from a 21sttruck plaza (Cashs Truck Plaza and Casino in Lobdell). Each truck plaza features a 24 hour per day convenience store, fueling operations, a restaurant operating not fewer than
12 hours per day, and up to 50 video gaming devices in the casino depending on the level of fuel sales and available space. At December 31, 2010, our truck plaza video gaming facilities had a combined total of 944 video gaming
devices.

The Louisiana truck plazas revenues are comprised of: (i) revenue from video poker gaming machines;
(ii) sales of gasoline and diesel fuel; (iii) sales of groceries, trucker supplies and various items through their convenience stores; (iv) sales of food and beverages in their restaurants and bars; and (v) miscellaneous
commissions on ATMs, pay phones and lottery sales.

The Louisiana video gaming industry consists of video gaming in 31 of
Louisianas 64 parishes. The industry is highly regulated and video gaming machines can only be placed in qualifying bars, restaurants, hotels, satellite wagering facilities and truck plazas. In order to qualify for video gaming, a truck plaza
must offer diesel fuel, gasoline, a convenience store, a restaurant and a place for truck drivers to shower and sleep. Our video gaming machines are located in a separate gaming room that is designed to provide a pleasant casino-like
atmosphere. As of December 31, 2010, Louisiana had 197 licensed video gaming truck plazas.

The Louisiana truck plaza
video gaming market caters primarily to local residents, whom we believe contribute to the vast majority of truck plaza gaming revenue. We believe that most of our video gaming customers live within a five-mile radius of our properties.



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Colonial DownsNew Kent, Virginia. Colonial Downs, which opened in 1997,
is a racetrack in New Kent, Virginia, which primarily conducts pari-mutuel wagering on thoroughbred and harness racing. The track facility was designed to provide patrons with a pleasant atmosphere to enjoy quality horse racing. The outside
grandstand area, located on the first floor of the track facility, has an occupancy capacity of approximately 4,000 patrons. Also located on the first floor of the track facility are simulcast television seating areas, two covered patio areas, two
bars, a large concession food court, gift shop, game room and wagering locations with approximately 72 tellers. The Jockey Club, which is in the main grandstand area located on the third floor of the track facility, includes a full-service dining
area with a seating capacity of 548 patrons, two separate lounge areas, and additional wagering locations with 24 tellers. On the fourth floor is the Turf Club with seating for full service dining for 125 along with 10 luxury suites with skybox
seating and a wagering location with eight tellers. In addition, there is a ballroom with seating for 250 patrons for special events.

The dirt track at Colonial Downs is one and one-quarter miles in length and is one of the largest tracks in the United States. Based on our knowledge of the industry, we believe the 180-foot wide turf
track is the widest turf track in the country, thereby establishing the track as one of the major turf racing facilities in the Mid-Atlantic region. In addition to our racetrack, we presently operate ten satellite wagering facilities in Virginia as
described below. We previously operated nine such facilities until we closed our Chesapeake Military Highway facility in November 2008 in order to consolidate operations with our Chesapeake Indian River Road facility. During 2010, we opened two new
satellite wagering facilities in Richmond, Virginia.

Satellite Wagering Facilities, Virginia. In addition to
our racetrack facility, we operate ten satellite wagering facilities in Virginia (five are leased). These facilities provide simulcast pari-mutuel wagering on thoroughbred and harness racing from our racetrack and selected other racetracks
throughout the United States. Our satellite wagering facilities are located in Alberta, Chesapeake, Hampton, Martinsville, Weber City, Vinton, and four in Richmond. These facilities employ state-of-the-art audio/video technology for receiving
quality import simulcast thoroughbred and harness racing from nationally known racetracks. The Virginia Racing Commission cannot grant licenses for more satellite wagering facilities under existing legislation.

The facilities are structured to accommodate the needs of various patrons, from the seasoned handicapper to the novice wagerer, and
provide patrons with a comfortable, upscale environment including a full bar and a range of restaurant services. In addition, self-serve automated wagering equipment is available to patrons in order to make wagering more user-friendly to the novice
and more efficient for the expert. This equipment, with touch-screen interactive terminals and personalized portable wagering terminals, provides patrons with current odds information and enables them to place wagers and credit winning tickets to
their accounts without waiting in line.

In 2003, the legislature of the Commonwealth of Virginia passed a statute authorizing
the Virginia Racing Commission to grant licenses and thereafter regulate account wagering in Virginia. Each year, the Virginia Racing Commission licenses advance deposit account wagering providers, including Colonial Downs, to accept wagers over the
telephone or through the internet via the providers advanced deposit wagering system. For 2010, five providers (including Colonial Downs) have been licensed. Colonial receives a share of source market fees for wagers placed by Virginians
through these account wagering service providers. Effective January 1, 2010, the Virginia General Assembly amended the statutory provisions relating to account wagering to set the source market fee for wagers originating from Virginia at 10% of
such wagers. Colonial shares the source market fee equally with the recognized majority horsemens groups.

Since 2004,
Colonial Downs has operated an internet account wagering platform in Virginia called EZ Horseplay. In early 2009, Colonial Downs commenced development of a custom built account wagering support kiosk that allows a customer to remotely open a
wagering account, fund the account with cash, take a cash withdrawal from their account and print a race track program. The first kiosks, along with a touchscreen version of the EZ Horseplay internet account wagering platform, were deployed in
September 2009. As of December 31, 2010, we have deployed approximately 30 kiosks in private clubs, bars and restaurants in Virginia.

The Nautica Properties. During July 2006, we acquired from affiliated parties options to lease and options to purchase six businesses and their related assets, including various parcels of
land, buildings and related improvements, on the west bank of the Cuyahoga River in Cleveland, Ohio. We refer to these businesses and their related assets, covering an aggregate of approximately 624,000 square feet of land (14.4 acres) and a
building comprised of 47,380 square feet of net rentable space, as the Nautica Properties.



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On April 1, 2008, we acquired a business and its related assets, referred to as
Lot D, for $800,000. The company that owned this business was wholly owned by our Chairman and Chief Executive Officer (CEO). On January 21, 2009, we acquired a second Nautica Properties based business and its related
assets, referred to as Sugar Warehouse, for $2,450,000 from the limited partnership that owned this building. An affiliate of our CEO owned 82% of the general partner interests and 16.4% of the limited partner interests of the seller.

On August 16, 2010, we acquired a third Nautica Properties based business and its related assets, referred to as
Flats, for $2,800,000. Flats was controlled by the mother and sister of our CEO, and is therefore deemed to be an entity under common control. See Item 13 Certain Relationships and Related Transactions, and Director
Independence.

In July 2010, we amended the three remaining unexercised option agreements and extended the option
periods to July 11, 2012, giving us the right to purchase or enter into long-term leases on the three remaining Nautica Properties businesses and their related assets.

On January 18, 2011, we exercised one of these remaining option agreements and acquired a fourth Nautica Properties based business and its related assets, referred to as Nautica Phase 2,
for $1,250,000 from a limited partnership. The general partner owned 1% and the limited partner owned 99% of the limited partnership. Our CEO owned 58% of the general partner interests and controlled the partnership. Third parties owned the
remaining 42% of the general partner interests and the 99% limited partnership interest. The acquisition of this business will be accounted for as a combination of entities under common control during 2011.

The remaining two unexercised Nautica Properties options require aggregate option payments totaling $100,000 per year. Our CEO owns
varying interests in the two remaining parcels. Although we may elect not to exercise the remaining options unless casino gaming opportunities arise, we nonetheless have the right to acquire all or part of the remaining Nautica Properties for other
purposes. If we decide to exercise our two remaining options, the aggregate annual lease payments on the remaining two parcels would be $230,000. If both remaining parcels are purchased, the total purchase price would be $2.3 million. The purchase
price and rent payments would be increased based on independent appraisals of the land, improvements and other asset values if, in the future, a casino were to be licensed on the Nautica Properties.

During 2009, we provided financial support to oppose a proposed constitutional amendment in Ohio (Issue 3) that would allow
for one casino each at designated locations in Cincinnati, Cleveland, Columbus and Toledo and distribute to all Ohio counties a tax on the casinos. For the year ended December 31, 2009, we provided financial support totaling $2.3 million to
oppose Issue 3. On November 3, 2009, Issue 3 was passed in Ohio which permits casino gaming at the locations designated in the amendment. None of the designated locations is owned by JEI or its affiliates.

Seasonality and Weather Conditions

Seasonality and weather conditions can affect our results of operations. Winter travel conditions can adversely affect patronage and revenues at our Colorado and Nevada casinos. Although casino business
is not seasonal, levels of gaming activity increase significantly during weekends and holidays, especially holiday weekends. Hurricanes Katrina and Rita temporarily affected our truck plaza video gaming operations in late 2005, while Hurricanes
Gustav and Ike temporarily affected our truck plaza video gaming operations in late 2008. Similar hurricanes could have a material adverse effect on our Louisiana operations in future years. Our pari-mutuel wagering revenues are higher during
scheduled live racing than at other times of the year. Adverse weather conditions can cause cancellation of or curtail attendance at outdoor races, thereby reducing wagering and our revenues. Attendance and wagering at both outdoor races and
satellite wagering facilities can be harmed by holidays and other competing seasonal activities.



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Competition

General. We face intense competition in each of the markets in which we operate. Our existing gaming facilities compete directly with other gaming properties and activities in and near
Colorado, Nevada, Louisiana and Virginia. We expect this competition to increase as new gaming operators enter our markets, existing competitors expand their operations, gaming activities expand in existing jurisdictions and gaming is legalized in
new jurisdictions. Several of our competitors have significantly better name recognition and more marketing and financial resources than we do. We cannot predict with any certainty the effects of existing and future competition on our operating
results.

We compete with other forms of gaming and entertainment such as bingo, pull-tab games, card parlors, sports books,
pari-mutuel or telephonic betting on horse racing and dog racing, state-sponsored lotteries, video lottery terminals, and video poker terminals. We may compete with gaming from other venues including internet gaming, although its legality is
presently unclear.

We also compete with gaming operators in other gaming jurisdictions such as Las Vegas, Nevada, and
Atlantic City, New Jersey. Our competition includes casinos located on Native American reservations throughout the United States, which have the advantage of being exempt from certain state and federal taxes. Some Native American tribes are either
establishing or are considering the establishment of gaming at additional locations. Expansion of existing gaming jurisdictions and the development of new gaming jurisdictions and casinos on Native American-owned lands would increase competition for
our existing and future operations. In addition, increased competition could limit new opportunities for us or result in the saturation of certain gaming markets. See Item 1A Risk FactorsCompetition below.

Casino Properties. We believe the primary competitive factors in the Black Hawk, Colorado, market are location,
availability and convenience of parking; number and types of slot machines and gaming tables; types and pricing of amenities, including food; name recognition; overall atmosphere; and customer service. We believe our Colorado casinos generally
compete favorably based on these factors.

Our Colorado casinos are on opposite sides of Main Street in Black Hawk. Because of
their proximity, our Black Hawk casinos compete for some of the same customers. Further, there were 15 other casinos operating in Black Hawk on December 31, 2010. There were approximately 8,400 total gaming devices (slot machines, poker, black
jack, craps and roulette tables) in Black Hawk as of December 31, 2010.

Central City is located adjacent to Black Hawk
and provides the most direct competition to the gaming establishments in Black Hawk. There were seven casinos operating in Central City with approximately 2,200 total gaming devices as of December 31, 2010. Black Hawk has historically enjoyed a
competitive advantage over Central City in large part because access by State Highway 119 (formerly the only major access to Black Hawk from the Denver metropolitan area and Interstate 70) requires customers to drive by and, in part, through
Black Hawk to reach Central City. In late 2004, Central City constructed a road from I-70 directly into Central City, commonly referred to as the Central City Parkway. It is now possible for certain traffic that passed through Black Hawk to proceed
directly to Central City from Interstate 70. Nonetheless, motorists driving from the Denver metropolitan area still have the option of choosing to go either to Black Hawk or Central City without having to drive through the other town.

Large, well-financed companies have entered the Black Hawk and other Colorado markets and others may enter through the purchase or
expansion of existing facilities, which could have a material adverse effect on our results of operations and financial position. For example, on January 1, 2005, Ameristar Casinos, Inc. purchased a facility, formerly known as the Mountain
High Casino, which is directly across the street from The Lodge, and completed construction of a 536 hotel room tower in the fourth quarter of 2009, a convention center, and other amenities. Under Ameristars ownership, this facility has
been expanded to approximately 1,500 slot machines and 40 table games, and a parking garage accommodating 1,500 vehicles. No other casinos are currently under construction in Black Hawk. In 2003, the Isle of Capri Casinos, Inc. purchased
Colorado Central Station, located diagonally across the street from its existing facility and subsequently completed a major renovation and expansion project physically linking the two properties. The combined casinos are the largest in Black Hawk
with approximately 1,650 slot machines, 41 table games, 402 hotel rooms and 2,300 parking spaces. The Isle of Capri is noted for its aggressive marketing programs. The Mardi Gras casino, which is next to The Lodge, was purchased in 2005 and the
owners have developed and implemented new marketing programs.



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Our Gold Dust West Casino-Reno encounters strong competition from large hotel and casino
facilities and smaller casinos similar in size to our Gold Dust West-Reno in the Reno area, which includes Sparks, Nevada. There is also competition from gaming establishments in other towns and cities in Nevada and from Native American gaming
facilities located near Sacramento, California. Our Gold Dust West-Carson City and Gold Dust West-Elko, Nevada casinos face competition from several casinos in those cities and many other venues in Nevada.

Truck Plaza Operations. Our Louisiana truck plaza operations face competition from land-based and riverboat casinos
throughout Louisiana and on the Mississippi Gulf Coast, casinos on Native American lands and other non-casino gaming opportunities within Louisiana. The Louisiana Riverboat Economic Development and Gaming Control Act limits the number of gaming
casinos in Louisiana to 15 riverboat casinos statewide and one land-based casino in New Orleans. All 15 available riverboat licenses are issued, however, only 13 are currently operational.

Our video gaming operations also face competition from other truck plaza video gaming facilities located in surrounding areas, as well as
competition from Louisiana horse racing facilities, some of which have been authorized to operate video gaming machines, and restaurants and bars with video gaming machines. As of December 31, 2010, there were 197 truck plazas in Louisiana
licensed to operate video gaming devices.

Horse Racing and Pari-Mutuel Wagering Operations. We compete
with racetracks located outside Virginia (including several in Delaware, Maryland, New Jersey, New York, Pennsylvania, and West Virginia, all of which augment their purses with slot machine or other gaming revenues) and other forms of gaming, such
as land-based casinos, including those in Atlantic City, and statewide lotteries in Virginia and neighboring states. The possible legalization of other forms of gaming in Virginia, such as Native American or riverboat casinos, could have an adverse
effect on our performance. Although bills for the creation of riverboat casinos have failed in the Virginia legislature, proponents of riverboat gaming and other forms of gaming in Virginia may continue to seek legislative approval, in
particular to offset anticipated budget deficits. Additionally, certain Native American tribes are seeking federal recognition (through legislation currently pending in the U.S. Senate) which, if successful, could result in additional gaming venues.
Similarly, the expansion of other forms of gaming in neighboring states, such as table games in West Virginia and slot machines in Maryland, could have an adverse effect on our performance.

We have competed and will compete for wagering dollars and simulcast fees with live racing and races simulcast from racetracks in other
states, particularly racetracks in neighboring states such as Charles Town in West Virginia, Pimlico Race Course and Laurel Park in Maryland, and Delaware Park in Delaware. We believe that our existing agreements will continue to promote
coordination of thoroughbred events between Maryland and Virginia. However, if the Virginia or Maryland Racing Commissions do not approve either partys proposed racing days, or if the Virginia-Maryland thoroughbred racing circuit is otherwise
unsuccessful, our track may have to compete directly with Pimlico Race Course and Laurel Park in Maryland.

We also compete
for wagering dollars with account wagering companies operating both legally and illegally in Virginia. These companies take wagers from Virginians both over the phone and the internet. We believe legislation which went into effect January 1,
2010 will provide us with fair compensation for the activities of licensed providers. Unlicensed account wagering companies have lower costs than Colonial and thus are able to attract customers in Virginia with large wagering rebates.

Employees and Labor Relations

As of December 31, 2010, we had approximately 1,000 full-time and part-time employees at our facilities in Black Hawk, Colorado, and Reno, Carson City, and Elko, Nevada, 300 year-round and 500
seasonal employees at our facilities in Virginia and 400 employees at our facilities in Louisiana. Employees include cashiers, dealers, food and beverage service personnel, facilities maintenance, security, valet, accounting, marketing, and
personnel services. We consider relations with our employees to be good.



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None of our employees are presently represented by any union or other labor organization.
See Risk Factors under Item 1A below.

Regulation

Gaming Regulation and LicensingColorado

The State of Colorado
created the Colorado Division of Gaming within the Department of Revenue to license, implement, regulate and supervise the conduct of limited stakes gaming. The Division, under the supervision of the Gaming Commission, has been granted broad power
to ensure compliance with Colorado law and regulations adopted thereunder (collectively, the Colorado Regulations). The Division may inspect, without notice, premises where gaming is being conducted; may seize, impound or
remove any gaming device; may examine and copy all of a licensees records; may investigate the background and conduct of licensees and their employees; and may bring disciplinary actions against licensees and their employees.
For cause, the Division may suspend or revoke any license. The Division may also conduct detailed background checks of persons who lend money to or invest money in a licensee.

It is illegal to operate a gaming facility without a license issued by the Gaming Commission. The Gaming Commission is empowered to issue
five types of gaming and gaming-related licenses. The licenses are revocable and nontransferable. Our failure or inability to obtain and maintain necessary gaming licenses would have a material adverse effect on its gaming operations.

The Colorado casinos were granted retail/operator licenses concurrently with their openings. The licenses are subject to continued
satisfaction of suitability requirements and must be renewed biyearly. The current licenses for both Colorado casinos were renewed on April 16, 2009. There can be no assurance that the Colorado casinos can successfully renew their licenses in a
timely manner every other year.

All persons employed by us in Colorado who are involved, directly or indirectly, in gaming
operations in Colorado also are required to obtain various forms of gaming licenses. Key licenses are issued to key employees, which include any executive, employee or agent of a licensee having the power to exercise a significant
influence over decisions concerning any part of the operations of a licensee. At least one key license holder must be on the premises of each Colorado casino at all times that a casino is open for business.

The Gaming Commission closely regulates the suitability of persons owning or seeking to renew an interest in a gaming license, and the
suitability of a licensee can be adversely affected by persons associated with the licensee. Additionally, any person or entity having any direct interest in our subsidiary Black Hawk Gaming & Development Company, Inc. (Black Hawk
Gaming) or any casino directly or indirectly owned by Black Hawk Gaming may be subject to administrative action, including personal history and background investigations. The actions of persons associated with Jacobs
Entertainment, Inc., such as its shareholders, its officers, directors, management or employees, could jeopardize any licenses held by Black Hawk Gaming. All of Black Hawk Gamings directors are required to be found suitable as associated
persons.

As a general rule, under the Colorado Regulations, it is a criminal violation for any person to have a legal,
beneficial, voting or equitable interest, or right to receive profits in more than three retail/operator gaming licenses in Colorado. Black Hawk Gaming has an interest in two such licenses. Any expansion opportunities that we may have in
Colorado are limited to one more license.

The Colorado Division of Gaming may require any person having an interest in a
licensee or an applicant for a license to provide background information, information on sources of funding, and a sworn statement that the interested person or applicant is not holding that interest for another party. The Gaming Commission may, at
its discretion, require any person having an interest in a licensee to undergo a full background investigation and to pay for that investigation in the same manner as an applicant for a license. A background investigation includes an examination of
ones personal history, financial associations, character, record, and reputation, as well as the people with whom a person has associated.



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The Gaming Commission has the right to request information from any person directly or
indirectly interested in, or employed by, a licensee, and to investigate the moral character, honesty, integrity, prior activities, criminal record, reputation, habits and associations of (i) all persons licensed pursuant to the Colorado
Limited Gaming Act, (ii) all officers, directors and stockholders of a licensed privately held corporation, (iii) all officers, directors and stockholders holding either a 5% or greater interest or a controlling interest in a licensed
publicly traded corporation, (iv) any person who as agent, consultant, advisor or otherwise, exercises a significant influence upon the management or affairs of a publicly traded corporation, (v) all general partners and all limited
partners of a licensed partnership, (vi) all persons that have a relationship similar to that of an officer, director or stockholder of a corporation (such as members and managers of a limited liability company), (vii) all persons
supplying financing or lending money to any licensee connected with the establishment or operation of limited gaming, and (viii) all persons having a contract, lease or ongoing financial or business arrangement with any licensee, if such
contract, lease or arrangement relates to limited gaming operations, equipment, devices or premises.

If the Gaming Commission
determines that a person or entity is not suitable to own a direct or indirect voting interest in Black Hawk Gaming or Jacobs Entertainment, Black Hawk Gaming or Jacobs Entertainment may be sanctioned unless the person or entity disposes of its
voting interest. Sanctions may include the loss of the casino licenses and financial penalties. In addition, the Colorado Regulations prohibit a licensee or any affiliate of a licensee from paying dividends, interest or other remuneration to
any person found to be unsuitable, or recognizing the exercise of any voting rights by any person found to be unsuitable. The Colorado Regulations require an operating casino licensee to include in its corporate charter provisions that permit the
repurchase of the voting interests of any person found to be unsuitable. Black Hawk Gamings Articles of Incorporation include the required provisions.

The Gaming Commission also has the power to require Black Hawk Gaming to suspend or dismiss its officers, directors and other key employees or sever relationships with other persons who refuse to file
appropriate applications or who are found to be unsuitable to act in such capacities. The Commission or the Director of the Division of Gaming may review a licensees gaming contracts, require changes in the contract before the
licensees application is approved or participation in the contract is allowed, and require a licensee to terminate its participation in any gaming contract.

The Gaming Commission has enacted Rule 4.5, which imposes requirements on publicly traded corporations holding gaming licenses in Colorado and on gaming licenses owned directly or indirectly by a
publicly traded corporation, whether through a subsidiary or intermediary company. The term publicly traded corporation includes corporations, firms, limited liability companies, trusts, partnerships and other forms of business
organizations. Such requirements automatically apply to any ownership interest held by a publicly traded corporation, holding company or intermediary company thereof, when the ownership interest directly or indirectly is, or will be upon approval of
the Gaming Commission, 5% or more of the entire licensee. In any event, if the Gaming Commission determines that a publicly traded corporation, or a subsidiary, intermediary company or holding company has the actual ability to exercise influence
over a licensee, regardless of the percentage of ownership possessed by that entity, the Gaming Commission may require the entity to comply with the disclosure regulations contained in Rule 4.5.

Under Rule 4.5, gaming licensees, affiliated companies and controlling persons commencing a public offering of voting securities
must notify the Gaming Commission no later than ten business days after the initial filing of a registration statement with the Securities and Exchange Commission. Licensed publicly traded corporations are also required to send proxy statements to
the Division of Gaming within five days after their distribution. Licensees to whom Rule 4.5 applies must include in their charter documents provisions that: restrict the rights of the licensees to issue voting interests or securities except in
accordance with the Colorado Gaming Act and the Colorado Regulations; void the transfer of voting securities or other voting interests issued in violation of the Colorado Gaming Act and the Colorado Regulations until the issuer ceases to be subject
to the jurisdiction of the Gaming Commission or until the Gaming Commission, by affirmative act, validates the transfer; and provide that holders of voting interests or securities of licensees found unsuitable by the Gaming Commission may, within 60
days of such finding of unsuitability, be required to sell their interests or securities back to the issuer at the lesser of the cash equivalent of the holders investment or the market price as of the date of the finding of unsuitability.
Alternatively, the holders may, within 60 days after the finding of unsuitability, transfer the voting interests or securities to a person suitable to the Gaming Commission. Until the voting interests or securities are held by suitable



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persons, the issuer may not pay dividends or interest, the securities may not be voted, they may not be included in the voting or securities of the issuer, and the issuer
may not pay any remuneration in any form to the holders of the securities.

Notification must be given to the
Division of Gaming of the acquisition of direct or indirect beneficial ownership of:



| |  |  | 5% or more of any class of voting securities of a publicly traded corporation that is required to include in its articles of organization the
Rule 4.5 charter language provisions; or
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 5% or more of the beneficial interest in a gaming licensee directly or indirectly through any class of voting securities of any holding company or
intermediary company of a licensee, referred to as qualifying persons.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Owners of any such interests,
whether owned individually or in association with others, are subject to a finding of suitability. Notification must be made by persons acquiring these interests. Such persons must submit all requested information to the Division of Gaming, are
subject to a finding of suitability as required by the Division of Gaming or the Gaming Commission, and must be informed of these requirements by the licensee. A person other than an institutional investor whose interest equals 10% or more of a
publicly traded corporation or a 10% beneficial interest in a gaming licensee must apply to the Gaming Commission for a finding of suitability within 45 days after acquiring such securities.

An institutional investor who, individually or in association with others, acquires, directly or indirectly, the beneficial ownership of
15% or more of any class of voting securities or 15% of the beneficial interest in a gaming licensee must apply to the Gaming Commission for a finding of suitability within 45 days after acquiring such interests.

Licensees must also notify any qualifying persons of these requirements. Whether or not so notified, qualifying persons are responsible
for complying with these requirements.

The Colorado Regulations also provide for exemption from the requirements for a
finding of suitability when the Gaming Commission finds such action to be consistent with the purposes of the Colorado Gaming Control Act. The Gaming Commission may determine that anyone with a material relationship to, or material involvement
with, a licensee or an affiliated company must apply for a finding of suitability or must apply for a key employee license.

Pursuant to Rule 4.5, persons found unsuitable by the Gaming Commission must be removed immediately from any position as an officer,
director, or employee of a licensee, or of a holding or intermediary company. Such unsuitable persons also are prohibited from any beneficial ownership of the voting securities of any such entities. Licensees, or affiliated entities of licensees,
are subject to sanctions for paying dividends or distributions to persons found unsuitable by the Gaming Commission, or for recognizing voting rights of, or paying a salary or any remuneration for services to, unsuitable persons. Licensees or their
affiliated entities also may be sanctioned for failing to pursue efforts to require unsuitable persons to relinquish their interests. The Gaming Commission must provide prior approval of any sale, lease, purchase, conveyance, or acquisition of
an interest in a casino licensee, except as provided in Rule 4.5 relating to publicly traded corporations.

Prior to
July 2, 2009, Colorado casinos could operate only between 8:00 a.m. and 2:00 a.m. Slot machines, black jack, poker and other approved variations of those games and video poker were the only permitted games, with a maximum
single wager of $5. On November 4, 2008, Colorado Amendment 50 was approved by Colorado voters and was subsequently voted upon and approved by each of the three gaming towns in Colorado (Black Hawk, Central City and Cripple Creek). The new
gaming rules, which became effective on July 2, 2009 at Colorado casinos, allowed for the introduction of craps and roulette, increased the maximum single wager limit to $100, allows 24-hour gaming operations, and prohibit changes in existing
tax levels (currently, a series of graduated tax rates, with a maximum gaming tax rate of 20% on adjusted gross proceeds over $13 million) unless such changes are approved by a statewide vote. For further discussion, see Item 7
Managements Discussion and Analysis of Financial Condition and Results of Operations.



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The recent voter-approved amendment did not affect constitutional restrictions on the
percentage of space a casino may use for gaming  50% of any floor and 35% of the overall square footage of the building in which the casino is located. Also, it did not change the age-related restrictions for casinos, namely, that only
individuals who are 21 years or older may gamble or consume alcohol on the casino premises. Finally, Colorado casinos may not extend credit to any gaming patrons.

Gaming Regulation and LicensingNevada

The ownership and
operation of casino gaming facilities in Nevada, including the Nevada casino operated by Jacobs Entertainments direct and indirect subsidiaries Gold Dust West Casino, Inc. (Gold Dust West), Jacobs Piñon Plaza
Entertainment, Inc. (Piñon Plaza) and Jacobs Elko Entertainment, Inc. (Elko) (collectively, the Nevada Gaming Subsidiaries), are subject to the Nevada Gaming Control Act and the regulations promulgated
thereunder (the Nevada Act) and to the licensing and regulatory control of the Nevada Gaming Commission (the Nevada Commission), the Nevada State Gaming Control Board (the Nevada Board), and various local
ordinances and regulations, including, without limitation, those of the cities of Reno, Carson City and Elko, Nevada (collectively, the Nevada Gaming Authorities).

The laws, regulations and supervisory procedures of the Nevada Gaming Authorities are based upon declarations of public policy which are concerned with, among other things: (i) the prevention of
unsavory or unsuitable persons from having a direct or indirect involvement with gaming at any time or in any capacity; (ii) the establishment and maintenance of responsible accounting practices and procedures; (iii) the maintenance of
effective controls over the financial practices of licensees, including the establishment of minimum procedures for internal fiscal affairs and the safeguarding of assets and revenues, providing reliable record keeping and filing periodic reports
with the Nevada Gaming Authorities; (iv) the prevention of cheating and fraudulent practices; and (v) providing a source of state and local revenues through taxation and licensing fees. Change in such laws, regulations and procedures could
have an adverse effect on Jacobs Entertainments Nevada gaming operations.

The Nevada Gaming Subsidiaries have been
licensed by the Nevada Gaming Authorities as corporate licensees. Gaming licenses require the periodic payment of fees and taxes and are not transferable. Jacobs Entertainments parent company, Jacobs Investments, Inc. (Jacobs
Investments or JII), has been registered by the Nevada Commission as a holding company and has been found suitable to own Jacobs Entertainments stock. Black Hawk Gaming has been registered by the Nevada Commission as an
intermediary company and has been found suitable to own the stock of Gold Dust West. Jacobs Entertainment has been registered by the Nevada Commission as a publicly traded corporation (a Registered Corporation) and has been found
suitable as the sole shareholder of Black Hawk Gaming, Piñon Plaza and Elko. Registered Corporations, registered intermediary companies, and corporate licensees are required periodically to submit detailed financial and operating reports to
the Nevada Commission and furnish any other information that the Nevada Commission may require. Substantially all material loans, leases, sales of securities and similar financing transactions by Jacobs Investments, Jacobs Entertainment, Black
Hawk Gaming, and the Nevada Gaming Subsidiaries must be reported to or approved by the Nevada Commission. No person may become a stockholder of, or holder of an interest in, or receive any percentage of profits from a corporate licensee without
first obtaining licenses and approvals from the Nevada Gaming Authorities. The controlling shareholders, directors and certain officers of Jacobs Investments, Jacobs Entertainment, Black Hawk Gaming, and the Nevada Gaming Subsidiaries have obtained
from the Nevada Gaming Authorities the various registrations, findings of suitability, approvals, permits and licenses that are required in order to engage in gaming activities in Reno, Carson City and Elko, Nevada.

The Nevada Gaming Authorities may investigate any person who has a material relationship to, or material involvement with, Jacobs
Investments, Jacobs Entertainment, Black Hawk Gaming, or the Nevada Gaming Subsidiaries in order to determine whether that individual is suitable or should be licensed as a business associate of a gaming licensee. The officers, directors and
shareholders of Jacobs Investments and Jacobs Entertainment must file applications with and be licensed or found suitable by the Nevada Gaming Authorities. The officers, directors and certain key employees of the Nevada Gaming Subsidiaries must file
applications with and may be required to be licensed or found suitable by the Nevada Gaming Authorities. The officers, directors and key employees of Jacobs



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Investments, Jacobs Entertainment and Black Hawk Gaming who are actively and directly involved in the gaming activities of the Nevada Gaming Subsidiaries may be required to be licensed or
found suitable by the Nevada Gaming Authorities. The Nevada Gaming Authorities may deny an application for licensing for any cause that they deem reasonable. A finding of suitability is comparable to licensing, and both require submission of
detailed personal and financial information followed by a thorough investigation. The applicant for licensing or a finding of suitability must pay all the costs of the investigation. Changes in licensed positions must be reported to the Nevada
Gaming Authorities and, in addition to their authority to deny an application for a finding of suitability or licensure, the Nevada Gaming Authorities have jurisdiction to disapprove a change in a corporate position.

If the Nevada Gaming Authorities were to find an officer, director or key employee unsuitable for licensing or unsuitable to continue
having a relationship with Jacobs Investments, Jacobs Entertainment, Black Hawk Gaming or the Nevada Gaming Subsidiaries, the companies involved would have to sever all relationships with that person. In addition, the Nevada Commission
may require Jacobs Investments, Jacobs Entertainment, Black Hawk Gaming or the Nevada Gaming Subsidiaries to terminate the employment of any person who refuses to file appropriate applications. Determinations of suitability or of questions
pertaining to licensing are not subject to judicial review in Nevada.

Jacobs Investments, Jacobs Entertainment, Black Hawk
Gaming and the Nevada Gaming Subsidiaries are required periodically to submit detailed financial and operating reports to the Nevada Commission and furnish any other information that the Nevada Commission may require. Substantially material
loans, leases, sales of securities and similar financing transactions of Jacobs Investments, Jacobs Entertainment, Black Hawk Gaming and the Nevada Gaming Subsidiaries must be reported to or approved by the Nevada Commission.

If it were determined that the Nevada Act was violated by Jacobs Investments, Jacobs Entertainment, Black Hawk Gaming Jacobs Investments,
Jacobs Entertainment, Black Hawk Gaming or the Nevada Gaming Subsidiaries, the registrations or gaming licenses that Jacobs Investments, Jacobs Entertainment, Black Hawk Gaming Jacobs Investments, Jacobs Entertainment, Black Hawk Gaming and the
Nevada Gaming Subsidiaries hold could be limited, conditioned, suspended or revoked, subject to compliance with certain statutory and regulatory procedures. In addition, Jacobs Investments, Jacobs Entertainment, Black Hawk Gaming, or the Nevada
Gaming Subsidiaries and the persons involved could be subject to substantial fines for each separate violation of the Nevada Act at the discretion of the Nevada Commission. Further, a supervisor could be appointed by the Nevada Commission to operate
the casinos operated by the Nevada Gaming Subsidiaries and, under certain circumstances, earnings generated during the supervisors appointment (except for reasonable rental value of the casino) could be forfeited to the State of Nevada.
Limitation, conditioning or suspension of the gaming licenses of the Nevada Gaming Subsidiaries or the appointment of a supervisor could (and revocation of any gaming license would) have a material adverse effect on the gaming operations, financial
condition and results of operations of Jacobs Entertainment.

The Nevada Act requires any person who acquires beneficial
ownership of more than 5% of a Registered Corporations voting securities to report the acquisition to the Nevada Commission. The Nevada Act requires that beneficial owners of more than 10% of a Registered Corporations voting securities
apply to the Nevada Commission for a finding of suitability within 30 days after the Chairman of the Nevada Board mails the written notice requiring such filing. However, an institutional investor, as defined in the Nevada Act, that
beneficially owns more than 10% but not more than 11% of a Registered Corporations voting securities as a result of a stock repurchase by the Registered Corporation may not be required to file such an application. Further, an institutional
investor that acquires more than 10% but not more than 25% of a Registered Corporations voting securities may apply to the Nevada Commission for a waiver of a finding of suitability if that institutional investor holds the voting
securities for investment purposes only. An institutional investor that has obtained a waiver may hold more than 25% but not more than 29% of a Registered Corporations voting securities and maintain the waiver where the additional
ownership results from a stock repurchase by the Registered Corporation. An institutional investor will not be deemed to hold voting securities for investment purposes unless the voting securities were acquired and are held in the ordinary course of
business as an institutional investor and not for the purpose of causing, directly or indirectly, the election of a majority of the members of the Registered Corporations board of directors, any change in the Registered Corporations
corporate charter, bylaws, management, policies or operations, or of any of its gaming affiliates, or any other action that the Nevada Commission finds to be inconsistent with holding the Registered Corporations voting securities for
investment purposes only. Activities which are not deemed to be inconsistent with holding voting securities for investment purposes only include: (i) voting on all matters voted on



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by stockholders; (ii) making financial and other inquiries of management of the type normally made by securities analysts for informational purposes and not to cause a change in management,
policies or operations; and (iii) such other activities as the Nevada Commission may determine to be consistent with such investment intent. If the beneficial holder of voting securities who must be found suitable is a corporation,
partnership or trust, it must submit detailed business and financial information, including a list of beneficial owners. The applicant is required to pay all costs of investigation.

Any officer, director or stockholder of a licensed or registered company who fails or refuses to apply for a finding of suitability or a
license within 30 days after being directed to do so by the Nevada Commission or the Chairman of the Nevada Board may be found unsuitable. The same restrictions apply to a record owner of stock if the record owner, after request, fails to
identify the beneficial owner. Any stockholder found unsuitable who holds, directly or indirectly, any beneficial ownership of the stock of a licensed or registered company beyond such period of time as may be prescribed by the Nevada
Commission may be guilty of a criminal offense. A Registered Corporation is subject to disciplinary action if, after it receives notice that a person is unsuitable to be a stockholder or to have any other relationship with the Registered
Corporation, the Registered Corporation (i) pays that person any dividend or interest, (ii) allows that person to exercise, directly or indirectly, any voting right conferred through securities held by that person, (iii) pays
remuneration in any form to that person for services rendered or otherwise, or (iv) fails to pursue all lawful efforts to require that unsuitable person to relinquish its voting securities including, if necessary, the immediate purchase of
the voting securities for cash at fair market value. Additionally, the Cities of Reno, Carson City and Elko, Nevada have the authority to approve all persons owning or controlling the stock of any corporation controlling a gaming licensee operating
in those cities.

The Nevada Commission may, in its discretion, require the holder of any of the debt or similar securities of
a Registered Corporation to file applications, be investigated and be found suitable to own such debt securities if the Nevada Commission has reason to believe that such ownership would otherwise be inconsistent with the declared policies of the
State of Nevada. If the Nevada Commission determines that a person is unsuitable to own those securities, then pursuant to the Nevada Act, a Registered Corporation can be sanctioned, including by revocation of its approvals and those of its
affiliates, if without the prior approval of the Nevada Commission, the Registered Corporation (i) pays to the unsuitable person any dividend, interest, or any distribution whatsoever; (ii) recognizes any voting right by the unsuitable
person in connection with the Registered Corporations securities; (iii) pays the unsuitable person remuneration in any form; or (iv) makes any payment to the unsuitable person by way of principal, redemption, conversion, exchange,
liquidation, or similar transaction.

Jacobs Investments, Jacobs Entertainment, Black Hawk Gaming and the Nevada Gaming
Subsidiaries are required to maintain current stock ledgers in Nevada that may be examined by the Nevada Gaming Authorities at any time. If any securities are held in trust by an agent or by a nominee, the record holder may be required to
disclose the identity of the beneficial owner to the Nevada Gaming Authorities. A failure to make the required disclosure may be grounds for finding the record holder unsuitable. Licensed and registered companies are also required to render
maximum assistance in determining the identity of beneficial owners of their securities. The Nevada Commission has the power to require Jacobs Entertainments stock certificates to bear a legend indicating that the securities are subject to the
Nevada Act. To date, the Nevada Commission has not imposed such a requirement.

Jacobs Investments, Jacobs Entertainment and
Black Hawk Gaming may not make a public offering without the prior approval of the Nevada Commission if the proceeds from the offering are intended to be used to construct, acquire or finance gaming facilities in Nevada, or to retire or extend
obligations incurred for those purposes or for similar transactions. On September 17, 2009, the Nevada Commission granted Jacobs Entertainment prior approval to make public offerings for a period of two years, subject to certain conditions (the
Shelf Approval). The Shelf Approval also applies to any affiliated company wholly owned by Jacobs Entertainment which is a publicly traded corporation or would become a publicly traded corporation pursuant to a public offering. The Shelf
Approval may be rescinded for good cause without prior notice upon the issuance of an interlocutory stop order by the Chairman of the Nevada Board. The Shelf Approval does not constitute a finding, recommendation or approval by any of the
Nevada Gaming Authorities as to the accuracy or adequacy of the offering memorandum or the investment merits of the securities. Any representation to the contrary is unlawful.



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Changes in control of a Registered Corporation through merger, consolidation, stock or asset
acquisitions, management or consulting agreements, or any act or conduct by a person by which it obtains control of a Registered Corporation, may not occur without the prior approval of the Nevada Commission. Entities seeking to acquire control
of a Registered Corporation must satisfy the Nevada Board and Nevada Commission on a variety of stringent standards prior to assuming such control. The Nevada Commission may also require controlling stockholders, officers, directors and other
persons having a material relationship or involvement with the entity proposing to acquire control, to be investigated and licensed as part of the approval process relating to the transaction.

The Nevada legislature has declared that some corporate acquisitions opposed by management, repurchases of voting securities, and
corporate defense tactics affecting Nevada corporate gaming licensees may be injurious to stable and productive corporate gaming. Regulations of the Nevada Gaming Commission provide that control of a Registered Corporation cannot be acquired
through a tender offer, merger, consolidation, acquisition of assets, management or consulting agreements or any form of takeover whatsoever without the prior approval of the Nevada Gaming Commission. The Nevada Commission has established a
regulatory scheme to ameliorate the potentially adverse effects of these business practices on Nevadas gaming industry and to further Nevadas policy to: (i) assure the financial stability of corporate gaming licensees and their
affiliates; (ii) preserve the beneficial aspects of conducting business in the corporate form; and (iii) promote a neutral environment for the orderly governance of corporate affairs. Approvals are, in certain circumstances, required from
the Nevada Commission before a Registered Corporation can make exceptional repurchases of voting securities above the current market price thereof and before a corporate acquisition opposed by management can be consummated. The Nevada Act also
requires prior approval of a plan of recapitalization proposed by a Registered Corporation in response to a tender offer made directly to its stockholders for the purposes of acquiring control of the Registered Corporation.

License fees and taxes, computed in various ways depending on the type of gaming or activity involved, are payable to the State of Nevada
and to the counties and cities in which the Nevada Gaming Subsidiaries operations are conducted. Depending on the particular fee or tax involved, these fees and taxes are payable either monthly, quarterly or annually and are based on either
(i) a percentage of the gross revenues received; (ii) the number of gaming devices operated; or (iii) the number of table games operated. A live entertainment tax is also paid by gaming establishments where live entertainment is
furnished in connection with an admission fee or the selling or serving of food, refreshments or merchandise.

Any person who
is licensed, required to be licensed, registered, or required to be registered, or is under common control with any such person (collectively, Licensees), and who is or proposes to become involved in a gaming venture outside of Nevada,
is required to deposit with the Nevada Board, and thereafter maintain, a revolving fund in the amount of $10,000 to pay the expenses of investigation by the Nevada Board for its participation in that foreign gaming. The revolving fund is subject to
increase or decrease in the discretion of the Nevada Commission. Thereafter, foreign Licensees are required to comply with certain reporting requirements imposed by the Nevada Act. The Licensees are also subject to disciplinary action by the Nevada
Commission if they knowingly violate any laws of the foreign jurisdiction pertaining to the foreign gaming operation, fail to conduct the foreign gaming operation in accordance with the standards of honesty and integrity required of Nevada gaming
operations, engage in activities or enter into associations that are harmful to the State of Nevada or its ability to collect gaming taxes and fees, or employ, contract with or associate with a person in the foreign operation who has been denied a
license or finding of suitability in Nevada on the grounds of personal unsuitability.



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Gaming Regulation and LicensingLouisiana

Video gaming in Louisiana is regulated by the Louisiana Gaming Control Board, which is part of the Department of Public Safety and
Corrections. The enforcement arm thereof in charge of licensing and criminal investigations is the Video Gaming Division of the Louisiana State Police, likewise a part of the Department of Public Safety and Corrections. The Gaming
Section of the Attorney Generals Office provides all legal counsel and representation with respect to all matters involving licensing actions and any other litigation issue relative to gaming and involving either the Louisiana Gaming
Control Board (hereinafter the Board) or the Video Gaming Division of the Louisiana State Police (hereinafter the Division).

The Video Draw Poker Devices Control Law, which governs our operations in Louisiana, is contained within the Louisiana Revised Statutes at Title 27:301 et seq. (the act) with accompanying
regulations being promulgated by the Board pursuant to the statutory authority contained within the act. The video draw poker regulations are in Title 42 of the Louisiana Administrative Code at Sections 2401 et seq.

The act gives the Board broad authority and discretion in the licensing of persons for video draw poker operations within the State of
Louisiana. Generally, a person may not be licensed for video draw poker if he has been convicted in any jurisdiction of any of the following offenses within ten years prior to the date of the application for a video draw poker license or less
than ten years has elapsed between the date of application for a video draw poker license and the successful completion or service of any sentence, deferred adjudication, or period of probation or parole for any such offense: (i) any offense
punishable by imprisonment for more than one year; (ii) theft or any crime involving false statements or declarations; or (iii) gambling, as defined by the laws or ordinances of any municipality, any parish, any state, or the United
States. The act and its corresponding regulations further provide that an application for a video draw poker license may be denied if it contains any material omission of information. An applicant must also not be delinquent in state or federal
income taxes, penalties or interest or delinquent in the payment of any sales taxes, penalties, or interest to either the state or any local governing authority of the parish or municipality in which the establishment is located.

There are several general suitability requirements for licensure. Specifically, the law requires that an applicant for a video draw poker
license be: (i) a person of good character, honesty, and integrity; (ii) a person whose prior activities, arrest or criminal record if any, reputation, habits, and associations do not pose a threat to the public interest of Louisiana or to
the effective regulation of video draw poker, and do not create or enhance the dangers of unsuitable, unfair, or illegal practices, methods, and operations in the activities authorized by the act and financial arrangements incidental thereto; and
(iii) a person who is likely to conduct business as authorized by the act in complete compliance with the act.

The
suitability standards must be met by every person who has or controls directly or indirectly more than a 5% ownership, income, or profit interest in an entity that has or applies for a license in accordance with the act, or who receives more than a
5% revenue interest in the form of a commission, finders fee, loan repayment, or any other business expense related to the gaming operation, or who has the ability, in the opinion of the Division, to exercise a significant influence over
the activities of a licensee authorized or to be authorized by the act. For the purposes of the act, all gaming-related associations, outstanding loans, promissory notes, leases, or other financial indebtedness of an applicant or licensee must be
revealed to the Division for the purposes of determining significant influence and suitability. While significant influence is determined on a case-by-case basis, it has generally been interpreted to include any person who is an officer or director
of any juridical entity that is an applicant for a video draw poker license as well as the spouse of any person having more than a 5% ownership, income, or profit interest in an applicant as well as the spouse of any officer or director of any
juridical entity applicant. As of the middle of 2007, the Louisiana State Police made a policy decision that generally removed spouses from the list of parties required to file suitability documentation related to video draw poker establishment
licenses. However, the companion legislation was not approved nor sent to the governor for signature during the corresponding legislative session.

The suitability criteria law makes an exception for institutional investors. An institutional investor of any applicant otherwise required to be found suitable or qualified pursuant to the act is presumed
suitable or qualified upon submitting documentation to the Board and the Division sufficient to establish qualifications as an institutional investor as described below, and upon certifying that: (i) it owns, holds, or controls publicly traded
securities issued



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by a licensee or permittee or a holding, intermediate, or parent company of a licensee or permittee in the ordinary course of business for investment purposes only; (ii) it does not exercise
influence over the affairs of the issuer of the securities or over any licensed or permitted subsidiary of the issuer of the securities; and (iii) it does not intend to exercise influence over the affairs of the issuer of the securities, or
over any licensed or permitted subsidiary of the issuer of the securities, in the future, and that it agrees to notify the Board in writing within 30 days if that intent should change.

The exercise of voting privileges with regard to publicly traded securities is not deemed to constitute the exercise of influence over
the affairs of a licensee. The act also provides that this exception is not to be construed to preclude the Board or the Division from investigating the suitability or qualifications of an institutional investor should the Board or Division become
aware of facts or information which may result in such institutional investor being found unsuitable or disqualified.

An
institutional investor is defined in the act as: (i) a plan or trust established and maintained by the United States Government, a state, or a political subdivision of a state for the benefit of their respective employees; (ii) an
investment company that is registered under the Investment Company Act of 1940; (iii) a collective investment trust organized by a bank under Part Nine of the Rules of the Comptroller of the Currency; (iv) a closed end investment
trust that is registered with the United States Securities and Exchange Commission; (v) a mutual fund; (vi) a life insurance company or property and casualty company; (vii) a federal or state bank; or (viii) an investment advisor
registered under the Investment Advisers Act of 1940.

If any person required to be found qualified or suitable fails to
provide all or part of the documents or information required by the Board or the Division, and if, as a result, any person holding a license issued pursuant to the act is not or may no longer be qualified or suitable, the Board will issue,
under penalty of revocation of the license, a condition naming the person who failed to provide all or part of the documents or information required by the Board or the Division, and declaring that such person may not: (i) receive
dividends or interest on securities of a corporation holding a license, if the person has or controls directly or indirectly more than a 5% ownership, income, or profit interest in such corporation; (ii) exercise directly, or through a trustee
or nominee, a right conferred by securities of a corporation holding a license, if the person has or controls directly or indirectly more than a five percent ownership, income, or profit interest in such corporation; (iii) receive remuneration
or other economic benefit from any person holding a license issued pursuant to the provisions of the act; (iv) exercise significant influence over the activities of a person holding a license issued pursuant to the provisions of the act; or
(v) continue owning or holding a security of a corporation holding a license if the person has or controls directly or indirectly more than a 5% ownership, income, or profit interest in such corporation.

Operating video draw poker devices at truck plazas in Louisiana requires both an establishment license and a device owner license. The
establishment license permits the placement by a licensed device owner of video draw poker devices on the licensed premises. A device owner license permits the licensed entity to place and operate video draw poker devices at licensed establishments.
In many cases, an establishment licensed for the placement of video draw poker devices will contract with a licensed device owner for video draw poker device placement services for a percentage of the video draw poker revenues. A licensed
establishment may also, however, be a licensed device owner. A licensed device owner entity must be majority-owned by a person or persons who have resided within the State of Louisiana for a period of two years.

Licensed establishments in Louisiana may be a restaurant, bar, motel or hotel, a Louisiana State Racing Commission licensed
pari-mutuel wagering facility, a Louisiana State Racing Commission licensed satellite wagering facility, or a qualified truck stop facility. Generally, a licensed establishment pays to a device owner a percentage of the net device revenues generated
by video draw poker devices placed at its business premises. There is no law that governs the minimum amount that a device owner must be compensated for its services.

Restaurants and bars may contain up to three video draw poker devices and a hotel or motel may have three video draw poker devices in each of its lounges and restaurants licensed to sell
alcoholic beverages, up to a total of twelve for each hotel or motel. A pari-mutuel wagering facility and a licensed satellite wagering facility may have an unlimited number of video draw poker devices. A truck stop facility may have up to
fifty video draw poker devices, with the number being determined by the amount of fuel sales of the truck stop facility.



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A restaurant, bar, motel or hotel, pari-mutuel wagering facility, and satellite wagering
facility pays an initial non-refundable licensing and processing fee of $1,100. A truck stop facility pays an initial licensing and processing fee of $10,100. A license must be renewed every five years but a renewal fee is required each year. The
non-refundable annual renewal and processing fee for a restaurant, bar, motel or hotel, pari-mutuel wagering facility, and satellite wagering facility is $200. The non-refundable annual renewal and processing fee for a truck stop facility is $1,100.

In addition to the licensing fee, the device owner collects all funds deposited in each video draw poker device and is
required to remit to the State of Louisiana on a bi-weekly basis a franchise payment in an amount equal to a percentage of the net device revenue derived from the operation of each video draw poker device owned by him. The amount of the percentage
is based on the type of licensed establishment authorized by the Board for the placement of video draw poker devices, as follows: (i) a restaurant, bar, tavern, cocktail lounge, club, motel, or hotel26%; (ii) a qualified truck stop
facility32.5%; and (iii) a pari-mutuel wagering facility or satellite wagering facility22.5%.

The number of
video draw poker devices permissible in a qualified truck stop facility is based on average monthly fuel sales, as follows: (i) 100,000 gallons of fuel, of which at least 40,000 gallons are dieselnot more than 50 devices; (ii) 75,000
gallons of fuel, of which at least 30,000 gallons are dieselnot more than 40 devices; and (iii) 50,000 gallons of fuel, of which at least 10,000 are dieselnot more than 35 devices. Compliance with the foregoing thresholds is
measured quarterly for the first year of operation and, thereafter, is measured annually. Once licensed, if a truck stop facility sells less than an average of 50,000 gallons per month but more than 25,000 gallons per month in any calendar year, the
truck stop facility will not be permitted to operate any video draw poker devices in the following calendar year. A qualified truck stop facility that sells less than an average of 25,000 gallons per month in any calendar year will be subject to
revocation of its video draw poker license. Bulk sales or transfers may not be used to calculate monthly averages. Fuel facilities may, however, offer fuel for sale at a lower price (a) when motor fuel is sold upon the final liquidation of
a business; (b) when motor fuel is advertised, offered for sale, or sold by any fiduciary or other officer under the order or direction of any court; (c) when motor fuel is sold for promotional purposes limited to a grand opening, an
annual anniversary, or an annual customer appreciation day sale, each of which does not exceed three consecutive days; and (d) when motor fuel is sold in a good faith effort to meet the legal price of a competitor. Louisiana law creates a
presumption that a fuel facility will not violate the price requirement when it sells fuel below the required price to meet the price of a competitor if it makes a bona fide effort to determine the legality of the price of such competitor and
determines in good faith that the competitors price is a legal price.

In addition, under the act, a qualified truck
stop facility is required to have at least five developed contiguous acres and sell fuel, lubricating oil, and other vehicular merchandise, such as batteries, tires, or vehicle parts for eighteen-wheel tractor-trailers, and also meet all of the
following criteria: (i) it must be located adjacent to a major state or interstate highway, as defined by the Board (within 2,000 feet of a major state highway or U.S. interstate highway); (ii) it must have an on-site restaurant with all
of the following features: (a) provides seating for at least 50 patrons; (b) provides full table service for sit-down meals; (c) is open 12 hours a day; (d) offers a varied menu; and (e) operates a fully equipped kitchen
which includes, but is not limited to, a range oven and refrigerated storage appliances used for the preparation of foods for on-premises or immediate consumption; (iii) it must have parking areas with each of the following: (a) a stable
parking area for at least 50 18-wheel tractor-trailer motor vehicles, either paved or concrete (or otherwise certified and approved), to support 18-wheel tractor- trailer motor vehicles and their loads, constructed according to industry
specifications, subject to approval by the Board and the Division; (b) parking of sufficient size is allowed for safe ingress and egress; and (c) parking areas for other vehicles around business entrance ways and exits shall not constitute
parking areas for 18-wheel tractor-trailer motor vehicles; (iv) it must sell diesel and gasoline fuel; (v) it must have on-site repair service facilities for 18-wheel tractor-trailer motor vehicles which facility may be in the
form of a contract services business which regularly performs this type of service; (vi) it must have at least four of the following amenities: (a) a separate truckers television lounge; (b) a full service laundry facility
located in a convenient area for truckers use; (c) private showers for men and women, not located in an area open to general public restroom facilities; (d) a travel store with items commonly referred to as truckers
supplies (items commonly used only by commercial motor vehicles); (e) truck scales; (f) separate truckers telephones; and (g) permanent storage facilities for fuel; (vii) it must have an area separated for adult patronage
only; and (viii) it must have, if available, a Class AGeneral retail permit or a Class ARestaurant permit, as defined in Part II of Chapter 1 or Part II of Chapter 2 of Title 26 of the Louisiana



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Revised Statutes of 1950, to serve or sell alcoholic beverages for on-premises consumption and be owned and leased by a person who meets all personal qualifications for such permit. In light of
Hurricane Katrina and other recent events, the Louisiana legislature put in place exceptions to the amenities requirements and fuel requirements that allow qualified truck stop facility licensees to operate casinos with a previously approved number
of gaming devices, notwithstanding certain non-compliance with the amenities or fuel requirements. The exceptions may apply, depending on the circumstances and as determined by the Division, if the non-compliance is caused by force majeure,
expropriation by political subdivision, road construction or other non-commercial circumstances that directly affect compliance. An owner or lessor of a qualified truck stop facility may lease or sublease any restaurant, convenience store, fuel
facility, or any other business operation located on the premises of the qualified truck stop facility to another person, provided that such person executes a written lease which contains a requirement that the lessee or sublessee comply with the
laws and regulations which govern the operation of video draw poker devices. If such lease or sublease is granted, the owner or lessor of such qualified truck stop facility shall maintain ultimate supervision and control of that entire truck stop
premises.

Additionally, no license can be granted to any truck stop facility located, at the time application is made for a
license to operate video draw poker devices, within five hundred feet of any property that is on the National Historic Registry, any public playground, or a building used exclusively as a church, synagogue, public library or school. In addition, no
license shall be issued for any truck stop facility unless previously applied for or licensed as of January 1, 2008, located, at the time application is made for a license to operate video draw poker devices, within two thousand five hundred
feet of any property that is on the National Historic Registry, any public playground, or a building used exclusively as a church, synagogue, public library, or school unless the applicant for the license has applied prior to January 1, 2008,
with the local governing authority of the parish where the truck stop is located for a certificate of compliance with applicable zoning ordinances and building codes and a statement of approval for the operation of video draw poker devices at a
truck stop facility or has applied with the appropriate authority for a building permit prior to January 1, 2008. Moreover, no license shall be issued for any truck stop facility unless previously applied for or licensed as of June 1,
2010, for facilities located, at the time of application, within one mile of any residential property or any property that is on the National Historic Registry, any public playground, or a building used exclusively as a church, synagogue, public
library or school unless the applicant for the license has applied prior to June 1, 2010 with the local governing authority of the parish where the truck stop is located for a certificate of compliance with applicable zoning ordinances and
building codes and statement of approval for the operation of video draw poker devices at the location or has applied with the appropriate authority for a building permit prior to June 1, 2010. In such instance, residential property is any
property wholly or partly used for or intended to be used for living or sleeping with one or more rooms, including a bathroom and complete kitchen facilities, and includes mobile home or manufactured housing, provided that such mobile home or
manufactured housing has been in its present location for at least 60 days.

All suitability information and applications
required to be submitted with respect to the 18 Louisiana truck plazas currently owned by us, as well as the truck stop in which we share in the revenue, have been submitted to the Board and the Division. All applications submitted have been
approved and none are currently pending. However, because the Board and the Division conduct a new suitability investigation in connection with each acquisition of a facility at which video gaming devices are to be operated, regardless of prior
approvals, there can be no guarantee that a suitability approval will ultimately result with respect to the plazas that we propose to acquire.

Gaming Regulation and LicensingVirginia

Colonials success is dependent upon continued government and public acceptance of horse racing as a form of legalized gaming. Although Colonial believes that pari-mutuel wagering on horse
racing will continue to be legal in Virginia, gaming has come under increasing scrutiny nationally and locally.

Opposition to
the Virginia Racing Act has been unsuccessfully introduced in the Virginia legislature in the past, but additional legislative opposition may arise in the future. Any repeal or material amendment of the Virginia Racing Act could have a material
adverse effect on Colonials business of pari-mutuel wagering.

Under the Virginia Racing Act, the Virginia Racing
Commission is vested with control over all aspects of horse racing with pari-mutuel wagering and the power to prescribe regulations and conditions under which such racing and wagering are conducted. The Virginia Racing Commission is responsible for,
among other things,



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(i) conducting a review annually of Colonials track and satellite wagering facility licenses, (ii) annually approving Colonials proposed schedule of racing days,
(iii) approving new or modified types of pari-mutuel wagering pools requested by Colonial, (iv) issuing permits to all officers, directors, racing officials, and other employees of Colonial, and (v) approving simulcast schedules at
the track and at the satellite wagering facilities. The Virginia Racing Commission also has the authority to promulgate regulations pertaining to Colonials track facilities, equipment, safety and security measures, and controls the issuing of
licenses and permits for participants in pari-mutuel racing, including Colonial employees at the track and at the satellite wagering facilities. In addition, the Virginia Racing Commission must approve any acquisition or continuing ownership of a 5%
or greater interest in Colonial. Action by the Virginia Racing Commission that is inconsistent with the Colonials business plan could have a material adverse effect on Colonial.

During the 2000 session of the Virginia General Assembly, an amendment to the Racing Act was passed that requires Colonial to enter into
contracts with each representative horsemens group and provides for it to contribute to the purse account of the respective breed a minimum of 5% of the first $75 million of simulcast amounts wagered (handle), 6% of the next $75
million and 7% of all handle over $150 million. The amendment also provides for the breakage generated by pari-mutuel wagering to be allocated 70% to capital expenditures and 30% to backstretch benevolent activities. Prior to this amendment,
Colonial received all breakage. The Virginia Racing Act requires that, after July 1, 2000, we enter into contracts with each representative horsemens group that provide for us to contribute, by breed of horse, a minimum of 5% of the first
$75 million of handle, 6% of the next $75 million of handle and 7% of all handle over $150 million to the purse account of the respective breed. Finally, the amendment empowers the Commission to summarily suspend Colonials licenses if it
believes the Racing Act or the regulations have been violated. In addition, the Interstate Horse Racing Act also requires that we secure the consent of the Virginia Horsemens Benevolence and Protective Association (the VaHBPA) and
the Virginia Harness Horse Association (VHHA) to the export simulcasting of races. These consents are usually contained in the agreement between each group and Colonial.

The licenses issued by the Virginia Racing Commission to Colonial for the racetrack and its satellite wagering facilities are for a
period of not less than 20 years, but are subject to annual review by the Virginia Racing Commission. It is possible that such licenses will not be renewed or that such licenses could be suspended or revoked by the Virginia Racing Commission for
violations of the Virginia Racing Act or Virginia Racing Commission rules. We also hold an advance deposit account wagering license that is renewable annually. Our current advance deposit account wagering license expires December 31, 2011.

We have an agreement with the VHHA that expires December 31, 2011 and an agreement with the VaHBPA that expires
December 31, 2012.

Colonial, the track and the satellite wagering facilities are also subject to a variety of other laws
and regulations, including zoning, construction, and land-use laws and the regulations of the Virginia Alcoholic Beverage Control Board. Such laws and regulations may affect the selection of satellite wagering facility sites because of parking,
traffic flow, and other similar considerations. Any interruption or termination of Colonials ability, or that of its concessionaires, to serve alcoholic beverages could have a material adverse effect on Colonial.

Gaming RegulationFederal

Colonials interstate simulcast operations are subject to the Federal Interstate Horse Racing Act, which regulates interstate satellite wagering. In order to conduct wagering on import simulcasting
at the track or any racing center, the Interstate Horse Racing Act requires Colonial to obtain the consent of the Virginia Racing Commission, the consent of the racing commission of the state where the horse racing meet originates, and the consent
of the representative horsemen groups in the origination state. To conduct export simulcasting, Colonial must obtain the consent of the Virginia Horsemans Benevolent and Protective Association or the Virginia Harness Horse Association, and the
Virginia Racing Commission. Also, in the case of satellite wagering to be conducted at any of Colonials satellite wagering facilities, the Interstate Horse Racing Act requires Colonial to obtain the approval of all currently operating horse
racetracks within 60 miles of the satellite wagering facilities or if there are no currently operating tracks within 60 miles, the approval of the closest operating horse racetrack, if any, in an adjoining state. Significant delay in obtaining or
failure to obtain these consents or approvals could have a material adverse effect on Colonial.



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Liquor Regulation

The sale of alcoholic beverages in Colorado is subject to licensing, control and regulation by certain Colorado state and local agencies (the Liquor Agencies). Subject to certain exceptions,
all persons who directly or indirectly own 5% or more of a company or its casino must file applications with and are subject to investigation by the Liquor Agencies. The Liquor Agencies also may investigate persons who, directly or indirectly,
lend money to liquor licensees. All liquor licenses are renewable, are revocable and are not transferable. The Liquor Agencies have broad powers to limit, condition, suspend or revoke any liquor license. Any disciplinary action by the Liquor
Agencies or any failure to renew or other revocation of any of our liquor licenses would have a material adverse effect on our operations and Black Hawk Gamings Colorado casinos.

Under Colorado law, it is a criminal violation for any person or entity to own a direct or indirect interest in more than one type of
alcoholic beverage license or more than three gaming tavern liquor licenses. Black Hawk Gamings Colorado casinos have gaming tavern liquor licenses. Accordingly, our expansion and diversification opportunities in Colorado are limited by these
licensing restrictions.

While gaming operations may now be conducted twenty-four hours a day, Colorados liquor laws
still limit service of patrons to the hours of 7:00 a.m. to 2:00 a.m. This limitation is contained in Colorado statute and could be changed only by the state legislature with the approval of the governor.

The sale of alcoholic beverages in the cities of Reno, Carson City and Elko, Nevada, is subject to licensing, control and regulation by
those cities. All licenses are revocable and are not transferable. The agencies involved have full power to limit, condition, suspend or revoke any such license, and any such disciplinary action could (and revocation would) have a material adverse
effect on the operations of one or more of our Gold Dust West casinos in Nevada.

Alcohol regulation within the State of
Louisiana is performed primarily by the Office of Alcohol and Tobacco Control (the Board). The Commissioner of the Board is given broad discretion in the granting and denial of state alcohol permits. While permits are issued on a state
level, the local municipality is also permitted to provide for concurrent local licensing. The state alcohol regulatory scheme is contained at Title 26:1 of the Louisiana Revised Statutes (hereinafter referred to as the act). Generally,
no permit may be issued if the applicable premises is located three hundred feet or less, as fixed and determined by the local municipal ordinance, of a public playground or of a building used exclusively as a church or synagogue, public
library, school, full-time daycare center or corrections facility housing inmates, including but not limited to, a halfway house. Louisiana parishes may enact ordinances extending the distance between the applicable premises and the property line of
such locations to 500 feet. Local municipalities are also permitted to regulate the opening and closing hours of permitted businesses as well as to prohibit the sale of alcoholic beverages altogether by referendum vote of the people within the
municipality. A local municipality may also regulate via zoning designations the permissibility or prohibition of the permitting of businesses that sell alcoholic beverages within that municipality. All of our video gaming truck plaza
facilities are currently licensed by the applicable state and local alcohol licensing authorities.

The sale of alcoholic
beverages in Virginia is subject to licensing, control and regulation by the Virginia Department of Alcoholic Beverage Control (the Virginia ABC Board), a Virginia state agency. The Virginia ABC Board issues licenses based upon the type
of beverage, type of establishment or place of consumption. Virginia ABC laws include the responsibility of the licensee to maintain complete and accurate records, certain restrictions on advertising and certain food sale requirements.

Before receiving a Virginia ABC license, an applicant must satisfy several requirements. The Virginia ABC Board conducts an extensive
background investigation (to include a criminal history review as well as contacts with the local governing body of each license application) and contacts local officials, residents and business people in the vicinity of the establishment to
ascertain if any objections exist. The background investigation is completed for all principal owners of the proposed licensee. Administrative hearings are available to afford all interested parties the opportunity to present any concerns with
respect to an application.

A licensee is required to maintain financial responsibility for its business, including timely
payment of all taxes, creditor obligations and other bills, and must keep accurate records of all such transactions. Mixed beverage



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licensees must record sales and purchases of all mixed beverages, food and non-alcoholic beverages. Mixed beverage licensees must submit annual review reports to the Virginia ABC Board showing
all purchases and sales of alcoholic beverages during the year as well as an accurate inventory. Finally, the Virginia ABC Board imposes certain restrictions and limitations on advertising, the use of advertising materials and promotions.

If Virginia ABC agents discover license violations, a disciplinary hearing will typically be conducted with a Virginia ABC
hearing officer. Any aggrieved localities and members of the community may attend the hearing and present any additional or relevant objections or complaints concerning the license. The Virginia ABC Board has broad power to limit, condition,
suspend or revoke any license granted on discovery of any violation. Any disciplinary action by the Virginia ABC Board or any failure to renew or any revocation of a liquor license would likely have a material adverse effect on the operation of
Colonials track and satellite wagering facilities.

Taxation

Gaming operators in Colorado are subject to state and local taxes and fees in addition to ordinary federal and state income taxes. The
City of Black Hawk has imposed an annual license fee, currently $750, for each gaming device installed in a casino. In addition, Colorado has a tax on gross gaming revenue (also called adjusted gross proceeds) being generally defined as
the total amount wagered less the total amount paid out in prizes as follows:



|                                             |  |                                         |            |  |  |  |   |  |  |  |            | 
|-------------------------------------------- |  | --------------------------------------- | ---------- |  |  |  | - |  |  |  | ---------- | 
|Tax as Percentage of
Adjusted Gross Proceeds |  | Annual Amount of AdjustedGross Proceeds |           
|0.25%                                        |  | $                                       | 0          |  |  |  |  |  |  |  | 2,000,000  | 
|2.00%                                        |  |                                         | 2,000,001  |  |  |  |  |  |  |  | 5,000,000  | 
|9.00%                                        |  |                                         | 5,000,001  |  |  |  |  |  |  |  | 8,000,000  | 
|11.00%                                       |  |                                         | 8,000,001  |  |  |  |  |  |  |  | 10,000,000 | 
|16.00%                                       |  |                                         | 10,000,001 |  |  |  |  |  |  |  | 13,000,000 | 
|20.00%                                       |  |                                         | 13,000,001 |  |  |  |   |  |  |  | and above  | 

Both of JEIs
Colorado casinos are subject to the maximum rate. Neither the Colorado Constitution nor the gaming statutes require that gaming tax rates be graduated, as they currently are. However, with the passage of Colorado Amendment 50, the gaming tax rates
were set in accordance with the table above, and gaming tax levels can only be increased (by means of either an increase in the applicable marginal tax rate(s) or a decrease in the applicable dollar threshold(s) at which particular rates become
effective) with prior voter approval.

In Nevada, license fees and taxes, computed in various ways depending on the type of
gaming or activity involved, are payable to the State of Nevada, Washoe, Carson City, and Elko Counties and the Cities of Reno, Carson City, and Elko. Depending upon the particular fee or tax involved, these fees and taxes are payable either
monthly, quarterly or annually and are based upon either: (i) a percentage of the gross revenues received; (ii) the number of gaming devices operated; or (iii) the number of table games operated. A live entertainment tax is also paid
by casino operations where entertainment is furnished in connection with an admissions charge or the selling or serving of food or refreshments or the selling of merchandise. Presently the state tax in Nevada on adjusted gross revenue from gaming is
6.75%.

Video gaming operators in truck plazas in Louisiana are subject to state and local taxes and fees in addition to
ordinary federal and state income taxes. The state of Louisiana has imposed a gaming franchise fee of 32.5% of the net device revenue from each video gaming device located at a truck plaza. The net device revenue is the amount remaining
after all winnings have been paid. This franchise fee is collected twice per month by the Louisiana state police based on the data that is provided directly to them from the devices. There is also an annual state establishment license fee of $1,100.
In addition, the state imposes a device operation fee of $1,000 per year per device, which is paid quarterly, and each parish imposes an annual occupational license tax of approximately $50 per device.

Colonial is subject to a number of federal, state and local taxes and fees. These include fees to support the Virginia Breeders Fund,
taxes payable to the Commonwealth of Virginia, taxes and admission charges payable to New Kent County, where the track is located, and taxes payable to localities in which satellite wagering facilities are



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located based upon attendance and the amount of monies wagered both at the track and at the satellite wagering facilities. Colonial believes that the public acceptance of pari-mutuel wagering on
horse races, as well as other forms of gaming, is based, in part, on the governmental revenues it generates from taxes and fees on such activities. It is possible that gaming activities, including horse racing, may become a target for additional
federal, state, or local taxes and fees. A significant increase in such taxes or fees or the creation of significant additional taxes or fees could have a material adverse effect on us.



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

To inform readers of our future plans and business strategies, this report contains statements concerning our future performance, intentions, objectives, plans and expectations that are or may be deemed
to be forward-looking statements. Our ability to do this has been fostered by the Private Securities Litigation Reform Act of 1995, which provides a safe harbor for forward-looking statements to encourage companies to provide
prospective information so long as those statements are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those discussed in the statements. All known material
risk factors are disclosed. Such factors affecting us include, but are not limited to, the following:

Risks Related to Our
Indebtedness

Our substantial indebtedness could adversely affect our financial health and prevent us from fulfilling our
obligations under our debt agreements.

We have a significant amount of indebtedness. As of December 31, 2010, we
had total indebtedness of $282.2 million, excluding accounts payable, accrued expenses and other noncurrent liabilities, and total stockholders equity of $25.7 million. Our substantial indebtedness could have considerable consequences. For
example, it could:



| |  |  | increase our vulnerability to general adverse economic and industry conditions;
| | - |  | -------------------------------------------------------------------------------



| |  |  | require us to dedicate a substantial portion of our cash flow from operations to debt service, thereby reducing the availability of our cash flow to
fund working capital, capital expenditures, and other general corporate purposes;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | limit our ability to fund a required regulatory redemption or a change of control offer;
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | place us at a competitive disadvantage to our competitors that have less debt; and
| | - |  | ----------------------------------------------------------------------------------



| |  |  | limit, along with the financial and other restrictive covenants in our debt agreements, among other things, our ability to borrow additional funds. A
failure to comply with those covenants could result in an event of default which, if not cured or waived, could have a significant adverse effect on us.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The occurrence of any one of these events could have a material adverse effect on our business, financial condition, results of operations, prospects and ability to satisfy our obligations under our debt
agreements.

Our debt agreements impose many restrictive covenants on us.

Our debt agreements contain covenants that, among other things, restrict our ability to:



| |  |  | expand our business through material acquisitions;
| | - |  | --------------------------------------------------



| |  |  | incur more debt;
| | - |  | ----------------



| |  |  | issue stock of subsidiaries;
| | - |  | ----------------------------



| |  |  | make investments;
| | - |  | -----------------



| |  |  | repurchase stock;
| | - |  | -----------------



| |  |  | create liens;
| | - |  | -------------



| |  |  | enter into transactions with affiliates;
| | - |  | ----------------------------------------



| |  |  | enter into sale-leaseback transactions;
| | - |  | ---------------------------------------



| |  |  | merge or consolidate; and
| | - |  | -------------------------



| |  |  | transfer and sell assets.
| | - |  | -------------------------



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In addition, our senior credit facility contains many restrictive covenants similar to the
covenants of our indenture but the covenants in our senior credit facility are generally more restrictive than those contained in our indenture. Our senior credit facility also requires us to maintain specified consolidated financial ratios and
satisfy certain consolidated financial tests. Our ability to meet those financial ratios and financial tests may be affected by events beyond our control, and we may not be able to continue to meet those tests. If we fail to meet those tests or
breach any of the covenants, the lenders under our senior credit facility could declare all amounts outstanding thereunder, together with the accrued interest, to be immediately due and payable. Our assets may not be sufficient to repay in full such
indebtedness or any other indebtedness, including $210 million of our senior unsecured notes issued under our indenture. Further, any other agreements we may enter into in the future governing our indebtedness may impose additional restrictions on
us, any of which may adversely affect our ability to finance our future operations or capital needs or to pursue available business opportunities. Our failure to pay interest, repay our indebtedness when due, or maintain compliance with our debt
covenants would result in an event of default under both our senior credit facility and our note indenture.

Complying with
these covenants could materially limit our financial and operating flexibility and could cause us to take actions that we otherwise would not take or cause us not to take actions that we otherwise would take.

Despite current indebtedness levels, we may still be able to incur substantially more debt, which could exacerbate the risks described above.

Subject to debt covenant restrictions, we and our subsidiaries may be able to incur substantial additional
indebtedness in the future. The indenture governing our senior unsecured notes and our senior credit facility do not fully prohibit us or our subsidiaries from doing so. If new debt is added to our and our subsidiaries current debt levels, the
related risks that we and they now face could intensify.

To service our indebtedness, we will require a significant amount of cash, the
availability of which depends on many factors beyond our control.

Our ability to make payments on and to refinance
our indebtedness and to fund our operations will depend on our ability to generate cash. This, to an extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Our business
may not generate sufficient cash flow from operations and future borrowings may not be available to us in amounts sufficient to enable us to pay our indebtedness, or to fund our other liquidity needs. In addition, if we consummate significant
acquisitions in the future, our cash requirements may increase significantly. If we are unable to generate sufficient cash flow and are unable to refinance or extend outstanding borrowings, we may have to:



| |  |  | reduce or delay planned expansion and capital expenditures;
| | - |  | -----------------------------------------------------------



| |  |  | sell assets;
| | - |  | ------------



| |  |  | restructure debt; or
| | - |  | --------------------



| |  |  | raise additional capital.
| | - |  | -------------------------

Our debt becomes due at various times between 2011 and 2014. We intend to refinance all of our debt on or before maturity. We cannot assure you that we will be able to refinance any of our debt on
commercially reasonable terms or at all. See Note 5 to our Consolidated Financial Statements.



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Our senior notes are not secured by any of our assets and senior noteholders rights to enforce
remedies will be limited to the rights of holders of unsecured debt.

Our senior notes are not secured by any of our
assets. Our obligations under our senior credit facility are secured by liens on substantially all of our assets. If we become insolvent or are liquidated, or if payments under our senior credit facility are accelerated, the lenders under our senior
credit facility will be entitled to exercise the remedies available to a secured lender under applicable law and our senior credit facility. Accordingly, such lenders will have a prior claim with respect to our assets and there may not be sufficient
assets remaining to pay amounts due on our senior unsecured notes then outstanding.

We are a holding company and will depend on the
business of our subsidiaries to satisfy our obligations under our indebtedness.

We are a holding company.
Substantially all of the operations necessary to fund payment on our indebtedness are conducted by our subsidiaries. Our ability to make payments on our indebtedness will depend on our subsidiaries cash flow and their payment of funds to us.
Our subsidiaries ability to make payments to us will depend on their earnings, the terms of their indebtedness, business and tax considerations, legal and regulatory restrictions and economic conditions.

We may not have the ability to raise the funds necessary to finance the change of control offer required by our indebtedness.

Upon the occurrence of certain change of control events, we will be required to offer to repurchase all outstanding senior unsecured
notes at a purchase price equal to 101% of their principal amount. Moreover, a change of control constitutes a default under our senior credit facility. However, it is likely that we will not have sufficient funds at the time of such a change of
control to make the required repurchase of our notes or repay the indebtedness under our senior credit facility. The change of control provisions may not protect you in a transaction in which we incur a large amount of debt, including a
reorganization, restructuring, merger or other similar transaction, because that kind of transaction may not involve any shift in voting power or beneficial ownership, or may not involve a shift large enough to trigger a change of control as defined
in our debt agreements.

Federal and state statutes allow courts, under specific circumstances, to void guarantees, subordinate claims
in respect of indebtedness and require debt holders to return payments received from guarantors.

Under the federal
bankruptcy law and comparable provisions of state fraudulent transfer laws, a court could void a guarantee of one or more of our subsidiaries or claims related to our senior unsecured notes or subordinate a subsidiarys guarantee to all of our
other debts or all other debts of the guarantor if, among other things, we or the guarantor, at the time we or it incurred the indebtedness evidenced by its guarantee:



| |  |  | received less than reasonably equivalent value or fair consideration for the incurrence of that indebtedness; and
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | we were or the guarantor was insolvent or rendered insolvent by reason of that incurrence;
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | we were or the guarantor was engaged in a business or transaction for which our or the guarantors remaining assets constituted unreasonably small
capital; or
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we or the guarantor intended to incur, or believed that we or it would incur, debts beyond our or its ability to pay those debts as they mature.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------

In addition, a court could void any payment by us or the guarantor pursuant to our senior unsecured notes
or a guarantee and require that payment to be returned to us or the guarantor, or to a fund for the benefit of our creditors or the creditors of the guarantor.



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The measures of insolvency for purposes of these fraudulent transfer laws will vary
depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, a guarantor would be considered insolvent if:



| |  |  | the sum of its debts, including contingent liabilities, were greater than the fair saleable value of all of its assets,
| | - |  | -----------------------------------------------------------------------------------------------------------------------



| |  |  | the present fair saleable value of its assets were less than the amount that would be required to pay its probable liability on its existing debts,
including contingent liabilities, as they become absolute and mature, or
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | it could not pay its debts as they become due.
| | - |  | ----------------------------------------------

We believe that we and the guarantors have received reasonably equivalent value and fair consideration for the incurrence of the indebtedness and obligations represented by our senior unsecured notes and
the guarantees. On the basis of historical financial information, recent operating history and other factors, we believe that we and each subsidiary guarantor, after giving effect to its guarantee of our senior unsecured notes, are not insolvent, do
not have unreasonably small capital for the business in which we are or it is engaged and have not incurred debts beyond our or its ability to pay such debts as they mature. However, a court might disagree with any or all of our conclusions in this
regard and it could apply different legal standards.

Holders of our senior unsecured notes may be required to comply with registration,
licensing, qualification or other requirements under gaming laws or dispose of their securities.

The gaming
authorities of any jurisdiction in which we currently or in the future conduct or propose to conduct gaming, either through our subsidiaries or a joint venture, may require that a holder or beneficial owner of our senior unsecured notes be
registered, licensed, qualified or found suitable, or comply with any other requirement under applicable gaming laws. If you have an interest in our senior unsecured notes, by the terms of the indenture, you will be deemed to agree to comply with
all of these requirements, including your agreement to register or apply for and maintain in full force and effect a license, qualification or a finding or suitability, or comply with any other requirement, within the required time period, as
provided by the relevant gaming authority. If you fail to apply to be, or fail to become, registered, licensed or qualified or such registration, license or qualification is suspended or revoked or not maintained, or you are found unsuitable or fail
to comply with any other requirement of a gaming authority, then we will have the right, at our option, to:



| |  |  | require you to sell your senior unsecured notes or beneficial interest in the senior unsecured notes in accordance with applicable gaming requirements
within 30 days after you receive notice of our election, or by any earlier date that the relevant gaming authority may request or prescribe; or
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | redeem your senior unsecured notes (possibly within less than 30 days following the notice of redemption if requested or prescribed by the gaming
authority) at a redemption price equal to the lesser of:
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | your cost;
| | - |  | ----------



| |  |  | 100% of the principal amount of the senior unsecured notes, plus accrued and unpaid interest, if any, to the redemption date or the date of the first
to occur of any (i) failure to become or continue to be registered, licensed or qualified, (ii) failure to be found or continue to be suitable, (iii) failure to comply with relevant gaming authority requirements or (iv) receipt
of notice from the relevant gaming authority that you will not be registered, licensed or qualified; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | any other amount required by applicable law or by order of any gaming authority.
| | - |  | --------------------------------------------------------------------------------

If we elect, in our sole discretion, to redeem your senior unsecured notes, we will notify the indenture trustee in writing of any
redemption as soon as practicable. We will not be responsible for any costs or expenses you may incur in connection with your registration, application for a license, qualification or a finding of suitability, or your renewal or continuation of the
foregoing or compliance with any other requirement of a gaming authority. The indenture also provides that as soon as you are required to sell your senior unsecured notes as a result of a gaming authority action, you will, to the extent required by
the applicable gaming authority, have no further right:



| |  |  | to exercise, directly or indirectly, any right conferred by the senior unsecured notes; or
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | to receive from us any interest or any other distributions or payments, or any remuneration in any form, relating to the senior unsecured notes, except
the redemption price we refer to above.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Risks Related to Our Business

We face significant competition.

The gaming industry is
characterized by a high degree of competition among a large number of participants, many of which have financial and other resources that are greater than our resources. Competitive gaming activities include casinos, pari-mutuel wagering, video
lottery terminals and other gaming devices, and other forms of legalized gaming. New or expanded operations by other persons can be expected to increase competition for our gaming operations and could have a material adverse impact on us.

Casino Operations. Our casino operations are conducted in Black Hawk, Colorado, and Reno, Carson City, and Elko,
Nevada. Competition in the Black Hawk gaming market, which is the primary gaming market in Colorado, is intense. In addition, large, well-financed companies have entered the Black Hawk and other Colorado markets through the purchase or expansion of
existing facilities and others may continue to do so, all of which could materially harm our business, financial condition and results of operations. For example:



| |  |  | Ameristar Casinos, Inc. (Ameristar) purchased Mountain High Casino (formerly the Black Hawk Casino by Hyatt) in a bankruptcy sale.
That casino is directly across highway 119 from The Lodge and Ameristar has expanded the casino area to accommodate approximately 1,550 total gaming devices with new slot product, expanded the parking garage and refurbished and rebranded its dining
venues. Ameristar completed construction of a 33 story, 536-room hotel, a convention center and other amenities and facilities in the fourth quarter of 2009. In all respects, Ameristar is known to be a fierce competitor in gaming markets in which it
operates;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Isle of Capri Casinos, Inc. owns Lady Luck Casino Black Hawk (previously operated as Colorado Central Station), across the street from its
existing facility and in 2005 completed a major renovation and expansion project physically linking the two properties. The combined casinos are the largest in Black Hawk with approximately 1,700 total gaming devices, 402 hotel rooms and 2,300
parking spaces;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the Mardi Gras casino, next to our casino, The Lodge, was purchased in 2005 and the owners have continued to develop and implement new marketing
programs and new slot product;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | late in 2004, Central City, a gaming area about one mile from Black Hawk, completed the Southern Access, a road which directly connects
Central City to Interstate 70. The new access road to Central City enables existing casinos and possible new casinos to pose a significant competitive threat to gaming activities in Black Hawk;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the market deterioration at Colorados horse track and three dog tracks may reinvigorate efforts to authorize video lottery terminals, slot
machines, so-called instant racing machines or other types of gaming at these venues and at the states off-track betting facilities. A possible statewide initiative or legislation to expand slot machine gaming to the two Denver
area racing facilities and potentially to one or both of its other tracks in the southern part of the state have been publicly discussed. In 2009, legislation to authorize instant racing machines (a form of slot machine) was defeated in the Colorado
General Assembly. In 2010, the Colorado General Assembly considered and rejected a proposal to seek voter approval of a race track on property owned by the Colorado State Fair in Pueblo, which site would include no fewer than 500 video lottery
terminals or other comparable devices that could be played throughout the year. In 2010 and 2011, the state legislature considered and rejected proposals to authorize keno, including devices that feature keno but appear to be and operate as slot
machines, in the states liquor licensed establishments, such as bars and restaurants. The pressure on Colorado state government to generate non-tax revenue to help offset continuing state revenue declines is substantial, and policy makers view
gaming expansion as a source of such added tax revenue. If authorization of any form of expanded gambling is granted by the Colorado Lottery Division, the Colorado state legislature, or the voters, it would have a material adverse effect on gaming
revenues in Black Hawk and at The Lodge and Gilpin casinos; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | in the recent past, the Cheyenne and Arapahoe Indian tribes have claimed significant treaty rights to land in Colorado have pursued a plan to exchange
those rights for land east of the Denver metropolitan area on which to build and operate a large casino gaming facility. This project appears to be dormant at present. If it is renewed, or if another tribe seeks approval from the United States
Department of Interior to secure other land in the state on which it does not now reside and to which it does not now have legal title, and if any such effort obtains all necessary federal, state, and local governmental approvals, it could have a
material adverse effect on gaming revenues in Black Hawk and at The Lodge and Gilpin casinos.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition
to competing with other gaming facilities in Colorado as described above, we compete to a lesser degree, for both customers and potential future gaming sites, with gaming companies nationwide, including casinos in Nevada and several other states,
and casinos on Native American lands in several states, many of which have substantially greater financial resources and experience in the gaming business. The expansion of legalized casino gaming to new jurisdictions throughout the United States
may also affect competitive conditions.

The Gold Dust West casino in Reno, Nevada, encounters strong competition from large
hotel and casino facilities and smaller casinos similar in size to the Gold Dust West casino in the Reno area, which includes Sparks, Nevada. There is also competition from gaming establishments in other towns and cities in Nevada and from Native
American gaming facilities located near Sacramento, California. Our Carson City and Elko, Nevada Gold Dust West casinos face competition from several casinos in those cities and other venues in Nevada. Gold Dust West-Elko faces additional
competitive and other risks associated with being a relatively new casino.

In addition, we believe that the introduction of
casino gaming, or the expansion of presently conducted gaming activities (particularly at Native American establishments) in areas in or close to Nevada, such as California, Oregon, Washington, Arizona and western Canada, could materially harm our
operations at our Nevada operations.

Finally, several states are giving consideration to approving intrastate, internet
gaming which could include poker, blackjack and slot machine-type games. Any widespread adoption of this form of gaming, especially in states where we operate, could have a materially adverse effect on our results of operations.

Louisiana Truck Plaza Operations. Our Louisiana truck plaza operations compete with other truck plazas located in Louisiana and
other forms of gaming, such as land-based, riverboat and Native American casinos, as well as slot machines located at horseracing tracks and video poker machines located in bars, restaurants, hotels, off-track wagering facilities and bingo parlors.
There were 197 licensed video poker truck plazas in Louisiana at December 31, 2010, which is a 2% increase over December 31, 2009.

Pari-Mutuel Wagering Operations. We operate a racetrack in New Kent, Virginia, and ten off-track wagering facilities located in Alberta, Chesapeake, Hampton, Martinsville, Weber City, Vinton, and
four in Richmond, Virginia. Similarly, the expansion of other forms of gaming in neighboring states, such as table games in West Virginia and slot machines in Maryland, could have an adverse effect on our performance.

We compete with racetracks located outside Virginia (including several in Delaware, Maryland, New Jersey, New York, Pennsylvania, and
West Virginia, all of which augment their purses with slot machine or other gaming revenues) and other forms of gaming, such as land-based casinos, including those in Atlantic City, New Jersey, and statewide lotteries in Virginia and neighboring
states. We also face competition from a wide range of entertainment options, including live and televised sporting events and other recreational activities such as theme parks (Kings Dominion to the northwest and Busch Gardens to the southeast).

We compete for wagering dollars and simulcast fees with live racing and races simulcast from racetracks in other states,
particularly racetracks in neighboring states such as Charles Town in West Virginia, Pimlico Race Course and Laurel Park in Maryland, and Delaware Park in Delaware. We also compete for wagering dollars with account wagering companies operating both
legally and illegally in Virginia. These companies take wagers from



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Virginians both over the phone and the internet. We believe legislation which went into effect January 1, 2010 will provide us with fair compensation for the activities of licensed
providers. Unlicensed account wagering companies have lower costs than Colonial Downs and thus are able to attract customers in Virginia with large wagering rebates.

We face extensive regulation from gaming authorities.

Licensing
Requirements.As owners and operators of gaming and pari-mutuel wagering facilities, we are subject to extensive state and local and some federal regulation. State and local authorities require us and our subsidiaries to demonstrate suitability
to obtain and retain various licenses and require that we have registrations, permits and approvals to conduct gaming and wagering operations. Various regulatory authorities, including the Colorado Limited Gaming Control Commission, the Nevada
Gaming Commission, the Nevada State Gaming Control Board, the Louisiana Gaming Control Board and the Virginia Racing Commission may, for any reason set forth in the applicable legislation, limit, condition, suspend or revoke a license or
registration to conduct gaming or wagering operations or prevent us from owning the securities of any of our gaming or wagering subsidiaries. Like all gaming and wagering operators in the jurisdictions in which we operate, we will need to apply
periodically to renew our licenses or registrations. We cannot assure you that we will be able to obtain such renewals. Regulatory authorities may also levy substantial fines against us or seize our assets or those of our subsidiaries or of the
people involved in violating gaming laws or regulations. Any of these events could materially harm our business, financial condition and results of operations. Gaming authorities in the United Sates can generally require that any beneficial owner of
our securities, including holders of our debt, file an application for a finding of suitability.

Potential Changes in
Regulatory Environment.From time to time, legislators and special interest groups have proposed legislation that would expand, restrict or prevent gaming or wagering operations in the jurisdictions in which we operate. Any expansion of gaming
or wagering or restriction on or prohibition of our gaming or wagering operations could materially harm our business, financial condition and results of operations. In particular in Colorado, there have been repeated attempts to expand gambling
beyond Black Hawk, Central City and Cripple Creek to other towns, racetracks, bingo halls, and tribal gaming through legislation, ballot initiatives, and administrative action by state or local agencies and this is a continued competitive threat to
us. Periodic changes to the membership of the Colorado Limited Gaming Control Commission and turnover in the office of the governor of Colorado (the appointing authority for both the members of the Gaming Commission and the executive director of the
Department of Revenue which oversees the Gaming Commission) in January 2011 could also affect our operations.

Taxation.We believe that the prospect of significant additional revenue is one of the primary reasons that jurisdictions permit legalized gaming and wagering. As a result, gaming and wagering companies are typically subject to significant taxes and fees
in addition to normal federal, state, local and provincial income taxes, and such taxes and fees are subject to increase at any time. We pay substantial taxes and fees with respect to all of our operations. From time to time, federal, state and
local legislators and officials have proposed changes in tax laws, or in the administration of such laws, affecting the gaming and wagering industry. It is not possible to predict the likelihood of changes in tax laws or in the administration of
such laws. Similarly, special improvement districts, now in existence or those that may be formed in the future, may impose assessments in the form of additional taxes or fees that will finance infrastructure improvements that enhance the
attractiveness or accessibility of casinos with which we compete and/or add to our costs of doing business, either of which can negatively affect the competitive position of our Lodge and Gilpin casinos. Such changes, if adopted, could materially
harm our business, financial condition and results of operations.

Compliance with Other Laws.We are also subject to a
variety of other rules and regulations, including zoning, environmental, construction and land-use laws and regulations governing the serving of alcoholic beverages.

We depend on our key personnel, particularly Jeffrey P. Jacobs.

We
are highly dependent on the services of Jeffrey P. Jacobs (one of our indirect owners and our Chief Executive Officer) and other officers and key employees. The loss of the services of any of these individuals could materially harm our business,
financial condition and results of operations. The loss of their experience and familiarity with our operations could have negative effects on managements efficiency and could cause us to incur costs to find qualified replacements.



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Our Chief Executive Officer and his family trusts own a controlling beneficial interest in our capital
stock and may significantly influence our affairs or may pursue other activities that compete with us.

All of our
equity securities are presently owned by Jacobs Investments, Inc. (JII). Jeffrey P. Jacobs, our Chairman and Chief Executive Officer, and his family trusts own all of JIIs equity securities. JII has the ability to significantly
influence our affairs, including the election of our directors and transactions including mergers, consolidations or sales of assets. Although Mr. Jacobs has agreed not to pursue any U.S. casino or gaming activities except through us (excepting
investments in publicly traded companies and his involvement therein), he is allowed to purchase and own additional truck plazas in Louisiana which we have the right to buy. Any such activities by him could be competitive with our operations in that
state.

We need to invest in capital expenditures to compete effectively.

Capital expenditures, amenity upgrades and new gaming equipment are necessary from time to time to preserve the competitiveness of our
properties. The gaming industry is very competitive and is expected to become more competitive in the future. If cash from our operations is insufficient to provide for needed levels of capital expenditures, our competitive position could
deteriorate if we are unable to borrow funds for such purposes.

Economic conditions, seasonality and weather conditions could affect
our operations.

Our business, financial condition and results of operations may be harmed by general and local
economic conditions. If the U.S. economy or the local economy in a market in which we operate suffers a downturn, our properties could be harmed as the disposable income of consumers or their willingness to patronize our operations declines,
resulting in a decrease in the number of patrons at our properties or a decrease in the amount that patrons are willing to wager.

In addition, seasonality and weather conditions can affect our results of operations. Winter travel conditions can adversely affect patronage and revenues at our Colorado and Nevada casinos. Although
casino business is not seasonal, levels of gaming activity increase significantly during weekends and holidays, especially holiday weekends. Hurricanes Katrina and Rita temporarily affected our truck plaza video gaming operations in late 2005, while
Hurricanes Gustav and Ike temporarily affected our truck plaza video gaming operations in late 2008. Similar hurricanes could have a material adverse effect on our Louisiana operations in future years. Our pari-mutuel wagering revenues are higher
during scheduled live racing than at other times of the year. Adverse weather conditions can cause cancellation of or curtail attendance at outdoor races, thereby reducing wagering and our revenues. Attendance and wagering at both outdoor races and
satellite wagering facilities can be harmed by holidays and other competing seasonal activities.

We depend on agreements with
Colonials horsemen to operate our racing and wagering business.

The Federal Interstate Horseracing Act and the
Virginia Racing Act require Colonial to have written agreements with representative Virginia horsemens groups in order to simulcast races. We have an agreement with the VHHA that expires December 31, 2011 and an agreement with the VaHBPA
that expires December 31, 2012.

Energy price increases may adversely affect our costs and our revenues.

Our casino and horse racing and pari-mutuel wagering operations use significant amounts of electricity and other forms of energy. Any
substantial increase in the cost of the forms of energy we use may negatively affect our results of operations. In addition, consumer energy or gasoline price increases may reduce the disposable income of our potential customers or their willingness
to patronize our operations and correspondingly reduce our patronage and revenues. Furthermore, a fuel price increase may impact fuel sales in Louisiana, making it more difficult to meet minimum fuel sale requirements which in turn could limit (or
eliminate entirely) the number of video gaming devices we can operate at any given truck plaza.



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Our business, financial condition, and results of operations may be harmed by union efforts to
organize our employees.

Our employees are not covered by collective bargaining agreements. However, in January and
February 2007, the United Food and Commercial Workers local union #7 conducted some initial organizing activities in Black Hawk by direct mail to casino employees, handouts at bus stops and personal solicitations. These efforts were directed to
employees of all major casinos in Black Hawk. A small number of our employees, which we estimate to be about 22, signed up with the local as internal organizers in January and February 2007. Since that time we have not been notified of any other
employees being involved with organizing. All union organization activity seems to have ceased in April 2007. If this or any other union seeks to organize any of our employees, we could experience disruption in our business and incur significant
costs, both of which could have a material adverse effect on our results of operation and financial condition. If a union were successful in organizing any of our employees, we could experience significant increases in our labor costs which could
also have a material adverse effect on our business, financial condition, and results of operations.

We are subject to potential
exposure to environmental liabilities.

Generally, we are subject to various federal, state and local governmental
laws and regulations relating to the use, storage, discharge, emission and disposal of hazardous materials. Failure to comply could result in the imposition of severe penalties or restrictions on our operations by governmental agencies or courts. We
are not aware of any such exposure at our properties. Black Hawk, Colorado is located within a 400-square mile area that in 1983 was designated as the Clear Creek Central/City National Priorities List Site Study Area under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended. Although our Colorado casinos are not within any of the specific areas currently identified for investigation or remediation under that statute, environmental problems may
subsequently be discovered, including in connection with any future construction on our property. Furthermore, governmental authorities could broaden their investigations and identify areas of concern within the site, we could be identified as a
potentially responsible party and any related liability could have a material adverse effect on us. We do not have insurance to cover environmental liabilities, if we incur any.

Failure to complete any future construction or development projects on budget and on time could adversely affect our financial condition.

Any future construction or expansion projects will be subject to significant risks, any of which could cause unanticipated cost increases
and delays. These include, among others, the following:



| |  |  | shortages of material and skilled laborers;
| | - |  | -------------------------------------------



| |  |  | labor disputes and work stoppages;
| | - |  | ----------------------------------



| |  |  | weather interference or delays;
| | - |  | -------------------------------



| |  |  | engineering problems;
| | - |  | ---------------------



| |  |  | environmental problems;
| | - |  | -----------------------



| |  |  | regulatory problems;
| | - |  | --------------------



| |  |  | changes to plans or specifications;
| | - |  | -----------------------------------



| |  |  | fire, earthquake, flood and other natural disasters; and
| | - |  | --------------------------------------------------------



| |  |  | geological, construction, excavation and equipment problems.
| | - |  | ------------------------------------------------------------

Our expansion projects may not be completed within our budget, our construction activities may disrupt our operations and our new
operations may not open on schedule. We have limited experience in developing properties and cannot predict all of the risks that any particular construction or remodeling project might face. In addition, we have experienced delays that adversely
affected our business during similar remodeling and expansion projects. Failure to complete a construction or expansion project on time or within our budget may cause us to devote additional resources to the project, which could divert our time and
attention away from the operation of our other businesses and could cause our business to suffer.



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If we are unable to finance our expansion and renovation projects as well as capital expenditures
through cash flow, borrowings under our senior credit facility and additional financings, our expansion and renovation efforts will be jeopardized.

We intend to finance our current and future expansion and renovation projects primarily with cash flow from operations and borrowings under our senior credit facility. If we are unable to finance our
current or future expansion projects, we will have to adopt one or more alternatives, such as reducing or delaying planned expansion, development and renovation projects as well as capital expenditures, selling assets, restructuring debt, or
obtaining additional equity financing or joint venture partners, or modifying our senior credit facility. These sources of funds may not be sufficient to finance our expansion, and other financing may not be available on acceptable terms in a timely
manner or at all. In addition, our existing indebtedness contains certain restrictions on our ability to incur additional indebtedness. If we are unable to secure additional financing, we could be forced to limit or suspend expansion, development
and renovation projects, which may adversely affect our business, financial condition and results of operations.

The concentration and
evolution of the slot machine manufacturing industry could impose additional costs on us.

A majority of our revenues
are attributable to slot machines operated by us at our gaming facilities. It is important, for competitive reasons, that we offer the most popular and up to date slot machine games with the latest technology to our customers.

We believe that a substantial majority of the slot machines sold in the U.S. in 2010 were manufactured by a few select companies. In
addition, we believe that one company in particular provided a majority of all slot machines sold in the U.S. in 2010.

In
recent years, the prices of new slot machines have escalated faster than the rate of inflation. Furthermore, in recent years, slot machine manufacturers have frequently refused to sell slot machines featuring the most popular games, instead
requiring participation lease arrangements in order to acquire the machines. Participation slot machine leasing arrangements typically require the payment of a fixed daily rental. Such agreements may also include a percentage payment of coin-in or
net win. Generally, a participation lease is substantially more expensive over the long term than the cost to purchase a new machine.

For competitive reasons, we may be forced to purchase new slot machines or enter into participation lease arrangements that are more expensive than our current costs associated with the continued
operation of our existing slot machines. If the new slot machines do not result in sufficient incremental revenues to offset the increased investment and participation lease costs, it could hurt our profitability.

Our operations could be adversely affected due to the adoption of certain anti-smoking regulations.

In November 2006, a ballot initiative listed as Question 5 and entitled the Nevada Clean Indoor Air Act (the Question
5) was approved by a majority of Nevada voters. Question 5 restricts smoking in all indoor public places of employment with certain exceptions. Among the exceptions are the gaming areas of casinos and stand alone bars, taverns and
saloons that do not serve meals. If future ballot initiatives or anti-smoking legislation are passed in Nevada removing or restricting these exceptions to Question 5, there could be a resulting material adverse effect on our business.

The Colorado Clean Indoor Act (the Indoor Act) was adopted in the Colorado legislature in March 2006. It
bans smoking in virtually all public places although certain portions of gaming casinos, including gaming areas, were exempt from the Indoor Act until January 1, 2008. Since that exception for gaming areas was repealed by the state legislature,
compliance with the Indoor Act has, we believe, had an adverse effect on our business.

In 2009, a bill was introduced in the
Louisiana state legislature that would ban smoking in bars, restaurants and casinos in Louisiana. The bill failed by a large margin. A similar bill banning smoking in certain free-standing casinos, riverboat casinos and racetrack slot parlors,
but excluded truck stop casinos, was introduced in the Louisiana state legislature in 2010, but died in committee. If anti-smoking legislation is passed in Louisiana, there could be a resulting material adverse effect on our business.



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Virginia banned smoking in restaurants that do not have separate smoking and non-smoking
facilities as of December 1, 2009. Colonial has installed appropriate separate facilities in four of its satellite wagering facilities. Colonial has no plans to install separate facilities in its other locations. Colonial does not believe the
restrictions placed on smoking in restaurants will have an adverse effect on our business.



|Item 1B. | Unresolved Staff Comments.
|-------- | --------------------------

None.



|Item 2. | Properties.
|------- | -----------

See Our Properties and Operations in Item 1 above for a description of the location and general character of our principal properties. Each of our properties is subject to liens and
encumbrances securing our senior credit facility. See Note 5 to our consolidated financial statements included elsewhere herein.



|Item 3. | Legal Proceedings.
|------- | ------------------

We are involved in routine litigation arising in the ordinary course of our business pertaining to workers compensation claims, equal opportunity employment issues, or guest injury claims. All such
claims are routinely turned over to our insurance providers. We believe these matters are covered by appropriate insurance policies, less applicable deductibles which are accrued in our financial statements. None of the claims or payment of
deductibles is expected to have a material impact on our financial position, results of operations or cash flows.



|Item 4. | [Reserved.]
|------- | -----------



|Item 5. | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
|------- | -------------------------------------------------------------------------------------------------------------

Effective January 31, 2007, all of our outstanding common stock became held by Jacobs Investments, Inc., a private holding company
and, accordingly, there is no established trading market for our common stock. We are a Qualified Subchapter S-Corporation Subsidiary under the Internal Revenue Code of 1986. Under those provisions, the owner of our common stock pays taxes on our
taxable income. Our ability to make distributions to our stockholder is limited by the terms of the credit agreement and indenture related to our indebtedness.

We have no equity compensation, stock option or similar plans relating to our equity securities.

We made no repurchases of our equity securities during the fourth quarter of the fiscal year covered by this report.



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|Item 6. | Selected Financial Data.
|------- | ------------------------

The following selected consolidated financial data should be read in conjunction with our managements discussion and analysis of financial condition and results of operations and our consolidated
financial statements and related notes thereto appearing elsewhere in this report. The consolidated statements of operations data and the consolidated balance sheet data are derived from our consolidated financial statements. The selected financial
data provided below is not necessarily indicative of our future results of operations or financial performance. The consolidated financial statements and the accompanying managements discussion and analysis of financial condition and results
of operations presented in this Form 10-K have been retroactively adjusted to include the operations of Flats Development, Inc. from the earliest period presented. See Note 4 of the consolidated financial statements.



|                                                                |  |                                                               |         |   |                                                    |   |         |                                                   |  |   |                  |   |  |                  |         |   |  |   |         |  
|--------------------------------------------------------------- |  | ------------------------------------------------------------- | ------- | - | -------------------------------------------------- | - | ------- | ------------------------------------------------- |  | - | ---------------- | - |  | ---------------- | ------- | - |  | - | ------- | -
|                                                                |  | As of and for the Year Ended December 31,                     |        
|                                                                |  | 2010                                                          |         |   | 2009(Asadjusted,see 
Note 4of FinancialStatements) |   |         | 2008(Asadjusted,see Note
4of FinancialStatements) |  |   | 2007(Asadjusted) |   |  | 2006(Asadjusted) |        
|                                                                |  | (Dollars In Thousands, except Distributions per Common Share) |        
|Statements of Operations Data:(1)                               |  |                                                               |         |   |                                                    |   |         |                                                   |  |   |                  |   |  |                  |         |   |  |   |         |  
|Net revenues                                                    |  | $                                                             | 329,924 |   |                                                    | $ | 313,466 |                                                   |  | $ | 363,286          |   |  | $                | 350,419 |   |  | $ | 323,090 |  
|Total costs and expenses                                        |  |                                                               | 301,235 |   |                                                    |   | 286,583 |                                                   |  |   | 340,022          |   |  |                  | 317,420 |   |  |   | 291,565 |  
|                                                                |  |                                                               |         |   |                                                    |   |         |                                                   |  |   |                  |   |  |                  |         |   |  |   |         |  
|Operating income                                                |  |                                                               | 28,689  |   |                                                    |   | 26,883  |                                                   |  |   | 23,264           |   |  |                  | 32,999  |   |  |   | 31,525  |  
|Interest expense, net                                           |  |                                                               | (25,556 | ) |                                                    |   | (25,191 | )                                                 |  |   | (27,283          | ) |  |                  | (28,132 | ) |  |   | (32,336 | )
|Pre-payment penalties, tender and consent costs                 |  |                                                               |        |   |                                                    |   |        |                                                   |  |   |                 |   |  |                  |        |   |  |   | (9,321  | )
|Income tax benefit                                              |  |                                                               |        |   |                                                    |   |        |                                                   |  |   |                 |   |  |                  |        |   |  |   | 103     |  
|                                                                |  |                                                               |         |   |                                                    |   |         |                                                   |  |   |                  |   |  |                  |         |   |  |   |         |  
|Net income (loss)                                               |  | $                                                             | 3,133   |   |                                                    | $ | 1,692   |                                                   |  | $ | (4,019           | ) |  | $                | 4,867   |   |  | $ | (10,029 | )
|                                                                |  |                                                               |         |   |                                                    |   |         |                                                   |  |   |                  |   |  |                  |         |   |  |   |         |  
|Balance Sheet Data (end of period):(1)                          |  |                                                               |         |   |                                                    |   |         |                                                   |  |   |                  |   |  |                  |         |   |  |   |         |  
|Current assets                                                  |  | $                                                             | 36,032  |   |                                                    | $ | 35,231  |                                                   |  | $ | 32,910           |   |  | $                | 35,802  |   |  | $ | 37,292  |  
|Total assets                                                    |  |                                                               | 334,296 |   |                                                    |   | 343,540 |                                                   |  |   | 347,432          |   |  |                  | 360,967 |   |  |   | 355,973 |  
|Current liabilities                                             |  |                                                               | 29,039  |   |                                                    |   | 25,937  |                                                   |  |   | 28,845           |   |  |                  | 30,450  |   |  |   | 32,486  |  
|Long-term debt, capital lease obligations and other liabilities |  |                                                               | 279,535 |   |                                                    |   | 292,081 |                                                   |  |   | 292,249          |   |  |                  | 300,779 |   |  |   | 286,666 |  
|Stockholders equity                                            |  |                                                               | 25,722  |   |                                                    |   | 25,522  |                                                   |  |   | 26,338           |   |  |                  | 29,738  |   |  |   | 36,821  |  
|Financial Data                                                  |  |                                                               |         |   |                                                    |   |         |                                                   |  |   |                  |   |  |                  |         |   |  |   |         |  
|Ratio of earnings to fixed charges(2)                           |  |                                                               | 1.12x   |   |                                                    |   | 1.06x   |                                                   |  |   | 0.87x            |   |  |                  | 1.16x   |   |  |   | 0.70x   |  
|Distributions per Common Share                                  |  | $                                                             | 2,533   |   |                                                    | $ | 2,159   |                                                   |  | $ | 1,200            |   |  | $                | 10,962  |   |  | $ | 22,803  |  



|(1) | See a discussion of our recent acquisition activities in Note 4 and our debt issuances in Note 5 to the consolidated financial statements.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. Earnings consist of income (loss) before income taxes and noncontrolling
interest, plus fixed charges and amortization of capitalized interest, less interest capitalized during the period. Fixed charges consist of interest on indebtedness (whether expensed or capitalized), amortization of deferred financing costs,
discounts and premiums and that portion of rental expense that we believe is representative of interest. For the years ended December 31, 2008 and 2006, we had a deficiency of $3,944 and $10,215, respectively, in earnings to fixed charges.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations.
|------- | --------------------------------------------------------------------------------------

This section discusses the results of our operations on a historical basis for the years indicated. You should read the following
discussion and analysis in conjunction with the audited consolidated financial statements that are included elsewhere in this Form 10-K. Certain statements contained in this Managements Discussion and Analysis of Financial Condition and
Results of Operations constitute forward-looking statements, which statements involve risks and uncertainties described elsewhere in this report.

Our historical information may not necessarily be meaningful when making year-to-year comparisons, as our cost structure, debt structure, capitalization, and the overall composition of our company
following the transactions discussed herein have significantly changed. Further, the historical information should not necessarily be taken as a reliable indication of our future performance.

TABLE OF CONTENTS:



|                    |  |                                                                                                       |  |  |    | 
|------------------- |  | ----------------------------------------------------------------------------------------------------- |  |  | -- | 
|Description of item | 
|A.                  |  | Company background                                                                                    |  |  | 36 | 
|B.                  |  | Significant transactions occurring during the year ended December 31, 2010                            |  |  | 36 | 
|C.                  |  | Subsequent events                                                                                     |  |  | 37 | 
|D.                  |  | Overview and discussion of our operations                                                             |  |  | 37 | 
|E.                  |  | Comparison of our operations for the year ended December 31, 2010 to the year ended December 31,
2009 |  |  | 41 | 
|F.                  |  | Comparison of our operations for the year ended December 31, 2009 to the year ended December 31,
2008 |  |  | 43 | 
|G.                  |  | Segment information for the three years ended December 31, 2010                                       |  |  | 45 | 
|H.                  |  | Liquidity and capital resourcesDecember 31, 2010                                                     |  |  | 49 | 
|I.                  |  | Critical accounting policies and estimates                                                            |  |  | 52 | 



|A. | Company background
|-- | ------------------

We
are a developer, owner and operator of gaming and pari-mutuel wagering facilities throughout the United States, with properties located in Colorado, Nevada, Louisiana and Virginia. As of December 31, 2010, we owned and operated two casinos in
Colorado and three casinos in Nevada, 18 video gaming truck plazas in Louisiana and a horse racing track with ten satellite wagering facilities in Virginia. In addition, we are party to an agreement that entitles us to a portion of the gaming
revenues from an additional truck plaza video gaming facility.

We are a wholly-owned subsidiary of Jacobs Investments, Inc.
(JII) and a Qualified Subchapter S-Corporation Subsidiary under the Internal Revenue Code of 1986, as amended. Under those provisions, the owner of our company pays income taxes on our taxable income. Jeffrey P. Jacobs, our Chief
Executive Officer (CEO), and his family trusts own 100% of JIIs outstanding Class A and Class B shares.



|B. | Significant transactions occurring during the year ended December 31, 2010
|-- | --------------------------------------------------------------------------

Amendment to Credit Agreement

On March 31, 2010, we entered
into an Amendment and Restatement Agreement (the Amendment) to our credit agreement. Generally, the Amendment, among other things, adjusted our bank financial covenants, allowed for the exclusion of certain items from EBITDA for purposes
of calculating our revised financial covenants, and provided for other minor amendments. Additionally, the maturity of all but $3.0 million of our revolving senior credit facility aggregating $40.0 million due June 2011 (Class B Revolving
Loans) was extended to June 2012 (Class A Revolving Loans).

As a result of the Amendment, our interest rate
increased by 0.25% on the drawn Class B Revolving Loans balance and by 0.50% on the drawn Class A Revolving Loans balance, and our interest rate on the Tranche B Term Loan and Delayed Draw Tranche B Term Loan (aggregating $57.4 million at
December 31, 2010) increased from



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2.75% above LIBOR to 3.00% above LIBOR. The total cost of the Amendment, including the bank consent fees, the fees to the joint lead arrangers, legal, accounting and other costs was approximately
$2.0 million. Of these costs, $1.5 million will be amortized to interest expense over the remaining life of the credit facility which is approximately one and one-half years and the remainder was expensed as incurred. At December 31, 2010, we
were in compliance with our financial covenants.

Nautica Properties

With respect to our properties in Cleveland, Ohio referred to as the Nautica Properties, in July 2010, we amended the three remaining
unexercised option agreements and extended the option periods to July 11, 2012, giving us the right to purchase or enter into long-term leases on the three remaining Nautica Properties businesses and their related assets. Additionally, on
July 7, 2010, we exercised our option and entered into a purchase agreement to acquire a third Nautica Properties based business and its related assets referred to as Flats for $2.8 million. Closing of the transaction occurred on
August 16, 2010. Flats was controlled by the mother and sister of our CEO, and was accounted for as a combination of entities under common control. The acquisition has been recorded at the historical cost bases in the assets and liabilities
transferred. Accordingly, the consolidated financial statements and the accompanying managements discussion and analysis of financial condition and results of operations presented in this Form 10-K have been retroactively adjusted to include
the operations of Flats from January 1, 2008. See Note 4 to our Consolidated Financial Statements.



|C. | Subsequent events
|-- | -----------------

On
January 18, 2011, we acquired a fourth Nautica Properties based business and its related assets referred to as Nautica Phase 2 for $1.25 million from a limited partnership. The general partner owned 1% and the limited partners owned
99% of the limited partnership. Our CEO owned 58% of the general partner interests and controlled the partnership. Third parties owned the remaining 42% of the general partner interests and the 99% limited partnership interest. The acquisition of
this business will be accounted for as a combination of entities under common control during 2011. Therefore, the portion of Nautica Phase 2 acquired from our CEO will be recorded at the historical cost bases in the assets and liabilities
transferred and the portion of Nautica Phase 2 acquired from third parties will be recorded at fair value at the acquisition date using the acquisition method of accounting.

Additionally, on January 31, 2011, we acquired two truck plaza video gaming facilities in Louisiana, Cash Magic Springhill, LLC and Cash Magic Vivian, LLC, for $5.5 million and $4.9 million,
respectively, which were previously wholly owned by another JII subsidiary, Gameco Holdings, Inc. The acquisitions of these businesses will be accounted for as combinations of entities under common control during 2011.



|D. | Overview and discussion of our operations
|-- | -----------------------------------------

Our CEO is our chief operating decision maker. As of December 31, 2010, we had four segments representing the geographic regions of our operations: Colorado, Nevada, Louisiana and Virginia. Each
segment is managed separately because of the unique characteristics of its revenue stream and customer base. We have aggregated our operations into these four segments based on similarities in the nature of the properties businesses, customers
and regulatory environment in which each property operates. The Colorado segment consists of The Lodge and Gilpin casinos. Our Nevada segment includes the Gold Dust West-Reno, Gold Dust West-Carson City and Gold Dust West-Elko casinos. The Louisiana
operations consist of truck plaza/video poker facilities, and the Virginia segment consists of Colonials pari-mutuel operations and satellite wagering facilities.

Our casino properties in Colorado (The Lodge and Gilpin casinos) and Nevada (the Gold Dust West-Reno, Gold Dust West-Carson City and Gold Dust West-Elko casinos) are managed by our Chief Operating Officer
(COO) who is located in our Golden, Colorado corporate offices. Our video poker truck plaza operations are also managed by our COO. Our COO reports to our President, who is also located in Golden, Colorado. Our President reports directly
to our CEO. Our Virginia racetrack and satellite wagering facilities are managed by our on-site President of Pari-Mutuel Operations, and he also reports directly to our CEO.



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When we analyze and manage our segments, we focus on several measurements that we believe
provide us with the necessary ratios and key performance indicators for us to determine how we are performing versus our competition and against our own internal goals and budgets. We confer monthly and discuss and analyze significant variances in
an effort to identify trends and changes in our business. We focus on EBITDA (earnings before interest, income taxes, depreciation and amortization) as one of the primary measurements of reviewing and analyzing the operating results of each segment.
While we recognize that EBITDA is not a generally accepted accounting principle (i.e. it is a non-GAAP financial measure), we nonetheless believe it is useful because it allows holders of our debt and management to evaluate and compare operating
results from continuing operations from period to period in a meaningful and consistent manner in addition to standard GAAP financial measures. Additionally, most financial analysts following the gaming industry utilize EBITDA as a financial
measurement, and when our debt holders (both secured and unsecured) inquire and discuss our operational performance with us, they consistently inquire about our EBITDA performance levels versus the prior year as well as our EBITDA margins versus our
competitors. Finally, EBITDA is a key component of certain financial covenants contained in our debt agreements, among other things, and as such it is a critical ingredient that we must watch in order to ensure compliance with our bank credit
agreement and our note indenture covenants, measure our historical operating performance, and determine our ability to achieve future growth and/or financing.

In addition to the above performance measurements, we pay particular attention to our monthly and annual cash flow. Our business is sensitive to shifts in volumes and levels of activity and we find it
necessary to monitor our cash levels closely. Every six months (June 15 and December 15) we have a cash interest payment due on our $210 million senior unsecured notes amounting to $10.2 million. Additionally, we currently have $57.4 million
outstanding on our senior secured credit facility with interest due at varying intervals. As of December 31, 2010, $11.5 million was outstanding on the $40 million senior secured revolving credit facility we have with a bank group on which we
can draw as needed in order to augment the cash flow we generate from operations. This is generally a function of the timing of generating cash from operations coupled with the amount of cash we need to run the businessi.e., our cash
inventory. Presently, we estimate that we require approximately $15 million of cash inventory to operate our properties. See also Section H, Liquidity and Capital Resources.

Colorado

Our Colorado operations consist of The Lodge Casino at Black Hawk (The Lodge) and the Gilpin Casino (Gilpin), both of which are located in Black Hawk, Colorado. The competitive
aspects of the market in Black Hawk continue to be a significant factor in our operations. At December 31, 2010, there were approximately 8,200 slot machines in the city of Black Hawk. We had 1,368 slot machines in this market (970 at The Lodge
and 398 at the Gilpin), which represented approximately 17% of the total slot machines in Black Hawk. Additionally, there were 185 table games in the city of Black Hawk. We had 41 table games in this market (35 at The Lodge and 6 at the Gilpin),
which represented approximately 22% of the total table games in Black Hawk. On March 15, 2010, we closed the Gilpin poker room.

New gaming regulation, Amendment 50, which became effective on July 2, 2009 at Colorado casinos, allowed for the introduction of craps and roulette, increased the maximum wager limit to $100, and
allows for 24-hour gaming operations. During 2009, our Colorado properties were affected by a number of events related to preparing our properties to take advantage of the higher limits, new games and extended hours. We reduced the slot machine
count to accommodate the addition of table games. Our casino floors at both The Lodge and Gilpin were disrupted during the second quarter to install new carpet, additional surveillance and new table games. On September 9, 2009, we began a
construction project to expand our casino floor space at The Lodge. The project was completed on November 16, 2009.

For
the year ended December 31, 2010, our gross gaming revenues at The Lodge and the Gilpin totaled $105.0 million, which represented 19% of the total gaming revenues in Black Hawk. The overall Black Hawk market gross gaming revenues increased by
5.6% in 2010 over 2009. However, total slot devices in Black Hawk decreased by 10% while table games decreased by 11%. We managed to generate 112% efficiencies (our percentage of the gross gaming revenues divided by our percentage of the gaming
devices) within the market for 2010. We follow our efficiency level very closely as we believe this is a useful measure of how well we are performing within the market.



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We expect some of our previous and existing market share to be lost due to increased
competition. As more properties continue to compete for their share of the market, our personnel costs, marketing costs, and other costs will likely increase as we attempt to keep our market share.

Nevada

Our Nevada operations consist of Gold Dust West-Reno, located in Reno, Nevada, which was acquired on January 5, 2001; Gold Dust West-Carson City, located in Carson City, Nevada, which was acquired on
June 25, 2006; and Gold Dust West-Elko, located in Elko, Nevada, which we developed and opened on March 5, 2007. As in Colorado, our Nevada casinos operate in highly competitive markets. As a result of the added competition from Indian
Gaming in California, many Northern Nevada casinos advertise themselves as locals casinos.

At
December 31, 2010, Reno had approximately 11,500 gaming devices, of which Gold Dust West-Reno had 475 devices, or 4.1% of the market. For the year ended December 31, 2010, our gross gaming revenues were 3.8% of the Reno market, with an
efficiency rate of 93%.

Since its acquisition in June 2006, Gold Dust West-Carson City (formerly Piñon Plaza Resort),
has undergone major renovations and changes to the operations emerging January 24, 2007 as the new Gold Dust West-Carson City by way of an extensive rebranding program. The Carson City area (state capital) is 30 miles south of Reno
and services the areas of Dayton, Gardnerville and Minden surrounding it with a total population base of 60,000 plus. The area had approximately 4,100 gaming devices of which Gold Dust West-Carson City had 403 (10% of total devices). For the year
ended December 31, 2010, our efficiency rate was 91%. This property is expected to substantially improve its efficiency through enhanced utilization of its many unique amenities.

At December 31, 2010, Gold Dust West-Elko had 348 gaming devices, representing approximately 11.5% of the total devices in the
market. For the year ended December 31, 2010, our gross gaming revenues were 12% of the Elko market, with an efficiency rate of 129%.

Louisiana

As of March 29, 2011, the Louisiana truck plaza
video gaming facilities consist of 20 truck plazas located in Louisiana and a share in the gaming revenues of an additional truck plaza. Each truck plaza features a convenience store, fueling operations, a restaurant and up to 50 video gaming
devices in the casino depending on the level of fuel sales and available space. At December 31, 2010, our truck plaza video gaming facilities had a combined total of 944 video gaming devices.

The Louisiana truck plazas revenues are comprised of: (i) revenue from video poker gaming machines; (ii) sales of
gasoline and diesel fuel; (iii) sales of groceries, trucker supplies and sundry items through their convenience stores; (iv) sales of food and beverages in their restaurants and bars; and (v) miscellaneous commissions on ATMs, pay
phones and lottery sales.

All video poker activity is reported via a computer phone line directly to the Louisiana State
Police. The Louisiana truck plazas revenues are dependent on meeting the minimum gallons of fuel sales requirements necessary to operate video poker gaming machines in Louisiana. The fuel sales requirements must be complied with on an annual
basis (except for the first year of operations during which it must be complied with on a quarterly basis) and in the event of noncompliance, the Louisiana State Police will turn off a portion of the video poker machines until the minimum fuel sales
requirements are met. Management of the Louisiana truck plazas believes that they will continue to meet the fuel sales requirements necessary to operate video poker gaming machines in Louisiana at current levels, however, we can give no assurance in
this regard.



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Virginia

Colonials revenues are comprised of: (i) pari-mutuel commissions from wagering on races broadcast from out-of-state racetracks
to Colonials satellite wagering facilities and the track using import simulcasting; (ii) wagering at the track and Colonials satellite wagering facilities on its live races; (iii) commissions from advance deposit account
wagering by telephone and over the internet; (iv) admission fees, program and racing form sales, and certain other ancillary deposit account activities; and (v) food and beverage sales and concessions.

Colonials revenues are heavily dependent on the operations of its satellite wagering facilities. Revenues from the satellite
wagering facilities help support live racing at the track. The amount of revenue Colonial earns from each wager depends on where the race is run. Revenues from import simulcasting of out-of-state races and from wagering at the track and at the
satellite wagering facilities on races run at the track consist of the total amount wagered at Colonials facilities, less the amount paid as winning wagers. The percentage of each dollar wagered on horse races that must be returned to the
public as winning wagers (typically about 79%) is legislated by the state in which a race takes place. Revenues from export simulcasting consist of amounts payable to Colonial by the out-of-state racetracks and their simulcast facilities with
respect to wagering on races run at the track.

On November 10, 2008, we closed one of our two satellite wagering
facilities in Chesapeake, Virginia. On April 28, 2010, we opened a satellite wagering facility in Henrico County, Virginia, and on August 27, 2010, we opened a satellite wagering facility in Richmond, Virginia. As of December 31,
2010, we operate ten satellite wagering facilities in Virginia.

Since 2004, Colonial Downs has operated an internet account
wagering platform in Virginia called EZ Horseplay. In early 2009, Colonial Downs commenced development of a custom built account wagering support kiosk that allows a customer to remotely open a wagering account, fund the account with cash, take
a cash withdrawal from their account and print a race track program. The first kiosks, along with a touchscreen version of the EZ Horseplay internet account wagering platform, were deployed in September 2009. As of December 31, 2010,
we have deployed approximately 30 kiosks in private clubs, bars and restaurants in Virginia.



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Summary of Consolidated Operating Results

Our results of operations reflect the consolidated operations of all our subsidiaries. A summary of our consolidated operating results for
the years ended December 31, 2010, 2009 and 2008 is as follows:



|                                                                                  |  |                         |         |   |                                                    |   |         |                                                    |  |   |         |  
|--------------------------------------------------------------------------------- |  | ----------------------- | ------- | - | -------------------------------------------------- | - | ------- | -------------------------------------------------- |  | - | ------- | -
|                                                                                  |  | Year Ended December 31, |        
|                                                                                  |  | 2010                    |         |   | 2009(As adjusted,see Note 4
ofFinancialStatements) |   |         | 2008(As adjusted,see Note 4
ofFinancialStatements) | 
|                                                                                  |  | (Dollars in Thousands)  |        
|REVENUES                                                                          |  |                         |         |   |                                                    |   |         |                                                    |  |   |         |  
|Gaming:                                                                           |  |                         |         |   |                                                    |   |         |                                                    |  |   |         |  
|Casino                                                                            |  | $                       | 140,265 |   |                                                    | $ | 139,766 |                                                    |  | $ | 139,492 |  
|Truck stop                                                                        |  |                         | 61,463  |   |                                                    |   | 62,983  |                                                    |  |   | 67,590  |  
|Pari-mutuel                                                                       |  |                         | 27,669  |   |                                                    |   | 32,276  |                                                    |  |   | 38,657  |  
|Food and beverage                                                                 |  |                         | 28,720  |   |                                                    |   | 29,781  |                                                    |  |   | 30,736  |  
|Convenience storefuel                                                            |  |                         | 85,443  |   |                                                    |   | 60,659  |                                                    |  |   | 97,021  |  
|Other                                                                             |  |                         | 21,271  |   |                                                    |   | 22,302  |                                                    |  |   | 23,508  |  
|Less: promotional allowances                                                      |  |                         | (34,907 | ) |                                                    |   | (34,301 | )                                                  |  |   | (33,718 | )
|                                                                                  |  |                         |         |   |                                                    |   |         |                                                    |  |   |         |  
|Total net revenues                                                                |  |                         | 329,924 |   |                                                    |   | 313,466 |                                                    |  |   | 363,286 |  
|                                                                                  |  |                         |         |   |                                                    |   |         |                                                    |  |   |         |  
|COSTS AND EXPENSES                                                                |  |                         |         |   |                                                    |   |         |                                                    |  |   |         |  
|Gaming:                                                                           |  |                         |         |   |                                                    |   |         |                                                    |  |   |         |  
|Casino                                                                            |  |                         | 48,871  |   |                                                    |   | 47,348  |                                                    |  |   | 46,809  |  
|Truck stop                                                                        |  |                         | 37,326  |   |                                                    |   | 38,784  |                                                    |  |   | 40,990  |  
|Pari-mutuel                                                                       |  |                         | 21,757  |   |                                                    |   | 26,077  |                                                    |  |   | 31,172  |  
|Food and beverage                                                                 |  |                         | 13,726  |   |                                                    |   | 13,521  |                                                    |  |   | 15,417  |  
|Convenience storefuel                                                            |  |                         | 80,510  |   |                                                    |   | 57,139  |                                                    |  |   | 90,714  |  
|Other                                                                             |  |                         | 15,254  |   |                                                    |   | 16,044  |                                                    |  |   | 18,260  |  
|Marketing, general and administrative                                             |  |                         | 63,054  |   |                                                    |   | 65,864  |                                                    |  |   | 68,931  |  
|Unrealized (gain) loss on change in fair value of investment in equity securities |  |                         | (594    | ) |                                                    |   | 309     |                                                    |  |   | 6,577   |  
|Goodwill impairment                                                               |  |                         |        |   |                                                    |   |        |                                                    |  |   | 199     |  
|Abandonment costs                                                                 |  |                         |        |   |                                                    |   |        |                                                    |  |   | 829     |  
|Depreciation and amortization                                                     |  |                         | 21,331  |   |                                                    |   | 21,497  |                                                    |  |   | 20,124  |  
|                                                                                  |  |                         |         |   |                                                    |   |         |                                                    |  |   |         |  
|Total costs and expenses                                                          |  |                         | 301,235 |   |                                                    |   | 286,583 |                                                    |  |   | 340,022 |  
|                                                                                  |  |                         |         |   |                                                    |   |         |                                                    |  |   |         |  
|OPERATING INCOME                                                                  |  |                         | 28,689  |   |                                                    |   | 26,883  |                                                    |  |   | 23,264  |  
|                                                                                  |  |                         |        
|Interest expense, net                                                             |  |                         | (25,556 | ) |                                                    |   | (25,191 | )                                                  |  |   | (27,283 | )
|Noncontrolling interest                                                           |  |                         |        |   |                                                    |   |        |                                                    |  |   | (71     | )
|                                                                                  |  |                         |         |   |                                                    |   |         |                                                    |  |   |         |  
|NET INCOME (LOSS) ATTRIBUTABLE TO JEI                                             |  | $                       | 3,133   |   |                                                    | $ | 1,692   |                                                    |  | $ | (4,090  | )
|                                                                                  |  |                         |         |   |                                                    |   |         |                                                    |  |   |         |  



|E. | Comparison of our operations for the year ended December 31, 2010 to the year ended December 31, 2009
|-- | -----------------------------------------------------------------------------------------------------

All comparisons below begin with the 2010 results followed by the 2009 results.

Casino revenues increased $0.5 million or less than 1% to $140.3 million from $139.8 million. Increases in casino revenues at The Lodge of
$3.7 million or 5% were offset by decreases at the Gilpin of $0.7 million or 4%, Gold Dust West-Reno of $2.2 million or 12%, Gold Dust West-Carson City of $0.1 million or 1% and Gold Dust West-Elko of $0.2 million or 2%. Revenues at The Lodge
increased primarily due to Amendment 50 becoming



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effective July 2, 2009. Amendment 50 is benefiting the larger casino properties in Black Hawk. Overall, the City of Black Hawk casino win increased 6% during 2010 compared to 2009. Gold Dust
West-Reno continues to be negatively impacted by continued declines in our market area.

Truck stop video poker gaming
revenues decreased $1.5 million or 2% to $61.5 million from $63.0 million. The decrease in revenues was experienced at nearly all of our truck stop locations and is consistent with the statewide truck stop video gaming revenue decline of 2%
resulting from the continued general economic conditions, including higher unemployment and decreased disposable income for 2010 compared to 2009.

Pari-mutuel revenues decreased $4.6 million or 14% to $27.7 million from $32.3 million. The decrease in revenues is attributable to a $3.7 million decrease in wagering revenues at the racetrack and off
track wagering facilities primarily due to an overall decrease in attendance in 2010 compared to 2009, combined with a $0.9 million decrease in account wagering revenues primarily due to a decrease in commission revenue resulting from revised profit
sharing agreements with horsemens groups as compared to the prior year.

Food and beverage revenues decreased $1.1
million or 4% to $28.7 million from $29.8 million. This decrease is primarily attributable to decreases of $1.6 million at the truck stop facilities, $0.2 million at the Gilpin and $0.5 million at Colonial which correspond to the decreases in gaming
revenues. These decreases were somewhat offset by increases of $0.7 million at The Lodge, $0.1 million at the Gold Dust West-Reno, $0.2 million at Gold Dust West-Carson City and $0.2 million at Gold Dust West-Elko.

Convenience store-fuel revenues increased $24.7 million or 41% to $85.4 million from $60.7 million. The increase was primarily due to an
increase in the average selling price of fuel to $2.71 per gallon in 2010 from $2.26 per gallon in 2009, combined with an 17% increase in volume. In December 2009, JEI entered into a fuel supply agreement with CITGO Petroleum Corporation
(CITGO). To help JEI reach the fuel sale volume necessary to qualify for the reduced pricing structure under the CITGO contract, JEI entered into agreements with affiliates to provide fuel at cost for their fuel operations. The increase
in fuel sales volume for this period was primarily due to the new affiliate agreements, resulting in an increase in fuel sales revenues totaling $8.0 million in 2010.

Other revenues decreased $1.0 million or 5% to $21.3 million from $22.3 million and were primarily attributable to a $1.2 million decrease in convenience store revenues at the truck stops and receipt of
$0.3 million in 2009 of insurance proceeds in excess of hurricane losses incurred during late 2008 at our truck stops, somewhat offset by a one-time oil and gas royalty received in April 2010 totaling $0.5 million and an increase in hotel revenues
totaling $0.2 million at The Lodge. Additionally, other revenues at Colonial, Lot D and Sugar Warehouse decreased by a combined $0.3 million.

Promotional allowances increased $0.6 million or 2% to $34.9 million from $34.3 million. Increases in promotional allowances of $2.4 million at The Lodge and $0.2 million at the truck stops were somewhat
offset by decreases of $1.8 million at Gold Dust West-Reno, $0.1 million at the Gilpin and $0.1 million at Gold Dust West-Elko.

Casino expenses increased $1.6 million or 3% to $48.9 million from $47.3 million. Increases of $2.1 million at The Lodge and $0.1 million
at Gold Dust West- Carson City were somewhat offset by decreases of $0.4 million at the Gilpin and $0.2 million at Gold Dust West-Elko. The increase at The Lodge was primarily due to additional staffing for the table games and extended hours
combined with increased gaming taxes resulting from increased casino revenues.

Truck stop gaming expenses decreased $1.5
million or 4% to $37.3 million from $38.8 million and is primarily due to direct costs associated with decreased truck stop video poker gaming revenues.

Pari-mutuel costs and expenses decreased $4.3 million or 17% to $21.8 million from $26.1 million. The decrease is attributable to a $2.7 million decrease in direct costs resulting from decreased
pari-mutuel revenues primarily as a result of an overall decrease in attendance as compared to the prior year, combined with a $1.6 million decrease in costs associated with account wagering resulting from revised profit sharing agreements with
horsemens groups.



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Food and beverage costs and expenses increased $0.2 million or 2% to $13.7 million from
$13.5 million. Increases of $0.5 million at The Lodge, $0.1 million at the Gilpin, $0.1 million at Gold Dust West-Reno, $0.4 million at Gold Dust West-Carson City and $0.2 million at Gold Dust West-Elko, were offset by decreases of $0.9 million at
the truck stops and $0.2 million at Colonial.

Convenience store-fuel expenses increased $23.4 million or 41% to $80.5 million
from $57.1 million. The increase was primarily due to an increase in the average cost of fuel to $2.57 per gallon in 2010 from $2.13 per gallon in 2009, combined with an increase in volume as discussed in convenience store-fuel revenues above. In
January 2010, we also collected $0.3 million in accounts receivable that had been fully reserved in December 2008. The increase in fuel costs associated with the new affiliate agreements was $8.0 million in 2010.

Other costs and expenses decreased $0.8 million or 5% to $15.2 million from $16.0 million, and were attributable to a $0.7 million
decrease in convenience store expenses at the truck stops which correlates to the decrease in convenience store revenues combined with a $0.1 million decrease in hotel expenses at The Lodge.

Marketing, general and administrative expenses decreased $2.8 million or 4% to $63.1 million from $65.9 million. This decrease is
primarily the result of a net decrease of $1.9 million at corporate which is comprised of the following: (a) during 2009, we made political contributions in Ohio totaling $2.3 million which did not recur in 2010, combined with decreases of:
(b) $0.5 million in professional accounting fees, (c) $0.1 million in legal expenses and (d) $0.4 million in other miscellaneous expenses; somewhat offset by increases of: (e) $0.5 million of costs incurred during 2010 related to
the amendment to our credit agreement, (f) $0.5 million for corporate payroll, (g) $0.1 million for travel expenses at corporate and (h) $0.3 million for various political contributions made in 2010. Additionally, we had decreases of
$0.2 million at Gold Dust West-Reno, $0.2 million at Gold Dust West-Carson City, $0.6 million at Colonial and $0.4 million at the truck stops. These decreases were somewhat offset by increases of $0.2 million at The Lodge, $0.2 million at the Gilpin
and $0.1 million combined at the Nautica Properties.

We account for our investment in MTR Gaming Group, Inc.
(MTR) as an equity security, in accordance with the fair value option permitted by FASB ASC Topic 825, Financial Instruments (ASC Topic 825). An increase in the stock price resulted in an unrealized gain on the change
in fair value of investment in equity securities totaling $0.6 million during the year ended December 31, 2010. A decrease in the stock price resulted in an unrealized loss on the change in fair value of investment in equity securities totaling
$0.3 million during the year ended December 31, 2009.

Depreciation and amortization expense decreased $0.2 million or 1%
to $21.3 million from $21.5 million.

Net interest expense increased by $0.4 million or 1% to $25.6 million from $25.2 million
and is attributable to higher effective interest rates on our variable rate bank debt, somewhat offset by a decrease in debt outstanding during the year ended December 31, 2010 compared to the year ended December 31, 2009.



|F. | Comparison of our operations for the year ended December 31, 2009 to the year ended December 31, 2008
|-- | -----------------------------------------------------------------------------------------------------

All comparisons below begin with the 2009 results followed by the 2008 results.

Casino revenues increased $0.3 million or less than 1% to $139.8 million from $139.5 million. Increases in casino revenues at The Lodge of
$2.3 million or 3%, Gold Dust West-Carson City of $0.1 million or 1% and Gold Dust West-Elko of $1.0 million or 10% were offset by decreases at the Gilpin of $1.1 million or 5% and Gold Dust West-Reno of $2.0 million or 10% . Overall, the City of
Black Hawk casino win increased 4% during 2009 compared to 2008, due to the improved July through December 2009 performance resulting from the new games, increased betting limits and expanded hours that began on July 2, 2009. However,
throughout 2009, revenues have been negatively impacted by general economic conditions, including higher unemployment and decreased disposable income.



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Truck stop gaming revenues decreased $4.6 million or 7% to $63.0 million from $67.6 million
primarily due to new competition at certain locations combined with general economic conditions, including higher unemployment and decreased disposable income.

Pari-mutuel revenues decreased $6.4 million or 17% to $32.3 million from $38.7 million. The decrease in revenues is attributable to a $1.9 million decrease in the Chesapeake market partially resulting
from the closure of our Chesapeake, Military Highway off track wagering facility in November 2008, combined with a $2.1 million decrease in the Richmond market resulting from fewer operating days in 2009 at our Broad Street and Hull Street off track
wagering facilities. Revenues at the racetrack and other off track wagering facilities decreased $2.1 million and account wagering revenues decreased $0.3 million.

Food and beverage revenues decreased $0.9 million or 3% to $29.8 million from $30.7 million. This decrease is primarily attributable to decreases of $1.2 million at the truck stops and $0.5 million at
Colonial due to the lower level of gaming activity, somewhat offset by increases of $0.5 million at The Lodge, $0.1 million at the Gilpin, $0.1 million at Gold Dust West-Carson City and $0.1 million at Gold Dust West-Elko.

Convenience store-fuel revenues decreased $36.3 million or 37% to $60.7 million from $97.0 million. The average selling price of fuel
decreased to $2.26 per gallon in 2009 from $3.58 per gallon in 2008, while fuel volume was down 1% to 26.9 million gallons.

Other revenues decreased $1.2 million or 5% to $22.3 million from $23.5 million and were primarily attributable to a $0.3 million decrease in hotel and other revenues at Gold Dust West-Carson City, a $0.1
million decrease in hotel revenues at The Lodge, a $0.1 million decrease at the Gilpin, a $0.2 million decrease at Colonial, a $0.2 million decrease in Sugar Warehouse revenues and a $0.6 million decrease in convenience store and other revenues at
the truck stops, somewhat offset by receipt of $0.3 million of insurance proceeds in excess of hurricane losses incurred during late 2008 at our truck stops.

Promotional allowances increased $0.6 million or 2% to $34.3 million from $33.7 million. Increases in promotional allowances of $0.3 million at The Lodge, $0.3 million at the Gilpin, $0.3 million at Gold
Dust West-Carson City and $0.5 million at Gold Dust West-Elko were somewhat offset by decreases of $0.5 million at Gold Dust West-Reno and $0.3 million at the truck stops.

Casino expenses increased $0.5 million or 1% to $47.3 million from $46.8 million, due to increases of $1.1 million at The Lodge and $0.1
million at Gold Dust West-Elko, offset by decreases of $0.2 million at the Gilpin, $0.4 million at Gold Dust West-Reno and $0.1 million at Gold Dust West-Carson City, which correspond to the changes in casino revenues at each location.

Truck stop gaming expenses decreased $2.2 million or 5% to $38.8 million from $41.0 million and is attributable to direct
costs associated to the decrease in truck stop gaming revenues.

Pari-mutuel costs and expenses decreased $5.1 million or 16%
to $26.1 million from $31.2 million. The decrease is attributable to decreased direct costs resulting from decreased pari-mutuel revenues combined with decreased operating costs resulting from the closure of one of our off track wagering facilities
in November 2008.

Food and beverage costs and expenses decreased $1.9 million or 12% to $13.5 million from $15.4 million, and
is due to decreases of $1.0 million at the truck stops, $0.6 million at Colonial, $0.1 million at The Lodge and $0.2 million at Gold Dust

West-Carson City.

Convenience
store-fuel expenses decreased $33.6 million or 37% to $57.1 million from $90.7 million. The average cost of fuel decreased to $2.13 per gallon in 2009 from $3.35 per gallon in 2008, while volume was down 1%.

Other costs and expenses decreased $2.2 million or 12% to $16.0 million from $18.2 million, and were primarily attributable to a $2.0
million decrease in convenience store expenses at the truck stops and a $0.2 million decrease in hotel expenses at Gold Dust West-Carson City.



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##### Table of Contents

Marketing, general and administrative expenses decreased $3.1 million or 4% to $65.9 million
from $68.9 million. This decrease is primarily the result of a $1.5 million decrease at Colonial due to decreases in marketing costs, Instant Racing lobbying costs, insurance costs, travel expenses and administrative salaries, combined with
decreases of $0.2 million at The Lodge, $0.8 million at the Gilpin, $0.5 million at Gold Dust West-Reno, $1.2 million at Gold Dust West-Carson City and $0.3 million at the truck stops, somewhat offset by increases of $1.1 million at corporate, $0.2
million at Sugar Warehouse and $0.1 million at Lot D and Flats combined. The decreases at our operating units are the result of cost management efforts at all locations. The increase in corporate overhead is primarily attributable to $2.3 million of
Ohio campaign costs incurred during 2009 and an increase in professional accounting fees totaling $0.4 million, somewhat offset by a decrease in labor totaling $0.2 million and $1.4 million of Colorado Amendment 50 campaign costs incurred during
2008. These 2009 and 2008 campaign costs are further discussed in Note 11 to the consolidated financial statements.

Beginning
November 1, 2008, we began accounting for our investment in MTR as an equity security, in accordance with the fair value option permitted by ASC Topic 825. Decreases in the stock price resulted in an unrealized loss on the change in fair value
of investment in equity securities totaling $0.3 million during the year ended December 31, 2009. During 2008, we recorded impairments totaling $6.6 million on the fair value of our investment in MTR.

A goodwill impairment totaling $0.2 million was recorded at Gold Dust West-Carson City during the year ended December 31, 2008. No
goodwill remained on this property after the impairment was recorded.

Abandonment costs totaling $0.8 million were recorded
at Colonial during 2008 due to the closure of one of our two satellite wagering facilities in Chesapeake, Virginia. No comparable transaction occurred during 2009.

Depreciation and amortization expense increased $1.4 million or 7% to $21.5 million from $20.1 million and was primarily attributable to increases of $1.1 million at the truck stop locations, $0.3 million
at The Lodge and $0.1 million at Gold Dust West-Elko, somewhat offset by a $0.1 million decrease at Gold Dust West-Carson City.

Net interest expense decreased $2.1 million or 8% to $25.2 million from $27.3 million. The decrease is attributable to lower effective
interest rates on our variable rate bank debt, combined with a decrease in debt outstanding during the year ended December 31, 2009 compared to the year ended December 31, 2008.



|G. | Segment information for the three years ended December 31, 2010
|-- | ---------------------------------------------------------------

As discussed above, we have four segments representing the geographic regions of our operations: Colorado, Nevada, Louisiana and Virginia. Each segment is managed separately because of the unique
characteristics of its revenue stream, regulatory environment and customer base.

The information presented is by each segment
in which we have operations and also presents our EBITDA (earnings before interest, income taxes, depreciation and amortization) for each segment. We believe that the presentation of a non-GAAP financial measure such as EBITDA is useful because it
allows holders of our debt and management to evaluate and compare our operating results from continuing operations from period to period in a meaningful and consistent manner in addition to standard GAAP financial measures. Management internally
evaluates the performance of our segments using EBITDA measures as do most analysts following the gaming industry. EBITDA is an element of certain key financial covenants in our debt agreements and, as such, is a critical component that we closely
watch in order to determine our ability to achieve future growth and to ensure we are in compliance with our debt agreements. We present EBITDA in the tables below to provide further discussion and analysis of our operating results. EBITDA can be
reconciled directly to our consolidated net income (loss) by adding the amounts shown for depreciation and amortization, interest and income taxes to net income (loss). This information should not be considered as an alternative to any measure of
performance as promulgated under accounting principles generally accepted in the United States of America, such as net income (loss), nor should it be considered as an indicator of our overall financial performance. Our calculation of EBITDA may be
different from the calculation used by other companies and comparability may be limited.



45



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##### Table of Contents

The following is a summary of the net revenues, costs and expenses and EBITDA, for the three
years ended December 31, 2010, 2009 and 2008 (dollars in thousands):



|                                                                                                    |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  
|--------------------------------------------------------------------------------------------------- |  | -------------------------------- | ------- | - | -------------------------------------------------- | - | ------- | -------------------------------------------------- |  | - | ------- | -
|                                                                                                    |  | For the Years Ended December 31, |        
|                                                                                                    |  | 2010                             |         |   | 2009(As adjusted,see Note 4
ofFinancialStatements) |   |         | 2008(As adjusted,see Note 4
ofFinancialStatements) | 
|NET REVENUES                                                                                        |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  
|Colorado:                                                                                           |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  
|The Lodge                                                                                           |  | $                                | 78,449  |   |                                                    | $ | 76,129  |                                                    |  | $ | 73,853  |  
|Gilpin                                                                                              |  |                                  | 18,076  |   |                                                    |   | 18,917  |                                                    |  |   | 20,200  |  
|                                                                                                    |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  
|Total Colorado                                                                                      |  |                                  | 96,525  |   |                                                    |   | 95,046  |                                                    |  |   | 94,053  |  
|                                                                                                    |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  
|Nevada:                                                                                             |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  
|Gold Dust West-Reno                                                                                 |  |                                  | 17,604  |   |                                                    |   | 17,968  |                                                    |  |   | 19,457  |  
|Gold Dust West-Carson City                                                                          |  |                                  | 12,621  |   |                                                    |   | 12,627  |                                                    |  |   | 13,085  |  
|Gold Dust West-Elko                                                                                 |  |                                  | 10,911  |   |                                                    |   | 10,824  |                                                    |  |   | 10,189  |  
|                                                                                                    |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  
|Total Nevada                                                                                        |  |                                  | 41,136  |   |                                                    |   | 41,419  |                                                    |  |   | 42,731  |  
|                                                                                                    |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  
|Louisiana                                                                                           |  |                                  | 160,445 |   |                                                    |   | 139,832 |                                                    |  |   | 182,101 |  
|Virginia                                                                                            |  |                                  | 31,285  |   |                                                    |   | 36,512  |                                                    |  |   | 43,592  |  
|Corporate and other                                                                                 |  |                                  | 533     |   |                                                    |   | 657     |                                                    |  |   | 809     |  
|                                                                                                    |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  
|Total Net Revenues                                                                                  |  |                                  | 329,924 |   |                                                    |   | 313,466 |                                                    |  |   | 363,286 |  
|                                                                                                    |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  
|                                                                                                    |  |                                  |        
|COSTS AND EXPENSES (excluding depreciation and amortization, net interest expense and income taxes) |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  
|Colorado:                                                                                           |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  
|The Lodge                                                                                           |  |                                  | 51,591  |   |                                                    |   | 48,917  |                                                    |  |   | 48,094  |  
|Gilpin                                                                                              |  |                                  | 13,713  |   |                                                    |   | 13,804  |                                                    |  |   | 14,793  |  
|                                                                                                    |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  
|Total Colorado                                                                                      |  |                                  | 65,304  |   |                                                    |   | 62,721  |                                                    |  |   | 62,887  |  
|                                                                                                    |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  
|Nevada:                                                                                             |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  
|Gold Dust West-Reno                                                                                 |  |                                  | 12,090  |   |                                                    |   | 12,257  |                                                    |  |   | 13,218  |  
|Gold Dust West-Carson City (3)                                                                      |  |                                  | 12,899  |   |                                                    |   | 12,591  |                                                    |  |   | 14,364  |  
|Gold Dust West-Elko                                                                                 |  |                                  | 9,028   |   |                                                    |   | 8,995   |                                                    |  |   | 8,901   |  
|                                                                                                    |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  
|Total Nevada                                                                                        |  |                                  | 34,017  |   |                                                    |   | 33,843  |                                                    |  |   | 36,483  |  
|                                                                                                    |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  
|Louisiana                                                                                           |  |                                  | 141,190 |   |                                                    |   | 121,280 |                                                    |  |   | 160,413 |  
|Virginia (4)                                                                                        |  |                                  | 29,802  |   |                                                    |   | 34,965  |                                                    |  |   | 42,993  |  
|Corporate overhead and other (1) (2) (5)                                                            |  |                                  | 9,591   |   |                                                    |   | 12,277  |                                                    |  |   | 17,122  |  
|                                                                                                    |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  
|Total Costs and Expenses                                                                            |  |                                  | 279,904 |   |                                                    |   | 265,086 |                                                    |  |   | 319,898 |  
|                                                                                                    |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  
|                                                                                                    |  |                                  |        
|EBITDA                                                                                              |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  
|Colorado:                                                                                           |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  
|The Lodge                                                                                           |  |                                  | 26,858  |   |                                                    |   | 27,212  |                                                    |  |   | 25,759  |  
|Gilpin                                                                                              |  |                                  | 4,363   |   |                                                    |   | 5,113   |                                                    |  |   | 5,407   |  
|                                                                                                    |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  
|Total Colorado                                                                                      |  |                                  | 31,221  |   |                                                    |   | 32,325  |                                                    |  |   | 31,166  |  
|                                                                                                    |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  
|Nevada:                                                                                             |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  
|Gold Dust West-Reno                                                                                 |  |                                  | 5,514   |   |                                                    |   | 5,711   |                                                    |  |   | 6,239   |  
|Gold Dust West-Carson City (3)                                                                      |  |                                  | (278    | ) |                                                    |   | 36      |                                                    |  |   | (1,279  | )
|Gold Dust West-Elko                                                                                 |  |                                  | 1,883   |   |                                                    |   | 1,829   |                                                    |  |   | 1,288   |  
|                                                                                                    |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  
|Total Nevada                                                                                        |  |                                  | 7,119   |   |                                                    |   | 7,576   |                                                    |  |   | 6,248   |  
|                                                                                                    |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  
|Louisiana                                                                                           |  |                                  | 19,255  |   |                                                    |   | 18,552  |                                                    |  |   | 21,688  |  
|Virginia (4)                                                                                        |  |                                  | 1,483   |   |                                                    |   | 1,547   |                                                    |  |   | 599     |  
|Corporate overhead and other (1) (2) (5)                                                            |  |                                  | (9,058  | ) |                                                    |   | (11,620 | )                                                  |  |   | (16,313 | )
|                                                                                                    |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  
|Total EBITDA                                                                                        |  | $                                | 50,020  |   |                                                    | $ | 48,380  |                                                    |  | $ | 43,388  |  
|                                                                                                    |  |                                  |         |   |                                                    |   |         |                                                    |  |   |         |  

See Notes on page 49.



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##### Table of Contents

General

See sections D and E above which provide explanations regarding the fluctuations in our revenues and costs and expenses by property and segment.

During the last six months of 2009 and the full year of 2010, the larger Colorado properties, including The Lodge, benefited from the new
games, higher limits and extended hours that began on July 2, 2009. However, throughout most of 2008 through 2010, net revenues at most of our other properties have been negatively impacted by local and general economic conditions, including
higher unemployment and decreased disposable income. Fuel prices were higher in 2010 and 2008 than in 2009. Except for The Lodge, costs and expenses are generally lower due to cost management efforts at all of our properties, combined with a
decrease in direct costs associated to the decrease in net revenues. Year-over-year, costs and expenses increased at The Lodge as a result of additional training, personnel and other expenses resulting from our preparations to take advantage of the
new gaming legislation, combined with increased gaming taxes resulting from increased revenues. Costs and expenses in Louisiana fluctuated primarily as a result of the changes in fuel prices.

The Lodge

Net revenues at The Lodge increased by 3% while EBITDA
decreased 1% for the year ended December 31, 2010 compared to the same period of 2009 primarily due to the new gaming legislation that began on July 2, 2009. Labor costs, gaming taxes and other expenses were consistent with the change in
revenues. The smoking ban which became effective in Colorado on January 1, 2008 had a significant negative impact in 2008. For the year ended December 31, 2009 compared to the year ended December 31, 2008, EBITDA increased 6%.

Gilpin

EBITDA at the Gilpin decreased 15% for the year ended December 31, 2010 compared to the same period
of 2009. Year-over-year, table games revenues increased primarily due to the new gaming legislation, offset by a decrease in player banked poker due to the March 2010 closure of the poker room at the Gilpin combined with a
decrease in slots and other revenues due to the general economic conditions discussed in the General section above. Marketing costs were higher during 2010 than 2009. For the year ended 2009 compared to 2008, the
Gilpin experienced a 6% decrease in revenues and a 5% decrease in EBITDA .

Gold Dust West-Reno

The Reno market has experienced significant slot revenue declines during 2010 and 2009 compared to 2008 revenue levels. EBITDA at Gold
Dust West-Reno decreased 3% for the year ended December 31, 2010 compared to the same period of 2009 and 8% for the year ended December 31, 2009 compared to 2008 primarily due to a decrease in slot revenues resulting from the local and
general economic conditions discussed in the General section above, substantially offset by a decrease in promotional allowances.

Gold Dust West-Carson City

EBITDA at Gold Dust West-Carson City decreased $0.3 million for the year ended December 31, 2010 compared to the same period of 2009. On April 1, 2010, we opened a new restaurant resulting in
additional labor, food and beverage and other start-up costs. EBITDA increased $1.3 million for the year ended 2009 compared to 2008 primarily due to reductions in labor, advertising and other operating costs and expenses. Furthermore, a goodwill
impairment totaling $0.2 million was recorded at Gold Dust West-Carson City during the year ended December 31, 2008. No goodwill impairment was recorded during 2010 or 2009.

Gold Dust West-Elko

EBITDA at Gold Dust West-Elko increased less
than $0.1 million for the year ended December 31, 2010 compared to the same period of 2009 primarily due to a decrease in promotional allowances, somewhat offset by lower slot revenues. For the year ended December 31, 2009 compared to the
same period of 2008, EBITDA increased $0.5 million primarily due to increases in slot revenues resulting from increases in promotional allowances.



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##### Table of Contents

Louisiana

EBITDA at the Louisiana truck stops increased 4% for the year ended December 31, 2010 compared to the same period of 2009 primarily due to an increase in fuel gross profit per gallon, somewhat offset
by decreases in gaming and non-gaming revenues resulting from the general economic conditions discussed in the General section above. EBITDA decreased 14% in 2009 compared to 2008, primarily due to decreases during the third and fourth
quarters of 2009 in gaming and non-gaming revenues resulting from the general economic conditions discussed in the General section above, combined with a decrease in fuel gross profit per gallon. Additionally, during the third quarter of
2008, hurricanes Gustav and Ike struck certain of our Louisiana operations causing minimal damage to our properties but significant damage in the region. All of our properties were operating within approximately two days, resulting in an increase in
gaming and non-gaming revenues during the third and fourth quarters of 2008.

Virginia

EBITDA at our pari-mutuel operations in Virginia decreased less than $0.1 million for the year ended December 31, 2010 compared to
the same period of 2009 but increased $0.9 million for the year ended December 31, 2009 compared to the same period of 2008. During 2008, Virginia recorded abandonment costs totaling $0.8 million for the closure of a satellite wagering
facility. No similar charges were recorded during 2010 or 2009.

Corporate Overhead and Other

The EBITDA loss at corporate decreased $2.6 million for the year ended December 31, 2010 compared to the same period of 2009 and
decreased $4.7 million for the year ended December 31, 2009 compared to the same period of 2008. These fluctuations are primarily due to the variability in the stock price of our investment in MTR as follows: a $0.6 million gain in 2010, a $0.3
million loss in 2009 and a $6.6 million loss in 2008. Additionally, we expended $0.5 million during 2010 for the amendment to our credit agreement, $2.3 million during 2009 for campaign costs in Ohio and $1.4 million during 2008 for campaign costs
in Colorado. After adjusting for these unusual items, the EBITDA loss increased 2% in 2010 compared to 2009, primarily due to the Nautica Properties, and increased 8% in 2009 compared to 2008, primarily due to higher professional accounting fees.

Reconciliation of EBITDA to Net Income (Loss)

The following table sets forth a reconciliation of our EBITDA, a non-GAAP financial measure, to our net income (loss), a GAAP financial measure (dollars in thousands):



|                                 |  |        |        |   |                              |   |        |                      |  |   |                  |  |  |   |         |  
|-------------------------------- |  | ------ | ------ | - | ---------------------------- | - | ------ | -------------------- |  | - | ---------------- |  |  | - | ------- | -
|Year Ended December 31, 2010     |  | EBITDA |        |   | Depreciation andAmortization |   |        | InterestExpense, net |  |   | NetIncome (Loss) | 
|Colorado:                        |  |        |        |   |                              |   |        |                      |  |   |                  |  |  |   |         |  
|The Lodge                        |  | $      | 26,858 |   |                              | $ | 5,028  |                      |  | $ | 6,664            |  |  | $ | 15,166  |  
|Gilpin                           |  |        | 4,363  |   |                              |   | 1,764  |                      |  |   | 1,899            |  |  |   | 700     |  
|                                 |  |        |        |   |                              |   |        |                      |  |   |                  |  |  |   |         |  
|Total Colorado                   |  |        | 31,221 |   |                              |   | 6,792  |                      |  |   | 8,563            |  |  |   | 15,866  |  
|                                 |  |        |        |   |                              |   |        |                      |  |   |                  |  |  |   |         |  
|Nevada:                          |  |        |        |   |                              |   |        |                      |  |   |                  |  |  |   |         |  
|Gold Dust West-Reno              |  |        | 5,514  |   |                              |   | 1,558  |                      |  |   | 2,619            |  |  |   | 1,337   |  
|Gold Dust West-Carson City       |  |        | (278   | ) |                              |   | 2,270  |                      |  |   | 1,534            |  |  |   | (4,082  | )
|Gold Dust West-Elko              |  |        | 1,883  |   |                              |   | 2,518  |                      |  |   | 1,070            |  |  |   | (1,705  | )
|                                 |  |        |        |   |                              |   |        |                      |  |   |                  |  |  |   |         |  
|Total Nevada                     |  |        | 7,119  |   |                              |   | 6,346  |                      |  |   | 5,223            |  |  |   | (4,450  | )
|                                 |  |        |        |   |                              |   |        |                      |  |   |                  |  |  |   |         |  
|Louisiana                        |  |        | 19,255 |   |                              |   | 4,990  |                      |  |   | 4,175            |  |  |   | 10,090  |  
|Virginia                         |  |        | 1,483  |   |                              |   | 2,261  |                      |  |   | 532              |  |  |   | (1,310  | )
|Corporate overhead and other (1) |  |        | (9,058 | ) |                              |   | 942    |                      |  |   | 7,063            |  |  |   | (17,063 | )
|                                 |  |        |        |   |                              |   |        |                      |  |   |                  |  |  |   |         |  
|TOTAL                            |  | $      | 50,020 |   |                              | $ | 21,331 |                      |  | $ | 25,556           |  |  | $ | 3,133   |  
|                                 |  |        |        |   |                              |   |        |                      |  |   |                  |  |  |   |         |  



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|                                                                               |  |        |         |   |                              |   |        |                      |  |   |                  |  |  |   |         |  
|------------------------------------------------------------------------------ |  | ------ | ------- | - | ---------------------------- | - | ------ | -------------------- |  | - | ---------------- |  |  | - | ------- | -
|Year Ended December 31, 2009
(As adjusted, see Note 4 of Financial Statements) |  | EBITDA |         |   | Depreciation andAmortization |   |        | InterestExpense, net |  |   | NetIncome (Loss) | 
|Colorado:                                                                      |  |        |         |   |                              |   |        |                      |  |   |                  |  |  |   |         |  
|The Lodge                                                                      |  | $      | 27,212  |   |                              | $ | 5,148  |                      |  | $ | 6,782            |  |  | $ | 15,282  |  
|Gilpin                                                                         |  |        | 5,113   |   |                              |   | 1,939  |                      |  |   | 1,904            |  |  |   | 1,270   |  
|                                                                               |  |        |         |   |                              |   |        |                      |  |   |                  |  |  |   |         |  
|Total Colorado                                                                 |  |        | 32,325  |   |                              |   | 7,087  |                      |  |   | 8,686            |  |  |   | 16,552  |  
|                                                                               |  |        |         |   |                              |   |        |                      |  |   |                  |  |  |   |         |  
|Nevada:                                                                        |  |        |         |   |                              |   |        |                      |  |   |                  |  |  |   |         |  
|Gold Dust West-Reno                                                            |  |        | 5,711   |   |                              |   | 1,598  |                      |  |   | 2,618            |  |  |   | 1,495   |  
|Gold Dust West-Carson City                                                     |  |        | 36      |   |                              |   | 1,948  |                      |  |   | 1,534            |  |  |   | (3,446  | )
|Gold Dust West-Elko                                                            |  |        | 1,829   |   |                              |   | 2,438  |                      |  |   | 932              |  |  |   | (1,541  | )
|                                                                               |  |        |         |   |                              |   |        |                      |  |   |                  |  |  |   |         |  
|Total Nevada                                                                   |  |        | 7,576   |   |                              |   | 5,984  |                      |  |   | 5,084            |  |  |   | (3,492  | )
|                                                                               |  |        |         |   |                              |   |        |                      |  |   |                  |  |  |   |         |  
|Louisiana                                                                      |  |        | 18,552  |   |                              |   | 5,307  |                      |  |   | 4,041            |  |  |   | 9,204   |  
|Virginia                                                                       |  |        | 1,547   |   |                              |   | 2,124  |                      |  |   | 577              |  |  |   | (1,154  | )
|Corporate overhead and other (2)                                               |  |        | (11,620 | ) |                              |   | 995    |                      |  |   | 6,803            |  |  |   | (19,418 | )
|                                                                               |  |        |         |   |                              |   |        |                      |  |   |                  |  |  |   |         |  
|TOTAL                                                                          |  | $      | 48,380  |   |                              | $ | 21,497 |                      |  | $ | 25,191           |  |  | $ | 1,692   |  
|                                                                               |  |        |         |   |                              |   |        |                      |  |   |                  |  |  |   |         |  



|                                                                               |  |        |         |   |                              |   |        |                      |  |   |                        |  |  |                  |     |   |  |   |         |  
|------------------------------------------------------------------------------ |  | ------ | ------- | - | ---------------------------- | - | ------ | -------------------- |  | - | ---------------------- |  |  | ---------------- | --- | - |  | - | ------- | -
|Year Ended December 31, 2008
(As adjusted, see Note 4 of Financial Statements) |  | EBITDA |         |   | Depreciation andAmortization |   |        | InterestExpense, net |  |   | NoncontrollingInterest |  |  | NetIncome (Loss) |    
|Colorado:                                                                      |  |        |         |   |                              |   |        |                      |  |   |                        |  |  |                  |     |   |  |   |         |  
|The Lodge                                                                      |  | $      | 25,759  |   |                              | $ | 4,825  |                      |  | $ | 6,715                  |  |  |                  |     |   |  | $ | 14,219  |  
|Gilpin                                                                         |  |        | 5,407   |   |                              |   | 1,998  |                      |  |   | 1,903                  |  |  |                  |     |   |  |   | 1,506   |  
|                                                                               |  |        |         |   |                              |   |        |                      |  |   |                        |  |  |                  |     |   |  |   |         |  
|Total Colorado                                                                 |  |        | 31,166  |   |                              |   | 6,823  |                      |  |   | 8,618                  |  |  |                  |     |   |  |   | 15,725  |  
|                                                                               |  |        |         |   |                              |   |        |                      |  |   |                        |  |  |                  |     |   |  |   |         |  
|Nevada:                                                                        |  |        |         |   |                              |   |        |                      |  |   |                        |  |  |                  |     |   |  |   |         |  
|Gold Dust West-Reno                                                            |  |        | 6,239   |   |                              |   | 1,589  |                      |  |   | 2,617                  |  |  |                  |     |   |  |   | 2,033   |  
|Gold Dust West-Carson City (3)                                                 |  |        | (1,279  | ) |                              |   | 2,079  |                      |  |   | 1,533                  |  |  |                  |     |   |  |   | (4,891  | )
|Gold Dust West-Elko                                                            |  |        | 1,288   |   |                              |   | 2,364  |                      |  |   | 1,423                  |  |  |                  |     |   |  |   | (2,499  | )
|                                                                               |  |        |         |   |                              |   |        |                      |  |   |                        |  |  |                  |     |   |  |   |         |  
|Total Nevada                                                                   |  |        | 6,248   |   |                              |   | 6,032  |                      |  |   | 5,573                  |  |  |                  |     |   |  |   | (5,357  | )
|                                                                               |  |        |         |   |                              |   |        |                      |  |   |                        |  |  |                  |     |   |  |   |         |  
|Louisiana                                                                      |  |        | 21,688  |   |                              |   | 4,219  |                      |  |   | 4,875                  |  |  |                  |     |   |  |   | 12,594  |  
|Virginia (4)                                                                   |  |        | 599     |   |                              |   | 2,114  |                      |  |   | 520                    |  |  |                  |     |   |  |   | (2,035  | )
|Corporate overhead and other (5)                                               |  |        | (16,313 | ) |                              |   | 936    |                      |  |   | 7,697                  |  |  | $                | (71 | ) |  |   | (25,017 | )
|                                                                               |  |        |         |   |                              |   |        |                      |  |   |                        |  |  |                  |     |   |  |   |         |  
|TOTAL                                                                          |  | $      | 43,388  |   |                              | $ | 20,124 |                      |  | $ | 27,283                 |  |  | $                | (71 | ) |  | $ | (4,090  | )
|                                                                               |  |        |         |   |                              |   |        |                      |  |   |                        |  |  |                  |     |   |  |   |         |  



|(1) | Included in corporate overhead and other for 2010 is a $0.6 million gain on the change in fair value of investment in equity securities and costs incurred related to
the amendment to our credit agreement totaling $0.5 million.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Included in corporate overhead and other for 2009 is a $0.3 million loss on the change in fair value of investment in equity securities and $2.3 million we expended in
opposition of a constitutional amendment in Ohio.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Included in Gold Dust West-Carson City for 2008 is a $0.2 million impairment of goodwill.
|--- | -----------------------------------------------------------------------------------------

|(4) | Included in Virginia for 2008 is a $0.8 million charge for the closure of a satellite wagering facility.
|--- | --------------------------------------------------------------------------------------------------------

|(5) | Included in corporate overhead and other for 2008 is a $6.6 million impairment of the fair value of an investment in equity securities and $1.4 million we expended in
support of a constitutional amendment in Colorado to expand games, limits and hours.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|H. | Liquidity and capital resourcesDecember 31, 2010
|-- | -------------------------------------------------

Cash and cash equivalents remained constant at $24.2 million as of December 31, 2010 and 2009, resulting from $27.2 million cash provided by operating activities, $12.0 million cash used in investing
activities, and $15.2 million used in financing activities, which is further discussed below. Our primary sources of liquidity are cash provided by operating activities and external borrowings. Our primary uses of cash are for debt service, capital



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improvements, development and acquisitions. Cash flows provided by operating activities increased $5.3 million for the year ended December 31, 2010 compared to the same period of 2009 and
decreased $3.7 million for the year ended December 31, 2009 compared to 2008. The year-over-year increase in operating cash flows from 2009 to 2010 is primarily due to routine fluctuations in accounts payable and other current liabilities
resulting from cash management activities combined with an increase in operating income after adjusting for non-cash transactions. The year-over-year decrease in operating cash flows from 2008 to 2009 is consistent with our decrease in operating
income after adjusting for non-cash transactions.

The cash used in investing activities during 2010 was the result of
property and equipment and device rights additions totaling $12.3 million for ongoing capital investments at our existing properties, somewhat offset by $0.3 million of proceeds from the sale of equipment. The cash used in investing activities
during 2009 was the result of property and equipment and device rights additions totaling $14.1 million for ongoing capital investments at our existing properties, $2.7 for the atrium expansion project at The Lodge, $0.3 million for Mississippi land
purchase transactions, and $0.2 million to acquire the noncontrolling interest of Sugar Warehouse, offset by $0.4 million of proceeds from the sale of equipment. Net cash used in investing activities was consistent for the year ended
December 31, 2009 compared to the same period of 2008. The cash used in investing activities during 2008 was the result of property and equipment and device rights additions totaling $18.1 million for capital investments at our existing
properties, offset by $0.4 million of proceeds from the sale of equipment.

The cash provided by or used in our financing
activities varies significantly from year to year depending upon the cash provided by operations and investing activities, both of which are discussed above, as well as our cash position. The cash used in financing activities during 2010 was the
result of net payments on the revolving senior credit facility totaling $7.5 million, payments on long-term debt totaling $2.4 million, payments to obtain financing totaling $1.5 million and distributions to stockholder totaling $3.8 million,
including $2.8 million for the purchase of Flats.

As of December 31, 2010, we had $28.5 million available on our $40
million revolving senior credit facility for acquisitions, capital expenditure programs and working capital. As of December 31, 2010, our total debt approximates $282.2 million. Our future liquidity, which includes our ability to make
semi-annual interest payments on June 15 and December 15 of each year, depends upon our future operational success. Our failure to pay interest, repay our indebtedness when due, or maintain compliance with our debt covenants would result
in an event of default under both our senior credit facility and our note indenture. At December 31, 2010, we were in compliance with our financial covenants.

While our owner has made capital contributions in the past to facilitate our various acquisitions from time to time, we can give no assurance that it will continue to do so in the future. Additionally, as
we are a Qualified Subchapter S-Corporation Subsidiary, we may from time to time make distributions to our owner for any taxes due as a result of taxable income generated by us. Furthermore, annual distributions may be made to our owner in an
aggregate amount not to exceed the greater of $1 million or 50% of consolidated net income as defined in our credit agreement and indenture.

We believe that our cash flow from operations, cash and cash equivalents and our $40 million senior revolving credit facility discussed above will be adequate to meet our debt service obligations and
operational expenditures, as well as our capital expenditure requirements for the next twelve months. During 2011, we currently anticipate spending approximately $15 million for discretionary capital expenditures. While we believe these sources will
provide us sufficient liquidity over the next twelve months, we can give no assurance that these sources of cash will be sufficient to enable us to do so. Further, in addition to our normal capital expenditure requirements, we anticipate that we
will pursue the acquisition of other properties and continue to engage in the pursuit of new development opportunities. It is possible that we may need to enter into new financing arrangements and raise additional capital in the future if we are
unable to generate sufficient cash to sustain expansion. Our ability to incur additional debt is further restricted by the terms and covenants of our senior secured bank credit facility and senior unsecured notes. We can give no assurance that we
will be able to raise any capital or obtain the necessary sources of liquidity and financing on favorable terms, if at all. Additionally, any debt financing that we may incur in the future will increase the amount of our total outstanding
indebtedness and our debt service requirements, and therefore heighten the related risks we currently face.



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We also face the risk that there could be further declines in the demand for our products
and services, which would reduce our ability to generate funds from operations. Adverse national and local economic conditions could persist or worsen. While we believe our cash flows are geographically diverse, at present we do have a significant
concentration of cash flows generated in the Black Hawk, Colorado and Louisiana markets. Should the Black Hawk or Louisiana markets decline or become saturated or should competition erode our market share, we would suffer a decline in available
funds generated from operations. If this were to occur, there exists the possibility that our credit rating could be downgraded, which would further reduce our ability to access the capital markets and obtain additional or alternative financing. See
the section Risk Factors in Item 1A above.

The following table provides disclosure concerning our
obligations and commitments to make future payments under contracts, such as debt and lease agreements, and purchase and other long-term obligations as of December 31, 2010.



|                                   |  |       |         |  |               |   |         |          |  |   |          |  |  |              |         |  |  |   |        | 
|---------------------------------- |  | ----- | ------- |  | ------------- | - | ------- | -------- |  | - | -------- |  |  | ------------ | ------- |  |  | - | ------ | 
|(In Thousands)                     |  | Total |         |  | Next12 Months |   |         | 1-3Years |  |   | 4-5Years |  |  | After 5Years |        
|Long-term debt (1)                 |  | $     | 353,892 |  |               | $ | 26,353  |          |  | $ | 107,271  |  |  | $            | 220,268 |  |  | $ |       | 
|Capital lease obligations          |  |       | 7,216   |  |               |   | 520     |          |  |   | 948      |  |  |              | 1,586   |  |  |   | 4,162  | 
|Operating leases (2)               |  |       | 38,141  |  |               |   | 3,079   |          |  |   | 5,746    |  |  |              | 5,163   |  |  |   | 24,153 | 
|Purchase obligations (3)           |  |       | 287,429 |  |               |   | 73,377  |          |  |   | 146,753  |  |  |              | 67,299  |  |  |   |       | 
|Other long-term obligations (4)    |  |       | 21,404  |  |               |   | 2,081   |          |  |   | 3,371    |  |  |              | 2,827   |  |  |   | 13,125 | 
|                                   |  |       |         |  |               |   |         |          |  |   |          |  |  |              |         |  |  |   |        | 
|Total contractual cash obligations |  | $     | 708,082 |  |               | $ | 105,410 |          |  | $ | 264,089  |  |  | $            | 297,143 |  |  | $ | 41,440 | 
|                                   |  |       |         |  |               |   |         |          |  |   |          |  |  |              |         |  |  |   |        | 



|(1) | Long-term debt includes principal and interest owing under the terms of our senior unsecured notes, our senior secured credit facility and capital leases. Interest on
variable rate debt is computed based on rates outstanding at December 31, 2010.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Operating leases include various land and building leases for certain properties in Nevada, Louisiana and Virginia, office space in Colorado, Louisiana, Virginia and
Florida, and other equipment leases at all locations.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Purchase obligations include five-year fuel supply agreements for gasoline and diesel fuel. Fuel volumes are specified in the contracts. The purchase price is a
variable market-based price. The long-term obligations in this table were derived using the applicable contract prices for gasoline and diesel fuel at December 31, 2010 multiplied by the actual fuel volumes per the contracts.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Other long-term obligations include a 20-year, $1.25 million per year management agreement with Jacobs Investments Management Co. Inc., an affiliated company, and our
obligation to pay $0.90 per operating video poker machine per day to Jalou Device Owner, L.P., the related party owner of the video poker machines in order to maintain the machines used in our truck plaza operations. In addition, Colonial has
entered into an agreement with a totalisator company, which provides wagering services and designs, programs, and manufactures totalisator systems for use in wagering applications. The amendment provides for a minimum charge per calendar year of
$205,000. Other long-term obligations also include various surveillance and service agreements in Louisiana and at the corporate office.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Finally, beginning June 15, 2010, we can redeem all or part of our outstanding senior unsecured notes aggregating $210 million at the redemption prices set forth below, plus accrued and unpaid
interest. The redemption prices, expressed as a percentage of the principal amount, for the 12-month period beginning on June 15 of the years indicated below are as follows:



|                    |  |            |         |  
|------------------- |  | ---------- | ------- | -
|Year                |  | Percentage |        
|2010                |  |            | 104.875 | %
|2011                |  |            | 102.438 | %
|2012 and thereafter |  |            | 100.000 | %



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|I. | Critical accounting policies and estimates
|-- | ------------------------------------------

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the
reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We periodically evaluate our
policies and the estimates and assumptions related to these policies. All of our subsidiary companies operate in a highly regulated industry. Our Colorado, Nevada, Louisiana and Virginia operations are subject to regulations that describe and
regulate operating and internal control procedures. The majority of our casino revenue is in the form of cash, personal checks, credit cards or gaming chips and tokens, which by their nature do not require complex estimations. We estimate certain
liabilities with payment periods that extend for longer than several months. Such estimates include our slot club liabilities, outstanding gaming chip, token and pari-mutuel ticket liability, self-insured medical and workers compensation
liabilities, and litigation costs. We believe that these estimates are reasonable based on our past experience with the business and based upon our assumptions related to possible outcomes in the future. Future actual results will likely differ from
these estimates.

Property and equipment

We have a significant investment in long-lived property and equipment, representing approximately 71% of our total assets. We estimate that the undiscounted future cash flows expected to result from the
use of these assets exceed the current carrying value of these assets. Any adverse change to the estimate of these undiscounted cash flows could necessitate an impairment charge that would adversely affect operating results. We review the carrying
value of our property and equipment for potential impairment when events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use. Further, we assign
lives to our assets based on our standard policy, which is established by management as representative of the useful life of each class of assets. Should the actual useful life of a class of assets differ from the estimated useful life, we would
record an impairment charge. We review useful lives and obsolescence and assess the commercial viability of our assets periodically.

During 2010, based on operating results, we were required, pursuant to Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 360, Property,
Plant and Equipment, to assess our ability to recover the recorded cost of the Gold Dust West-Carson City and Virginia long-lived assets. We prepared a cash flow analysis based on managements best estimate in an effort to assess the
likelihood of recovering the cost of these assets. Based on these projections and the related underlying assumptions as well as our knowledge of the Carson City and Virginia markets, we believe that we will be able to recover the carrying cost of
these assets and no impairment currently exists. However, future events such as actual performance versus projected performance, continued market decline, increased and/or changing competitive forces, or other unforeseen events could change our
estimates and cause us to recognize an impairment in the carrying value of the Gold Dust West-Carson City or Virginia long-lived assets in future periods. Such an impairment could be material to our financial position and results of operations.

Goodwill and other intangible assets

We have $46.5 million in goodwill recorded on our consolidated balance sheet resulting from the acquisition of businesses. We do not have any other nonamortizing intangible assets on our consolidated
balance sheet. We annually review our goodwill for impairment. The annual evaluation of goodwill requires the use of estimates about future operating results of each reporting unit to determine its estimated fair value. Changes in forecasted
operations can materially affect these estimates.

Our reporting units with goodwill balances at December 31, 2010 are
The Lodge ($4.2 million), Gilpin ($2.5 million), Gold Dust West-Reno ($8.8 million) and Louisiana ($31.0 million). There is no goodwill recorded in our Gold Dust West-Carson City, Gold Dust West-Elko or Virginia reporting units. We
performed our most recent annual impairment test for these reporting units as of September 30, 2010. Our annual impairment test included an analysis of the gaming industry overall as well as an analysis of the specific locations in which we
operate. We determined the fair values for each of these reporting units using both the market approach (recent comparable transactions from which we derived an applicable valuation multiple) and the income approach (net present value of



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our anticipated future cash flows). These fair values were then compared to the carrying values for the respective reporting unit. We determined that goodwill was not impaired at any of our
reporting units as of September 30, 2010. Furthermore, if the fair value of any of our reporting units declined by 10%, no goodwill impairment would be required. During 2008, we recorded a goodwill impairment totaling $0.2 million at our Gold
Dust West-Carson City reporting unit, which is further discussed in Note 3 to the financial statements.

We have also
reassessed the useful lives of our identifiable intangible assets without any change to the previously established amortization periods of such assets.



|Item 7A. | Quantitative and Qualitative Disclosure about Market Risk.
|-------- | ----------------------------------------------------------

Market Risk

Market risk is the risk of loss arising from adverse changes
in market rates and prices, such as commodity prices and interest rates. We purchase and sell fuel at market prices, subject to daily price changes.

We have issued $210 million of 93/4% fixed rate senior unsecured notes due in 2014 and a $100 million variable rate senior secured credit facility consisting of: (i) a $40 million revolving credit facility, of which $3 million is due
in 2011 and the remainder is due in 2012, (ii) a $40 million term loan facility due in 2012, and (iii) a $20 million delayed draw term loan due in 2012. As of December 31, 2010, $11.5 million is outstanding on the senior secured
revolving credit facility and $57.4 million is outstanding on our senior secured term loan debt, bearing interest at a blended variable rate approximating 3.33% at December 31, 2010. As of December 31, 2010, $28.5 million was available on
the revolving credit facility.

If market interest rates increase, our cash requirements for interest on the senior
secured credit facility balance would also increase. Conversely, if market interest rates decrease, our cash requirements for interest on the senior secured credit facility balance would also decrease. There would be an approximate change in our
cash requirements of $0.2 million annually for interest should market rates increase or decrease by 10% compared to interest rate levels at December 31, 2010.

We currently do not use interest rate swaps or other similar investments to alter interest rate exposure.

JEI owns an investment in the publicly traded equity of MTR Gaming Group, Inc. (MTR). Market prices for equity securities are subject to fluctuation. Fluctuation in the market price of
such a security may result from perceived changes in the underlying economic characteristics of the investee, the relative price of alternative investments, and general market conditions. Consequently, the amount realized on any ultimate sale of
this investment may significantly differ from the reported market value as of December 31, 2010.

The recent severe
economic downturn and adverse conditions in the local, regional, national and global markets has negatively affected our operations, and may continue to negatively affect our operations in the future. During periods of economic contraction such as
the current period, our revenues may decrease while some of our costs remain fixed or even increase, resulting in decreased earnings. Gaming and other leisure activities we offer represent discretionary expenditures and participation in such
activities may decline during economic downturns, during which consumers generally earn less disposable income. Even an uncertain economic outlook may adversely affect consumer spending in our gaming operations and related facilities, as consumers
spend less in anticipation of a potential economic downturn. Furthermore, other uncertainties, including national and global economic conditions, terrorist attacks or other global events, could adversely affect consumer spending, increase gasoline
prices and adversely affect our operations.

We use significant amounts of electricity, natural gas and other forms of energy.
While we have generally not experienced any major shortages of energy, any substantial increases in the cost of electricity and natural gas in the United States could negatively impact our operating results. The extent of any impact is subject to
the magnitude and duration of the energy price increases and could be material.



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Also, if gas prices rise, this may result in a reduction of automobile travel and a decrease
in the number of patrons at our properties. Our business, assets, financial condition and results of operations could be adversely affected by a weakening of national economic conditions, high gasoline prices and/or adverse winter weather
conditions.

We are a highly levered company. While we intend to finance expansion and capital expenditures with existing
cash, cash flow from operations and/or borrowings under our existing senior secured credit facilities, we may require additional financing to support our continued growth. However, due to the existing uncertainty in the capital and credit markets,
our access to capital may not be available on terms acceptable to us or at all. Further, if adverse regional and national economic conditions persist or worsen, we could experience decreased revenues from our operations attributable to decreases in
consumer spending levels and could fail to satisfy the financial and other restrictive covenants to which we are subject under our existing indebtedness.



|Item 8. | Financial Statements and Supplementary Data.
|------- | --------------------------------------------

Reference is made to the financial statements, the notes, and the report of our independent registered public accounting firm commencing on page F-1 of this report.



|Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
|------- | -------------------------------------------------------------------------------------

None.



|Item 9A. | Controls and Procedures.
|-------- | ------------------------

Evaluation of Disclosure Controls and Procedures

Our management, under the
supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the Exchange Act)) as of December 31, 2010. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls
and procedures were effective to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, evaluated and reported, as applicable, within the time periods specified in the rules and
forms of the U.S. Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely discussions
regarding required disclosure.

Managements Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in
Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act. Those rules define internal control over financial reporting as a process designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:



| |  |  | Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of our assets that could have a
material effect on our financial statements.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Because of its inherent limitations, internal controls over
financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control
over financial reporting as of December 31, 2010. In making this assessment, our management used the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). Based on our assessment, we believe that, as of December 31, 2010, our internal control over financial reporting is effective based on those criteria.

This Annual Report does not include an attestation report of the Companys registered public accounting firm regarding internal control over financial reporting. Managements report was not
subject to attestation by the Companys registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit the Company to provide only managements report in this Annual Report.

Changes in Internal Control Over Financial Reporting

There were no changes that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



|Item 9B. | Other Information.
|-------- | ------------------

There is no information we were required to report on Form 8-K during our fourth fiscal quarter of the year ended December 31, 2010 that was not so reported.



|Item 10. | Directors, Executive Officers and Corporate Governance.
|-------- | -------------------------------------------------------

The following table provides information regarding our directors and executive officers and key employees as of March 1, 2011



|                      |  |     |  |                                                                        
|--------------------- |  | --- |  | -----------------------------------------------------------------------
|Name                  |  | Age |  | Position                                                               
|Jeffrey P. Jacobs     |  | 57  |  | Chief Executive Officer, Secretary, Treasurer and Chairman of the Board
|Stephen R. Roark      |  | 63  |  | President                                                              
|Ian M. Stewart        |  | 56  |  | President of Pari-Mutuel Wagering Operations                           
|Michael T. Shubic     |  | 57  |  | Chief Operating Officer                                                
|Brett A. Kramer       |  | 42  |  | Chief Financial Officer                                                
|Stanley Politano      |  | 61  |  | Executive Vice President                                               
|Emanuel J. Cotronakis |  | 40  |  | Executive Vice President, General Counsel and Assistant Secretary      

Jeffrey P. Jacobs is our Chairman, Chief Executive Officer, Secretary and Treasurer and sole director. He is also Chairman and Chief Executive Officer of Colonial, and Chairman and Chief Executive Officer
of Black Hawk Gaming, two of our subsidiaries. From 1996 to 2007, he served as Chairman and Chief Executive Officer of Diversified Opportunities Group Ltd. (Diversified), a company co-founded by Mr. Jacobs and his father, Richard E.
Jacobs, and based in Cleveland, Ohio, that had investments in gaming companies and other ventures. Jacobs Entertainment, Inc. acquired Diversified on February 22, 2002 and it was dissolved in 2007. Mr. Jacobs serves as the Chairman and
Chief Executive Officer of Jacobs Investments, Inc., a company which owns all of our equity securities and which engages in a variety of private equity transactions and other investments. From 1975 to present, Mr. Jacobs has also served as the
Chairman and Chief Executive Officer of Jacobs Investments Management Co., Inc., a company engaged in the development, construction and operations of various residential and commercial real estate projects in Ohio. Mr. Jacobs became a director
of MTR Gaming Group, Inc. (MTR) on May 6, 2008 and became its chairman on October 31, 2008. In March 2010, Mr. Jacobs resigned from MTRs Board of Directors. MTR has a class of equity securities registered under the
Securities Exchange Act of 1934.



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Stephen R. Roark was appointed as our President on December 5, 2006. During the five
years prior to that, he was our Chief Financial Officer and President of Casino Operations. He was employed as Chief Financial Officer of Black Hawk Gaming since August 1993. Mr. Roark became a director of Black Hawk Gaming in 1994. He was
elected President of Black Hawk Gaming in September 1995. Prior to that time he was an independent consultant in the Denver area rendering financial and accounting assistance to companies in the public marketplace. Mr. Roark has 17 years
of public accounting experience, having served as a partner with a local accounting firm based in Denver and as a partner with a national accounting firm. Mr. Roark was with Hanifen, Imhoff and Prudential Securities, Inc. for three years and is
a member of the American Institute of Certified Public Accountants and the Colorado Society of Certified Public Accountants. Mr. Roark obtained his B.S.B.A. in Accounting from the University of Denver in 1973.

Ian M. Stewart is currently our President of Pari-Mutuel Wagering Operations. He has served as President of Colonial since
November 1998 and its Chief Financial Officer since June 1997. From January 1998 through November 1998, Mr. Stewart served as Chief Operating Officer of Colonial. From October 1994 to June 1997, Mr. Stewart
served as a consultant and a temporary Chief Financial Officer for several Virginia-based businesses. From December 1989 to September 1994, Mr. Stewart was Vice President and CFO of Hat Brands, Inc. Mr. Stewart is a Certified
Public Accountant and holds an M.B.A. degree from the University of Michigan.

Michael T. Shubic has been our Chief Operating
Officer since July 1, 2006. From December 1, 2002 when he joined us until his appointment as our Chief Operating Officer, he served as our Vice President of Operations. From 2000 to 2002, Mr. Shubic was Vice President and General
Manager of the Isle of Capri Black Hawk Casino in Black Hawk, Colorado. From 1997 to 2000, as a private individual, he explored and participated in various aspects of the golf industry, including education, sales and management. From 1984 to 1997,
Mr. Shubic was employed by several gaming companies in Las Vegas and Reno, Nevada, Joliet, Illinois, and Nassau, Bahamas. His positions included general manager, casino administrator, customer analysis manager, casino credit manager and food
and beverage manager. Mr. Shubic holds a B.S. degree in Hotel Administration from the University of Nevada.

Brett A.
Kramer has been our Chief Financial Officer since December 5, 2006. He has been employed by us and certain of our predecessor subsidiaries since 1994. He was responsible for overseeing accounting managers and controllers of our multi-state
operating subsidiaries, over 30 in all. He has also been involved in developing our system of internal controls in order to comply with various gaming regulations and provisions of the Sarbanes-Oxley Act of 2002. Mr. Kramer was a staff and
senior accountant for five years with Deloitte & Touche, LLP. He graduated with a degree in accounting from the University of Colorado in 1990.

Stanley Politano is our Executive Vice President and has been with the Company and its predecessor, Black Hawk Gaming & Development Company, Inc. since 1994. He is a former officer and director
of Black Hawk Gaming. He currently serves on our Companys Nevada Compliance Committee and our Audit and Disclosure Committee. Mr. Politano received his B.S. degree in Business, majoring in finance, from the University of Colorado in 1972.
He has 22 years of experience in the securities industry, in both retail and wholesale organizations. He has worked for Rauscher Pierce Securities Corporation and Prudential-Bache Securities, Inc. and was a vice president with E.F. Hutton &
Company, Inc. and Hanifen Imhoff Securities Corporation.

Emanuel J. Cotronakis is our Executive Vice President, General
Counsel and Assistant Secretary having joined us on July 31, 2009. Prior to his employment with us, Mr. Cotronakis was a partner at the national law firm of Baker & Hostetler, LLP, where he practiced law in their Business Group
beginning in 2000. While at Baker & Hostetler, Mr. Cotronakiss practice focused on mergers and acquisitions, corporate finance and corporate governance, counseling a variety of clients including us beginning with our
incorporation in 2001. Mr. Cotronakis graduated with a B.A. in economics from Case Western Reserve University in 1992 and earned his Juris Doctorate from the Georgetown University Law Center in 1998.

We are a company wholly owned by Jacobs Investments, Inc. (JII), which in turn is owned by Jeffrey P. Jacobs and his family
trusts which collectively own 100% of JIIs outstanding Class A and Class B shares.



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Our board of directors, currently consisting only of Jeffrey P. Jacobs, has no nominating,
audit, compensation or other committees. Jeffrey P. Jacobs and Richard E. Jacobs had served as our directors since our formation in 2001. The board of directors is elected each year. The board has adopted a code of ethics policy which is applicable
to our CEO, CFO and our employees. We rely on our employment procedures and system of internal controls and procedures, to deter wrongdoing and to promote honest and ethical conduct, full, fair and accurate disclosure in our reports, our compliance
with governmental laws, rules and regulations, and internal reporting of violations of our policies.



|Item 11. | Executive Compensation.
|-------- | -----------------------

Compensation Discussion and Analysis

The following discussion of our
executive compensation policies and practices include:



| |  |  | an overview of our board of directors philosophy as to executive compensation;
| | - |  | -------------------------------------------------------------------------------



| |  |  | a discussion of the overall objectives of our compensation program for executive officers; and
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | a discussion of all material components of compensation, particularly for the seven named executive officers listed in the Summary Compensation table.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------

Overview and Objectives

As described in Item 12 immediately below, we are a wholly owned subsidiary of a privately-held company, hence we have no publicly
traded securities, nor any option or other equity based incentive programs for our executives or employees. Our Chairman and Chief Executive Officer, Jeffrey P. Jacobs, and trusts that he has established, own the equity securities of Jacobs
Investments, Inc., the company that owns all of our equity securities.

During 2010, the total cash compensation to Jeffrey P.
Jacobs is limited to an aggregate of $1 million per year under our credit agreements. As a result, most elements of our compensation plans discussed below do not include our CEO, Jeffrey P. Jacobs. However, as also discussed below, our sole
shareholder nonetheless is entitled under our credit agreements to certain tax distributions since, as a Qualified Subchapter S-Corporation Subsidiary, our taxable income flows through and is taxed to it. Finally and also as discussed in detail in
Item 13 below, Mr. Jeffrey P. Jacobs has received certain direct dividends from us and constructive dividends resulting from the accounting treatment required of certain related party transactions.

Our Executive Compensation Program (Program) is designed to attract, motivate and retain high performing executives who are critical to
our long-term success. The Program is structured to link executive compensation to how successfully we execute our business plans and meet a number of corporate, financial and operational goals. This design is intended to provide executives
increased compensation when we do well and to provide less compensation when we do not.

The design and effectiveness of
compensation policies and programs are reviewed by our CEO periodically in light of general industry and peer trends, and recommendations for changes are made to the board of directors as deemed advisable by the CEO. The CEO reviews such
compensation matters with our internal personnel. The role played by the CEO in this process is reasonable and appropriate because he is best suited to evaluate the performance of our executive personnel.

Our CEO reviews the philosophy, goals and objectives of the Program at least annually. In assessing their continued appropriateness, our
CEO examines our success and the contributions of the individual executives in achieving our business plans. Our CEO considers the motivational impact of the Program as an incentive in attaining desired business results and in the continued ability
to attract and retain high-quality executives. Key factors in judging whether the Program has met its goals are the Programs relationship to our financial results, our future outlook and our ability to attract and retain key executive talent.



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As a result of our corporate structure, the base compensation structure and amounts paid to
all of our executive officers, except Jeffrey P. Jacobs, are determined after individual negotiations with each executive and approved by him. We formulate an annual cash incentive compensation plan for our named executive officers and selected
middle management personnel based on our achievement of multi-year financial and growth objectives. Our discretionary annual bonus is paid in cash in an amount reviewed and approved by our CEO and traditionally has been paid in a single installment
in the first quarter following the completion of a given fiscal year. The actual amount of discretionary bonus, which varies by individual, is determined by our CEO following a review of each executives individual performance and contribution
to our strategic and financial goals. In support of his recommendations, Mr. Jacobs considers the desirability of maintaining a cohesive, long standing management and operating group and keeps himself informed of the salaries and benefits
offered by competitors although he does not adhere to specific benchmarks, median placements, percentages or ranges of compensation paid by competitors or others.

The following table sets forth information regarding the compensation paid by us to each of the following individuals for services rendered in all capacities for the years indicated:



|                               |  |      |              |  |        |  |                        |       |  |  |                 |  |  |              |  |  |                                      |  |  |                                                                      |  |  |                              |  |  |       |  |  |  |  |                              |  |  |  |                              | 
|------------------------------ |  | ---- | ------------ |  | ------ |  | ---------------------- | ----- |  |  | --------------- |  |  | ------------ |  |  | ------------------------------------ |  |  | -------------------------------------------------------------------- |  |  | ---------------------------- |  |  | ----- |  |  |  |  | ---------------------------- |  |  |  | ---------------------------- | 
|Name and Principal
Position(1) |  | Year |              |  | Salary |  |                        | Bonus |  |  | StockAwards     |  |  | OptionAwards |  |  | Non-EquityIncentive PlanCompensation |  |  | Change inPension Valueand 
Non-QualifiedDeferredCompensationEarnings |  |  | All 
OtherCompensation(2)(3) |  |  | Total | 
|                               |  |      |              |  | ($)    |  |                        | ($)   |  |  | ($)             |  |  | ($)          |  |  | ($)                                  |  |  | ($)                                                                  |  |  | ($)                          |  |  | ($)   | 
|Jeffrey P. Jacobs              |  |      | 201020092008 |  |        |  | 727,500758,942
562,500 |       |  |  | 72,716
250,000 |  |  |              |  |  |                                      |  |  |                                                                      |  |  |                              |  |  |       |  |  |  |  | 1,250,0001,325,000
1,340,000 |  |  |  | 2,050,2162,083,942
2,152,500 | 
|Stephen R. Roark               |  |      | 201020092008 |  |        |  | 465,407485,571457,816  |       |  |  | 50,000
133,000 |  |  |              |  |  |                                      |  |  |                                                                      |  |  |                              |  |  |       |  |  |  |  |                              |  |  |  | 515,407485,571
590,816       | 
|Ian M. Stewart                 |  |      | 201020092008 |  |        |  | 307,494298,852
300,661 |       |  |  | 15,000  65,000 |  |  |              |  |  |                                      |  |  |                                                                      |  |  |                              |  |  |       |  |  |  |  |                              |  |  |  | 322,494298,852
365,661       | 
|Michael T. Shubic              |  |      | 201020092008 |  |        |  | 357,381361,175339,094  |       |  |  | 40,000  98,000 |  |  |              |  |  |                                      |  |  |                                                                      |  |  |                              |  |  |       |  |  |  |  |                              |  |  |  | 397,381361,175437,094        | 
|Brett A. Kramer                |  |      | 201020092008 |  |        |  | 245,663256,302231,821  |       |  |  | 30,000  70,000 |  |  |              |  |  |                                      |  |  |                                                                      |  |  |                              |  |  |       |  |  |  |  |                              |  |  |  | 275,663256,302301,821        | 
|Stanley Politano               |  |      | 201020092008 |  |        |  | 173,764181,226
171,440 |       |  |  | 22,577
49,000  |  |  |              |  |  |                                      |  |  |                                                                      |  |  |                              |  |  |       |  |  |  |  |                              |  |  |  | 196,341181,226
220,440       | 
|Emanuel J. Cotronakis(4)       |  |      | 201020092008 |  |        |  | 410,096188,077
       |       |  |  | 40,000
       |  |  |              |  |  |                                      |  |  |                                                                      |  |  |                              |  |  |       |  |  |  |  |                              |  |  |  | 450,096188,077
             | 



|(1) | See Item 10 above which describes the principal positions of the named executives.
|--- | ----------------------------------------------------------------------------------

|(2) | See Item 13 below which describes consulting fees paid to Jacobs Investments Management Co., Inc., an affiliate of Mr. Jacobs.
|--- | ------------------------------------------------------------------------------------------------------------------------------

|(3) | Also see Director Compensation and Item 13 below that describe distributions to our owner during 2010, which directly and indirectly benefited our Chief Executive
Officer.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Mr. Cotronakis assumed his positions effective July 31, 2009.
|--- | -------------------------------------------------------------



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Employment Agreements

As of December 31, 2010, three of our executive officers are a party to an Executive Employment Agreement as follows:



|                      |  |                                                                   |  |                |  |             |         |  |          |   |         |            |  |   |         | 
|--------------------- |  | ----------------------------------------------------------------- |  | -------------- |  | ----------- | ------- |  | -------- | - | ------- | ---------- |  | - | ------- | 
|                      |  |                                                                   |  |                |  | Base Salary |        
|Name                  |  | Title                                                             |  | Effective Date |  | Year One    |         |  | Year Two |   |         | Year Three | 
|Michael T. Shubic     |  | Chief Operating Officer                                           |  | July 1, 2009   |  | $           | 350,000 |  |          | $ | 360,500 |            |  | $ | 371,315 | 
|                      |  |                                                                   |  |                | 
|Ian M. Stewart        |  | President of Pari-Mutuel Wagering Operations                      |  | August 1, 2009 |  |             | 300,000 |  |          |   | 309,000 |            |  |   | 318,270 | 
|                      |  |                                                                   |  |                | 
|Emanuel J. Cotronakis |  | Executive Vice President, General Counsel and Assistant Secretary |  | July 31, 2009  |  |             | 400,000 |  |          |   | 425,000 |            |  |   | 450,000 | 

All employment
agreements are substantially identical except with respect to the amount of the executives respective salaries. Among the more important provisions of the agreements are the following:

(a) the term of each agreement is approximately three years from its effective date;

(b) the base salaries are set forth above; in addition, each executive is entitled to receive an annual bonus of up to 35% of his base
salary if certain performance criteria (established each year) are met, and Mr. Cotronakis has a minimum annual bonus in an amount equal to 10% of his base salary;

(c) the agreements provide that if the executive is terminated without cause, he is entitled to a lump sum payment equal to six months salary and a prorated portion of his bonus. If the executive
dies, his estate is entitled to a lump sum payment equal to one years salary and a prorated portion of his bonus. If there is a change in our control and the executive is not offered employment satisfactory to him, he is entitled to a lump sum
payment equal to one and one-half years salary except in the case of Mr. Cotronakis who is entitled to a lump sum payment equal to three years salary; and

(d) each agreement contains customary provisions regarding vacations, benefits, insurance, indemnification and expense reimbursements.

Director Compensation

We had two directors, Jeffrey P. Jacobs, who is also our CEO, and Richard E. Jacobs, his father. In 2008, Richard E. Jacobs was paid $187,500 for his service as a director. Effective October 15,
2008, Richard E. Jacobs resigned his position as a member of the Board of Directors of JEI. Our directors received no other compensation for their services as directors. During 2010 and 2009, no directors fees were paid.

As explained in Item 13 below, our stockholder received compensation from us in 2010 as a result of amounts accounted for as a
distribution resulting from the sale of a certain Nautica Property. Additionally, annual distributions may be made to our owner in an aggregate amount not to exceed the greater of $1 million and 50% of consolidated net income as defined in our
credit agreement and indenture. Distributions to our stockholder totaled $3,800,000 in 2010, including $2,800,000 for the purchase of Flats Development, Inc.

Finally, under the terms of our bank credit agreement and note indenture, we are allowed to make a tax distribution to our stockholder to cover the tax on our income which is taxable to our stockholder
because of our Qualified Subchapter S-Corporation Subsidiary status.

Our director has reviewed and discussed the foregoing
Compensation Discussion and Analysis with management and based thereon, has recommended that it be included in this Annual Report on Form 10-K.



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During 2010, there were no interlocking relationships between any member of our board of
directors and any of our executive officers that would be required to be disclosed under Item 407(e)(4) of Regulation S-K.



|Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|-------- | -----------------------------------------------------------------------------------------------

As of March 1, 2011, there were 1,500 shares of our common stock outstanding divided into 1,320 Class A shares and 180 Class B
shares. The shares are equal in all respects except that each Class B share entitles the holder to 50,000 votes on each matter required to be voted upon by our shareholders. We have no equity compensation, stock option or similar plans relating to
our equity securities. All 1,500 shares (100%) of our issued and outstanding common stock are owned by Jacobs Investments, Inc., a Delaware corporation (JII).

The following table sets forth certain information regarding the beneficial ownership of JIIs common stock as of March 1, 2011, for each stockholder who is known by us to own beneficially more
than 5% of JIIs common stock.



|                                                                                                                         |  |                  |     |  |            |  |     |         |  |  |         |   |  |  |     |  
|------------------------------------------------------------------------------------------------------------------------ |  | ---------------- | --- |  | ---------- |  | --- | ------- |  |  | ------- | - |  |  | --- | -
|                                                                                                                         |  | Number of Shares |     |  | Percentage | 
|Stockholders of JII                                                                                                      |  | Class A          |     |  | Class B    |  |     | Class A |  |  | Class B |  
|Jeffrey P. Jacobs(1)
Golden Bear Plaza
East Tower 1170 U.S. Highway One, Suite 600 North Palm Beach,
Florida 33408       |  |                  | 528 |  |            |  |    |         |  |  | 40      | % |  |  |    |  
|                                                                                                                         |  |                  |     | 
|Jacobs Family Economic and Control Trusts(2)
Hahn Loeser & Parks LLP
200 Public Square, Suite 2800
Cleveland, Ohio 44114 |  |                  | 792 |  |            |  | 180 |         |  |  | 60      | % |  |  | 100 | %
|                                                                                                                         |  |                  |     | 
|All executive officers and directors as a group                                                                          |  |                  | 528 |  |            |  |    |         |  |  | 40      | % |  |  |    |  



|(1) | Jeffrey P. Jacobs is our Chief Executive Officer, Secretary, Treasurer and Chairman of the Board.
|--- | -------------------------------------------------------------------------------------------------

|(2) | The Jacobs Family Economic Trust owns 792 Class A shares and the Jacobs Family Control Trust owns 180 Class B shares. Both trusts are dynasty trusts established by
Jeffrey P. Jacobs for the benefit of his current and future heirs and place certain restrictions on the transfer of the shares by the trustee. The current trustee of both trusts is Stanley R. Gorom III, a partner in the Cleveland, Ohio law firm of
Hahn Loeser & Parks LLP. The trusts referred to herein are collectively referred to as the Trusts.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Item 13. | Certain Relationships and Related Transactions, and Director Independence.
|-------- | --------------------------------------------------------------------------

JIMCO Management Agreement

In order to assist us in our efforts to research, develop, perform due diligence on and possibly acquire new gaming opportunities, we have a consulting agreement with Jacobs Investments Management Co.
Inc. (JIMCO), 82% of which is owned by Jeffrey P. Jacobs and the remaining 18% of which is owned in equal portions by two of his business associates. This agreement calls for payments of $1.25 million per year payable in two equal
installments of $625,000 on January 1stand
July 1stplus 2.5% of budgeted development costs for
projects undertaken by us, if certain debt covenant ratios are met. Totals expenses incurred under this agreement with JIMCO were $1,250,000, $1,325,000 and $1,340,000 for the years ended December 31, 2010, 2009 and 2008, respectively.



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Transactions with Affiliate Truck Stops

We allocate management, accounting and overhead costs incurred by JEI to various truck stops owned by Gameco Holdings, Inc.
(Gameco), another wholly owned subsidiary of JII. These costs totaled $1,200,000, $1,101,000, and $1,157,000 for the years ended December 31, 2010, 2009 and 2008, respectively. We expect to continue to render management and
accounting services to Gameco in the future. We believe the fees paid to us are no less favorable to us than those that would be paid to unaffiliated vendors. Additionally, beginning in December 2009, to help JEI reach the fuel sale volume necessary
to qualify for the reduced pricing structure under the fuel supply agreements with CITGO Petroleum Corporation (see Note 8 to the financial statements), we entered into agreements with various Gameco subsidiaries to provide gasoline and diesel fuel
at cost for their fuel operations. We provided gasoline and diesel fuel totaling $7,968,000 to Gameco subsidiaries for the year ended December 31, 2010.

Gameco owns and has the right to acquire additional video gaming truck plazas in Louisiana. We have the right to purchase any existing or future video gaming facilities acquired by Gameco at a price equal
to (i) the lesser of (a) seven times trailing 12 months EBITDA, and (b) the sum of the consideration paid by the affiliated company plus or minus an adjustment for working capital and plus an amount equal to the trailing
12 months EBITDA, or (ii) an amount supported by a fairness opinion by a nationally recognized accounting, investment banking or appraisal firm; provided that after giving effect to each such acquisition and pro forma for contemplated
expenditures, we must be in pro forma compliance with all financial covenants under our credit agreements. Any such acquisitions by us could result in significant profits to Gameco.

On January 31, 2011, we acquired two truck plaza video gaming facilities in Louisiana, Cash Magic Springhill, LLC and Cash Magic
Vivian, LLC, for $5,461,797 and $4,912,718, respectively, which were previously wholly owned by Gameco. The acquisitions of these businesses will be accounted for as combinations of entities under common control during 2011.

Jalou Device Owner, L.P.

Under Louisiana law, video poker machines must be owned by Louisiana residents. Through October 2009, the Jalou truck plaza video gaming facilities paid a fee to the third party owner of the machines in
order to maintain the machines used in our truck plaza operations, plus reimbursement for the owners licensing costs and various other expenses. Beginning in November 2009, the ownership of the video poker machines and the related repair parts
inventory used by the Jalou truck plazas was transferred from the third party owner to a related party, Jalou Device Owner, L.P. (Device Owner), of which Gameco owns 49% and is the general partner. Two Louisiana residents own 51% and are
the limited partners. The Jalou truck plazas pay 90 cents per operating video poker machine per day to Device Owner, plus reimbursement for Device Owners licensing costs. Total expense under these arrangements was $1,301,000, $1,126,000 and
$1,273,000 for the years ended December 31, 2010, 2009 and 2008, respectively.

Other Related Party Transactions

During 2009, we incurred expenses with the R.E. Jacobs Group for JEI-related airplane usage totaling $113,000.
Additionally, Flats periodically received working capital advances from JIMCO, our CEO and the mother of our CEO. These advances totaled $731,000 as of December 31, 2009 and are included in the balances due to affiliates discussed below. These
working capital advances were settled upon acquisition of Flats by JEI during 2010.

Balances Due To/From Affiliates

Each of the above related party transactions results in either receivables from or payables to our affiliates. As of
December 31, 2010 and 2009, these transactions resulted in net receivables from affiliates totaling $1,276,000 and $1,023,000, respectively. As of December 31, 2010 and 2009, these transactions resulted in net payables to affiliates
totaling $639,000 and $1,469,000, respectively.



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Nautica Properties

During July 2006, we acquired from affiliated parties options to lease and options to purchase six businesses and their related assets,
including various parcels of land, buildings and related improvements, on the west bank of the Cuyahoga River in Cleveland, Ohio. We refer to these businesses and their related assets, covering an aggregate of approximately 624,000 square feet of
land (14.4 acres) and a building comprised of 47,380 square feet of net rentable space, as the Nautica Properties.

On
April 1, 2008, we acquired a business and its related assets referred to as Lot D for $800,000, which was accounted for as a distribution to our stockholder. The company that owned this business was wholly owned by our Chairman
and Chief Executive Officer (CEO). The net assets acquired were $131,000. On January 21, 2009, we acquired a second Nautica Properties based business and its related assets referred to as Sugar Warehouse for $2,450,000
from a limited partnership controlled by our CEO. An affiliate (Affiliate) of our CEO owned 82% of the general partner interests and 16.4% of the limited partner interests of the seller. A distribution of $2,238,000 was recorded on the
acquisition date for the portion of the purchase price attributable to our CEO. The net assets acquired were $1,721,000.

On
July 7, 2010, we exercised our option and entered into a purchase agreement to acquire a third Nautica Properties based business and its related assets referred to as Flats for $2,800,000, which was accounted for as a distribution
to our stockholder. Closing of the transaction occurred on August 16, 2010. Flats was controlled by the mother and sister of our CEO, and was accounted for as a combination of entities under common control. The net assets acquired were
$1,637,000.

In July 2010, we amended the three remaining unexercised option agreements and extended the option periods to
July 11, 2012 giving us the right to purchase or enter into long-term leases on the three remaining Nautica Properties businesses and their related assets.

On January 18, 2011, we acquired a fourth Nautica Properties based business and its related assets referred to as Nautica Phase 2 for $1,250,000 from a limited partnership. The general
partner owned 1% and the limited partners owned 99% of the limited partnership. Our CEO owned 58% of the general partner interests and controlled the partnership. Third parties owned the remaining 42% of the general partner interests and the 99%
limited partnership interest. The acquisition of this business will be accounted for as a combination of entities under common control during 2011. Therefore, the portion of Nautica Phase 2 acquired from our CEO will be recorded at the historical
cost bases in the assets and liabilities transferred and the portion of Nautica Phase 2 acquired from third parties will be recorded at fair value at the acquisition date using the acquisition method of accounting.

The remaining two unexercised Nautica Properties options require aggregate payments totaling $100,000 per year. Our CEO owns varying
interests in the two remaining parcels. Although we may elect not to exercise the remaining options unless casino gaming opportunities arise, we nonetheless have the right to acquire all or part of the remaining Nautica Properties for other
purposes. If we decide to exercise our two remaining options, the aggregate annual lease payments on the remaining two parcels would be $230,000. If both remaining parcels are purchased, the total purchase price would be $2.3 million. The purchase
price and rent payments would be increased based on independent appraisals of the land, improvements and other assets values if, in the future, a casino were to be licensed on the Nautica Properties.

Other Investments

We may invest up to $3 million per year in private or publicly traded securities of unaffiliated companies. These investments may be selected and managed by JII, provided that under our senior credit
agreement our pro forma consolidated leverage ratio (ratio of our total pro forma debt to our pro forma EBITDA) must be 5.0 to 1.0 or less after giving effect to any such investment and provided that under our note indenture our fixed charge
coverage ratio (ratio of our Consolidated EBITDA to our fixed charges, primarily interest) was at least 2.0 to 1.0 for the preceding four quarter period; and provided further that to the extent that less than $3.0 million in the aggregate of
such investments are made in any fiscal year, the unused amount may be used in the succeeding fiscal year, subject to the pro forma leverage condition just discussed. Furthermore, we may invest an aggregate amount not to exceed $5.0 million at any
time outstanding. At December 31, 2010, we had invested $7,943,000 (cost) in the securities of an unaffiliated public company; the market value of such securities at December 31, 2010 was $1,652,000.



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Director Independence

We are a privately held company wholly owned by Jacobs Investments, Inc. which in turn is owned beneficially by our director, Jeffrey P. Jacobs, who is also our Chief Executive Officer and two trusts
created by him. Therefore, our board of directors is not independent, nor are any independence standards applicable to us as a result of stock exchange or any other self-regulatory organizations requirements. Mr. Jacobs approves all
transactions required to be reported under this Item giving due regard to the covenants in our bank credit agreement and in our note indenture.



|Item 14. | Principal Accountant Fees and Services.
|-------- | ---------------------------------------

Fees paid to our registered public accounting firm for the last two years were as follows:



|                    |  |                         |           |  |      |   |           | 
|------------------- |  | ----------------------- | --------- |  | ---- | - | --------- | 
|                    |  | Year EndedDecember 
31, |          
|                    |  | 2010                    |           |  | 2009 |  
|Audit fees          |  | $                       | 1,107,000 |  |      | $ | 1,428,000 | 
|Audit related fees* |  |                         | 25,000    |  |      |   | 30,000    | 
|Tax fees**          |  |                         | 314,000   |  |      |   | 388,000   | 
|All other fees      |  |                         | 160,000   |  |      |   | 21,000    | 



|* | Audit-related fees are comprised of our 401(k) audits and fees.
|- | ---------------------------------------------------------------

|** | Tax fees are principally comprised of preparation of federal and state corporate income tax returns, various state tax returns, and research and related tax
consultation services.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We have no audit committee. Our board of directors considered and determined that
provision of the services described above and amounts paid for those services are compatible with maintaining our principal accountants independence.



|Item 15. | Exhibits and Financial Statement Schedules.
|-------- | -------------------------------------------



| | (a) | Financial Statements and Financial Statement Schedules
| | --- | ------------------------------------------------------

(1) Financial Statements filed herewith are listed in the Index to Consolidated Financial Statements on page F-1 of this report.

(2) No Financial Statement Schedules are included herein because such schedules are not applicable, are not required, or
because the required financial information is included in the Consolidated Financial Statements or notes thereto.



| | (b) | Exhibits
| | --- | --------

A list of the
exhibits filed, or incorporated by reference as part of this Annual Report on Form 10-K is set forth in the Exhibit Index which immediately precedes such exhibits and is incorporated herein by this reference.



63



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.



JACOBS ENTERTAINMENT, INC.By:

/s/ JEFFREY P. JACOBSJeffrey P. JacobsChief Executive OfficerBy:

/s/ BRETT A. KRAMERBrett A. KramerChief Financial Officer


Date:
March 29, 2011

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.



|                      |  |                                                 |  |               
|--------------------- |  | ----------------------------------------------- |  | --------------
|Signature             |  | Title                                           |  | Date          
|                      |  |                                                
|/s/ JEFFREY P. JACOBS |  | Chairman of the Board of Directors and Chief    |  | March 29, 2011
|Jeffrey P. Jacobs     |  | Executive Officer (Principal Executive Officer) |  |               
|                      |  |                                                
|/s/ BRETT A. KRAMER   |  | Chief Financial Officer                         |  | March 29, 2011
|Brett A. Kramer       |  | (Principal Financial and Accounting Officer)    |  |               



64



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Jacobs Entertainment, Inc.

Consolidated Financial Statements as of December 31, 2010 and 2009, and for the Years Ended December 31, 2010, 2009 and 2008, and Report of Independent Registered Public Accounting Firm



---

##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholder of

Jacobs Entertainment, Inc.

Golden, Colorado

We have audited the accompanying consolidated balance sheets of Jacobs Entertainment, Inc. and subsidiaries (the Company) as of
December 31, 2010 and 2009, and the related consolidated statements of operations, stockholders equity, and cash flows for each of the three years in the period ended December 31, 2010. These financial statements are the
responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Jacobs Entertainment, Inc. and
subsidiaries as of December 31, 2010 and 2009, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2010, in conformity with accounting principles generally accepted in the
United States of America.



|                         
|-------------------------
|/s/ Deloitte & Touche LLP
|                         
|Denver, Colorado         
|March 29, 2011           



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JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2010 and 2009

(Dollars in thousands)



|                                                                                                                                    |  |      |          |   |                              |   |          |  
|----------------------------------------------------------------------------------------------------------------------------------- |  | ---- | -------- | - | ---------------------------- | - | -------- | -
|                                                                                                                                    |  | 2010 |          |   | 2009(As adjusted,see Note
4) |  
|ASSETS                                                                                                                              |  |      |          |   |                              |   |          |  
|CURRENT ASSETS:                                                                                                                     |  |      |          |   |                              |   |          |  
|Cash and cash equivalents                                                                                                           |  | $    | 24,234   |   |                              | $ | 24,205   |  
|Restricted cash                                                                                                                     |  |      | 1,211    |   |                              |   | 1,121    |  
|Accounts receivable, net of allowance for doubtful accounts of $607 and $910, respectively                                          |  |      | 2,906    |   |                              |   | 2,993    |  
|Due from affiliates                                                                                                                 |  |      | 1,276    |   |                              |   | 1,023    |  
|Inventory                                                                                                                           |  |      | 3,429    |   |                              |   | 3,039    |  
|Prepaid expenses and other current assets                                                                                           |  |      | 2,976    |   |                              |   | 2,850    |  
|                                                                                                                                    |  |      |          |   |                              |   |          |  
|Total current assets                                                                                                                |  |      | 36,032   |   |                              |   | 35,231   |  
|                                                                                                                                    |  |      |          |   |                              |   |          |  
|PROPERTY, PLANT AND EQUIPMENT:                                                                                                      |  |      |          |   |                              |   |          |  
|Land and improvements                                                                                                               |  |      | 62,465   |   |                              |   | 62,397   |  
|Buildings and improvements                                                                                                          |  |      | 192,319  |   |                              |   | 190,236  |  
|Equipment, furniture and fixtures                                                                                                   |  |      | 102,301  |   |                              |   | 95,164   |  
|Leasehold improvements                                                                                                              |  |      | 3,213    |   |                              |   | 3,201    |  
|Construction in progress                                                                                                            |  |      | 1,033    |   |                              |   | 594      |  
|                                                                                                                                    |  |      |          |   |                              |   |          |  
|                                                                                                                                    |  |      | 361,331  |   |                              |   | 351,592  |  
|Less accumulated depreciation                                                                                                       |  |      | (125,323 | ) |                              |   | (107,285 | )
|                                                                                                                                    |  |      |          |   |                              |   |          |  
|Property, plant and equipment, net                                                                                                  |  |      | 236,008  |   |                              |   | 244,307  |  
|                                                                                                                                    |  |      |          |   |                              |   |          |  
|OTHER NONCURRENT ASSETS:                                                                                                            |  |      |          |   |                              |   |          |  
|Goodwill                                                                                                                            |  |      | 46,471   |   |                              |   | 46,471   |  
|Identifiable intangible assets, net                                                                                                 |  |      | 7,425    |   |                              |   | 8,173    |  
|Debt issue costs, net                                                                                                               |  |      | 5,016    |   |                              |   | 5,695    |  
|Investment in equity securities                                                                                                     |  |      | 1,652    |   |                              |   | 1,058    |  
|Other assets                                                                                                                        |  |      | 1,692    |   |                              |   | 2,605    |  
|                                                                                                                                    |  |      |          |   |                              |   |          |  
|Total other noncurrent assets                                                                                                       |  |      | 62,256   |   |                              |   | 64,002   |  
|                                                                                                                                    |  |      |          |   |                              |   |          |  
|TOTAL                                                                                                                               |  | $    | 334,296  |   |                              | $ | 343,540  |  
|                                                                                                                                    |  |      |          |   |                              |   |          |  
|                                                                                                                                    |  |     
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                |  |      |          |   |                              |   |          |  
|CURRENT LIABILITIES:                                                                                                                |  |      |          |   |                              |   |          |  
|Accounts payable                                                                                                                    |  | $    | 8,220    |   |                              | $ | 6,367    |  
|Accrued expenses                                                                                                                    |  |      | 16,442   |   |                              |   | 15,984   |  
|Due to affiliates                                                                                                                   |  |      | 639      |   |                              |   | 1,469    |  
|Current portion of long-term debt and capital lease obligations                                                                     |  |      | 3,738    |   |                              |   | 2,117    |  
|                                                                                                                                    |  |      |          |   |                              |   |          |  
|Total current liabilities                                                                                                           |  |      | 29,039   |   |                              |   | 25,937   |  
|Long-term debt and capital lease obligations                                                                                        |  |      | 278,421  |   |                              |   | 291,070  |  
|Other noncurrent liabilities                                                                                                        |  |      | 1,114    |   |                              |   | 1,011    |  
|                                                                                                                                    |  |      |          |   |                              |   |          |  
|Total liabilities                                                                                                                   |  |      | 308,574  |   |                              |   | 318,018  |  
|                                                                                                                                    |  |      |          |   |                              |   |          |  
|COMMITMENTS AND CONTINGENCIES (Note 8)                                                                                              |  |      |          |   |                              |   |          |  
|STOCKHOLDERS EQUITY:                                                                                                               |  |      |          |   |                              |   |          |  
|Class A Common stock, $.01 par value; 1,800 shares authorized, 1,320 shares issued and outstanding as of December 31,
2010 and 2009 |  |      |         |   |                              |   |         |  
|Class B Common stock, $.01 par value; 200 shares authorized, 180 shares issued and outstanding as of December 31, 2010 and
2009     |  |      |         |   |                              |   |         |  
|Additional paid-in capital                                                                                                          |  |      | 27,724   |   |                              |   | 30,657   |  
|Accumulated deficit                                                                                                                 |  |      | (2,002   | ) |                              |   | (5,135   | )
|                                                                                                                                    |  |      |          |   |                              |   |          |  
|Total stockholders equity                                                                                                          |  |      | 25,722   |   |                              |   | 25,522   |  
|                                                                                                                                    |  |      |          |   |                              |   |          |  
|TOTAL                                                                                                                               |  | $    | 334,296  |   |                              | $ | 343,540  |  
|                                                                                                                                    |  |      |          |   |                              |   |          |  

See notes to consolidated financial statements.



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JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 and 2008

(Dollars in
thousands)



|                                                                                  |  |      |         |   |                              |   |         |                              |  |   |         |  
|--------------------------------------------------------------------------------- |  | ---- | ------- | - | ---------------------------- | - | ------- | ---------------------------- |  | - | ------- | -
|                                                                                  |  | 2010 |         |   | 2009(As adjusted,see Note
4) |   |         | 2008(As adjusted,see Note
4) | 
|REVENUES                                                                          |  |      |         |   |                              |   |         |                              |  |   |         |  
|Gaming:                                                                           |  |      |         |   |                              |   |         |                              |  |   |         |  
|Casino                                                                            |  | $    | 140,265 |   |                              | $ | 139,766 |                              |  | $ | 139,492 |  
|Truck stop                                                                        |  |      | 61,463  |   |                              |   | 62,983  |                              |  |   | 67,590  |  
|Pari-mutuel                                                                       |  |      | 27,669  |   |                              |   | 32,276  |                              |  |   | 38,657  |  
|Food and beverage                                                                 |  |      | 28,720  |   |                              |   | 29,781  |                              |  |   | 30,736  |  
|Convenience storefuel                                                            |  |      | 85,443  |   |                              |   | 60,659  |                              |  |   | 97,021  |  
|Convenience storeother                                                           |  |      | 11,239  |   |                              |   | 12,460  |                              |  |   | 12,908  |  
|Hotel                                                                             |  |      | 3,806   |   |                              |   | 3,607   |                              |  |   | 4,101   |  
|Other                                                                             |  |      | 6,226   |   |                              |   | 6,235   |                              |  |   | 6,499   |  
|                                                                                  |  |      |         |   |                              |   |         |                              |  |   |         |  
|Total revenues                                                                    |  |      | 364,831 |   |                              |   | 347,767 |                              |  |   | 397,004 |  
|Less: Promotional allowances                                                      |  |      | (34,907 | ) |                              |   | (34,301 | )                            |  |   | (33,718 | )
|                                                                                  |  |      |         |   |                              |   |         |                              |  |   |         |  
|Net revenues                                                                      |  |      | 329,924 |   |                              |   | 313,466 |                              |  |   | 363,286 |  
|                                                                                  |  |      |         |   |                              |   |         |                              |  |   |         |  
|                                                                                  |  |      |        
|COSTS AND EXPENSES                                                                |  |      |         |   |                              |   |         |                              |  |   |         |  
|Gaming:                                                                           |  |      |         |   |                              |   |         |                              |  |   |         |  
|Casino                                                                            |  |      | 48,871  |   |                              |   | 47,348  |                              |  |   | 46,809  |  
|Truck stop                                                                        |  |      | 37,326  |   |                              |   | 38,784  |                              |  |   | 40,990  |  
|Pari-mutuel                                                                       |  |      | 21,757  |   |                              |   | 26,077  |                              |  |   | 31,172  |  
|Food and beverage                                                                 |  |      | 13,726  |   |                              |   | 13,521  |                              |  |   | 15,417  |  
|Convenience storefuel                                                            |  |      | 80,510  |   |                              |   | 57,139  |                              |  |   | 90,714  |  
|Convenience storeother                                                           |  |      | 14,455  |   |                              |   | 15,179  |                              |  |   | 17,222  |  
|Hotel                                                                             |  |      | 799     |   |                              |   | 865     |                              |  |   | 1,038   |  
|Marketing, general and administrative                                             |  |      | 63,054  |   |                              |   | 65,864  |                              |  |   | 68,931  |  
|Unrealized (gain) loss on change in fair value of investment in equity securities |  |      | (594    | ) |                              |   | 309     |                              |  |   | 6,577   |  
|Goodwill impairment                                                               |  |      |        |   |                              |   |        |                              |  |   | 199     |  
|Abandonment costs                                                                 |  |      |        |   |                              |   |        |                              |  |   | 829     |  
|Depreciation and amortization                                                     |  |      | 21,331  |   |                              |   | 21,497  |                              |  |   | 20,124  |  
|                                                                                  |  |      |         |   |                              |   |         |                              |  |   |         |  
|Total costs and expenses                                                          |  |      | 301,235 |   |                              |   | 286,583 |                              |  |   | 340,022 |  
|                                                                                  |  |      |         |   |                              |   |         |                              |  |   |         |  
|OPERATING INCOME                                                                  |  |      | 28,689  |   |                              |   | 26,883  |                              |  |   | 23,264  |  
|Interest income                                                                   |  |      | 24      |   |                              |   | 26      |                              |  |   | 194     |  
|Interest expense                                                                  |  |      | (25,580 | ) |                              |   | (25,217 | )                            |  |   | (27,477 | )
|                                                                                  |  |      |         |   |                              |   |         |                              |  |   |         |  
|NET INCOME (LOSS)                                                                 |  |      | 3,133   |   |                              |   | 1,692   |                              |  |   | (4,019  | )
|Net income attributable to the noncontrolling interest                            |  |      |        |   |                              |   |        |                              |  |   | (71     | )
|                                                                                  |  |      |         |   |                              |   |         |                              |  |   |         |  
|NET INCOME (LOSS) ATTRIBUTABLE TO JACOBS ENTERTAINMENT, INC.                      |  | $    | 3,133   |   |                              | $ | 1,692   |                              |  | $ | (4,090  | )
|                                                                                  |  |      |         |   |                              |   |         |                              |  |   |         |  

See notes to consolidated financial statements.



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##### Table of Contents

JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 and 2008

(Dollars in
thousands)



|                                                      |  |                                        |   |  |                          |   |        |                                      |  |   |                                            |   |  |                        |        |  |                              |   |      |       |  |   |        |   |  |   |        |  
|----------------------------------------------------- |  | -------------------------------------- | - |  | ------------------------ | - | ------ | ------------------------------------ |  | - | ------------------------------------------ | - |  | ---------------------- | ------ |  | ---------------------------- | - | ---- | ----- |  | - | ------ | - |  | - | ------ | -
|                                                      |  | Jacobs Entertainment, Inc. Stockholder |   |  |                          |   |        |                                      |  |   |                                            |  
|                                                      |  | CommonStock*                           |   |  | AdditionalPaid-inCapital |   |        | (AccumulatedDeficit)RetainedEarnings |  |   | AccumulatedOtherComprehensiveIncome (Loss) |   |  | NoncontrollingInterest |        |  | ComprehensiveIncome (Loss)** |   |      | Total | 
|BALANCES, JANUARY 1, 2008 (As adjusted, see Note 4)   |  | $                                      |  |  |                          | $ | 34,753 |                                      |  | $ | (2,737                                     | ) |  | $                      | (2,419 |  |                              | $ | 141  |       |  | $ |       |   |  | $ | 29,738 |  
|Distributions                                         |  |                                        |   |  |                          |   | (1,800 | )                                    |  |   |                                            |   |  |                        |        |  |                              |   |      |       |  |   |        |   |  |   | (1,800 | )
|Comprehensive income (loss):                          |  |                                        |   |  |                          |   |        |                                      |  |   |                                            |   |  |                        |        |  |                              |   |      |       |  |   |        |   |  |   |        |  
|Change in fair value of equity securities             |  |                                        |   |  |                          |   |        |                                      |  |   |                                            |   |  |                        | 2,419  |  |                              |   |      |       |  |   | 2,419  |   |  |   | 2,419  |  
|Net (loss) income (As adjusted, see Note 4)           |  |                                        |   |  |                          |   |        |                                      |  |   | (4,090                                     | ) |  |                        |        |  |                              |   | 71   |       |  |   | (4,019 | ) |  |   | (4,019 | )
|                                                      |  |                                        |   |  |                          |   |        |                                      |  |   |                                            |   |  |                        |        |  |                              |   |      |       |  |   |        |   |  |   |        |  
|Total comprehensive loss (As adjusted, see Note 4)    |  |                                        |   |  |                          |   |        |                                      |  |   |                                            |   |  |                        |        |  |                              |   |      |       |  | $ | (1,600 | ) |  |   |        |  
|                                                      |  |                                        |   |  |                          |   |        |                                      |  |   |                                            |   |  |                        |        |  |                              |   |      |       |  |   |        |   |  |   |        |  
|BALANCES, DECEMBER 31, 2008 (As adjusted, see Note 4) |  | $                                      |  |  |                          | $ | 32,953 |                                      |  | $ | (6,827                                     | ) |  | $                      |       |  |                              | $ | 212  |       |  |   |        |   |  | $ | 26,338 |  
|Capital contribution                                  |  |                                        |   |  |                          |   | 942    |                                      |  |   |                                            |   |  |                        |        |  |                              |   |      |       |  |   |        |   |  |   | 942    |  
|Distributions                                         |  |                                        |   |  |                          |   | (3,238 | )                                    |  |   |                                            |   |  |                        |        |  |                              |   |      |       |  |   |        |   |  |   | (3,238 | )
|Acquisition of noncontrolling interest                |  |                                        |   |  |                          |   |        |                                      |  |   |                                            |   |  |                        |        |  |                              |   | (212 | )     |  |   |        |   |  |   | (212   | )
|Net income ** (As adjusted, see Note 4)               |  |                                        |   |  |                          |   |        |                                      |  |   | 1,692                                      |   |  |                        |        |  |                              |   |      |       |  |   |        |   |  |   | 1,692  |  
|                                                      |  |                                        |   |  |                          |   |        |                                      |  |   |                                            |   |  |                        |        |  |                              |   |      |       |  |   |        |   |  |   |        |  
|BALANCES, DECEMBER 31, 2009 (As adjusted, see Note 4) |  | $                                      |  |  |                          | $ | 30,657 |                                      |  | $ | (5,135                                     | ) |  | $                      |       |  |                              | $ |     |       |  |   |        |   |  | $ | 25,522 |  
|Capital contribution                                  |  |                                        |   |  |                          |   | 867    |                                      |  |   |                                            |   |  |                        |        |  |                              |   |      |       |  |   |        |   |  |   | 867    |  
|Distributions                                         |  |                                        |   |  |                          |   | (3,800 | )                                    |  |   |                                            |   |  |                        |        |  |                              |   |      |       |  |   |        |   |  |   | (3,800 | )
|Net income **                                         |  |                                        |   |  |                          |   |        |                                      |  |   | 3,133                                      |   |  |                        |        |  |                              |   |      |       |  |   |        |   |  |   | 3,133  |  
|                                                      |  |                                        |   |  |                          |   |        |                                      |  |   |                                            |   |  |                        |        |  |                              |   |      |       |  |   |        |   |  |   |        |  
|BALANCES, DECEMBER 31, 2010                           |  | $                                      |  |  |                          | $ | 27,724 |                                      |  | $ | (2,002                                     | ) |  | $                      |       |  |                              | $ |     |       |  |   |        |   |  | $ | 25,722 |  
|                                                      |  |                                        |   |  |                          |   |        |                                      |  |   |                                            |   |  |                        |        |  |                              |   |      |       |  |   |        |   |  |   |        |  



|* | The par value amount of the Jacobs Entertainment, Inc. 1,320 shares of Class A common stock and 180 shares of Class B common stock outstanding for the periods
presented is less than $500 and is therefore presented as $0 due to rounding.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|** | For the years ended December 31, 2010 and 2009, comprehensive income is equal to net income and is entirely attributable to the Jacobs Entertainment, Inc.
stockholder.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

See notes to consolidated financial statements.



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JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 and 2008

(Dollars in
thousands)



|                                                                                         |  |      |         |   |                              |   |         |                              |  |   |         |  
|---------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---------------------------- | - | ------- | ---------------------------- |  | - | ------- | -
|                                                                                         |  | 2010 |         |   | 2009(Asadjusted,see 
Note 4) |   |         | 2008(Asadjusted,see 
Note 4) | 
|OPERATING ACTIVITIES:                                                                    |  |      |         |   |                              |   |         |                              |  |   |         |  
|Net income (loss)                                                                        |  | $    | 3,133   |   |                              | $ | 1,692   |                              |  | $ | (4,019  | )
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |      |         |   |                              |   |         |                              |  |   |         |  
|Depreciation and amortization                                                            |  |      | 21,331  |   |                              |   | 21,497  |                              |  |   | 20,124  |  
|Goodwill impairment                                                                      |  |      |        |   |                              |   |        |                              |  |   | 199     |  
|Unrealized (gain) loss on change in fair value of investment in equity securities        |  |      | (594    | ) |                              |   | 309     |                              |  |   | 6,577   |  
|Loss on sale of equipment                                                                |  |      | 22      |   |                              |   | 203     |                              |  |   | 240     |  
|Deferred financing cost amortization                                                     |  |      | 2,179   |   |                              |   | 1,655   |                              |  |   | 1,481   |  
|Noncash abandonment costs                                                                |  |      |        |   |                              |   |        |                              |  |   | 782     |  
|Other                                                                                    |  |      | 6       |   |                              |   | 9       |                              |  |   | (75     | )
|Changes in operating assets and liabilities, net of acquisitions:                        |  |      |         |   |                              |   |         |                              |  |   |         |  
|Restricted cash                                                                          |  |      | (90     | ) |                              |   | 302     |                              |  |   | (25     | )
|Accounts receivable, net                                                                 |  |      | 20      |   |                              |   | 28      |                              |  |   | 580     |  
|Inventory                                                                                |  |      | (390    | ) |                              |   | (125    | )                            |  |   | (93     | )
|Prepaid expenses and other assets                                                        |  |      | (409    | ) |                              |   | 103     |                              |  |   | 74      |  
|Accounts payable                                                                         |  |      | 1,851   |   |                              |   | (1,860  | )                            |  |   | 2,682   |  
|Accrued expenses and other noncurrent liabilities                                        |  |      | 458     |   |                              |   | (1,860  | )                            |  |   | (2,515  | )
|Due from/to affiliates                                                                   |  |      | (341    | ) |                              |   | (7      | )                            |  |   | (393    | )
|                                                                                         |  |      |         |   |                              |   |         |                              |  |   |         |  
|Net cash provided by operating activities                                                |  |      | 27,176  |   |                              |   | 21,946  |                              |  |   | 25,619  |  
|                                                                                         |  |      |         |   |                              |   |         |                              |  |   |         |  
|INVESTING ACTIVITIES:                                                                    |  |      |         |   |                              |   |         |                              |  |   |         |  
|Additions to property, plant and equipment                                               |  |      | (11,568 | ) |                              |   | (16,104 | )                            |  |   | (17,208 | )
|Proceeds from sale of equipment                                                          |  |      | 338     |   |                              |   | 389     |                              |  |   | 370     |  
|Purchase of device rights                                                                |  |      | (755    | ) |                              |   | (967    | )                            |  |   | (900    | )
|Acquisition of noncontrolling interest                                                   |  |      |        |   |                              |   | (212    | )                            |  |   |        |  
|                                                                                         |  |      |         |   |                              |   |         |                              |  |   |         |  
|Net cash used in investing activities                                                    |  |      | (11,985 | ) |                              |   | (16,894 | )                            |  |   | (17,738 | )
|                                                                                         |  |      |         |   |                              |   |         |                              |  |   |         |  
|FINANCING ACTIVITIES:                                                                    |  |      |         |   |                              |   |         |                              |  |   |         |  
|Payments to obtain financing                                                             |  |      | (1,500  | ) |                              |   | (555    | )                            |  |   |        |  
|Proceeds from revolving line of credit                                                   |  |      | 24,000  |   |                              |   | 29,463  |                              |  |   | 20,038  |  
|Payments on long-term debt                                                               |  |      | (2,362  | ) |                              |   | (1,398  | )                            |  |   | (1,735  | )
|Payments on revolving line of credit                                                     |  |      | (31,500 | ) |                              |   | (27,000 | )                            |  |   | (27,000 | )
|Distributions to stockholder                                                             |  |      | (3,800  | ) |                              |   | (3,238  | )                            |  |   | (1,800  | )
|                                                                                         |  |      |         |   |                              |   |         |                              |  |   |         |  
|Net cash used in financing activities                                                    |  |      | (15,162 | ) |                              |   | (2,728  | )                            |  |   | (10,497 | )
|                                                                                         |  |      |         |   |                              |   |         |                              |  |   |         |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                     |  |      | 29      |   |                              |   | 2,324   |                              |  |   | (2,616  | )
|CASH AND CASH EQUIVALENTSBeginning of year                                              |  |      | 24,205  |   |                              |   | 21,881  |                              |  |   | 24,497  |  
|                                                                                         |  |      |         |   |                              |   |         |                              |  |   |         |  
|CASH AND CASH EQUIVALENTSEnd of year                                                    |  | $    | 24,234  |   |                              | $ | 24,205  |                              |  | $ | 21,881  |  
|                                                                                         |  |      |         |   |                              |   |         |                              |  |   |         |  
|SUPPLEMENTAL CASH FLOW INFORMATION:                                                      |  |      |         |   |                              |   |         |                              |  |   |         |  
|Cash paid for interest                                                                   |  | $    | 23,455  |   |                              | $ | 23,643  |                              |  | $ | 26,198  |  
|                                                                                         |  |      |         |   |                              |   |         |                              |  |   |         |  
|Non-cash investing and financing activities:                                             |  |      |         |   |                              |   |         |                              |  |   |         |  
|Capital contribution exchanged for retirement of liabilities paid by affiliate           |  | $    | 867     |   |                              | $ | 942     |                              |  | $ |        |  
|                                                                                         |  |      |         |   |                              |   |         |                              |  |   |         |  
|Non-cash additions to property                                                           |  | $    | 1,518   |   |                              | $ | 1,193   |                              |  | $ | 988     |  
|                                                                                         |  |      |         |   |                              |   |         |                              |  |   |         |  

See notes to consolidated financial statements.



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##### Table of Contents

JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2010 and 2009, AND FOR THE

YEARS ENDED
DECEMBER 31, 2010, 2009 and 2008

(Dollars in thousands)



|1. | BUSINESS AND ORGANIZATION
|-- | -------------------------

Jacobs Entertainment, Inc. (JEI, the Company, us, our, or we) was formed
on April 17, 2001 to become a geographically diversified gaming and pari-mutuel wagering company with properties in Colorado, Nevada, Louisiana and Virginia. We are a wholly-owned subsidiary of Jacobs Investments, Inc. (JII) and a
Qualified Subchapter S-Corporation Subsidiary under the Internal Revenue Code of 1986, as amended. Jeffrey P. Jacobs, our Chief Executive Officer (CEO), and his family trusts own 100% of JIIs outstanding Class A and Class B
shares. These persons and their affiliates are referred to herein as Jacobs.

As of March 29, 2010, we own and
operate five casinos through wholly-owned subsidiaries. Our casinos include The Lodge Casino at Black Hawk (The Lodge) and the Gilpin Hotel Casino (Gilpin), both in Black Hawk, Colorado, the Gold Dust West Casino (Gold
Dust West-Reno) in Reno, Nevada, the Gold Dust West-Carson City (Gold Dust West-Carson City) in Carson City, Nevada and the Gold Dust West-Elko (Gold Dust West-Elko) in Elko, Nevada. JEI also owns and operates 20 truck
plaza video gaming facilities in Louisiana, which are collectively referred to as Jalou, truck stops or truck plazas. We also receive a percentage of gaming revenue from an additional truck plaza video gaming
facility. Finally, JEI owns and operates a horse racing track with ten satellite wagering facilities in Virginia through a wholly-owned subsidiary, Colonial Holdings, Inc. (Colonial).

On April 1, 2008, we acquired a business and its related assets referred to as Lot D based in what we call the Nautica
Properties area in Cleveland, Ohio. The company that owned this business was wholly owned by our CEO. On January 21, 2009, we acquired a second Nautica Properties based business and its related assets referred to as Sugar Warehouse
from a limited partnership controlled by our CEO. On August 16, 2010, we acquired a third Nautica Properties based business and its related assets referred to as Flats. Flats was controlled by the mother and sister of our CEO. The
acquisition of these three businesses were each accounted for as combinations of entities under common control. Our 2009 and 2008 financial statements were previously retroactively adjusted to include the operations of the Lot D and Sugar Warehouse
acquisitions from January 1, 2008 to their respective acquisition dates. The accompanying consolidated financial statements have also been retroactively adjusted to include the operations of Flats from January 1, 2008. See Note 4.



|2. | SIGNIFICANT ACCOUNTING POLICIES
|-- | -------------------------------

ConsolidationThe accompanying consolidated financial statements include the accounts of JEI and its subsidiaries. All intercompany transactions and balances have been eliminated in
consolidation. We have evaluated subsequent events through the date on which the financial statements are issued.

Cash
and Cash EquivalentsWe consider all demand deposits and time deposits with original maturities of three months or less to be cash equivalents.

Restricted CashAmounts due under agreements with the Virginia Horsemens Benevolent and Protective Association, Inc. and the Virginia Harness Horse Association are accrued based
on the terms of the agreements. Funds for purses for future live race meets are held in restricted cash accounts.

Accounts ReceivableOur accounts receivable balances primarily consist of receivables from convenience store fuel sales
on account. Generally, our receivables are collected within two months, and we have had minimal bad debt losses. We routinely assess the recoverability of all material receivables to determine their collectibility.



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##### Table of Contents

InventoryInventory consists of food and beverages and uniforms at our
casinos and of fuel, convenience store, and restaurant items at Jalous truck stop operations, and is recorded at the lower of cost (first-in, first-out method) or market.

Property, Plant, and EquipmentProperty, plant, and equipment are stated at historical cost. Depreciation is computed using the straight-line method over the estimated useful lives of
the related assets. Leasehold improvements are depreciated, using the straight-line method, over the shorter of the lease term or the useful life of the asset. Estimated useful lives used are as follows:



|                                  |  |  |             | 
|--------------------------------- |  |  | ----------- | 
|Land improvements                 |  |  | 20-40 years | 
|Buildings and improvements        |  |  | 5-40 years  | 
|Equipment, furniture and fixtures |  |  | 2-20 years  | 
|Leasehold improvements            |  |  | 5-25 years  | 

Costs of major
improvements are capitalized, while costs of normal repairs and maintenance are charged to expense as incurred. Gains or losses on disposal of assets are recognized as incurred.

GoodwillGoodwill represents the excess purchase price over the fair value of the net identifiable assets acquired
related to third party acquisitions. See Note 3.

Identifiable Intangible AssetsIdentifiable intangible
assets are comprised of revenue rights, device use rights associated with video poker machines used at each truck stop, and restriction agreements associated with certain Jalou truck stop acquisitions. Revenue rights are amortized on a straight line
basis over 50 years, representing the term of the related agreement. Device use rights are amortized on a straight line basis over five years, representing the terms of the related agreements. Restriction agreements are amortized on a straight line
basis over five or ten years, representing the terms of the related agreements.

Debt Issue CostsCosts that
are incurred by us in connection with the issuance of debt are capitalized and amortized to interest expense, using the effective interest method, over the expected terms of the related debt agreements.

Investments in Equity SecuritiesInvestments in equity securities are recorded at fair value and included in other
noncurrent assets. See Note 6.

Slot Club LiabilityOur casinos offer customers the ability to become
members in their respective slot clubs. Once a member, the customer can insert a special card into slot and video poker machines while playing in our casinos to earn points. Based on their point totals, members receive various cash
rewards and gift prizes. We accrue a liability based on the points earned by the members of the slot clubs with the associated reduction in revenues recorded to Promotional Allowances (see below). Redemptions are deducted from the accrued liability.
The slot club liability is a component of accrued expenses in the accompanying consolidated balance sheets.

Outstanding
Gaming Chip and Token LiabilityWhen customers exchange cash for gaming chips and tokens, we have a liability as long as those chips and tokens are not redeemed or won by the house. That liability is established by determining the
difference between the total chips and tokens placed in service and the actual inventory of chips and tokens in custody or under the control of the casinos. The chip and token liability is adjusted periodically to reflect an estimate of chips and
tokens that will never be redeemed, such as chips and tokens that have been lost or taken as souvenirs and is reflected as a component of accrued expenses in the accompanying consolidated balance sheets.

RevenueCasinoCasino revenues are the net winnings from gaming activities, which is the difference
between gaming wins and losses. Jackpots, other than the incremental amount of progressive jackpots, are recognized at the time they are won by customers. We accrue the incremental amount of progressive jackpots as the progressive machine is played
and the progressive jackpot amount increases, with a corresponding reduction of casino gaming revenues.



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RevenueTruck StopVideo poker revenue is the net
winnings from gaming activities of our truck stops, which is the difference between gaming wins and losses.

RevenuePari-MutuelPari-mutuel revenue includes our share of pari-mutuel wagering on live races
after payments of amounts returned on winning wagers, and our share of wagering from import and export simulcasting at our racing centers.

RevenueFood and BeverageWe recognize food and beverage revenue at the time that goods or services are rendered.

RevenueConvenience StoreFuel and OtherWe recognize revenue at the time of sale
for fuel and convenience store items.

RevenueHotelWe recognize hotel revenue at the
time rooms are provided to customers.

RevenueOtherOther revenue consists of ATM
commissions, cash advance commissions, miscellaneous vending commissions, rental income, admission charges, and program and concession sales at Colonials live racing events. Other revenues are recognized at the time services are provided to
patrons.

Promotional AllowancesGross revenues include the retail amount of rooms, food and beverages, and
other goods and services provided gratuitously to customers. When computing net revenues, the retail amount of rooms, food and beverages and coupons, as well as slot club player points earned, is deducted from gross revenues as promotional
allowances. The estimated cost of such complimentary services in our casino operations for rooms, food, and beverages is charged to casino operations. The estimated cost of such complimentary services in our truck stops related to video poker
operations for food and beverages is charged to truck stop operations. The estimated cost of such complimentary services in our truck stops related to fuel operations for food and beverages is charged to convenience store operations. The estimated
costs of such complimentary services charged to casino operations, truck stop operations and convenience store operations, respectively, are as follows:



|                             |  |                         |        |  |      |   |        |      |  |   |        | 
|---------------------------- |  | ----------------------- | ------ |  | ---- | - | ------ | ---- |  | - | ------ | 
|                             |  | Years Ended December 31 |       
|                             |  | 2010                    |        |  | 2009 |   |        | 2008 | 
|Casino operations            |  | $                       | 13,978 |  |      | $ | 14,100 |      |  | $ | 13,686 | 
|Truck stop operations        |  |                         | 2,176  |  |      |   | 2,265  |      |  |   | 2,243  | 
|Convenience store operations |  |                         | 413    |  |      |   | 267    |      |  |   | 463    | 

Income
TaxesWe have elected for income tax purposes to be treated as a Qualified Subchapter S-Corporation Subsidiary under the Internal Revenue Code of 1986, as amended, and, consequently, no current or deferred income taxes have been
reflected in the accompanying consolidated financial statements as these taxes are the responsibility of the stockholder.

Long-Lived AssetsWe periodically evaluate our long-lived assets, including property, plant and equipment and
identifiable intangibles, for potential impairment. If an impairment is indicated, such impaired assets are written down to their estimated fair value. For the years ended December 31, 2010, 2009 and 2008, we determined that there was no
impairment of our long-lived assets other than those discussed in Notes 3 and 12.

During 2010, based on operating results, we
were required, pursuant to FASB ASC Topic 360, Property, Plant and Equipment, to assess our ability to recover the recorded cost of the Gold Dust West-Carson City and Virginia long-lived assets. We prepared a cash flow analysis based on
managements best estimate in an effort to assess the likelihood of recovering the cost of these assets. Based on these projections and the related underlying assumptions as well as our knowledge of the Carson City and Virginia markets, we
believe that we will be able to recover the carrying cost of these assets and no impairment currently exists. However, future events such as actual performance versus projected performance, continued market decline, increased and/or changing
competitive forces, or other unforeseen events could change our estimates and cause us to recognize an impairment in the carrying value of the Gold-Dust West-Carson City or Virginia long-lived assets in future periods. Such an impairment could be
material to our financial position and results of operations.



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Use of EstimatesThe preparation of financial statements in accordance
with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

We
periodically evaluate our policies, and the estimates and assumptions related to such accounting principles. All of our subsidiary companies operate in a highly regulated industry. Our operations are subject to regulations that describe and regulate
operating and internal control procedures. The majority of gaming revenue is in the form of cash which by nature does not require complex estimations. We estimate certain liabilities with payment periods that extend for longer than several months.
Such estimates include, but are not limited to, the self-insured medical, workers compensation liabilities, slot club liabilities, chip and token liabilities and litigation costs. We believe that these estimates are reasonable based on past
experience with the business and based upon assumptions related to possible outcomes in the future. Actual results, however, could differ from those estimates.

Furthermore, we have determined that the policies associated with our long-lived assets, goodwill and identifiable intangible assets, and related estimates are critical to the preparation of our
consolidated financial statements. We have a significant investment in long-lived property and equipment. We estimate that the undiscounted future cash flows expected to result from the use of these assets exceeds the current carrying value of these
assets. Any adverse change to the estimate of these undiscounted cash flows could necessitate an impairment charge that would adversely affect operating results. We estimate the useful lives for our assets based on historical experience, estimates
of assets commercial lives, and the likelihood of obsolescence. Should the actual useful life of a class of assets differ from the estimated useful life, we would record an impairment charge.

New Accounting GuidanceNew authoritative accounting guidance under FASB ASC Topic 810, Consolidation (ASC
Topic 810), amended existing accounting literature to require an enterprise to perform an analysis to determine whether any variable interest held gives it a controlling financial interest in a variable interest entity and requires an ongoing
reassessment of this nature. The standard also requires enhanced disclosures that will provide more transparent information about an entitys involvement in a variable interest entity. The standard was effective for us on January 1, 2010.
The adoption of this standard did not have a material impact on our consolidated financial statements.

New authoritative
accounting guidance under FASB ASC Topic 924, Entertainment-Casinos (ASC Topic 924) clarified existing literature that an entity should accrue jackpot liabilities and charge to revenues when an entity has the obligation to pay the
jackpot (or a portion thereof as applicable). This guidance applies to both base jackpots and the incremental portion of progressive jackpots. The standard was effective for us on January 1, 2011. The adoption of this standard did not have a
material impact on our consolidated financial statements.



|3. | GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS
|-- | -------------------------------------------

We test goodwill for impairment as of September 30 each year or when circumstances indicate it is necessary. Testing compares the estimated fair values of our reporting units to the reporting
units carrying value. We consider a variety of factors when estimating the fair value of our reporting units, including estimates about the future operating results of each reporting unit, multiples of EBITDA (earnings before interest, income
taxes, depreciation and amortization), investment banker market analyses, and recent sales of comparable business units if such information is available to us. A variety of estimates and judgments about the relevance and comparability of these
factors to the reporting units are made. As of September 30, 2010 and 2009, we determined that goodwill was not impaired at any of our reporting units. However, as of September 30, 2008, we determined the carrying value of the goodwill in
our Gold Dust West-Carson City reporting unit was impaired. Market conditions in 2008 resulted in Gold Dust West-Carson City not meeting the financial performance expectations originally forecast at the time of acquisition. Consequently, Gold Dust
West-Carson City recorded a goodwill impairment charge of $199 during the year ended December 31, 2008. As a result of the impairment charge, the carrying amount of the Gold Dust West-Carson City goodwill was reduced to zero. There has been no
change in the carrying amount of goodwill during 2010 and 2009.



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##### Table of Contents

In addition, we have reassessed the useful lives of our identifiable intangible assets
without any change to the previously established amortization periods of such assets.

Identifiable intangible assets as of
December 31, 2010 and 2009 consist of the following:



|                               |  |                              |       |  |                         |   |        |                   |  |   |                     |  |  |                         |       |  |                   |   |        |  |  |   |       |  |  |   |       | 
|------------------------------ |  | ---------------------------- | ----- |  | ----------------------- | - | ------ | ----------------- |  | - | ------------------- |  |  | ----------------------- | ----- |  | ----------------- | - | ------ |  |  | - | ----- |  |  | - | ----- | 
|                               |  | WeightedAverageRemainingLife |       |  | 2010                    |   |        | 2009              | 
|                               |  | GrossCarryingAmount          |       |  | AccumulatedAmortization |   |        | NetCarryingAmount |  |   | GrossCarryingAmount |  |  | AccumulatedAmortization |       |  | NetCarryingAmount |  
|Amortizable intangible assets: |  |                              |       |  |                         |   |        |                   |  |   |                     |  |  |                         |       |  |                   |   |        |  |  |   |       |  |  |   |       | 
|Revenue rights                 |  |                              | 41.00 |  |                         | $ | 6,000  |                   |  | $ | 1,080               |  |  | $                       | 4,920 |  |                   | $ | 6,000  |  |  | $ | 960   |  |  | $ | 5,040 | 
|Device use rights              |  |                              | 2.17  |  |                         |   | 9,815  |                   |  |   | 7,392               |  |  |                         | 2,423 |  |                   |   | 9,064  |  |  |   | 6,275 |  |  |   | 2,789 | 
|Restriction agreements         |  |                              | 5.13  |  |                         |   | 169    |                   |  |   | 87                  |  |  |                         | 82    |  |                   |   | 1,369  |  |  |   | 1,025 |  |  |   | 344   | 
|                               |  |                              |       |  |                         |   |        |                   |  |   |                     |  |  |                         |       |  |                   |   |        |  |  |   |       |  |  |   |       | 
|Total                          |  |                              |       |  |                         | $ | 15,984 |                   |  | $ | 8,559               |  |  | $                       | 7,425 |  |                   | $ | 16,433 |  |  | $ | 8,260 |  |  | $ | 8,173 | 
|                               |  |                              |       |  |                         |   |        |                   |  |   |                     |  |  |                         |       |  |                   |   |        |  |  |   |       |  |  |   |       | 

Aggregate amortization expense of identifiable intangible assets was $1,495, $1,995, and $1,398 for the
years ended December 31, 2010, 2009 and 2008, respectively.

Estimated amortization expense for the years ending
December 31 (in thousands):



|           |  |   |       | 
|---------- |  | - | ----- | 
|2011       |  | $ | 1,045 | 
|2012       |  |   | 855   | 
|2013       |  |   | 558   | 
|2014       |  |   | 359   | 
|2015       |  |   | 278   | 
|Thereafter |  |   | 4,330 | 
|           |  |   |       | 
|Total      |  | $ | 7,425 | 
|           |  |   |       | 



|4. | RECENT ACQUISITION ACTIVITY
|-- | ---------------------------

Acquisition of Nautica Lot D

As discussed in Note 1, on April 1,
2008, we acquired Lot D for $800. The acquisition of Lot D and its parking lot business was accounted for as a combination of entities under common control. Therefore, the acquisition has been recorded at our CEOs historical cost bases in the
assets and liabilities transferred. A distribution of $800 was recorded on the acquisition date, and the net assets of the entity acquired have been retroactively accounted for in our financial statements since January 1, 2008. Therefore, an
effective net distribution of $669 (the $800 distribution reduced by the $131 of net assets acquired) results from the transaction.



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##### Table of Contents

The following table summarizes the net assets acquired and liabilities assumed as of
April 1, 2008, for the Lot D acquisition:



|                            |  |       |     | 
|--------------------------- |  | ----- | --- | 
|                            |  | Lot D |    
|Current assets              |  | $     | 1   | 
|Property and equipment, net |  |       | 143 | 
|                            |  |       |     | 
|Total assets acquired       |  |       | 144 | 
|Current liabilities assumed |  |       | 13  | 
|                            |  |       |     | 
|Net assets acquired         |  | $     | 131 | 
|                            |  |       |     | 

Acquisition of Nautica Sugar Warehouse

As discussed in Note 1, on January 21, 2009, we acquired Sugar Warehouse for $2,450. The acquisition of Sugar Warehouse and its
related business was accounted for as a combination of entities under common control. Therefore, the portion of Sugar Warehouse acquired from our CEO has been recorded at the historical cost bases in the assets and liabilities transferred and the
portion of Sugar Warehouse acquired from third parties has been recorded at fair value at the acquisition date using the acquisition method of accounting in accordance with FASB ASC Topic 805, Business Combinations (ASC Topic
805). A distribution of $2,238 was recorded on the acquisition date for the portion of the purchase price attributable to our CEO. The net assets of the entity acquired have been retroactively accounted for in our financial statements since
January 1, 2008. The net assets attributable to the noncontrolling interest holders have been reflected as a separate component of equity.

If casino gaming were to become legalized in Ohio within seven years from the purchase date and a for-profit casino is licensed on the Nautica Properties, the purchase price of Sugar Warehouse could
increase based on independent appraisals of the land, improvements and other asset values. Any additional purchase price shall be equal to the fair market value of the property at the time that a license is issued to JEI in the State of Ohio for a
for-profit casino less the purchase price previously paid. There is no maximum additional purchase price. We will continue to evaluate the fair value of this additional contingent purchase price at each balance sheet date throughout the term of the
agreement. If applicable, any additional purchase price would be accounted for consistently with the original acquisition accounting, whereby the portion attributable to our CEO would be accounted for as a combination of entities under common
control and as a distribution, and the portion attributable to third parties would be accounted for using the acquisition method of accounting. At December 31, 2010, the fair value of the Sugar Warehouse contingent purchase price was immaterial
to the financial position of JEI, but could have a material impact in the future if and when a casino license is granted for the Nautica Properties.



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##### Table of Contents

The following table summarizes the net assets acquired and liabilities assumed as of
January 21, 2009, for the Sugar Warehouse acquisition considering both the portion acquired from our affiliate and the noncontrolling interest holders:



|                            |  |                |       | 
|--------------------------- |  | -------------- | ----- | 
|                            |  | SugarWarehouse |      
|Current assets              |  | $              | 47    | 
|Property and equipment, net |  |                | 1,775 | 
|                            |  |                |       | 
|Total assets acquired       |  |                | 1,822 | 
|                            |  |                |       | 
|Current liabilities assumed |  |                | 38    | 
|Other long-term liabilities |  |                | 63    | 
|                            |  |                |       | 
|Total liabilities assumed   |  |                | 101   | 
|                            |  |                |       | 
|Net assets acquired         |  | $              | 1,721 | 
|                            |  |                |       | 

The following schedule discloses the effects on JEIs equity due to the change in ownership interest in
Sugar Warehouse discussed above:



|                                                                                       |  |                         |       |  |                             |   |       |  
|-------------------------------------------------------------------------------------- |  | ----------------------- | ----- |  | --------------------------- | - | ----- | -
|                                                                                       |  | Year Ended December 31, |      
|                                                                                       |  | 2010                    |       |  | 2009(As adjusted,see
below) |  
|Net income attributable to JEI                                                         |  | $                       | 3,133 |  |                             | $ | 1,692 |  
|Decrease in JEIs equity for purchase of Sugar Warehouse noncontrolling interest       |  |                         |      |  |                             |   | (212  | )
|                                                                                       |  |                         |       |  |                             |   |       |  
|Change from net income attributable to JEI and purchase of the noncontrolling interest |  | $                       | 3,133 |  |                             | $ | 1,480 |  
|                                                                                       |  |                         |       |  |                             |   |       |  

Acquisition of Flats Development, Inc.

As discussed in Note 1, on August 16, 2010, we acquired Flats for $2,800. The acquisition of Flats and its parking lot business was
accounted for as a combination of entities under common control. Therefore, the acquisition has been recorded at the historical cost bases in the assets and liabilities transferred. A distribution of $2,800 was recorded on the acquisition date, and
the net assets of the entity acquired have been retroactively accounted for in our financial statements since January 1, 2008. Therefore, an effective net distribution of $1,163 (the $2,800 distribution reduced by the $1,637 of net assets
acquired) results from the transaction.

If casino gaming were to become legalized in Ohio within seven years from the purchase
date and a for-profit casino is licensed on the Nautica Properties, the purchase price of Flats could increase based on independent appraisals of the land, improvements and other asset values. Any additional purchase price shall be equal to the fair
market value of the property at the time that a license is issued to JEI in the State of Ohio for a for-profit casino less the purchase price previously paid. There is no maximum additional purchase price. We will continue to evaluate the fair value
of this additional contingent purchase price at each balance sheet date throughout the term of the agreement. If applicable, any additional purchase price would be accounted for consistently with the original acquisition accounting. At
December 31, 2010, the fair value of the Flats contingent purchase price was immaterial to the financial position of JEI, but could have a material impact in the future if and when a casino license is granted for the Nautica Properties.



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The following table summarizes the net assets acquired and liabilities assumed as of
August 16, 2010, for the Flats acquisition:



|                            |  |       |       | 
|--------------------------- |  | ----- | ----- | 
|                            |  | Flats |      
|Property and equipment, net |  | $     | 1,652 | 
|Current liabilities assumed |  |       | 15    | 
|                            |  |       |       | 
|Net assets acquired         |  | $     | 1,637 | 
|                            |  |       |       | 

Acquisition of Land and Land Options along the Gulf Coast of Mississippi

During 2008, we completed several land purchase transactions with owners of real estate along the Gulf Coast of Mississippi, at a total
purchase price of $3,047. During January 2009, we completed one additional land purchase transaction at a total purchase price of $307.

Additionally, during 2008, we entered into three land purchase options at a price of $260. During the second quarter of 2009, two of these land purchase options were extended to July 1, 2010 for an
additional $200. These option agreements expired unexercised in June 2010. The third land purchase option expired unexercised in May 2009.

We are evaluating the feasibility of developing and constructing a mixed use project which may include a licensed gaming establishment, a hotel, restaurant, condominiums, retail development and parking
facilities. Our application filed with Hancock County, Mississippi, to rezone the property to waterfront district, as part of our plan to build a casino resort and hotel, was approved by the Planning Commission but denied by the Hancock County Board
of Supervisors by a vote of 3 to 2 in April 2009. We continue to evaluate rezoning of the property, including the potential to file an amended application with Hancock County. The project is subject to all necessary approvals from the Mississippi
Gaming Commission and the necessary financing.

Acquisitions Subsequent to December 31, 2010

On January 18, 2011, we acquired a fourth Nautica Properties based business and its related assets referred to as Nautica Phase
2 for $1,250 from a limited partnership. The general partner owned 1% and the limited partners owned 99% of the limited partnership. Our CEO owned 58% of the general partner interests and controlled the partnership. Third parties owned the
remaining 42% of the general partner interests and the 99% limited partnership interest. The acquisition of this business will be accounted for as a combination of entities under common control during 2011. Therefore, the portion of Nautica Phase 2
acquired from our CEO will be recorded at the historical cost bases in the assets and liabilities transferred and the portion of Nautica Phase 2 acquired from third parties will be recorded at fair value at the acquisition date using the acquisition
method of accounting.

Additionally, on January 31, 2011, we acquired two truck plaza video gaming facilities in
Louisiana, Cash Magic Springhill, LLC and Cash Magic Vivian, LLC, for $5,462 and $4,913, respectively, which were previously wholly owned by another JII subsidiary, Gameco Holdings, Inc. (Gameco). The acquisitions of these businesses
will be accounted for as combinations of entities under common control during 2011.



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##### Table of Contents

|5. | LONG-TERM DEBT
|-- | --------------

Long-term
debt and capital lease obligations as of December 31, 2010 and 2009 consist of the following:



|                                                           |  |      |         |   |                              |   |         |  
|---------------------------------------------------------- |  | ---- | ------- | - | ---------------------------- | - | ------- | -
|                                                           |  | 2010 |         |   | 2009(As adjusted,see Note
4) |  
|93/4% Senior Unsecured Notes due 2014                      |  | $    | 210,000 |   |                              | $ | 210,000 |  
|Senior Secured Term Loan Facility due 2012                 |  |      | 38,200  |   |                              |   | 38,600  |  
|Senior Secured Delayed Draw Term Loan Facility due 2012    |  |      | 19,150  |   |                              |   | 19,350  |  
|Senior Secured Revolving Credit Facility due 2011 and 2012 |  |      | 11,500  |   |                              |   | 19,000  |  
|Black Hawk Bonds Payable due 2011                          |  |      |        |   |                              |   | 885     |  
|Capital Leases and Other                                   |  |      | 3,309   |   |                              |   | 5,352   |  
|                                                           |  |      |         |   |                              |   |         |  
|Total indebtedness                                         |  |      | 282,159 |   |                              |   | 293,187 |  
|Less current indebtedness                                  |  |      | (3,738  | ) |                              |   | (2,117  | )
|                                                           |  |      |         |   |                              |   |         |  
|Total long-term indebtedness                               |  | $    | 278,421 |   |                              | $ | 291,070 |  
|                                                           |  |      |         |   |                              |   |         |  

93/4% Senior Unsecured Notes due 2014 and Senior Secured Credit Facility

On June 16, 2006, we issued senior unsecured notes in the amount of $210,000 bearing interest at 93/4% due June 15, 2014 with interest only payments due each
June 15 and December 15. We also have a $100,000 senior secured credit facility consisting of: (i) a $40,000 revolving credit facility; (ii) a $40,000 six-year term loan facility due June 2012; and (iii) a $20,000 six-year
delayed draw term loan due June 2012. Borrowings under our senior secured credit facility bear interest at a rate equal to an applicable margin plus, at our option, either (a) a base rate determined by reference to the higher of (1) the
prime rate, as defined, and (2) the federal funds rate plus 1/2of 1% or (b) a LIBOR rate for the interest period relevant to such borrowing adjusted for certain costs.

Our $210,000 of
93/4% senior unsecured notes rank equally in right
of payment with all of our existing and future unsecured senior indebtedness and senior to any existing and future subordinated indebtedness. The notes are effectively subordinated to any secured indebtedness (including indebtedness under our senior
credit facility) up to the value of the collateral securing such indebtedness. The notes are guaranteed by our current and future restricted subsidiaries that also guarantee our senior secured credit facility. Beginning June 15, 2010, we can
redeem all or part of our outstanding senior unsecured notes aggregating $210,000 at the redemption prices set forth below, plus accrued and unpaid interest. The redemption prices, expressed as a percentage of the principal amount, for the 12-month
period beginning on June 15 of the years indicated below are as follows:



|                    |  |           
|------------------- |  | ----------
|Year                |  | Percentage
|2010                |  | 104.875%  
|2011                |  | 102.438%  
|2012 and thereafter |  | 100.000%  

On March 31,
2010, we entered into an Amendment and Restatement Agreement (the Amendment) to the credit agreement. Generally, the Amendment, among other things, adjusted our bank financial covenants, allowed for the exclusion of certain items from
EBITDA for purposes of calculating our revised financial covenants, and provided for other minor amendments. Additionally, the maturity of all but $3,000 of our revolving senior credit facility aggregating $40,000 due June 2011 (Class B
Revolving Loans) was extended to June 2012 (Class A Revolving Loans).



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##### Table of Contents

As a result of the Amendment, our interest rate increased by 0.25% on the drawn Class B
Revolving Loans balance and by 0.50% on the drawn Class A Revolving Loans balance, and our interest rate on the Tranche B Term Loan and Delayed Draw Tranche B Term Loan (aggregating $57,350 at December 31, 2010) increased from 2.75% above
LIBOR to 3.00% above LIBOR. The total cost of the Amendment, including the bank consent fees, the fees to the joint lead arrangers, legal, accounting and other costs was approximately $1,982. Of these costs, $1,500 will be amortized to interest
expense over the remaining life of the credit facility which is approximately one and one-half years and the remainder was expensed as incurred. At December 31, 2010, the blended interest rate on our senior secured credit facility was
approximately 3.33%. As of December 31, 2010, $28,500 was available on the revolving credit facility.

There are many
restrictions and covenants placed upon us under both our secured and unsecured indebtedness. We are required to maintain certain operating performance ratios, our covenants impose various restrictions on us as to the timing of redemptions of our
notes, there are various change of control covenants, and there are many other restrictive and operational limitations on us that would be difficult or impossible for us to change. The occurrence of any one of these events and/or covenant violations
to our debt agreements could have a material adverse effect on our business, financial condition, results of operations, prospects and ability to satisfy our obligations under our debt agreements. The failure to repay or maintain compliance with our
covenants on any of our indebtedness would result in an event of default under both our senior credit facility and our note indenture. Annual distributions may be made to our owner in an aggregate amount not to exceed the greater of $1 million or
50% of consolidated net income as defined in our credit agreement and indenture. At December 31, 2010, we were in compliance with our financial covenants.

Black Hawk Bonds Payable due 2011

The Black Hawk bonds payable were
issued in two series with interest payments varying between 6.25% and 6.50%. Principal and interest payments totaling $368 were due semi-annually beginning in June 2000 and continuing until December 2011. These bonds were secured by infrastructure
improvements made by The Lodge and were paid in full in December 2010.

Capital Leases

Gold Dust West-Elko has a capital lease on its building, which requires interest and principal payments of $21 per month. The lease
initially matured in October 2010. We have the right to extend the lease three times, each for five year intervals, or to purchase the land and building for $5,398 at any time through the first renewal period (i.e., through October 2015). The
purchase option is no longer available after the first renewal period. Effective November 1, 2010, Gold Dust West-Elko exercised its right to extend the lease for five years to October 2015. The effective interest rate is 16.9%. Each additional
lease renewal, if elected, will result in an increase in monthly payments based on a base index rate established with the August 2005 Consumer Price Index, as published.

Colonial has a capital lease on the land under its satellite wagering facility in Vinton, Virginia, which requires interest and principal payments of $11 per month. The lease initially matured in
September 2009. We have the right to extend the term of the lease five times, each for five year intervals, or to purchase the land for $800 at any time after the first renewal period of the lease (i.e., after September 11, 2014). In 2009, we
exercised our right under the lease to extend the term for five years to September 11, 2014. The effective interest rate is 11.8%. Each additional lease renewal, if elected, will result in an increase in monthly payments by 10% over the
previous lease term.

The Company has entered into various other insignificant capital leases related to land and buildings
used in Colonials satellite wagering business, equipment used in its truck plaza operations, and vehicles used by executives of JEI.



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##### Table of Contents

Other Notes Payable

Sugar Warehouse has two notes payable. The first has interest and principal payments of $2 per month, an effective interest rate of 11.5%
and matures March 2013. The second has principal only payments of $2 per month and matures March 2015.

A note payable with a
maturity date of December 2011, bearing interest at 7.0% with interest and principal payments of $11 per month, was carried by Flats and secured by certain real property. JEI did not assume this note payable upon the acquisition of Flats by JEI. See
Note 4 above. The prior owner of Flats entered into an amendment to the loan agreement which released the encumbrance on the property acquired by JEI.

Scheduled maturities of long-term debt and capital lease obligations as of December 31, 2010, are as follows:



|           |  |   |         | 
|---------- |  | - | ------- | 
|2011       |  | $ | 3,738   | 
|2012       |  |   | 65,353  | 
|2013       |  |   | 97      | 
|2014       |  |   | 210,891 | 
|2015       |  |   | 56      | 
|Thereafter |  |   | 2,024   | 
|           |  |   |         | 
|Total      |  | $ | 282,159 | 
|           |  |   |         | 



|6. | FAIR VALUE OF FINANCIAL INSTRUMENTS
|-- | -----------------------------------

FASB ASC Topic 820, Fair Value Measurements and Disclosures (ASC Topic 820) establishes a framework for measuring fair value and requires specific disclosures about fair value
measurements. ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The guidance
identifies market or observable inputs as the preferred sources of values, followed by assumptions based on hypothetical transactions in the absence of market inputs. The guidance establishes a hierarchy for grouping these assets and
liabilities, based on the significance level of the following inputs:



| |  |  | Level 1  inputs are unadjusted quoted prices for identical assets or liabilities in active markets.
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | Level 2  inputs include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset
or liability, either directly or indirectly, for substantially the full term of the financial instrument.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 3  inputs are unobservable and considered significant to the fair value measurement.
| | - |  | -------------------------------------------------------------------------------------------

A financial instruments categorization within the hierarchy is based upon the lowest level of input that is significant to the fair
value measurement.

Investment in Equity Securities

We own approximately three percent of the outstanding shares of MTR Gaming Group, Inc. (MTR), a publicly-traded gaming
company. Our CEO, his father and other affiliated entities have also historically invested in MTR, increasing the combined ownership to approximately 18.5% of the outstanding common shares of MTR and making the affiliated group MTRs largest
shareholder.

Effective May 6, 2008, our CEO was appointed to the MTR board of directors, and on October 31, 2008, he
became the chairman of the MTR board. On June 5, 2009, our CEOs father died, and a trust established by our CEO was subsequently bequeathed the shares formerly held by his father. As a result, our CEO and his family trusts now control the
entire 18.5% interest in MTR owned by the affiliated group. In March 2010, our CEO resigned from MTRs board of directors.



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##### Table of Contents

Through October 31, 2008, our investment in MTR was accounted for as an
available-for-sale investment and was recorded at fair value in other noncurrent assets, with unrealized gains and losses recognized as accumulated other comprehensive income (loss). During the fourth quarter of 2008, we concluded that the
affiliated group had reached a level of significant influence on the operations of MTR because of the factors discussed above, and were therefore required to account for our investment in MTR using the equity method of accounting. Alternatively, we
elected the fair value option permitted by FASB ASC Topic 825, Financial Instruments (ASC Topic 825), and beginning November 1, 2008, we recognize changes in the fair value of our investment in MTR as unrealized gains/losses
in earnings based on its quoted market price.

The following table presents information about our assets measured at fair value
on a recurring basis as of December 31, 2010, aggregated by the level in the fair value hierarchy within which those assets fall:



|                                                                        |  |                 |       |  |         |   |       |         |  |  |         |  |  |  |   | 
|----------------------------------------------------------------------- |  | --------------- | ----- |  | ------- | - | ----- | ------- |  |  | ------- |  |  |  | - | 
|Assets Measured at Fair Value on a
Recurring Basis at December 31, 2010 | 
|                                                                        |  | Total FairValue |       |  | Level 1 |   |       | Level 2 |  |  | Level 3 | 
|Investment in equity securities                                         |  | $               | 1,652 |  |         | $ | 1,652 |         |  |  |        |  |  |  |  | 

The following table
presents information about our assets measured at fair value on a recurring basis as of December 31, 2009, aggregated by the level in the fair value hierarchy within which those assets fall:



|                                                                        |  |                 |       |  |         |   |       |         |  |  |         |  |  |  |   | 
|----------------------------------------------------------------------- |  | --------------- | ----- |  | ------- | - | ----- | ------- |  |  | ------- |  |  |  | - | 
|Assets Measured at Fair Value on a
Recurring Basis at December 31, 2009 | 
|                                                                        |  | Total FairValue |       |  | Level 1 |   |       | Level 2 |  |  | Level 3 | 
|Investment in equity securities                                         |  | $               | 1,058 |  |         | $ | 1,058 |         |  |  |        |  |  |  |  | 

For the year ended
December 31, 2010, we recorded an unrealized gain on the change in the fair value of the investment totaling $594. For the year ended December 31, 2009, we recorded an unrealized loss on the change in the fair value of the investment
totaling $309. During 2008, prior to electing the fair value option discussed above, our MTR investment was deemed to have an other-than-temporary decline in value. As a result, we recorded an impairment of our investment in MTR totaling
$5,763. Subsequent to electing the fair value option for our investment in MTR, we recorded an additional unrealized loss on the change in the fair value of the investment totaling $814 during 2008.

For the period that our CEO was the chairman of the MTR board, we reached a level of significant influence. Therefore, consistent with the
requirements of ASC Topic 825 and Rule 4-08(g) of Regulation S-X of the Securities Exchange Act of 1934, the following is summary level financial information of MTR for the three months ended March 31, 2010 and for the years ended
December 31, 2009 and 2008, and as of March 31, 2010 and December 31, 2009 as derived from its reports filed with the SEC:



|                                |  |                             |        |   |                          |   |         |      |  |   |         |  
|------------------------------- |  | --------------------------- | ------ | - | ------------------------ | - | ------- | ---- |  | - | ------- | -
|                                |  | ThreeMonths EndedMarch 
31, |        |   | Years Ended December 31, |  
|                                |  | 2010                        |        |   | 2009                     |   |         | 2008 | 
|Net revenues                    |  | $                           | 99,359 |   |                          | $ | 444,155 |      |  | $ | 470,851 |  
|Total operating expenses        |  |                             | 90,069 |   |                          |   | 421,308 |      |  |   | 432,617 |  
|Loss from continuing operations |  |                             | (3,137 | ) |                          |   | (23,698 | )    |  |   | (4,386  | )
|Net loss                        |  |                             | (3,280 | ) |                          |   | (22,538 | )    |  |   | (17,711 | )



|                       |  |                     |         |  |                        |   |         | 
|---------------------- |  | ------------------- | ------- |  | ---------------------- | - | ------- | 
|                       |  | As
ofMarch 31, 2010 |         |  | As
ofDecember 31, 2009 |  
|Current assets         |  | $                   | 71,915  |  |                        | $ | 72,160  | 
|Noncurrent assets      |  | $                   | 424,195 |  |                        | $ | 430,853 | 
|Current liabilities    |  | $                   | 31,853  |  |                        | $ | 45,879  | 
|Noncurrent liabilities |  | $                   | 394,408 |  |                        | $ | 383,861 | 



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##### Table of Contents

Other Financial Instruments

The following disclosure of estimated fair value of our financial instruments has been determined using available market information and
generally accepted valuation methodologies. However, considerable judgment is required to interpret market data in order to develop the estimates of fair value. The use of different market assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts.

The estimated fair value of our financial instruments as of
December 31, 2010 and 2009 is as follows:



|                                               |  |                |         |  |                               |   |         |                |  |   |                    |  |  |   |         | 
|---------------------------------------------- |  | -------------- | ------- |  | ----------------------------- | - | ------- | -------------- |  | - | ------------------ |  |  | - | ------- | 
|                                               |  | 2010           |         |  | 2009(As adjusted, see Note
4) |  
|                                               |  | CarryingAmount |         |  | EstimatedFairValue            |   |         | CarryingAmount |  |   | EstimatedFairValue | 
|LiabilitiesDebt and capital lease obligations |  | $              | 282,159 |  |                               | $ | 280,263 |                |  | $ | 293,187            |  |  | $ | 285,264 | 

The estimation
methodologies utilized are summarized as follows:

DebtThe fair value of our variable rate debt is
estimated to be equal to its carrying amount. The fair value of our senior unsecured notes is based upon quoted market rates. The fair value of other fixed rate debt is estimated based on a discounted cash flow analysis, using the prevailing market
interest rates for debt of similar dollar amount, maturity and risk.

The estimated fair value of our other financial
instruments, such as cash and cash equivalents, accounts receivable and accounts payable, have been determined to approximate carrying value based on the short-term nature of those financial instruments.

Nonrecurring Fair Value Measurements

For the years ended December 31, 2010 and 2009, we had no assets or liabilities measured at fair value on a nonrecurring basis.



|7. | RELATED PARTY TRANSACTIONS
|-- | --------------------------

JIMCO Management Agreement

In order to assist us in our efforts to research, develop, perform due diligence on and possibly acquire new gaming opportunities, we have a consulting agreement with Jacobs Investments Management Co.
Inc. (JIMCO), 82% of which is owned by Jeffrey P. Jacobs and the remaining 18% of which is owned in equal portions by two of his business associates. This agreement calls for payments of $1,250 per year payable in two equal installments
of $625 on January 1stand July 1stplus 2.5% of budgeted development costs for projects undertaken by
us, if certain debt covenant ratios are met. Total expenses incurred under this agreement with JIMCO were $1,250, $1,325 and $1,340 for the years ended December 31, 2010, 2009 and 2008, respectively.

Transactions with Affiliate Truck Stops

We allocate management, accounting and overhead costs incurred by JEI to various truck stops owned by Gameco. These costs totaled $1,200, $1,101 and $1,157 for the years ended December 31, 2010, 2009
and 2008, respectively. Additionally, beginning in December 2009, to help JEI reach the fuel sale volume necessary to qualify for the reduced pricing structure under the CITGO contracts discussed in Note 8 below, we entered into agreements with
various Gameco subsidiaries to provide gasoline and diesel fuel at cost for their fuel operations. We provided gasoline and diesel fuel totaling $7,968 to Gameco subsidiaries for the year ended December 31, 2010.



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##### Table of Contents

Jalou Device Owner, L.P.

Under Louisiana law, video poker machines must be owned by Louisiana residents. Through October 2009, the Jalou truck plaza video gaming
facilities paid a fee to the third party owner of the machines in order to maintain the machines used in our truck plaza operations, plus reimbursement for the owners licensing costs and various other expenses. Beginning in November 2009, the
ownership of the video poker machines and the related repair parts inventory used by the Jalou truck plazas was transferred from the third party owner to a related party, Jalou Device Owner, L.P. (Device Owner), of which Gameco owns 49%
and is the general partner. Two Louisiana residents own 51% and are the limited partners. The Jalou truck plazas pay 90 cents per operating video poker machine per day to Device Owner, plus reimbursement for Device Owners licensing costs.
Total expense under these arrangements was $1,301, $1,126 and $1,273 for the years ended December 31, 2010, 2009 and 2008, respectively.

Other Related Party Transactions

During 2009, we incurred expenses
with the R.E. Jacobs Group for JEI-related airplane usage totaling $113. Additionally, Flats periodically received working capital advances from JIMCO, our CEO and the mother of our CEO. These advances totaled $731 as of December 31, 2009 and are
included in the balances due to affiliates discussed below. These working capital advances were settled upon acquisition of Flats by JEI during 2010.

Balances Due To/From Affiliates

Each of the above related party
transactions results in either receivables from or payables to our affiliates. As of December 31, 2010 and 2009, these transactions resulted in net receivables from affiliates totaling $1,276 and $1,023, respectively. As of December 31,
2010 and 2009, these transactions resulted in net payables to affiliates totaling $639 and $1,469, respectively.

Nautica Properties

During July 2006, we acquired from affiliated parties options to lease and options to purchase six businesses and their related assets, including various parcels of land, buildings and related
improvements, on the west bank of the Cuyahoga River in Cleveland, Ohio. We refer to these businesses and their related assets as the Nautica Properties.

See Note 4 for discussion related to the acquisitions of Lot D, Sugar Warehouse and Flats.

In July 2010, we amended the three remaining unexercised option agreements and extended the option periods to July 11, 2012, giving us the right to purchase or enter into long-term leases on the
three remaining Nautica Properties businesses and their related assets. On January 18, 2011, we exercised one of these remaining option agreements and acquired a fourth Nautica Properties business and its related assets referred to as
Nautica Phase 2. See Note 4.

The remaining two unexercised Nautica Properties options require aggregate payments
totaling $100 per year. Our CEO owns varying interests in the two remaining parcels. Although we may elect not to exercise the remaining options unless casino gaming opportunities arise, we nonetheless have the right to acquire all or part of the
remaining Nautica Properties for other purposes. If we decide to exercise our two remaining options, the aggregate annual lease payments on the remaining two parcels would be $230. If both remaining parcels are purchased, the total purchase price
would be $2,300. The purchase price and rent payments would be increased based on independent appraisals of the land, improvements and other assets values if, in the future, a casino were to be licensed on the Nautica Properties.



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##### Table of Contents

|8. | COMMITMENTS AND CONTINGENCIES
|-- | -----------------------------

Commitments

Colonial has an agreement with a totalisator company
which provides wagering services and designs, programs, and manufactures totalisator systems for our pari-mutuel wagering applications. The basic terms of the agreement state that the totalisator company shall provide totalisator services to
Colonial for all wagering held at Colonials facilities to 2012, and to provide replacement equipment for existing equipment, at a rate of .385% of handle up to $270,000 in handle. Handle above $270,000 will be charged a rate of .345%. The
agreement also provides for a minimum charge per calendar year of $205. In addition, effective May 1, 2009, Colonial has an agreement with a company which provides broadcasting and simulcasting equipment and services. The agreements for live
racing broadcasting and simulcasting services at the horse racing track expires December 31, 2011. Total expense incurred for totalisator and broadcasting and simulcasting services was $762, $850, and $930 for the years ended December 31,
2010, 2009 and 2008, respectively.

The Interstate Horse Racing Act requires that we secure the consent of the Virginia
Horsemens Benevolence and Protective Association (the VaHBPA) and the Virginia Harness Horse Association (VHHA) to export the simulcasting of races. These consents are usually contained in the agreement between each
group and Colonial. We have an agreement with the VHHA that expires December 31, 2011 and an agreement with the VaHBPA that expires December 31, 2012.

JEI Distributing, LLC (JEID), a wholly-owned subsidiary of JEI, entered into fuel supply agreements with CITGO Petroleum Corporation (CITGO). The agreements provide for the
purchase and sale of CITGO branded and unbranded gasoline and diesel fuel. On December 21, 2009, JEID and CITGO entered into a five-year Marketer Franchise Agreement (the MFA) which created a franchise relationship between JEID and
CITGO and requires JEID to purchase at least 90% of certain listed monthly quantities of gasoline from CITGO in order to maintain the franchise and not be in violation of the MFA. Under the MFA, CITGO grants JEID the right to use CITGOs
applicable brand names, trademarks and other forms of CITGOs identification, in connection with the resale by JEID of products acquired under CITGOs brand names. Additionally, on December 21, 2009, JEID and CITGO entered into
an Unbranded Rack Sales Agreement (the RSA). Although the initial term of the RSA is five years followed by annual renewals, the RSA provides that either party may terminate the RSA, without cause, upon providing thirty days written
notice. The RSA requires JEID to purchase at least 90% of certain listed monthly quantities of fuel from CITGO in order to qualify for CITGOs rack posting pricing in effect and not be in violation of the RSA. The Addendum to Unbranded
Rack Sales Agreement between JEID and CITGO, also dated December 21, 2009, amends the pricing for unbranded fuel under the RSA. The amended pricing equals the sum of the base price and an adder fee that is dependent on the location of the
terminal where the product is delivered.

Operating Leases

Our operating leases include various land and building leases for certain properties in Nevada, Louisiana and Virginia, leases for office
space in Colorado, Louisiana, Virginia and Florida, as well as leases for automobiles and other property and equipment at all locations, expiring at various dates. Total expense under these non-cancelable operating leases was $3,050, $2,978 and
$2,968 for the years ended December 31, 2010, 2009 and 2008, respectively.



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##### Table of Contents

The future minimum commitments relating to JEIs non-cancelable operating agreements
and leases are as follows:



|                         |  |   |        | 
|------------------------ |  | - | ------ | 
|Years Ending December 31 |  |   |       
|2011                     |  | $ | 3,079  | 
|2012                     |  |   | 2,985  | 
|2013                     |  |   | 2,761  | 
|2014                     |  |   | 2,710  | 
|2015                     |  |   | 2,453  | 
|Thereafter               |  |   | 24,153 | 
|                         |  |   |        | 
|Total                    |  | $ | 38,141 | 
|                         |  |   |        | 

Capital Leases

The following is an analysis of the leased property under capital leases:



|                                           |  |      |       |   |      |   |       |  
|------------------------------------------ |  | ---- | ----- | - | ---- | - | ----- | -
|Class of Property                          |  | 2010 |       |   | 2009 |  
|Land                                       |  | $    | 1,182 |   |      | $ | 1,523 |  
|Buildings                                  |  |      | 1,686 |   |      |   | 2,095 |  
|Equipment and furniture and fixtures       |  |      | 255   |   |      |   | 255   |  
|Other                                      |  |      | 40    |   |      |   | 72    |  
|Less: accumulated depreciation             |  |      | (600  | ) |      |   | (555  | )
|                                           |  |      |       |   |      |   |       |  
|Total leased property under capital leases |  | $    | 2,563 |   |      | $ | 3,390 |  
|                                           |  |      |       |   |      |   |       |  

As of December 31, 2010, the following is a schedule by years of future minimum lease payments under
capital leases together with the net present value of the minimum lease payments:



|                                                                       |  |   |       | 
|---------------------------------------------------------------------- |  | - | ----- | 
|Years Ending December 31                                               |  |   |      
|2011                                                                   |  | $ | 520   | 
|2012                                                                   |  |   | 474   | 
|2013                                                                   |  |   | 474   | 
|2014                                                                   |  |   | 1,241 | 
|2015                                                                   |  |   | 345   | 
|Thereafter                                                             |  |   | 4,162 | 
|                                                                       |  |   |       | 
|Total future minimum lease payments                                    |  |   | 7,216 | 
|Less amount representing interest ranging from 6.3% to 16.9% per annum |  |   | 4,056 | 
|                                                                       |  |   |       | 
|Net present value of minimum lease payments                            |  | $ | 3,160 | 
|                                                                       |  |   |       | 

Contingencies

We are involved in routine litigation arising in the ordinary course of our business pertaining to workers compensation claims, equal opportunity employment issues, or guest injury claims. All such
claims are routinely turned over to our insurance providers. None of the claims is expected to have a material impact on our financial position, results of operations or cash flows. We believe these matters are covered by appropriate insurance
policies.



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##### Table of Contents

|9. | ACCRUED EXPENSES
|-- | ----------------

Accrued
expenses as of December 31, 2010 and 2009, include the following:



|                              |  |                  |        |  |                                          |   |        | 
|----------------------------- |  | ---------------- | ------ |  | ---------------------------------------- | - | ------ | 
|                              |  | December 31,2010 |        |  | December 31,2009(As
adjusted,see Note 4) |  
|Payroll and related           |  | $                | 4,826  |  |                                          | $ | 3,887  | 
|Gaming taxes payable          |  |                  | 3,306  |  |                                          |   | 3,213  | 
|Interest payable              |  |                  | 886    |  |                                          |   | 941    | 
|Property taxes payable        |  |                  | 1,134  |  |                                          |   | 1,087  | 
|Slot club liability           |  |                  | 1,191  |  |                                          |   | 1,169  | 
|Progressive jackpot liability |  |                  | 1,260  |  |                                          |   | 1,381  | 
|Purses due horsemen           |  |                  | 511    |  |                                          |   | 598    | 
|Other                         |  |                  | 3,328  |  |                                          |   | 3,708  | 
|                              |  |                  |        |  |                                          |   |        | 
|                              |  | $                | 16,442 |  |                                          | $ | 15,984 | 
|                              |  |                  |        |  |                                          |   |        | 



|10. | EMPLOYEE BENEFIT PLANS
|--- | ----------------------

The Company is the sponsor of Jacobs Entertainment, Inc.s 401(k) Plan (the Plan). The Plan is a defined
contribution plan covering eligible employees of JEI, The Lodge, the Gilpin, Gold Dust West-Reno, Gold Dust West-Carson City, Gold Dust West-Elko, Jalou and Colonial. The Plan allows eligible employees to make tax-deferred contributions that are
matched by us up to a specified level. We contributed approximately $424, $93, and $540 to the Plan for the years ended December 31, 2010, 2009 and 2008, respectively.



|11. | CONSTITUTIONAL AMENDMENTS
|--- | -------------------------

During 2009, we provided financial support to oppose a proposed constitutional amendment in Ohio (Issue 3) that would allow
for one casino each at designated locations in Cincinnati, Cleveland, Columbus and Toledo and distribute to all Ohio counties a tax on the casinos. For the year ended December 31, 2009, we provided financial support totaling $2,285 to oppose
Issue 3. On November 3, 2009, Issue 3 was passed in Ohio which permits casino gaming at the locations designated in the amendment. None of the designated locations is owned by JEI or its affiliates.

During 2008, we provided financial support for a proposed constitutional amendment that would increase the types of games, wagering limits
and hours of operation at Colorado casinos. For the year ended December 31, 2008, we funded a total of $1,371 in support of this amendment. Colorado residents approved the proposed constitutional amendment on November 4, 2008. The
amendment was subsequently voted upon and approved by the residents of each of the three gaming towns in Colorado (Black Hawk, Central City and Cripple Creek). The new gaming regulation, which became effective on July 2, 2009 at Colorado
casinos, allows for the introduction of craps and roulette, increases the maximum wager limit to one hundred dollars, allows 24-hour gaming operations, and prohibits changes in existing tax levels (currently, a series of graduated tax rates, with a
maximum gaming tax rate of 20% on adjusted gross proceeds over $13,000) unless such changes are approved by a statewide vote.



|12. | ABANDONMENT COSTS
|--- | -----------------

On
November 10, 2008, we closed one of our two satellite wagering facilities in Chesapeake, Virginia. We recorded an impairment of leasehold improvements at this location totaling $783 in the fourth quarter of 2008. Additionally, we incurred costs
for the termination of the operating lease and severance totaling $46 in the fourth quarter of 2008.



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##### Table of Contents

|13. | HURRICANE
|--- | ---------

During the
third quarter of 2008, hurricanes Gustav and Ike struck certain of our Louisiana operations causing minimal damage totaling approximately $213. We received insurance proceeds related to the damages totaling $462 during January and February 2009.



|14. | SEGMENT INFORMATION
|--- | -------------------

Our
CEO is our chief operating decision maker. At December 31, 2010, 2009 and 2008, we had four segments representing the geographic regions of our operations. Each segment is managed separately because of the unique characteristics of its revenue
stream and customer base. We have aggregated our operations into these four segments based on similarities in the nature of the properties businesses, customers and regulatory environment in which each property operates. The Colorado segment
consists of The Lodge and Gilpin casinos. Our Nevada segment includes the Gold Dust West-Reno, Gold Dust West-Carson City and Gold Dust West-Elko casinos. The Louisiana operations consist of truck plaza/video poker facilities, and the Virginia
segment consists of Colonials pari-mutuel operations and satellite wagering facilities.

The accounting policies of the
segments are the same as those described in Note 2. The corporate adjustments, eliminations and other represent all other income and expenses, and are also presented.



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##### Table of Contents

As of and for the Year Ended December 31, 2010



|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                            |        |   |       |   |         |   |  |   |         |  
|----------------------------------- |  | -------- | ------- | - | ------ | - | ------ | --------- |  | - | -------- | - |  | ------------------------------------------ | ------ | - | ----- | - | ------- | - |  | - | ------- | -
|                                    |  | Colorado |         |   | Nevada |   |        | Louisiana |  |   | Virginia |   |  | CorporateAdjustments,Eliminationsand Other |        |   | Total |  
|Revenues                            |  |          |         |   |        |   |        |           |  |   |          |   |  |                                            |        |   |       |   |         |   |  |   |         |  
|Gaming                              |  |          |         |   |        |   |        |           |  |   |          |   |  |                                            |        |   |       |   |         |   |  |   |         |  
|Casino                              |  | $        | 105,056 |   |        | $ | 35,209 |           |  |   |          |   |  |                                            |        |   |       |   |         |   |  | $ | 140,265 |  
|Truck stop                          |  |          |         |   |        |   |        |           |  | $ | 61,463   |   |  |                                            |        |   |       |   |         |   |  |   | 61,463  |  
|Pari-mutuel                         |  |          |         |   |        |   |        |           |  |   |          |   |  | $                                          | 27,669 |   |       |   |         |   |  |   | 27,669  |  
|Food and beverage                   |  |          | 11,939  |   |        |   | 9,382  |           |  |   | 5,417    |   |  |                                            | 1,982  |   |       |   |         |   |  |   | 28,720  |  
|Convenience store  fuel            |  |          |         |   |        |   |        |           |  |   | 85,443   |   |  |                                            |        |   |       |   |         |   |  |   | 85,443  |  
|Convenience store  other           |  |          |         |   |        |   |        |           |  |   | 11,239   |   |  |                                            |        |   |       |   |         |   |  |   | 11,239  |  
|Hotel                               |  |          | 1,936   |   |        |   | 1,870  |           |  |   |          |   |  |                                            |        |   |       |   |         |   |  |   | 3,806   |  
|Other                               |  |          | 932     |   |        |   | 1,268  |           |  |   | 1,859    |   |  |                                            | 1,634  |   |       | $ | 533     |   |  |   | 6,226   |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                            |        |   |       |   |         |   |  |   |         |  
|Total revenues                      |  |          | 119,863 |   |        |   | 47,729 |           |  |   | 165,421  |   |  |                                            | 31,285 |   |       |   | 533     |   |  |   | 364,831 |  
|Less: Promotional allowances        |  |          | (23,338 | ) |        |   | (6,593 | )         |  |   | (4,976   | ) |  |                                            |        |   |       |   |         |   |  |   | (34,907 | )
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                            |        |   |       |   |         |   |  |   |         |  
|Net revenues                        |  | $        | 96,525  |   |        | $ | 41,136 |           |  | $ | 160,445  |   |  | $                                          | 31,285 |   |       | $ | 533     |   |  | $ | 329,924 |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                            |        |   |       |   |         |   |  |   |         |  
|Depreciation and amortization       |  | $        | 6,792   |   |        | $ | 6,346  |           |  | $ | 4,990    |   |  | $                                          | 2,261  |   |       | $ | 942     |   |  | $ | 21,331  |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                            |        |   |       |   |         |   |  |   |         |  
|Interest income                     |  | $        |        |   |        | $ |       |           |  | $ | 10       |   |  | $                                          | 9      |   |       | $ | 5       |   |  | $ | 24      |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                            |        |   |       |   |         |   |  |   |         |  
|Interest expense                    |  | $        | 8,563   |   |        | $ | 5,223  |           |  | $ | 4,185    |   |  | $                                          | 541    |   |       | $ | 7,068   |   |  | $ | 25,580  |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                            |        |   |       |   |         |   |  |   |         |  
|Net income (loss)                   |  | $        | 15,866  |   |        | $ | (4,450 | )         |  | $ | 10,090   |   |  | $                                          | (1,310 | ) |       | $ | (17,063 | ) |  | $ | 3,133   |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                            |        |   |       |   |         |   |  |   |         |  
|EBITDA(1)                           |  | $        | 31,221  |   |        | $ | 7,119  |           |  | $ | 19,255   |   |  | $                                          | 1,483  |   |       | $ | (9,058  | ) |  | $ | 50,020  |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                            |        |   |       |   |         |   |  |   |         |  
|                                    |  |          |         |   |        |  
|Goodwill                            |  | $        | 6,711   |   |        | $ | 8,836  |           |  | $ | 30,924   |   |  |                                            |        |   |       |   |         |   |  | $ | 46,471  |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                            |        |   |       |   |         |   |  |   |         |  
|Identifiable intangible assets, net |  |          |         |   |        |   |        |           |  | $ | 7,425    |   |  |                                            |        |   |       |   |         |   |  | $ | 7,425   |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                            |        |   |       |   |         |   |  |   |         |  
|Property, plant and equipment, net  |  | $        | 88,587  |   |        | $ | 38,124 |           |  | $ | 39,021   |   |  | $                                          | 61,856 |   |       | $ | 8,420   |   |  | $ | 236,008 |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                            |        |   |       |   |         |   |  |   |         |  
|Total assets                        |  | $        | 110,380 |   |        | $ | 54,412 |           |  | $ | 88,996   |   |  | $                                          | 66,959 |   |       | $ | 13,549  |   |  | $ | 334,296 |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                            |        |   |       |   |         |   |  |   |         |  
|Long-term debt                      |  | $        | 84,771  |   |        | $ | 61,113 |           |  | $ | 51,089   |   |  | $                                          | 4,875  |   |       | $ | 76,573  |   |  | $ | 278,421 |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                            |        |   |       |   |         |   |  |   |         |  
|Capital expenditures                |  | $        | 3,866   |   |        | $ | 3,653  |           |  | $ | 2,281    |   |  | $                                          | 1,329  |   |       | $ | 439     |   |  | $ | 11,568  |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                            |        |   |       |   |         |   |  |   |         |  



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##### Table of Contents

As of and for the Year Ended December 31, 2009



|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|----------------------------------- |  | -------- | ------- | - | ------ | - | ------ | --------- |  | - | -------- | - |  | ------------------------------------------------------------------ | ------ | - | ----------------------------- | - | ------- | - |  | - | ------- | -
|                                    |  | Colorado |         |   | Nevada |   |        | Louisiana |  |   | Virginia |   |  | CorporateAdjustments,EliminationsAnd Other(As adjusted,see Note 4) |        |   | Total(As adjusted,see Note
4) |  
|Revenues:                           |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|Gaming                              |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|Casino                              |  | $        | 102,032 |   |        | $ | 37,734 |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  | $ | 139,766 |  
|Truck stop                          |  |          |         |   |        |   |        |           |  | $ | 62,983   |   |  |                                                                    |        |   |                               |   |         |   |  |   | 62,983  |  
|Pari-mutuel                         |  |          |         |   |        |   |        |           |  |   |          |   |  | $                                                                  | 32,276 |   |                               |   |         |   |  |   | 32,276  |  
|Food and beverage                   |  |          | 11,388  |   |        |   | 8,961  |           |  |   | 7,008    |   |  |                                                                    | 2,424  |   |                               |   |         |   |  |   | 29,781  |  
|Convenience store  fuel            |  |          |         |   |        |   |        |           |  |   | 60,659   |   |  |                                                                    |        |   |                               |   |         |   |  |   | 60,659  |  
|Convenience store  other           |  |          |         |   |        |   |        |           |  |   | 12,460   |   |  |                                                                    |        |   |                               |   |         |   |  |   | 12,460  |  
|Hotel                               |  |          | 1,738   |   |        |   | 1,869  |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   | 3,607   |  
|Other                               |  |          | 947     |   |        |   | 1,362  |           |  |   | 1,457    |   |  |                                                                    | 1,812  |   |                               | $ | 657     |   |  |   | 6,235   |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|Total revenues                      |  |          | 116,105 |   |        |   | 49,926 |           |  |   | 144,567  |   |  |                                                                    | 36,512 |   |                               |   | 657     |   |  |   | 347,767 |  
|Less: Promotional allowances        |  |          | (21,059 | ) |        |   | (8,507 | )         |  |   | (4,735   | ) |  |                                                                    |        |   |                               |   |         |   |  |   | (34,301 | )
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|Net revenues                        |  | $        | 95,046  |   |        | $ | 41,419 |           |  | $ | 139,832  |   |  | $                                                                  | 36,512 |   |                               | $ | 657     |   |  | $ | 313,466 |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|Depreciation and amortization       |  | $        | 7,087   |   |        | $ | 5,984  |           |  | $ | 5,307    |   |  | $                                                                  | 2,124  |   |                               | $ | 995     |   |  | $ | 21,497  |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|Interest income                     |  | $        |        |   |        | $ |       |           |  | $ | 6        |   |  | $                                                                  | 17     |   |                               | $ | 3       |   |  | $ | 26      |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|Interest expense                    |  | $        | 8,686   |   |        | $ | 5,084  |           |  | $ | 4,047    |   |  | $                                                                  | 594    |   |                               | $ | 6,806   |   |  | $ | 25,217  |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|Net income (loss)                   |  | $        | 16,552  |   |        | $ | (3,492 | )         |  | $ | 9,204    |   |  | $                                                                  | (1,154 | ) |                               | $ | (19,418 | ) |  | $ | 1,692   |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|EBITDA(1)                           |  | $        | 32,325  |   |        | $ | 7,576  |           |  | $ | 18,552   |   |  | $                                                                  | 1,547  |   |                               | $ | (11,620 | ) |  | $ | 48,380  |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|Goodwill                            |  | $        | 6,711   |   |        | $ | 8,836  |           |  | $ | 30,924   |   |  |                                                                    |        |   |                               |   |         |   |  | $ | 46,471  |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|Identifiable intangible assets, net |  |          |         |   |        |   |        |           |  | $ | 8,173    |   |  |                                                                    |        |   |                               |   |         |   |  | $ | 8,173   |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|Property, plant and equipment, net  |  | $        | 91,585  |   |        | $ | 40,907 |           |  | $ | 40,294   |   |  | $                                                                  | 62,964 |   |                               | $ | 8,557   |   |  | $ | 244,307 |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|Total assets                        |  | $        | 113,679 |   |        | $ | 57,580 |           |  | $ | 90,201   |   |  | $                                                                  | 67,847 |   |                               | $ | 14,233  |   |  | $ | 343,540 |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|Long-term debt                      |  | $        | 84,981  |   |        | $ | 61,337 |           |  | $ | 51,115   |   |  | $                                                                  | 4,902  |   |                               | $ | 88,735  |   |  | $ | 291,070 |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|Capital expenditures                |  | $        | 7,722   |   |        | $ | 2,887  |           |  | $ | 3,543    |   |  | $                                                                  | 1,052  |   |                               | $ | 900     |   |  | $ | 16,104  |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  



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##### Table of Contents

As of and for the Year Ended December 31, 2008



|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|----------------------------------- |  | -------- | ------- | - | ------ | - | ------ | --------- |  | - | -------- | - |  | ------------------------------------------------------------------ | ------ | - | ----------------------------- | - | ------- | - |  | - | ------- | -
|                                    |  | Colorado |         |   | Nevada |   |        | Louisiana |  |   | Virginia |   |  | CorporateAdjustments,EliminationsAnd Other(As adjusted,see Note 4) |        |   | Total (Asadjusted,see Note 4) |  
|Revenues                            |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|Gaming                              |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|Casino                              |  | $        | 100,807 |   |        | $ | 38,685 |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  | $ | 139,492 |  
|Truck stop                          |  |          |         |   |        |   |        |           |  | $ | 67,590   |   |  |                                                                    |        |   |                               |   |         |   |  |   | 67,590  |  
|Pari-mutuel                         |  |          |         |   |        |   |        |           |  |   |          |   |  | $                                                                  | 38,657 |   |                               |   |         |   |  |   | 38,657  |  
|Food and beverage                   |  |          | 10,812  |   |        |   | 8,757  |           |  |   | 8,264    |   |  |                                                                    | 2,903  |   |                               |   |         |   |  |   | 30,736  |  
|Convenience store  fuel            |  |          |         |   |        |   |        |           |  |   | 97,021   |   |  |                                                                    |        |   |                               |   |         |   |  |   | 97,021  |  
|Convenience store  other           |  |          |         |   |        |   |        |           |  |   | 12,908   |   |  |                                                                    |        |   |                               |   |         |   |  |   | 12,908  |  
|Hotel                               |  |          | 1,946   |   |        |   | 2,155  |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   | 4,101   |  
|Other                               |  |          | 927     |   |        |   | 1,420  |           |  |   | 1,311    |   |  |                                                                    | 2,032  |   |                               | $ | 809     |   |  |   | 6,499   |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|Total revenues                      |  |          | 114,492 |   |        |   | 51,017 |           |  |   | 187,094  |   |  |                                                                    | 43,592 |   |                               |   | 809     |   |  |   | 397,004 |  
|Less: Promotional allowances        |  |          | (20,439 | ) |        |   | (8,286 | )         |  |   | (4,993   | ) |  |                                                                    |        |   |                               |   |         |   |  |   | (33,718 | )
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|Net revenues                        |  | $        | 94,053  |   |        | $ | 42,731 |           |  | $ | 182,101  |   |  | $                                                                  | 43,592 |   |                               | $ | 809     |   |  | $ | 363,286 |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|Depreciation and amortization       |  | $        | 6,823   |   |        | $ | 6,032  |           |  | $ | 4,219    |   |  | $                                                                  | 2,114  |   |                               | $ | 936     |   |  | $ | 20,124  |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|Interest income                     |  | $        | 3       |   |        | $ | 4      |           |  | $ | 19       |   |  | $                                                                  | 83     |   |                               | $ | 85      |   |  | $ | 194     |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|Interest expense                    |  | $        | 8,621   |   |        | $ | 5,577  |           |  | $ | 4,894    |   |  | $                                                                  | 603    |   |                               | $ | 7,782   |   |  | $ | 27,477  |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|Net income (loss)                   |  | $        | 15,725  |   |        | $ | (5,357 | )         |  | $ | 12,594   |   |  | $                                                                  | (2,035 | ) |                               | $ | (24,946 | ) |  | $ | (4,019  | )
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|EBITDA(1)                           |  | $        | 31,166  |   |        | $ | 6,248  |           |  | $ | 21,688   |   |  | $                                                                  | 599    |   |                               | $ | (16,313 | ) |  | $ | 43,388  |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|                                    |  |          |         |   |        |  
|Goodwill                            |  | $        | 6,711   |   |        | $ | 8,836  |           |  | $ | 30,924   |   |  |                                                                    |        |   |                               |   |         |   |  | $ | 46,471  |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|Identifiable intangible assets, net |  |          |         |   |        |   |        |           |  | $ | 9,192    |   |  |                                                                    |        |   |                               |   |         |   |  | $ | 9,192   |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|Property, plant and equipment, net  |  | $        | 90,574  |   |        | $ | 44,241 |           |  | $ | 40,517   |   |  | $                                                                  | 64,106 |   |                               | $ | 8,620   |   |  | $ | 248,058 |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|Total assets                        |  | $        | 110,441 |   |        | $ | 61,552 |           |  | $ | 90,396   |   |  | $                                                                  | 69,453 |   |                               | $ | 15,590  |   |  | $ | 347,432 |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|Long-term debt                      |  | $        | 85,655  |   |        | $ | 61,556 |           |  | $ | 51,174   |   |  | $                                                                  | 5,644  |   |                               | $ | 87,329  |   |  | $ | 291,358 |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  
|Capital expenditures                |  | $        | 5,348   |   |        | $ | 5,138  |           |  | $ | 2,561    |   |  | $                                                                  | 781    |   |                               | $ | 3,380   |   |  | $ | 17,208  |  
|                                    |  |          |         |   |        |   |        |           |  |   |          |   |  |                                                                    |        |   |                               |   |         |   |  |   |         |  



|(1) | EBITDA (earnings before interest, income taxes, depreciation and amortization) is presented as supplemental information in the tables above as it is a key measure of
operating performance used by our chief operating decision maker. EBITDA can be reconciled directly to our consolidated net income (loss) by adding the amounts shown for depreciation, amortization, income taxes and interest to net income (loss).
This information should not be considered as an alternative to any measure of performance as promulgated under accounting principles generally accepted in the United States of America, such as net income (loss), nor should it be considered as an
indicator of our overall financial performance. Our calculation of EBITDA may be different from the calculation used by other companies and comparability may be limited. Management believes that presentation of a non-GAAP financial measure such as
EBITDA is useful because it allows holders of our debt and management to evaluate and compare our operating results from continuing operations from period to period in a meaningful and consistent manner in addition to standard GAAP financial
measures. Management internally evaluates the performance of our segments using EBITDA measures as do most analysts following the gaming industry. EBITDA is also a key component of certain financial covenants in our debt agreements.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|15. | CONDENSED CONSOLIDATING FINANCIAL INFORMATION
|--- | ---------------------------------------------

Our senior secured credit facility and unsecured senior notes are both guaranteed by our current and future restricted subsidiaries. Each subsidiary guarantor is 100% owned by the parent company, all
guarantees are full and unconditional and joint and several, and all subsidiaries of JEI guarantee the securities.

The
following information sets forth our Condensed Consolidating Balance Sheets as of December 31, 2010 and 2009, and the Condensed Consolidating Statements of Operations and the Condensed Consolidating Statements of Cash Flows for the three years
ended December 31, 2010 as required by Rule 3-10 of Regulation S-X of the Securities Exchange Act of 1934, as amended. Investments in our subsidiaries are accounted for on the equity method. Accordingly, entries necessary to consolidate the
Parent Company Issuer and our Subsidiary Guarantors are reflected in the eliminations column.



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JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEETS

AS OF DECEMBER 31, 2010



|                                                      |  |                     |          |   |                      |   |         |              |  |   |              |   |  |   |         | 
|----------------------------------------------------- |  | ------------------- | -------- | - | -------------------- | - | ------- | ------------ |  | - | ------------ | - |  | - | ------- | 
|                                                      |  | ParentCompanyIssuer |          |   | SubsidiaryGuarantors |   |         | Eliminations |  |   | Consolidated |  
|ASSETS                                                |  |                     |          |   |                      |   |         |              |  |   |              |   |  |   |         | 
|Current assets                                        |  | $                   | 554      |   |                      | $ | 35,478  |              |  |   |              |   |  | $ | 36,032  | 
|Property, plant and equipment, net                    |  |                     | 897      |   |                      |   | 235,111 |              |  |   |              |   |  |   | 236,008 | 
|Net investment in and advances to subsidiaries        |  |                     | 102,238  |   |                      |   |         |              |  | $ | (102,238     | ) |  |   |        | 
|Other long-term assets                                |  |                     | 4,389    |   |                      |   | 57,867  |              |  |   |              |   |  |   | 62,256  | 
|                                                      |  |                     |          |   |                      |   |         |              |  |   |              |   |  |   |         | 
|Total assets                                          |  | $                   | 108,078  |   |                      | $ | 328,456 |              |  | $ | (102,238     | ) |  | $ | 334,296 | 
|                                                      |  |                     |          |   |                      |   |         |              |  |   |              |   |  |   |         | 
|                                                      |  |                     |          |  
|LIABILITIES AND STOCKHOLDERS EQUITY                  |  |                     |          |   |                      |   |         |              |  |   |              |   |  |   |         | 
|Current liabilities                                   |  | $                   | 5,884    |   |                      | $ | 23,155  |              |  |   |              |   |  | $ | 29,039  | 
|Long-term debt                                        |  |                     | 275,250  |   |                      |   | 3,171   |              |  |   |              |   |  |   | 278,421 | 
|Long-term debt (receivable from) payable to affiliate |  |                     | (198,782 | ) |                      |   | 198,782 |              |  |   |              |   |  |   |        | 
|Other long-term liabilities                           |  |                     | 4        |   |                      |   | 1,110   |              |  |   |              |   |  |   | 1,114   | 
|Stockholders equity                                  |  |                     | 25,722   |   |                      |   | 102,238 |              |  | $ | (102,238     | ) |  |   | 25,722  | 
|                                                      |  |                     |          |   |                      |   |         |              |  |   |              |   |  |   |         | 
|Total liabilities and stockholders equity            |  | $                   | 108,078  |   |                      | $ | 328,456 |              |  | $ | (102,238     | ) |  | $ | 334,296 | 
|                                                      |  |                     |          |   |                      |   |         |              |  |   |              |   |  |   |         | 

AS OF DECEMBER 31, 2009

(As adjusted, see Note 4)



|                                                      |  |                     |          |   |                      |   |         |              |  |   |              |   |  |   |         | 
|----------------------------------------------------- |  | ------------------- | -------- | - | -------------------- | - | ------- | ------------ |  | - | ------------ | - |  | - | ------- | 
|                                                      |  | ParentCompanyIssuer |          |   | SubsidiaryGuarantors |   |         | Eliminations |  |   | Consolidated |  
|ASSETS                                                |  |                     |          |   |                      |   |         |              |  |   |              |   |  |   |         | 
|Current assets                                        |  | $                   | 644      |   |                      | $ | 34,587  |              |  |   |              |   |  | $ | 35,231  | 
|Property, plant and equipment, net                    |  |                     | 1,404    |   |                      |   | 242,903 |              |  |   |              |   |  |   | 244,307 | 
|Net investment in and advances to subsidiaries        |  |                     | 110,238  |   |                      |   |         |              |  | $ | (110,238     | ) |  |   |        | 
|Other long-term assets                                |  |                     | 3,655    |   |                      |   | 60,347  |              |  |   |              |   |  |   | 64,002  | 
|                                                      |  |                     |          |   |                      |   |         |              |  |   |              |   |  |   |         | 
|Total assets                                          |  | $                   | 115,941  |   |                      | $ | 337,837 |              |  | $ | (110,238     | ) |  | $ | 343,540 | 
|                                                      |  |                     |          |   |                      |   |         |              |  |   |              |   |  |   |         | 
|                                                      |  |                     |          |  
|LIABILITIES AND STOCKHOLDERS EQUITY                  |  |                     |          |   |                      |   |         |              |  |   |              |   |  |   |         | 
|Current liabilities                                   |  | $                   | 3,023    |   |                      | $ | 22,914  |              |  |   |              |   |  | $ | 25,937  | 
|Long-term debt                                        |  |                     | 286,569  |   |                      |   | 4,501   |              |  |   |              |   |  |   | 291,070 | 
|Long-term debt (receivable from) payable to affiliate |  |                     | (199,182 | ) |                      |   | 199,182 |              |  |   |              |   |  |   |        | 
|Other long-term liabilities                           |  |                     | 9        |   |                      |   | 1,002   |              |  |   |              |   |  |   | 1,011   | 
|Stockholders equity                                  |  |                     | 25,522   |   |                      |   | 110,238 |              |  | $ | (110,238     | ) |  |   | 25,522  | 
|                                                      |  |                     |          |   |                      |   |         |              |  |   |              |   |  |   |         | 
|Total liabilities and stockholders equity            |  | $                   | 115,941  |   |                      | $ | 337,837 |              |  | $ | (110,238     | ) |  | $ | 343,540 | 
|                                                      |  |                     |          |   |                      |   |         |              |  |   |              |   |  |   |         | 



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JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2010



|                                   |  |                     |        |   |                      |   |          |              |  |   |              |   |  |   |          |  
|---------------------------------- |  | ------------------- | ------ | - | -------------------- | - | -------- | ------------ |  | - | ------------ | - |  | - | -------- | -
|                                   |  | ParentCompanyIssuer |        |   | SubsidiaryGuarantors |   |          | Eliminations |  |   | Consolidated |  
|Net revenues                       |  |                     |        |   |                      | $ | 329,949  |              |  | $ | (25          | ) |  | $ | 329,924  |  
|Costs and expenses                 |  | $                   | (9,440 | ) |                      |   | (291,820 | )            |  |   | 25           |   |  |   | (301,235 | )
|Interest expense, net              |  |                     | (5,452 | ) |                      |   | (20,104  | )            |  |   |              |   |  |   | (25,556  | )
|Equity in earnings of subsidiaries |  |                     | 18,025 |   |                      |   |          |              |  |   | (18,025      | ) |  |   |         |  
|                                   |  |                     |        |   |                      |   |          |              |  |   |              |   |  |   |          |  
|Net income                         |  | $                   | 3,133  |   |                      | $ | 18,025   |              |  | $ | (18,025      | ) |  | $ | 3,133    |  
|                                   |  |                     |        |   |                      |   |          |              |  |   |              |   |  |   |          |  

FOR THE YEAR ENDED DECEMBER 31, 2009

(As adjusted, see Note 4)



|                                   |  |                     |         |   |                      |   |          |              |  |   |              |   |  |   |          |  
|---------------------------------- |  | ------------------- | ------- | - | -------------------- | - | -------- | ------------ |  | - | ------------ | - |  | - | -------- | -
|                                   |  | ParentCompanyIssuer |         |   | SubsidiaryGuarantors |   |          | Eliminations |  |   | Consolidated |  
|Net revenues                       |  |                     |         |   |                      | $ | 313,641  |              |  | $ | (175         | ) |  | $ | 313,466  |  
|Costs and expenses                 |  | $                   | (12,359 | ) |                      |   | (274,399 | )            |  |   | 175          |   |  |   | (286,583 | )
|Interest expense, net              |  |                     | (5,184  | ) |                      |   | (20,007  | )            |  |   |              |   |  |   | (25,191  | )
|Equity in earnings of subsidiaries |  |                     | 19,235  |   |                      |   |          |              |  |   | (19,235      | ) |  |   |         |  
|                                   |  |                     |         |   |                      |   |          |              |  |   |              |   |  |   |          |  
|Net income                         |  | $                   | 1,692   |   |                      | $ | 19,235   |              |  | $ | (19,235      | ) |  | $ | 1,692    |  
|                                   |  |                     |         |   |                      |   |          |              |  |   |              |   |  |   |          |  

FOR THE YEAR ENDED DECEMBER 31, 2008

(As adjusted, see Note 4)



|                                      |  |                     |         |   |                      |   |          |              |  |   |              |   |  |   |          |  
|------------------------------------- |  | ------------------- | ------- | - | -------------------- | - | -------- | ------------ |  | - | ------------ | - |  | - | -------- | -
|                                      |  | ParentCompanyIssuer |         |   | SubsidiaryGuarantors |   |          | Eliminations |  |   | Consolidated |  
|Net revenues                          |  |                     |         |   |                      | $ | 363,611  |              |  | $ | (325         | ) |  | $ | 363,286  |  
|Costs and expenses                    |  | $                   | (17,450 | ) |                      |   | (322,897 | )            |  |   | 325          |   |  |   | (340,022 | )
|Interest expense, net                 |  |                     | (6,048  | ) |                      |   | (21,235  | )            |  |   |              |   |  |   | (27,283  | )
|Equity in earnings of subsidiaries    |  |                     | 19,408  |   |                      |   |          |              |  |   | (19,408      | ) |  |   |         |  
|Noncontrolling interest               |  |                     |         |   |                      |   | (71      | )            |  |   |              |   |  |   | (71      | )
|                                      |  |                     |         |   |                      |   |          |              |  |   |              |   |  |   |          |  
|Net (loss) income attributable to JEI |  | $                   | (4,090  | ) |                      | $ | 19,408   |              |  | $ | (19,408      | ) |  | $ | (4,090   | )
|                                      |  |                     |         |   |                      |   |          |              |  |   |              |   |  |   |          |  



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JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2010



|                                                    |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  
|--------------------------------------------------- |  | ------------------- | ------- | - | -------------------- | - | ------- | ------------ |  | - | ------------ |  |  | - | ------- | -
|                                                    |  | ParentCompanyIssuer |         |   | SubsidiaryGuarantors |   |         | Eliminations |  |   | Consolidated | 
|Net cash provided by operating activities           |  | $                   | 19,570  |   |                      | $ | 7,606   |              |  | $ |              |  |  | $ | 27,176  |  
|                                                    |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  
|                                                    |  |                     |         |  
|INVESTING ACTIVITIES:                               |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  
|Additions to property, plant and equipment          |  |                     | (145    | ) |                      |   | (11,423 | )            |  |   |              |  |  |   | (11,568 | )
|Proceeds from sale of equipment                     |  |                     | 37      |   |                      |   | 301     |              |  |   |              |  |  |   | 338     |  
|Purchase of device rights                           |  |                     |         |   |                      |   | (755    | )            |  |   |              |  |  |   | (755    | )
|                                                    |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  
|Net cash used in investing activities               |  |                     | (108    | ) |                      |   | (11,877 | )            |  |   |              |  |  |   | (11,985 | )
|                                                    |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  
|                                                    |  |                     |         |  
|FINANCING ACTIVITIES:                               |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  
|Payments to obtain financing                        |  |                     | (1,500  | ) |                      |   |         |              |  |   |              |  |  |   | (1,500  | )
|Proceeds from revolving line of credit              |  |                     | 24,000  |   |                      |   |         |              |  |   |              |  |  |   | 24,000  |  
|Payments on long-term debt                          |  |                     | (406    | ) |                      |   | (1,956  | )            |  |   |              |  |  |   | (2,362  | )
|Payments on revolving line of credit                |  |                     | (31,500 | ) |                      |   |         |              |  |   |              |  |  |   | (31,500 | )
|Net advances to/from subsidiaries                   |  |                     | (6,251  | ) |                      |   | 6,251   |              |  |   |              |  |  |   |        |  
|Distributions to stockholder                        |  |                     | (3,800  | ) |                      |   |         |              |  |   |              |  |  |   | (3,800  | )
|                                                    |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  
|Net cash (used in) provided by financing activities |  |                     | (19,457 | ) |                      |   | 4,295   |              |  |   |              |  |  |   | (15,162 | )
|                                                    |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  
|                                                    |  |                     |         |  
|Net Increase in Cash and Cash Equivalents           |  |                     | 5       |   |                      |   | 24      |              |  |   |              |  |  |   | 29      |  
|Cash and Cash Equivalents  Beginning of Year       |  |                     | 191     |   |                      |   | 24,014  |              |  |   |              |  |  |   | 24,205  |  
|                                                    |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  
|Cash and Cash Equivalents  End of Year             |  | $                   | 196     |   |                      | $ | 24,038  |              |  | $ |              |  |  | $ | 24,234  |  
|                                                    |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  



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JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2009

(As adjusted, see Note 4)



|                                                     |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  
|---------------------------------------------------- |  | ------------------- | ------- | - | -------------------- | - | ------- | ------------ |  | - | ------------ |  |  | - | ------- | -
|                                                     |  | ParentCompanyIssuer |         |   | SubsidiaryGuarantors |   |         | Eliminations |  |   | Consolidated | 
|Net cash provided by operating activities            |  | $                   | 8,952   |   |                      | $ | 12,994  |              |  | $ |              |  |  | $ | 21,946  |  
|                                                     |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  
|                                                     |  |                     |         |  
|INVESTING ACTIVITIES:                                |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  
|Additions to property, plant and equipment           |  |                     | (192    | ) |                      |   | (15,912 | )            |  |   |              |  |  |   | (16,104 | )
|Proceeds from sale of equipment                      |  |                     | 4       |   |                      |   | 385     |              |  |   |              |  |  |   | 389     |  
|Purchase of device rights                            |  |                     |         |   |                      |   | (967    | )            |  |   |              |  |  |   | (967    | )
|Acquisition of noncontrolling interest               |  |                     | (212    | ) |                      |   |         |              |  |   |              |  |  |   | (212    | )
|                                                     |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  
|Net cash used in investing activities                |  |                     | (400    | ) |                      |   | (16,494 | )            |  |   |              |  |  |   | (16,894 | )
|                                                     |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  
|                                                     |  |                     |         |  
|FINANCING ACTIVITIES:                                |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  
|Payments to obtain financing                         |  |                     | (555    | ) |                      |   |         |              |  |   |              |  |  |   | (555    | )
|Proceeds from revolving line of credit               |  |                     | 29,463  |   |                      |   |         |              |  |   |              |  |  |   | 29,463  |  
|Payments on long-term debt                           |  |                     | (404    | ) |                      |   | (994    | )            |  |   |              |  |  |   | (1,398  | )
|Payments on revolving line of credit                 |  |                     | (27,000 | ) |                      |   |         |              |  |   |              |  |  |   | (27,000 | )
|Net advances to/from subsidiaries                    |  |                     | (7,114  | ) |                      |   | 7,114   |              |  |   |              |  |  |   |        |  
|Distributions to stockholder                         |  |                     | (3,238  | ) |                      |   |         |              |  |   |              |  |  |   | (3,238  | )
|                                                     |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  
|Net cash (used in) provided by financing activities  |  |                     | (8,848  | ) |                      |   | 6,120   |              |  |   |              |  |  |   | (2,728  | )
|                                                     |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  
|                                                     |  |                     |         |  
|Net (Decrease) Increase in Cash and Cash Equivalents |  |                     | (296    | ) |                      |   | 2,620   |              |  |   |              |  |  |   | 2,324   |  
|Cash and Cash Equivalents  Beginning of Year        |  |                     | 487     |   |                      |   | 21,394  |              |  |   |              |  |  |   | 21,881  |  
|                                                     |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  
|Cash and Cash Equivalents  End of Year              |  | $                   | 191     |   |                      | $ | 24,014  |              |  | $ |              |  |  | $ | 24,205  |  
|                                                     |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  



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##### Table of Contents

JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2008

(As adjusted, see Note 4)



|                                                     |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  
|---------------------------------------------------- |  | ------------------- | ------- | - | -------------------- | - | ------- | ------------ |  | - | ------------ |  |  | - | ------- | -
|                                                     |  | ParentCompanyIssuer |         |   | SubsidiaryGuarantors |   |         | Eliminations |  |   | Consolidated | 
|Net cash provided by operating activities            |  | $                   | 20,492  |   |                      | $ | 5,127   |              |  | $ |              |  |  | $ | 25,619  |  
|                                                     |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  
|                                                     |  |                     |         |  
|INVESTING ACTIVITIES:                                |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  
|Additions to property, plant and equipment           |  |                     | (301    | ) |                      |   | (16,907 | )            |  |   |              |  |  |   | (17,208 | )
|Proceeds from sale of equipment                      |  |                     |         |   |                      |   | 370     |              |  |   |              |  |  |   | 370     |  
|Purchase of device rights                            |  |                     |         |   |                      |   | (900    | )            |  |   |              |  |  |   | (900    | )
|                                                     |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  
|Net cash used in investing activities                |  |                     | (301    | ) |                      |   | (17,437 | )            |  |   |              |  |  |   | (17,738 | )
|                                                     |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  
|                                                     |  |                     |         |  
|FINANCING ACTIVITIES:                                |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  
|Proceeds from revolving line of credit               |  |                     | 20,038  |   |                      |   |         |              |  |   |              |  |  |   | 20,038  |  
|Payments on long-term debt                           |  |                     | (405    | ) |                      |   | (1,330  | )            |  |   |              |  |  |   | (1,735  | )
|Payments on revolving line of credit                 |  |                     | (27,000 | ) |                      |   |         |              |  |   |              |  |  |   | (27,000 | )
|Net advances to/from subsidiaries                    |  |                     | (10,772 | ) |                      |   | 10,772  |              |  |   |              |  |  |   |        |  
|Distributions to stockholder                         |  |                     | (1,800  | ) |                      |   |         |              |  |   |              |  |  |   | (1,800  | )
|                                                     |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  
|Net cash (used in) provided by financing activities  |  |                     | (19,939 | ) |                      |   | 9,442   |              |  |   |              |  |  |   | (10,497 | )
|                                                     |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  
|                                                     |  |                     |         |  
|Net Increase (Decrease) in Cash and Cash Equivalents |  |                     | 252     |   |                      |   | (2,868  | )            |  |   |              |  |  |   | (2,616  | )
|Cash and Cash Equivalents  Beginning of Year        |  |                     | 235     |   |                      |   | 24,262  |              |  |   |              |  |  |   | 24,497  |  
|                                                     |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  
|Cash and Cash Equivalents  End of Year              |  | $                   | 487     |   |                      | $ | 21,394  |              |  | $ |              |  |  | $ | 21,881  |  
|                                                     |  |                     |         |   |                      |   |         |              |  |   |              |  |  |   |         |  

******



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##### Table of Contents

EXHIBIT INDEX

The following exhibits are filed, or incorporated by reference where indicated, in Part IV of this Annual Report on Form 10-K.



|           |  |                                                                                                 |  |      |  |           |  |                           |  |              |  |              
|---------- |  | ----------------------------------------------------------------------------------------------- |  | ---- |  | --------- |  | ------------------------- |  | ------------ |  | -------------
|ExhibitNo. |  | Description                                                                                     |  | Form |  | File No.  |  | Wherelocated(Exhibit No.) |  | Filing Date  |  | FiledHerewith
|3.1        |  | Certificate of Incorporation of Gameco, Inc.                                                    |  | S-4  |  | 333-88242 |  | 3.1                       |  | May 14, 2002 |  |              
|           |  |                                                                                                 |  |      |  |          
|3.2        |  | By-Laws of Gameco, Inc.                                                                         |  | S-4  |  | 333-88242 |  | 3.2                       |  | May 14, 2002 |  |              
|           |  |                                                                                                 |  |      |  |          
|3.3        |  | Articles of Incorporation of Black Hawk Gaming & Development Company, Inc.                      |  | S-4  |  | 333-88242 |  | 3.3                       |  | May 14, 2002 |  |              
|           |  |                                                                                                 |  |      |  |          
|3.4        |  | Bylaws of Black Hawk Gaming & Development Company, Inc.                                         |  | S-4  |  | 333-88242 |  | 3.4                       |  | May 14, 2002 |  |              
|           |  |                                                                                                 |  |      |  |          
|3.5        |  | Articles of Incorporation of Gold Dust West Casino, Inc.                                        |  | S-4  |  | 333-88242 |  | 3.5                       |  | May 14, 2002 |  |              
|           |  |                                                                                                 |  |      |  |          
|3.6        |  | Code of By-laws of Gold Dust West Casino, Inc.                                                  |  | S-4  |  | 333-88242 |  | 3.6                       |  | May 14, 2002 |  |              
|           |  |                                                                                                 |  |      |  |          
|3.7        |  | Articles of Organization of Black Hawk/Jacobs Entertainment, LLC.                               |  | S-4  |  | 333-88242 |  | 3.7                       |  | May 14, 2002 |  |              
|           |  |                                                                                                 |  |      |  |          
|3.8        |  | Operating Agreement of Black Hawk/Jacobs Entertainment, LLC.                                    |  | S-4  |  | 333-88242 |  | 3.8                       |  | May 14, 2002 |  |              
|           |  |                                                                                                 |  |      |  |          
|3.9        |  | Joint Venture Agreement of Gilpin Hotel Venture.                                                |  | S-4  |  | 333-88242 |  | 3.9                       |  | May 14, 2002 |  |              
|           |  |                                                                                                 |  |      |  |          
|3.10       |  | Articles of Incorporation of Gilpin Ventures, Inc.                                              |  | S-4  |  | 333-88242 |  | 3.10                      |  | May 14, 2002 |  |              
|           |  |                                                                                                 |  |      |  |          
|3.11       |  | By-Laws of Gilpin Ventures, Inc.                                                                |  | S-4  |  | 333-88242 |  | 3.11                      |  | May 14, 2002 |  |              
|           |  |                                                                                                 |  |      |  |          
|3.12       |  | Articles of Incorporation of Winners Choice Casino, Inc., now Cash Magic Winners Choice, LLC. |  | S-4  |  | 333-88242 |  | 3.14                      |  | May 14, 2002 |  |              
|           |  |                                                                                                 |  |      |  |          
|3.13       |  | By-Laws of Winners Choice Casino, Inc., now Cash Magic Winners Choice, LLC.                   |  | S-4  |  | 333-88242 |  | 3.15                      |  | May 14, 2002 |  |              
|           |  |                                                                                                 |  |      |  |          
|3.14       |  | Articles of Organization of Houma Truck Plaza & Casino, L.L.C.                                  |  | S-4  |  | 333-88242 |  | 3.18                      |  | May 14, 2002 |  |              



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##### Table of Contents

|           |  |                                                                                 |  |      |  |           |  |                           |  |                |  |              
|---------- |  | ------------------------------------------------------------------------------- |  | ---- |  | --------- |  | ------------------------- |  | -------------- |  | -------------
|           |  |                                                                                 |  |      |  |          
|ExhibitNo. |  | Description                                                                     |  | Form |  | File No.  |  | Wherelocated(Exhibit No.) |  | Filing Date    |  | FiledHerewith
|3.15       |  | Articles of Organization of Jalou-Cashs L.L.C.                                 |  | S-4  |  | 333-88242 |  | 3.19                      |  | May 14, 2002   |  |              
|           |  |                                                                                 |  |      |  |          
|3.16       |  | Articles of Organization of Lucky Magnolia Truck Stop and Casino, L.L.C.        |  | S-4  |  | 333-88242 |  | 3.21                      |  | May 14, 2002   |  |              
|           |  |                                                                                 |  |      |  |          
|3.17       |  | Articles of Organization of Bayou Vista Truck Plaza and Casino, L.L.C.          |  | S-4  |  | 333-88242 |  | 3.22                      |  | May 14, 2002   |  |              
|           |  |                                                                                 |  |      |  |          
|3.18       |  | Articles of Organization of Raceland Truck Plaza and Casino, L.L.C.             |  | S-4  |  | 333-88242 |  | 3.23                      |  | May 14, 2002   |  |              
|           |  |                                                                                 |  |      |  |          
|3.19       |  | Articles of Organization of JACE, LLC.                                          |  | S-4  |  | 333-88242 |  | 3.24                      |  | May 14, 2002   |  |              
|           |  |                                                                                 |  |      |  |          
|3.20       |  | Certificate of Amendment of Certificate of Incorporation of Gameco, Inc.        |  | S-4A |  | 333-88242 |  | 3.25                      |  | August 8, 2002 |  |              
|           |  |                                                                                 |  |      |  |          
|3.21       |  | Amended and Restated Certificate of Limited Partnership of Colonial Downs, L.P. |  | S-4A |  | 333-88242 |  | 3.26                      |  | August 8, 2002 |  |              
|           |  |                                                                                 |  |      |  |          
|3.22       |  | Limited Partnership Agreement of Colonial Downs, L.P.                           |  | S-4A |  | 333-88242 |  | 3.27                      |  | August 8, 2002 |  |              
|           |  |                                                                                 |  |      |  |          
|3.23       |  | Amended and Restated Articles of Incorporation of Colonial Downs Holdings, Inc. |  | S-4A |  | 333-88242 |  | 3.28                      |  | August 8, 2002 |  |              
|           |  |                                                                                 |  |      |  |          
|3.24       |  | Amendment to Articles of Incorporation of Colonial Downs Holdings, Inc.         |  | S-4A |  | 333-88242 |  | 3.29                      |  | August 8, 2002 |  |              
|           |  |                                                                                 |  |      |  |          
|3.25       |  | Bylaws of Colonial Downs Holdings, Inc.                                         |  | S-4A |  | 333-88242 |  | 3.30                      |  | May 14, 2002   |  |              
|           |  |                                                                                 |  |      |  |          
|3.26       |  | Articles of Incorporation of Stansley Racing Corp.                              |  | S-4A |  | 333-88242 |  | 3.31                      |  | August 8, 2002 |  |              
|           |  |                                                                                 |  |      |  |          
|3.27       |  | Articles of Amendment to the Articles of Incorporation of Stansley Racing Corp. |  | S-4A |  | 333-88242 |  | 3.32                      |  | August 8, 2002 |  |              
|           |  |                                                                                 |  |      |  |          
|3.28       |  | Bylaws of Stansley Racing Corp.                                                 |  | S-4A |  | 333-88242 |  | 3.33                      |  | August 8, 2002 |  |              
|           |  |                                                                                 |  |      |  |          
|3.29       |  | Amendment to the Operating Agreement of Black Hawk/Jacobs Entertainment, LLC.   |  | S-4A |  | 333-88242 |  | 3.35                      |  | August 8, 2002 |  |              



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##### Table of Contents

|           |  |                                                                                                                  |  |      |  |            |  |                           |  |                   |  |              
|---------- |  | ---------------------------------------------------------------------------------------------------------------- |  | ---- |  | ---------- |  | ------------------------- |  | ----------------- |  | -------------
|ExhibitNo. |  | Description                                                                                                      |  | Form |  | File No.   |  | Wherelocated(Exhibit No.) |  | Filing Date       |  | FiledHerewith
|3.30       |  | Amendment to the Certificate of Incorporation of Gameco, Inc.                                                    |  | S-4A |  | 333-88242  |  | 3.36                      |  | August 8, 2002    |  |              
|           |  |                                                                                                                  |  |      |  |           
|3.31       |  | Articles of Organization of Jalou Breaux Bridge, LLC dated January 29, 2003.                                     |  | 10-K |  | 333-88242  |  | 3.37                      |  | March 28, 2005    |  |              
|           |  |                                                                                                                  |  |      |  |           
|3.32       |  | Articles of Organization of Jalou Eunice, LLC dated March 27, 2003.                                              |  | 10-K |  | 333-88242  |  | 3.38                      |  | March 28, 2005    |  |              
|           |  |                                                                                                                  |  |      |  |           
|3.33       |  | Articles of Organization of Jalou of Jefferson, LLC dated September 23, 2003.                                    |  | 10-K |  | 333-88242  |  | 3.39                      |  | March 28, 2005    |  |              
|           |  |                                                                                                                  |  |      |  |           
|3.34       |  | Certificate of Amendment of Certificate of Incorporation of Jacobs Entertainment, Inc. dated September 27, 2005. |  | 10-Q |  | 333-88242  |  | 3.40                      |  | November 14, 2005 |  |              
|           |  |                                                                                                                  |  |      |  |           
|3.35       |  | Articles of Incorporation of Jacobs Piñon Plaza Entertainment, Inc. dated November 2, 2005.                      |  | 10-Q |  | 333-88242  |  | 3.41                      |  | November 14, 2005 |  |              
|           |  |                                                                                                                  |  |      |  |           
|3.36       |  | Bylaws of Jacobs Piñon Plaza Entertainment, Inc. dated November 8, 2005.                                         |  | S-4  |  | 333-136066 |  | 3.41(A)                   |  | July 27, 2006     |  |              
|           |  |                                                                                                                  |  |      |  |           
|3.37       |  | Articles of Organization of Fuel Stop 36, LLC dated August 24, 1989.                                             |  | S-4  |  | 333-136066 |  | 3.42                      |  | July 27, 2006     |  |              
|           |  |                                                                                                                  |  |      |  |           
|3.38       |  | Articles of Organization of Jalou of Larose, LLC dated November 3, 2005, now Cash Magic Larose, LLC.             |  | S-4  |  | 333-136066 |  | 3.43                      |  | July 27, 2006     |  |              
|           |  |                                                                                                                  |  |      |  |           
|3.39       |  | Articles of Incorporation of Jacobs Elko Entertainment, Inc.                                                     |  | S-4  |  | 333-136066 |  | 3.44                      |  | July 27, 2006     |  |              
|           |  |                                                                                                                  |  |      |  |           
|3.40       |  | Bylaws of Jacobs Elko Entertainment, Inc.                                                                        |  | S-4  |  | 333-136066 |  | 3.45                      |  | July 27, 2006     |  |              
|           |  |                                                                                                                  |  |      |  |           
|3.41       |  | Articles of Organization of Jalou Diamond L.L.C.                                                                 |  | S-4  |  | 333-136066 |  | 3.48                      |  | July 27, 2006     |  |              
|           |  |                                                                                                                  |  |      |  |           
|3.42       |  | Limited Liability Company Agreement of Jalou Diamond L.L.C.                                                      |  | S-4  |  | 333-136066 |  | 3.49                      |  | July 27, 2006     |  |              



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##### Table of Contents

|           |  |                                                                                                   |  |      |  |            |  |                           |  |               |  |              
|---------- |  | ------------------------------------------------------------------------------------------------- |  | ---- |  | ---------- |  | ------------------------- |  | ------------- |  | -------------
|ExhibitNo. |  | Description                                                                                       |  | Form |  | File No.   |  | Wherelocated(Exhibit No.) |  | Filing Date   |  | FiledHerewith
|3.43       |  | Articles of Organization of Jalou Magic L.L.C. (nka Cash Magic Vinton, LLC).                      |  | S-4  |  | 333-136066 |  | 3.50                      |  | July 27, 2006 |  |              
|           |  |                                                                                                   |  |      |  |           
|3.44       |  | Limited Liability Company Agreement of Jalou Magic L.L.C. (nka Cash Magic Vinton, LLC).           |  | S-4  |  | 333-136066 |  | 3.51                      |  | July 27, 2006 |  |              
|           |  |                                                                                                   |  |      |  |           
|3.45       |  | Articles of Organization of Jalou of Vinton-Bingo, LLC.                                           |  | S-4  |  | 333-136066 |  | 3.52                      |  | July 27, 2006 |  |              
|           |  |                                                                                                   |  |      |  |           
|3.46       |  | Limited Liability Company Agreement of Jalou of Vinton-Bingo, LLC.                                |  | S-4  |  | 333-136066 |  | 3.53                      |  | July 27, 2006 |  |              
|           |  |                                                                                                   |  |      |  |           
|3.47       |  | Articles of Organization of Jalou of Vinton, LLC.                                                 |  | S-4  |  | 333-136066 |  | 3.54                      |  | July 27, 2006 |  |              
|           |  |                                                                                                   |  |      |  |           
|3.48       |  | Limited Liability Company Agreement of Jalou of Vinton, LLC.                                      |  | S-4  |  | 333-136066 |  | 3.55                      |  | July 27, 2006 |  |              
|           |  |                                                                                                   |  |      |  |           
|3.49       |  | Articles of Organization of Jalou of St. Helena, LLC (nka Cash Magic St. Helena, LLC).            |  | S-4  |  | 333-136066 |  | 3.56                      |  | July 27, 2006 |  |              
|           |  |                                                                                                   |  |      |  |           
|3.50       |  | Limited Liability Company Agreement of Jalou of St. Helena, LLC (nka Cash Magic St. Helena, LLC). |  | S-4  |  | 333-136066 |  | 3.57                      |  | July 27, 2006 |  |              
|           |  |                                                                                                   |  |      |  |           
|3.51       |  | Amended and Restated Articles of Incorporation of Jacobs Piñon Plaza Entertainment, Inc.          |  | S-4  |  | 333-136066 |  | 3.58                      |  | July 27, 2006 |  |              
|           |  |                                                                                                   |  |      |  |           
|3.52       |  | Articles of Organization of Jalou of St. Martin, L.L.C.                                           |  | S-4  |  | 333-136066 |  | 3.59                      |  | July 27, 2006 |  |              
|           |  |                                                                                                   |  |      |  |           
|3.53       |  | Limited Liability Company Agreement of Jalou of St. Martin, L.L.C.                                |  | S-4  |  | 333-136066 |  | 3.60                      |  | July 27, 2006 |  |              
|           |  |                                                                                                   |  |      |  |           
|3.54       |  | Operating Agreement of Houma Truck Plaza Stop and Casino, L.L.C.                                  |  | S-4  |  | 333-136066 |  | 3.62                      |  | July 27, 2006 |  |              
|           |  |                                                                                                   |  |      |  |           
|3.55       |  | Limited Liability Company Agreement of Jalou-Cashs L.L.C.                                        |  | S-4  |  | 333-136066 |  | 3.63                      |  | July 27, 2006 |  |              



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##### Table of Contents

|           |  |                                                                                                 |  |      |  |            |  |                           |  |               |  |              
|---------- |  | ----------------------------------------------------------------------------------------------- |  | ---- |  | ---------- |  | ------------------------- |  | ------------- |  | -------------
|ExhibitNo. |  | Description                                                                                     |  | Form |  | File No.   |  | Wherelocated(Exhibit No.) |  | Filing Date   |  | FiledHerewith
|3.56       |  | Limited Liability Company Agreement of Lucky Magnolia Truck Stop and Casino, L.L.C.             |  | S-4  |  | 333-136066 |  | 3.64                      |  | July 27, 2006 |  |              
|           |  |                                                                                                 |  |      |  |           
|3.57       |  | Limited Liability Company Agreement of Bayou Vista Truck Plaza and Casino, L.L.C.               |  | S-4  |  | 333-136066 |  | 3.65                      |  | July 27, 2006 |  |              
|           |  |                                                                                                 |  |      |  |           
|3.58       |  | Limited Liability Company Agreement of Raceland Truck Plaza and Casino, L.L.C.                  |  | S-4  |  | 333-136066 |  | 3.66                      |  | July 27, 2006 |  |              
|           |  |                                                                                                 |  |      |  |           
|3.59       |  | Limited Liability Company Agreement of Jalou Breaux Bridge, LLC.                                |  | S-4  |  | 333-136066 |  | 3.67                      |  | July 27, 2006 |  |              
|           |  |                                                                                                 |  |      |  |           
|3.60       |  | Limited Liability Company Agreement of Jalou of Eunice, LLC.                                    |  | S-4  |  | 333-136066 |  | 3.68                      |  | July 27, 2006 |  |              
|           |  |                                                                                                 |  |      |  |           
|3.61       |  | Limited Liability Company Agreement of Jalou of Jefferson, LLC.                                 |  | S-4  |  | 333-136066 |  | 3.69                      |  | July 27, 2006 |  |              
|           |  |                                                                                                 |  |      |  |           
|3.62       |  | Limited Liability Company Agreement of Jalou of Larose, LLC (nka Cash Magic Larose, LLC).       |  | S-4  |  | 333-136066 |  | 3.70                      |  | July 27, 2006 |  |              
|           |  |                                                                                                 |  |      |  |           
|3.63       |  | Articles of Organization of Colonial Downs, LLC.                                                |  | S-4  |  | 333-136066 |  | 3.71                      |  | July 27, 2006 |  |              
|           |  |                                                                                                 |  |      |  |           
|3.64       |  | Operating Agreement of Colonial Downs, LLC.                                                     |  | S-4  |  | 333-136066 |  | 3.72                      |  | July 27, 2006 |  |              
|           |  |                                                                                                 |  |      |  |           
|3.65       |  | Articles of Organization of JRJ Properties, LLC.                                                |  | S-4  |  | 333-136066 |  | 3.73                      |  | July 27, 2006 |  |              
|           |  |                                                                                                 |  |      |  |           
|3.66       |  | Limited Liability Company Agreement of JRJ Properties, LLC.                                     |  | S-4  |  | 333-136066 |  | 3.74                      |  | July 27, 2006 |  |              
|           |  |                                                                                                 |  |      |  |           
|3.67       |  | Articles of Organization of Virginia Concessions, LLC.                                          |  | S-4  |  | 333-136066 |  | 3.75                      |  | July 27, 2006 |  |              
|           |  |                                                                                                 |  |      |  |           
|3.68       |  | Amended and Restated Operating Agreement of Virginia Concessions, LLC.                          |  | S-4  |  | 333-136066 |  | 3.76                      |  | July 27, 2006 |  |              
|           |  |                                                                                                 |  |      |  |           
|3.69       |  | Articles of Amendment to the Articles of Incorporation of Old Dominion Racing Association, Inc. |  | S-4  |  | 333-136066 |  | 3.77A                     |  | July 27, 2006 |  |              



E-5



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##### Table of Contents

|           |  |                                                                                                  |  |      |  |            |  |                           |  |                   |  |              
|---------- |  | ------------------------------------------------------------------------------------------------ |  | ---- |  | ---------- |  | ------------------------- |  | ----------------- |  | -------------
|ExhibitNo. |  | Description                                                                                      |  | Form |  | File No.   |  | Wherelocated(Exhibit No.) |  | Filing Date       |  | FiledHerewith
|3.70       |  | Articles of Amendment to the Articles of Incorporation of Old Dominion Racing Association, Inc.  |  | S-4  |  | 333-136066 |  | 3.77B                     |  | July 27, 2006     |  |              
|           |  |                                                                                                  |  |      |  |           
|3.71       |  | Articles of Amendment to the Articles of Incorporation of Old Dominion Jockey Club, Inc.         |  | S-4  |  | 333-136066 |  | 3.77C                     |  | July 27, 2006     |  |              
|           |  |                                                                                                  |  |      |  |           
|3.72       |  | Articles of Amendment to the Articles of Incorporation of Maryland-Virginia Racing Circuit, Inc. |  | S-4  |  | 333-136066 |  | 3.77D                     |  | July 27, 2006     |  |              
|           |  |                                                                                                  |  |      |  |           
|3.73       |  | Articles of Organization of Jalou Fox, LLC dated November 14, 2005.                              |  | 8-K  |  | 333-88242  |  | 3.78                      |  | September 6, 2007 |  |              
|           |  |                                                                                                  |  |      |  |           
|3.74       |  | Limited Liability Company Agreement of Jalou Fox, LLC dated September 1, 2005.                   |  | 8-K  |  | 333-88242  |  | 3.79                      |  | September 6, 2007 |  |              
|           |  |                                                                                                  |  |      |  |           
|3.75       |  | Articles of Organization of Jalou Silver Dollar, LLC.                                            |  | 10-K |  | 333-88242  |  | 3.80                      |  | March 26, 2008    |  |              
|           |  |                                                                                                  |  |      |  |           
|3.76       |  | Limited Liability Company Agreement of Jalou Silver Dollar, LLC.                                 |  | 10-K |  | 333-88242  |  | 3.81                      |  | March 26, 2008    |  |              
|           |  |                                                                                                  |  |      |  |           
|3.77       |  | Certificate of Incorporation of Jacobs Nautica Development, Inc.                                 |  | 10-Q |  | 333-88242  |  | 3.82                      |  | May 13, 2008      |  |              
|           |  |                                                                                                  |  |      |  |           
|3.78       |  | Bylaws of Jacobs Nautica Development, Inc.                                                       |  | 10-Q |  | 333-88242  |  | 3.83                      |  | May 13, 2008      |  |              
|           |  |                                                                                                  |  |      |  |           
|3.79       |  | Certificate of Formation of Diamondhead Real Estate, LLC.                                        |  | 10-K |  | 333-88242  |  | 3.84                      |  | March 18, 2009    |  |              
|           |  |                                                                                                  |  |      |  |           
|3.80       |  | Limited Liability Company Agreement of Diamondhead Real Estate, LLC.                             |  | 10-K |  | 333-88242  |  | 3.85                      |  | March 18, 2009    |  |              
|           |  |                                                                                                  |  |      |  |           
|3.81       |  | Articles of Organization of JEI Distributing, LLC.                                               |  | 10-K |  | 333-88242  |  | 3.86                      |  | March 18, 2009    |  |              
|           |  |                                                                                                  |  |      |  |           
|3.82       |  | Limited Liability Company Agreement of JEI Distributing, LLC.                                    |  | 10-K |  | 333-88242  |  | 3.87                      |  | March 18, 2009    |  |              



E-6



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##### Table of Contents

|           |  |                                                                                                                                                                                                                                                                                                                    |  |      |  |            |  |                           |  |                  |  |              
|---------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- |  | ---------- |  | ------------------------- |  | ---------------- |  | -------------
|ExhibitNo. |  | Description                                                                                                                                                                                                                                                                                                        |  | Form |  | File No.   |  | Wherelocated(Exhibit No.) |  | Filing Date      |  | FiledHerewith
|3.83       |  | Certificate of Incorporation of Jacobs Sugar Warehouse, Inc.                                                                                                                                                                                                                                                       |  | 10-K |  | 333-88242  |  | 3.88                      |  | March 18, 2009   |  |              
|           |  |                                                                                                                                                                                                                                                                                                                    |  |      |  |           
|3.84       |  | Bylaws of Jacobs Sugar Warehouse, Inc.                                                                                                                                                                                                                                                                             |  | 10-K |  | 333-88242  |  | 3.89                      |  | March 18, 2009   |  |              
|           |  |                                                                                                                                                                                                                                                                                                                    |  |      |  |           
|3.85       |  | Articles of Organization of Cash Magic Springhill, LLC.                                                                                                                                                                                                                                                            |  | 8-K  |  | 333-88242  |  | 3.85                      |  | February 3, 2011 |  |              
|           |  |                                                                                                                                                                                                                                                                                                                    |  |      |  |           
|3.86       |  | Articles of Organization of Cash Magic Vivian, LLC.                                                                                                                                                                                                                                                                |  | 8-K  |  | 333-88242  |  | 3.86                      |  | February 3, 2011 |  |              
|           |  |                                                                                                                                                                                                                                                                                                                    |  |      |  |           
|3.87       |  | Limited Liability Company Agreement of Cash Magic Springhill, LLC.                                                                                                                                                                                                                                                 |  | 8-K  |  | 333-88242  |  | 3.87                      |  | February 3, 2011 |  |              
|           |  |                                                                                                                                                                                                                                                                                                                    |  |      |  |           
|3.88       |  | Limited Liability Company Agreement of Cash Magic Vivian, LLC.                                                                                                                                                                                                                                                     |  | 8-K  |  | 333-88242  |  | 3.88                      |  | February 3, 2011 |  |              
|           |  |                                                                                                                                                                                                                                                                                                                    |  |      |  |           
|4.1        |  | Trust Indenture Agreement by and between Jacobs Entertainment, Inc. and Wells Fargo Bank, as Trustee, dated June 16, 2006.                                                                                                                                                                                         |  | 8-K  |  | 333-88242  |  | 4.1                       |  | March 23, 2006   |  |              
|           |  |                                                                                                                                                                                                                                                                                                                    |  |      |  |           
|4.2        |  | Registration Rights Agreement by and between Jacobs Entertainment, Inc. and Credit Suisse Securities (USA) LLC, CIBC World Markets Corp., Libra Securities, LLC, Wells Fargo
Securities, LLC and KeyBanc Capital Markets, a Division of McDonald Investments Inc., as the initial purchasers, dated June 16, 2006. |  | 8-K  |  | 333-88242  |  | 4.2                       |  | March 23, 2006   |  |              
|           |  |                                                                                                                                                                                                                                                                                                                    |  |      |  |           
|4.3        |  | Pledge Agreement dated as of June 16, 2006 by and among Jacobs Entertainment, Inc., Black Hawk Gaming & Development Company, Inc. and Credit Suisse, Cayman Islands
Branch.                                                                                                                                        |  | S-4  |  | 333-136066 |  | 4.3                       |  | July 27, 2006    |  |              
|           |  |                                                                                                                                                                                                                                                                                                                    |  |      |  |           
|4.4        |  | Guarantee Agreement dated as of June 16, 2006, by and among Jacobs Entertainment, Inc., certain of the subsidiaries of Jacobs Entertainment, Inc. and Credit Suisse, Cayman Islands
Branch.                                                                                                                        |  | S-4  |  | 333-136066 |  | 4.4                       |  | July 27, 2006    |  |              



E-7



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##### Table of Contents

|           |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |      |  |            |  |                           |  |               |  |              
|---------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- |  | ---------- |  | ------------------------- |  | ------------- |  | -------------
|ExhibitNo. |  | Description                                                                                                                                                                                                                                                                                                                                                                                    |  | Form |  | File No.   |  | Wherelocated(Exhibit No.) |  | Filing Date   |  | FiledHerewith
|4.5        |  | Security Agreement dated as of June 16, 2006, made by Jacobs Entertainment, Inc. and each of the guarantors listed on the signature pages or from time to time a party by execution
of a joinder agreement, as pledgors, assignors and debtors in favor of Credit Suisse, Cayman Islands Branch, in its capacity as collateral agent for the Secured Parties pursuant to the Credit Agreement. |  | S-4  |  | 333-136066 |  | 4.5                       |  | July 27, 2006 |  |              
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |      |  |           
|4.6        |  | Contribution Agreement dated June 16, 2006, by and among Jacobs Entertainment, Inc. and affiliates of Jacobs Entertainment, Inc.                                                                                                                                                                                                                                                               |  | S-4  |  | 333-136066 |  | 4.6                       |  | July 27, 2006 |  |              
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |      |  |           
|4.7        |  | Custodian Agreement dated as of June 16, 2006, by and between Dunham Trust Company, 1 East Liberty Street, Sixth Floor, Reno, NV 89504, as custodian, Credit Suisse, Cayman Islands
Branch as Collateral Agent under the Credit Agreement, Jacobs Entertainment, Inc., as the Borrower under the Credit Agreement and Blackhawk Gaming & Development Company, Inc.                             |  | S-4  |  | 333-136066 |  | 4.7                       |  | July 27, 2006 |  |              
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |      |  |           
|4.8        |  | Form of Jacobs Entertainment, Inc. 9.75% Rule 144A Global Note due 2014.                                                                                                                                                                                                                                                                                                                       |  | S-4  |  | 333-136066 |  | 4.8                       |  | July 27, 2006 |  |              
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |      |  |           
|4.9        |  | Form of Jacobs Entertainment, Inc. 9.75% Regulation S Global Note due 2014.                                                                                                                                                                                                                                                                                                                    |  | S-4  |  | 333-136066 |  | 4.9                       |  | July 27, 2006 |  |              
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |      |  |           
|4.10       |  | Form of Jacobs Entertainment, Inc. 9.75% IAI Global Note due 2014.                                                                                                                                                                                                                                                                                                                             |  | S-4  |  | 333-136066 |  | 4.10                      |  | July 27, 2006 |  |              
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |      |  |           
|4.11       |  | Intercompany Note dated as of June 16, 2006 by and among Jacobs Entertainment, Inc., and Credit Suisse, Cayman Islands Branch.                                                                                                                                                                                                                                                                 |  | S-4  |  | 333-136066 |  | 4.11                      |  | July 27, 2006 |  |              



E-8



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##### Table of Contents

|           |  |                                                                                                                                                                                                                                         |  |      |  |            |  |                           |  |                   |  |              
|---------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- |  | ---------- |  | ------------------------- |  | ----------------- |  | -------------
|ExhibitNo. |  | Description                                                                                                                                                                                                                             |  | Form |  | File No.   |  | Wherelocated(Exhibit No.) |  | Filing Date       |  | FiledHerewith
|4.12       |  | Purchase Agreement dated June 9, 2006 by and among Jacobs Entertainment, Inc. and Credit Suisse Securities (USA) LLC, on behalf of the purchasers of the $210,000,000 9.75% Senior
Notes.                                               |  | S-4  |  | 333-136066 |  | 4.12                      |  | July 27, 2006     |  |              
|           |  |                                                                                                                                                                                                                                         |  |      |  |           
|4.13       |  | Pledge Agreement dated June 16, 2006 by and among Jacobs Entertainment, Inc., Black Hawk Gaming & Development Company, Inc. and Canadian Imperial Bank of Commerce, acting
through its New York Agency.                                 |  | S-4  |  | 333-136066 |  | 4.13                      |  | July 27, 2006     |  |              
|           |  |                                                                                                                                                                                                                                         |  |      |  |           
|10.1       |  | Deed of Lease dated May 8, 2003 between Haynes Chippenham Plaza, LLC and Colonial Downs, L.P.                                                                                                                                           |  | 10-K |  | 333-88242  |  | 10.1                      |  | March 29, 2004    |  |              
|           |  |                                                                                                                                                                                                                                         |  |      |  |           
|10.2       |  | Asset Purchase Agreement dated November 2, 2005 among Capital City Entertainment, Inc. and Jacobs Piñon Plaza Entertainment, Inc.                                                                                                       |  | 10-Q |  | 333-88242  |  | 10.2                      |  | November 14, 2005 |  |              
|           |  |                                                                                                                                                                                                                                         |  |      |  |           
|10.3       |  | Piñon Plaza Ground Lease dated June 26, 2006 by and between Clark G. Russell and Jean M. Russell, Trustees of The Clark and Jean Russell Family Trust and Jacobs
Entertainment, Inc.                                                    |  | S-4  |  | 333-136066 |  | 10.3                      |  | July 27, 2006     |  |              
|           |  |                                                                                                                                                                                                                                         |  |      |  |           
|10.4       |  | Triple Net Lease dated November 14, 2005 among Route 225 Investments, LLC and Jacobs Entertainment, Inc.                                                                                                                                |  | 8-K  |  | 333-88242  |  | 10.4                      |  | November 15, 2005 |  |              
|           |  |                                                                                                                                                                                                                                         |  |      |  |           
|10.5       |  | Shopping Center Lease dated February 28, 2005 between Jay F. Wilks, Trustee under Indenture dated December 20, 1976 by and between Herbert Cashvan and Marvin Simon, as Settlors, and
Jay F. Wilks as Trustee, and Colonial Downs, L.P. |  | 8-K  |  | 333-88242  |  | 10.7                      |  | March 23, 2006    |  |              



E-9



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##### Table of Contents

|           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |      |  |            |  |                           |  |               |  |              
|---------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- |  | ---------- |  | ------------------------- |  | ------------- |  | -------------
|ExhibitNo. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | Form |  | File No.   |  | Wherelocated(Exhibit No.) |  | Filing Date   |  | FiledHerewith
|10.6       |  | Membership Interests Purchase Agreement dated May 16, 2006 by and between Gameco Holdings, Inc. and Jacobs Entertainment, Inc.                                                                                                                                                                                                                                                                                                                                                                                    |  | S-4  |  | 333-136066 |  | 10.9                      |  | July 27, 2006 |  |              
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |      |  |           
|10.7       |  | Asset Purchase Agreement dated May 17, 2006 between Feliciana Ventures, Inc., Forest Gold Truck Plaza and Casino, L.L.C., St. Helena Express & Casino, L.L.C., Seabuckle Gaming,
Inc., Janice M. Penn and Minnie L. Hughes, as Sellers, Claude M. Penn, Jr., and Gameco Holdings, Inc. as Purchaser. (Assigned as to St. Helena to Jacobs Entertainment, Inc.).                                                                                                                                                   |  | S-4  |  | 333-136066 |  | 10.10A                    |  | July 27, 2006 |  |              
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |      |  |           
|10.8       |  | First Amendment to Asset Purchase Agreement dated July 12, 2006 between Feliciana Ventures, Inc., Forest Gold Truck Plaza and Casino, L.L.C., St. Helena Express & Casino,
L.L.C., Seabuckle Gaming, Inc., Janice M. Penn and Minnie L. Hughes, as Sellers, Claude M. Penn, Jr., and Gameco Holdings, Inc. as Purchaser. (Assigned as to St. Helena to Jacobs Entertainment, Inc.).                                                                                                                               |  | S-4  |  | 333-136066 |  | 10.10B                    |  | July 27, 2006 |  |              
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |      |  |           
|10.9       |  | Credit Agreement by and between Jacobs Entertainment, Inc., Credit Suisse Securities (USA) LLC and CIBC World Markets Corp., as Joint Lead Arrangers and Joint Bookrunners, and CIBC
World Markets Corp., as Syndication Agent, and Wells Fargo Bank, National Association, as Documentation Agent and Swingline Lender, and CIT Lending Services Corporation, as Documentation Agent, and Credit Suisse, Cayman Islands Branch, as Issuing
Bank, Administrative Agent and Collateral Agent, dated June 16, 2006. |  | 8-K  |  | 333-88242  |  | 10.11                     |  | June 22, 2006 |  |              



E-10



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##### Table of Contents

|           |  |                                                                                                                                                           |  |      |  |            |  |                           |  |               |  |              
|---------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- |  | ---------- |  | ------------------------- |  | ------------- |  | -------------
|ExhibitNo. |  | Description                                                                                                                                               |  | Form |  | File No.   |  | Wherelocated(Exhibit No.) |  | Filing Date   |  | FiledHerewith
|10.10      |  | Consulting Agreement dated January 1, 2006 and amended June 16, 2006, by and among Jacobs Entertainment, Inc. and Jacobs Investments Management Co., Inc. |  | S-4  |  | 333-136066 |  | 10.12                     |  | July 27, 2006 |  |              
|           |  |                                                                                                                                                           |  |      |  |           
|10.11      |  | Option Agreement dated July 11, 2006 between Jacobs Entertainment, Inc. and Nautica Phase 2 Limited Partnership.                                          |  | S-4  |  | 333-136066 |  | 10.14                     |  | July 27, 2006 |  |              
|           |  |                                                                                                                                                           |  |      |  |           
|10.11B     |  | Amendment to Option Agreement between Jacobs Entertainment, Inc. and Nautica Phase 2 Limited Partnership dated July 6, 2010.                              |  | 8-K  |  | 333-88242  |  | 10.11B                    |  | July 12, 2010 |  |              
|           |  |                                                                                                                                                           |  |      |  |           
|10.12      |  | Option Agreement dated April 18, 2006 between Jacobs Entertainment, Inc. and Flats Development, Inc.                                                      |  | S-4  |  | 333-136066 |  | 10.16                     |  | July 27, 2006 |  |              
|           |  |                                                                                                                                                           |  |      |  |           
|10.12B     |  | Purchase Agreement between Jacobs Sugar Warehouse, Inc. and Flats Development, Inc. dated July 7, 2010.                                                   |  | 8-K  |  | 333-88242  |  | 10.12B                    |  | July 12, 2010 |  |              
|           |  |                                                                                                                                                           |  |      |  |           
|10.13      |  | Option Agreement dated July 11, 2006 between Jacobs Entertainment, Inc. and Sycamore & Main, Inc.                                                         |  | S-4  |  | 333-136066 |  | 10.17                     |  | July 27, 2006 |  |              
|           |  |                                                                                                                                                           |  |      |  |           
|10.13B     |  | Amendment to Option Agreement between Jacobs Entertainment, Inc. and Sycamore & Main, Inc. dated July 6, 2010.                                            |  | 8-K  |  | 333-88242  |  | 10.13B                    |  | July 12, 2010 |  |              
|           |  |                                                                                                                                                           |  |      |  |           
|10.14      |  | Option Agreement dated July 11, 2006 between Jacobs Entertainment, Inc. and Nautica Peninsula Land Limited Partnership.                                   |  | S-4  |  | 333-136066 |  | 10.18                     |  | July 27, 2006 |  |              
|           |  |                                                                                                                                                           |  |      |  |           
|10.14B     |  | Amendment to Option Agreement between Jacobs Entertainment, Inc. and Nautica Peninsula Land Limited Partnership dated July 6, 2010.                       |  | 8-K  |  | 333-88242  |  | 10.14B                    |  | July 12, 2010 |  |              
|           |  |                                                                                                                                                           |  |      |  |           
|10.15      |  | Lease and Option to Purchase Agreement dated June 21, 2006 by and between Curray Corporation, Texas Pelican, LLC and Jalou of Vinton, LLC.                |  | S-4  |  | 333-136066 |  | 10.20                     |  | July 27, 2006 |  |              



E-11



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##### Table of Contents

|           |  |                                                                                                                                   |  |      |  |           |  |                           |  |                    |  |              
|---------- |  | --------------------------------------------------------------------------------------------------------------------------------- |  | ---- |  | --------- |  | ------------------------- |  | ------------------ |  | -------------
|ExhibitNo. |  | Description                                                                                                                       |  | Form |  | File No.  |  | Wherelocated(Exhibit No.) |  | Filing Date        |  | FiledHerewith
|10.16      |  | Membership Interests Purchase Agreement dated August 20, 2007 by and between Gameco Holdings, Inc. and Jacobs Entertainment, Inc. |  | 8-K  |  | 333-88242 |  | 10.28                     |  | September 6, 2007  |  |              
|           |  |                                                                                                                                   |  |      |  |          
|10.17      |  | Amendment No. 1 dated May 4, 2007 to Credit Agreement among Jacobs Entertainment, Inc. and various lenders.                       |  | 8-K  |  | 333-88242 |  | 10.28A                    |  | May 10, 2007       |  |              
|           |  |                                                                                                                                   |  |      |  |          
|10.18      |  | Asset Purchase Agreement dated October 4, 2006 regarding the Silver Dollar Truck Plaza.                                           |  | 10-K |  | 333-88242 |  | 10.29                     |  | March 26, 2008     |  |              
|           |  |                                                                                                                                   |  |      |  |          
|10.19      |  | Purchase Agreement dated March 14, 2008 regarding Jacobs Lot D, Inc.                                                              |  | 10-Q |  | 333-88242 |  | 10.30                     |  | May 13, 2008       |  |              
|           |  |                                                                                                                                   |  |      |  |          
|10.20      |  | Amendment No. 2 dated February 5, 2009 to Credit Agreement among Jacobs Entertainment, Inc. and various lenders.                  |  | 8-K  |  | 333-88242 |  | 10.31                     |  | February 6, 2009   |  |              
|           |  |                                                                                                                                   |  |      |  |          
|10.21      |  | Executive Employment Agreement between Jacobs Entertainment, Inc. and Emanuel J. Cotronakis signed August 21, 2009.               |  | 8-K  |  | 333-88242 |  | 10.32                     |  | August 24, 2009    |  |              
|           |  |                                                                                                                                   |  |      |  |          
|10.22      |  | Executive Employment Agreement between Jacobs Entertainment, Inc. and Michael T. Shubic signed September 23, 2009.                |  | 8-K  |  | 333-88242 |  | 10.33                     |  | September 29, 2009 |  |              
|           |  |                                                                                                                                   |  |      |  |          
|10.23      |  | Executive Employment Agreement between Jacobs Entertainment, Inc. and Ian M. Stewart signed September 23, 2009.                   |  | 8-K  |  | 333-88242 |  | 10.34                     |  | September 29, 2009 |  |              
|           |  |                                                                                                                                   |  |      |  |          
|10.24      |  | Marketer Franchise Agreement between JEI Distributing, LLC and CITGO Petroleum Corporation dated as of December 21, 2009.         |  | 8-K  |  | 333-88242 |  | 10.35                     |  | January 13, 2010   |  |              



E-12



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##### Table of Contents

|           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |      |  |            |  |                           |  |                  |  |              
|---------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- |  | ---------- |  | ------------------------- |  | ---------------- |  | -------------
|ExhibitNo. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  | Form |  | File No.   |  | Wherelocated(Exhibit No.) |  | Filing Date      |  | FiledHerewith
|10.25      |  | Unbranded Rack Sales Agreement between JEI Distributing, LLC and CITGO Petroleum Corporation dated as of December 21, 2009.                                                                                                                                                                                                                                                                                                                                                                  |  | 8-K  |  | 333-88242  |  | 10.36                     |  | January 13, 2010 |  |              
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |      |  |           
|10.26      |  | Addendum to Unbranded Rack Sales Agreement between JEI Distributing, LLC and CITGO Petroleum Corporation dated as of December 21, 2009.                                                                                                                                                                                                                                                                                                                                                      |  | 8-K  |  | 333-88242  |  | 10.37                     |  | January 13, 2010 |  |              
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |      |  |           
|10.27      |  | Amendment and Restatement Agreement, dated as of March 31, 2010, among Jacobs Entertainment, Inc., as borrower, several lenders from time to time party thereto and Credit
Suisse AG, Cayman Islands Branch, as Administrative Agent and Wells Fargo Bank, National Association, as Swingline Lender, which amended and restated in its entirety the Credit Agreement, dated as of June 16, 2006, among such parties, as set forth
in Exhibit A to such Amendment and Restatement Agreement. |  | 8-K  |  | 333-88242  |  | 10.27                     |  | April 6, 2010    |  |              
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |      |  |           
|10.28      |  | Membership Interests Purchase Agreement effective January 31, 2011 by and between Gameco Holdings, Inc. and Jacobs Entertainment, Inc.                                                                                                                                                                                                                                                                                                                                                       |  | 8-K  |  | 333-88242  |  | 10.28                     |  | February 3, 2011 |  |              
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |      |  |           
|10.29      |  | Purchase Agreement between Nautica Phase 2 Limited Partnership and Jacobs Sugar Warehouse, Inc. dated January 14, 2011.                                                                                                                                                                                                                                                                                                                                                                      |  |      |  |            |  |                           |  |                  |  | X            
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |      |  |           
|12         |  | Computation of Ratio of Earnings to Fixed Charges.                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |      |  |            |  |                           |  |                  |  | X            
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |      |  |           
|14         |  | Code of Ethics (as revised).                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | 10-K |  | 333-88242  |  | 14.1                      |  | March 26, 2008   |  |              
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |      |  |           
|21.2       |  | Subsidiaries of Jacobs Entertainment, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |      |  |            |  |                           |  |                  |  | X            
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |      |  |           
|25.1       |  | Statement of Eligibility of Trustee on Form T-1.                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | S-4  |  | 333-136066 |  | 25.1                      |  | July 27, 2006    |  |              



E-13



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##### Table of Contents

|           |  |                                                                                            |  |      |  |          |  |                           |  |             |  |              
|---------- |  | ------------------------------------------------------------------------------------------ |  | ---- |  | -------- |  | ------------------------- |  | ----------- |  | -------------
|ExhibitNo. |  | Description                                                                                |  | Form |  | File No. |  | Wherelocated(Exhibit No.) |  | Filing Date |  | FiledHerewith
|31.1       |  | Chief Executive Officer Certification under Section 302 of the Sarbanes-Oxley Act of 2002. |  |      |  |          |  |                           |  |             |  | X            
|           |  |                                                                                            |  |      |  |         
|31.2       |  | Chief Financial Officer Certification under Section 302 of the Sarbanes-Oxley Act of 2002. |  |      |  |          |  |                           |  |             |  | X            
|           |  |                                                                                            |  |      |  |         
|32.1       |  | Chief Executive Officer Certification under Section 906 of the Sarbanes-Oxley Act of 2002. |  |      |  |          |  |                           |  |             |  | X            
|           |  |                                                                                            |  |      |  |         
|32.2       |  | Chief Financial Officer Certification under Section 906 of the Sarbanes-Oxley Act of 2002. |  |      |  |          |  |                           |  |             |  | X            



E-14