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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
|- | ------------------------------------------------------------------------------------

For the fiscal year ended: September 30, 2008



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

For the transition period from  to

Commission
File Number: 1-9481

ARCHON CORPORATION

(Exact name of registrant as specified in its charter)



|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Nevada                                                         |  | 88-0304348                             
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)

4336 Losee Road, Suite 5, North Las Vegas, NV 89030

(Address of principal executive office and zip code)

(702) 732-9120

(Registrants telephone number, including area code)







(Former name, former address and former fiscal year, if changed since last report)



|                                        |  |                                
|--------------------------------------- |  | -------------------------------
|Common Stock, par value $.01 per share  |  | Over the Counter Bulletin Board
|(Title of Class)                        |  |                                
|                                        | 
|Exchangeable Redeemable Preferred Stock |  | Over the Counter Bulletin Board
|(Title of Class)                        |  |                                

Indicate by a check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.    YES  x    NO   ̈

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



|                            |  |                       |  |                           |  |                           
|--------------------------- |  | --------------------- |  | ------------------------- |  | --------------------------
|Large accelerated filer:   ̈ |  | Accelerated filer:   ̈ |  | Non-accelerated filer:   ̈ |  | Small reporting company  x

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

The aggregate market value of the common stock held by non-affiliates of the registrant was approximately $52,233,430. The market value was computed by reference to the closing price of the common stock as of
March 31, 2008.

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether
the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a
court.    YES   ̈    NO   ̈

APPLICABLE ONLY TO CORPORATE ISSUERS:

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

6,329,177 as of January 09, 2009

DOCUMENTS INCORPORATED BY REFERENCE

None

Indicate by checkmark 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).    YES  x









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ARCHON CORPORATION AND SUBSIDIARIES

ANNUAL REPORT ON FORM 10-K FOR THE FISCAL

YEAR ENDED SEPTEMBER 30, 2008

TABLE OF CONTENTS



|         |  |                                                                                       |  |         
|-------- |  | ------------------------------------------------------------------------------------- |  | --------
|         |  |                                                                                       |  | Page No.
|PART I   |  |                                                                                       |  |         
|Item 1.  |  | Business                                                                              |  | 1       
|         |  | General                                                                               |  | 1       
|         |  | Hotel and Casino Operations                                                           |  | 1       
|         |  | Rental Properties                                                                     |  | 2       
|         |  | Land Held for Development                                                             |  | 3       
|         |  | Nevada Regulations and Licensing                                                      |  | 3       
|Item 1A. |  | Risk Factors                                                                          |  | 6       
|Item 2.  |  | Properties                                                                            |  | 7       
|Item 3.  |  | Legal Proceedings                                                                     |  | 8       
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                   |  | 9       
|         |  |                                                                                      
|PART II  |  |                                                                                       |  |         
|Item 5.  |  | Market for the Registrants Common Stock and Related Security Holders Matters         |  | 9       
|Item 6.  |  | Selected Financial Data                                                               |  | 11      
|Item 7.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 12      
|Item 7A. |  | Market Risk Disclosure                                                                |  | 20      
|Item 8.  |  | Financial Statements                                                                  |  | 21      
|Item 9.  |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  |  | 46      
|Item 9A. |  | Controls and Procedures                                                               |  | 46      
|         |  |                                                                                      
|PART III |  |                                                                                       |  |         
|Item 10. |  | Directors and Executive Officers of the Registrant                                    |  | 47      
|Item 11. |  | Executive Compensation                                                                |  | 49      
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management                        |  | 54      
|Item 13. |  | Certain Relationships and Related Transactions                                        |  | 54      
|Item 14. |  | Principal Accountants Fees and Services                                              |  | 55      
|         |  |                                                                                      
|PART IV  |  |                                                                                       |  |         
|Item 15. |  | Exhibits                                                                              |  | 56      



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PART I



|Item 1. | BUSINESS
|------- | --------

General

Archon Corporation, (the Company or Archon), is a Nevada corporation. The Companys primary business
operations are conducted through a wholly-owned subsidiary corporation, Pioneer Hotel Inc. (PHI), which operates the Pioneer Hotel & Gambling Hall (the Pioneer) in Laughlin, Nevada. In addition, the Company owns real
estate on Las Vegas Boulevard South (the Strip) in Las Vegas, Nevada (See Land Held for Development), and rental properties in Dorchester, Massachusetts and Gaithersburg, Maryland.

Through the Securities and Exchange Commissions (SEC) website, at http://www.sec.gov/ the Companys annual report on Form
10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchanges Act, are made available free of charge, as soon as reasonably
practical after such information has been filed or furnished to the SEC.

The principal executive office of the Company is located at 4336
Losee Road, Suite 5, North Las Vegas, Nevada, 89030, and the telephone number is (702) 732-9120.

Hotel and
Casino Operations

The Pioneer

The Pioneer, built in 1982, features a classical western architecture style, and is located in
Laughlin, Nevada, an unincorporated town on the Colorado River bordering Arizona. The Pioneer is located on approximately 12 acres of land, with Colorado River frontage of approximately 770 feet, and is situated near the center of Laughlins
Casino Drive. Approximately 61/2acres of the 12 acres are leased pursuant to a 99-year ground lease (the Ground
Lease) which, by its terms, is scheduled to terminate in December 2078. The leased land lies between and separates the remaining two parcels of land that are held in fee simple. The Pioneer is comprised of four buildings. One of the three
motel buildings together with a portion of both the Pioneers casino building and a second motel building are located on land subject to the Ground Lease. The casino is located in the main building, totaling approximately 50,000 square feet, of
which approximately 21,500 square feet house the casino. The first floor includes the casino, two bars, snack bar and gift shop, as well as a twenty-four hour restaurant, kitchen, special events area, restrooms and storage areas. A partial second
floor houses a gourmet restaurant, administrative offices and banquet rooms. The three motel buildings were built in 1984 and comprise approximately 66,000, 54,000 and 30,000 square feet, respectively. A total of 416 motel rooms are housed in the
three buildings with improvements including a swimming pool and spa.

Revenues. The primary source of revenues to the
Companys hotel-casino operations is gaming, which represented approximately 47% and 52% in 2008 and 2007, respectively, of total revenues. The Pioneer contributed 100% in fiscal 2008 and 2007 to total gaming revenues. As of September 30,
2008, the Pioneer had approximately 733 slot machines, six blackjack tables (21), one craps table, one roulette wheel and five other gaming tables. In addition, the Pioneer offers keno.



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Market. The Pioneer targets primarily mature, out-of-town customers residing in Central
Arizona and Southern California, retirees who reside in the Northeast and Midwest United States and Canada and travel to the Southwest United States during the winter months, and local residents who reside in Laughlin, Nevada, and in Bullhead City,
Kingman and Lake Havasu, Arizona. The occupancy rates at the Pioneer were approximately 43% and 56% in fiscal years 2008 and 2007, respectively.

Business Strategy. The Pioneer attempts to attract and retain customers by offering slot and video poker machine payouts that compare favorably to the competition. A visible means used by the Pioneer to accomplish this
marketing program is to offer what management believes to be a large number of quarter video poker machines with liberal theoretical pay outs, compared to other casinos in Laughlin. The Pioneer periodically sponsors detailed product research of its
competitors to categorize the number and type of video poker games by payouts and monitors changes in game products to assist it in developing competitive products.

The Pioneer has a program called the Bounty Hunter Round-Up Club (the Club) established to encourage repeat business from frequent and active slot and table game customers. A member of the Club
accumulates points in the members account for play on slot machines and table games that can be redeemed for cash, free gifts, food and beverages and additional points redeemable for free play. Pioneer management also uses the Club membership
list for direct mail marketing.

Management and Personnel

As of December 9, 2008, the Company employed 12 executive and administrative personnel and the Pioneer employed approximately 459 persons.

Competition

In addition to competing with the hotel-casinos in Laughlin, the Pioneer also competes
with the hotel-casinos in Las Vegas and those situated on Interstate-15 (the principal highway between Las Vegas and Southern California) near the California-Nevada state line. In March 2000, California voters approved an amendment to the California
constitution that permits compacts allowing Native American tribes to operate in excess of 100,000 slot machines in addition to banked card games and lotteries. Management believes that Native American casinos in Southern California, Arizona and New
Mexico have had an adverse impact on the Laughlin market, including the Pioneer, by drawing visitors away from the market.

Rental Properties

The Company acquired rental properties in Dorchester, Massachusetts and Gaithersburg, Maryland in March 2001.
The Dorchester, Massachusetts property is located on 12 acres and includes several buildings with approximately 425,000 square feet of commercial office space. The property was acquired for approximately $82.4 million plus $0.5 million in debt
issuance costs. The Company paid $5.6 million in cash and assumed $77.3 million in nonrecourse debt associated with the property. The property is under a net lease through 2020 with a single tenant with an investment grade credit rating. Under the
lease, the tenant is responsible for substantially all obligations related to the property.

The property in Gaithersburg, Maryland is
located on 51 acres and includes one building with approximately 342,000 square feet of commercial office space. The property was acquired for $62.6 million, plus debt issuance costs of $2.7 million. The Company paid $9.9 million in cash and issued
$55.4 million in nonrecourse first mortgage indebtedness. The property is under a net lease through 2014 with a single tenant with an investment grade credit rating. Under the lease, the tenant is responsible for substantially all obligations
related to the property. The Gaithersburg, Maryland, property was under contract to be sold if certain conditions precedent were satisfied by



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December 31, 2008, or by a later date if the deadline had been extended pursuant to the terms of the contract. The buyers right to extend the
deadline was not exercised, and the contract expired on December 31, 2008. See Notes 6 and 20, Consolidated Financial Statements

See also Item 2., Properties

Land Held for Development

The Company owns, through its wholly owned subsidiary, Sahara Las Vegas Corp. (SLVC), an approximately 27-acre parcel of land (the
Property) located on the east side of Las Vegas Boulevard South, just south of Sahara Avenue. The Company presently leases the Property to two different lessees for an aggregate amount of $0.4 million per month. Both leases may be
terminated with sixty days written notice in the event the Property is sold to a third party.

On June 24, 2006, SLVC entered into an
Option Agreement (the Agreement) between SLVC and LVTI, LLC, a Delaware limited liability company (LVTI), granting LVTI the option to purchase the Property on certain terms and conditions. Pursuant to the Agreement, LVTI was
required to make a payment to SLVC in the amount of $2.9 million on or before June 2, 2008. LVTI failed to make the June 2008 payment, and SLVC formally terminated the Agreement by written notice on June 3, 2008. A Confirmation of
Termination of Option Agreement was executed by both SLVC and LVTI, and this document was recorded in the Office of the Clark County, Nevada Recorder on June 10, 2008. As a result of the termination of the Agreement, the Company has realized
$67.1 million of income during the period ended June 30, 2008. This income is the sum of all payments made to SLVC under the terms of the Agreement prior to termination of the option. See Note 20, Consolidated Financial Statements

See also Item 2., Properties

The Company has provided financial segment information in the Notes to Consolidated Financial Statements, Note 18. Segment Information.

Nevada Regulations and Licensing

The Company and PHI (collectively, the Archon Group) are subject to extensive state and local regulation by the Nevada Gaming Commission (the Commission), the Nevada State Gaming Control Board
(the Board) and in the case of PHI, the Clark County Liquor and Gaming Licensing Board (collectively the Nevada Gaming Authorities).

The laws, regulations and supervisory procedures of the Nevada Gaming Authorities seek (i) to prevent unsavory or unsuitable persons from having any direct or indirect involvement with gaming at any time or in
any capacity, (ii) to establish and maintain responsible accounting practices and procedures, (iii) to maintain effective control over the financial practices of licensees, including establishing minimum procedures for internal fiscal
affairs and the safeguarding of assets and revenues, providing reliable record-keeping and making periodic reports to the Nevada Gaming Authorities, (iv) to prevent cheating and fraudulent practices and (v) to provide a source of state and
local revenues through taxation and licensing fees. Changes in such laws, regulations and procedures could have an adverse effect on any or all of the members of the Archon Group. Management believes the Archon Group is in compliance with
regulations promulgated by the Nevada Gaming Authorities.

Licensing and Registration. PHI holds Nevada State gaming licenses
to operate the Pioneer. The Company has been approved by the Nevada Gaming Authorities to own, directly or indirectly, a beneficial interest in PHI.



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The licenses held by members of the Archon Group are not transferable. Each issuing agency may at any
time revoke, suspend, condition, limit or restrict licenses or approvals to own a beneficial interest in PHI for any cause deemed reasonable by such agency. Any failure to retain a valid license or approval would have a material adverse effect on
all members of the Archon Group.

If it is determined that PHI or, when applicable, new members of the Archon Group, have violated the
Nevada laws or regulations relating to gaming, PHI or, when applicable, new members of the Archon Group, could, under certain circumstances, be fined and the licenses of PHI or, when applicable, new members of the Archon Group, could also be
limited, conditioned, revoked or suspended. A violation under any of the licenses held by the Company, or PHI or, when applicable, new members of the Archon Group, may be deemed a violation of all the other licenses held by the Company and PHI or,
when applicable, new members of the Archon Group. If the Commission does petition for a supervisor to manage the affected casino and hotel facilities, the suspended or former licensees shall not receive any earnings of the gaming establishment until
approved by the court, and after deductions for the costs of the supervisors operation and expenses and amounts necessary to establish a reserve fund to facilitate continued operation in light of any pending litigation, disputed claims, taxes,
fees and other contingencies known to the supervisor which may require payment. The supervisor is authorized to offer the gaming establishment for sale if requested by the suspended or former licensee, or without such a request after six months
after the date the license was suspended, revoked or not renewed.

Individual Licensing. Certain stockholders, directors,
officers and key employees of corporate gaming licensees must be licensed by the Nevada Gaming Authorities. An application for licensing of an individual may be denied for any cause deemed reasonable by the issuing agency. Changes in licensed
positions must be reported to the Nevada Gaming Authorities. In addition to its authority to deny an application for an individual license, the Nevada Gaming Authorities have jurisdiction to disapprove a change in corporate position. If the Nevada
Gaming Authorities were to find any such person unsuitable for licensing or unsuitable to continue to have a relationship with a corporate licensee, such licensee would have to suspend, dismiss and sever all relationships with such person. Such
corporate licensee would have similar obligations with regard to any person who refuses to file appropriate applications, who is denied licensing following the filing of an application or whose license is revoked. Each gaming employee must obtain a
work permit which may be revoked upon the occurrence of certain specified events.

Any individual who is found to have a material
relationship or a material involvement with a gaming licensee may be investigated to be found suitable or to be licensed. The finding of suitability is comparable to licensing and requires submission of detailed financial information and a full
investigation. Key employees, controlling persons or others who exercise significant influence upon the management or affairs of a gaming licensee may be deemed to have such a relationship or involvement.

Beneficial owners of more than 10% of the voting securities of a corporation or partner interests of a partnership registered with the Nevada Gaming
Authorities that is publicly traded (a Registered Entity) must be found suitable by the Nevada Gaming Authorities, and any person who acquires more than 5% of the voting securities or partner interests, as the case may be, of
a Registered Entity must report the acquisition to the Nevada Gaming Authorities in a filing similar to the beneficial ownership filings required by the Federal securities laws. Under certain circumstances an institutional investor, as such term is
defined in the Nevada Gaming Control Act and the regulations of the Commission and Board (collectively, the Nevada Gaming Regulations), that acquires more than 10% of the Companys voting securities may apply to the Commission for a
waiver of such finding of suitability requirement. If the stockholder 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. Any beneficial
owner of equity or debt securities of a Registered Entity (whether or not a controlling stockholder) may be required to be found suitable if the relevant Nevada Gaming Authorities have reason to believe that such ownership would be inconsistent with
the declared policy of the State of Nevada. If the beneficial owner who must be found suitable is a corporation, partnership or trust, it must submit detailed business and financial information, including a list of its securities.

Any stockholder found unsuitable and who beneficially owns, directly or indirectly, any securities or partner interests of a Registered Entity beyond
such period of time as may be prescribed by the Nevada Gaming Authorities may be guilty of a gross misdemeanor. Any person who fails or refuses to apply for a finding of suitability or a



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license within 30 days after being ordered to do so may be found unsuitable. A Registered Entity is subject to disciplinary action if, after it receives
notice that a person is unsuitable to be a security holder or partner, as the case may be, or to have any other relationship with it, such Registered Entity (i) pays the unsuitable person any dividends or property upon any voting securities or
partner interests or makes any payments or distributions of any kind whatsoever to such person; (ii) recognizes the exercise, directly or indirectly, of any voting rights in its securities or partner interests by the unsuitable person;
(iii) pays the unsuitable person any remuneration in any form for services rendered or otherwise, except in certain and specific circumstances or; (iv) fails to pursue all lawful efforts to require the unsuitable person to divest himself
of his voting securities, including, if necessary, the immediate purchase of the voting securities for cash at fair market value.

Registered Entities must maintain current stock ledgers in the State of Nevada that may be examined by the Nevada Gaming Authorities at any time. If any securities or partner interests 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 such disclosure may be grounds for finding the record owner unsuitable. Record owners are required to conform to all
applicable rules and regulations of the Nevada Gaming Authorities. Licensees also are required to render maximum assistance in determining the identity of a beneficial owner.

The Nevada Gaming Authorities have the power to require that certificates representing voting securities of a corporate licensee bear a legend to the
effect that such voting securities or partner interests are subject to the Nevada Gaming Regulations. The Nevada Gaming Authorities, through the power to regulate licensees, have the power to impose additional restrictions on the holders of such
voting securities at any time.

Financial Responsibility.The Company and PHI are required to submit detailed financial and
operating reports to the Nevada Gaming Authorities. Substantially all loans, leases, sales of securities and other financial transactions entered into by the Company or PHI must be reported to and, in some cases, approved by the Nevada Gaming
Authorities.

Certain Transactions. None of the Archon Group may make a public offering of its securities without the
approval of the Commission if the proceeds therefrom are intended to be used to construct, acquire or finance gaming facilities in Nevada, or retire or extend obligations incurred for such purposes. Such approval, if given, will not constitute a
recommendation or approval of the investment merits of the securities offered. Any public offering requires the approval of the Commission.

Changes in control of the Company through merger, consolidation, acquisition of assets, management or consulting agreements or any form of takeover cannot occur without the prior investigation of the Board and approval of the Commission.
The Commission may require controlling stockholders, partners, officers, directors and other persons who have a material relationship or involvement in the transaction to be licensed.

The Nevada legislature has declared that some corporate acquisitions opposed by management, repurchases of voting securities and other corporate defense
tactics that affect corporate gaming licensees in Nevada, and corporations whose securities are publicly traded that are affiliated with those operations, may be injurious to stable and productive corporate gaming. The Commission has established a
regulatory scheme to ameliorate the potentially adverse effects of these business practices upon Nevadas gaming industry and to further Nevadas policy to (i) assure the financial stability of corporate or partnership gaming
operators 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 or partnership affairs. Approvals are, in
certain circumstances, required from the Commission before the Company can make exceptional repurchases of voting securities above the current market price thereof (commonly referred to as greenmail) and before an acquisition opposed by
management can be consummated. Nevadas gaming regulations also require prior approval by the Commission if the Company were to adopt a plan of recapitalization proposed by the Companys Board of Directors in opposition to a tender offer
made directly to the stockholders for the purpose of acquiring control of the Company.



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Miscellaneous. The Company and its Nevada-based affiliates, including subsidiaries, may
engage in gaming activities outside the State of Nevada without seeking the approval of the Nevada Gaming Authorities provided that such activities are lawful in the jurisdiction where they are to be conducted and that certain information regarding
the foreign operation is provided to the Board on a periodic basis. The Company and its Nevada-based affiliates may be disciplined by the Commission if any of them violates any laws of the foreign jurisdiction pertaining to the foreign gaming
operation, fails to conduct the foreign gaming operation in accordance with the standards of honesty and integrity required of Nevada gaming operations, engages in activities that are harmful to the State of Nevada or its ability to collect gaming
taxes and fees, or employs a person in the foreign operation who had been denied a license or finding of suitability in Nevada on the ground of personal unsuitability.

License fees and taxes, computed in various ways depending on the type of gaming involved, are payable to the State of Nevada and to the counties and cities in which the Company and PHI conduct their respective
operations. Depending upon the particular fee or tax involved, these fees and taxes are payable either monthly, quarterly or annually and are based upon: (i) a percentage of the gross gaming revenues received by the casino operation;
(ii) the number of slot machines operated by the casino; or (iii) the number of table games operated by the casino. A casino entertainment tax is also paid by the licensee where entertainment is furnished in connection with the selling of
food or refreshments.

Finally, the Nevada Gaming Authorities may require that lenders to licensees be investigated to determine if they
are suitable and, if found unsuitable, may require that they dispose of their loans.



|Item 1A. | RISK FACTORS
|-------- | ------------

You are encouraged to review
the following discussion of the specific risks and uncertainties that affect our business. These include, but are not limited to, the following:

Our Business is Vulnerable to Changing Economic Conditions. Unfavorable changes in general economic conditions including recession, economic slowdown, or higher fuel or other transportation costs, may reduce disposable income
of casino patrons or result in fewer patrons visiting casinos. Our operating results may be negatively impacted by an increase in interest rates causing an increase in interest expense.

Our Laughlin Property is Vulnerable to Existing and New Competitors and Their Capital Investments. Recent acquisition by competitors of
casino/hotel properties in Laughlin could produce unfavorable operating results if the investments by competitors are successful in capturing market share from the Companys Laughlin property. These new competitors may have greater capital
resources and liquidity than the Company.

Redemption of the Companys Preferred Stock and Redemption Price Disputes.The Company called all outstanding shares of its Exchangeable Redeemable Preferred Stock for redemption on and as of August 31, 2007, at a redemption price of $5.241 per share, which sum included accrued and unpaid dividends to the date
of redemption. From and after August 31, 2007, all shares of the Exchangeable Redeemable Preferred Stock ceased to be outstanding and to accrue dividends. As of January 09, 2009, the holders of 4,259,252 shares of the Exchangeable
Redeemable Preferred Stock have surrendered their shares and received payment of the redemption price.

On August 27, 2007, a group of
institutional investors filed an action, in Nevada, against the registrant. The Complaint was subsequently amended to add an additional party plaintiff (collectively, the Plaintiffs). The Amended Complaint: (i) seeks a finding by
the Court that the Company has breached its obligations under the Companys Certificate of Designation of the Preferred Stock, dated September 30, 1993 (the Certificate), and awarding the Plaintiffs full compensation of any and
all available damages suffered by the Plaintiffs as a result of



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the Companys breach of the Certificate; (ii) seeks a finding by the Court that the Companys issuance of its redemption notice with an improper
redemption price is an anticipatory breach of a material term of the Certificate and awarding the Plaintiffs full compensation of any and all available damages suffered as a result of the Companys anticipatory breach of the Certificate; (iii)
seeks a declaration by the Court that the dividends be properly calculated and compounded per the terms of the Certificate in an amount no less than $7,235,351 up through and including the date of final judgment; (iv) seeks an order from the Court
calling for the Company to reimburse the Plaintiffs attorneys fees, expenses and costs incurred in enforcing their rights; and (v) seeks such other and further relief as the Court may deem appropriate. The Plaintiffs, thereafter, filed a
motion for partial summary judgment (the Motion), seeking a ruling from the court that the Company breached its obligations under the Certificate of Designation by calculating the redemption price as it did. The Court granted that Motion
on August 8, 2008, finding the language of the Certificate of Designation to be unambiguous and that the redemption price should have been calculated differently. The Court has not yet issued a monetary judgment against the Company. Mediation of
certain issues is planned for the near future and the Company intends on appealing the adverse decision of the court on the Motion, if necessary. The Company is also considering its rights and remedies against third parties in the event that it does
not prevail on its interpretation of the Certificate of Designation of the Preferred Stock.

Also subsequent to the end of the
Companys fiscal year, two former holders of the Exchangeable Redeemable Preferred Stock filed Complaints, both alleging essentially the same claim as in the first complaint related to the case set forth immediately above. If the plaintiffs in
these two additional actions are correct, the redemption price as of August 31, 2007 should have been $8.69 per share and not $5.241 per share as calculated by the Company. If applied to all the then outstanding shares of Exchangeable Redeemable
Preferred Stock, including the shares held by the Companys officers and directors, valuation of the redemption price at $8.69 per share would increase the redemption price in excess of $15.2 million.

A Significant Decline in Real Estate Values may have an Adverse Impact on the Companys Financial Condition. The Company owns real
estate on the Strip and on the East Coast of the United States. Although the Company is presently not dependent on cash flows from these properties, a significant decline in real estate values in these markets could have an impact on the
Companys ability to readily generate cash flow from the real estate.

Our Outstanding Debt Obligations Subject us to Additional
Risks. Effective May 20, 2008, the Company completed a new bank credit facility for $29.0 million of which $9.8 million is outstanding and $19.2 million remains available to the Company. The bank credit facility is due on May 20,
2009 and its interest rate is a floating commercial loan rate publicly announced from time-to-time (the Colonial Bank Base Rate) with a floor of 6%. The interest rate is currently at 6.25%. The debt is guaranteed by the Companys
primary shareholder, who is also the CEO and Chairman of the Board, and his wife, who is the Executive Vice President, Secretary and Treasurer of the Company.



|Item 2. | PROPERTIES
|------- | ----------

The Pioneer is located on
approximately 12 acres of land, with Colorado River frontage of approximately 770 feet, and is situated near the center of Laughlins Casino Drive. See Item 1., Business  Hotel and Casino Operations for more
detailed information regarding the Pioneer.

The Companys rental property in Dorchester, Massachusetts is located on 12 acres and
includes several buildings with approximately 425,000 square feet of commercial office space. The property was acquired for approximately $82.4 million plus $0.5 million in debt issuance costs. The Company paid $5.6 million in cash and assumed $77.3
million in nonrecourse debt associated with the property. The property is under a net lease through 2020 with a single tenant with an investment grade credit rating. Under the lease, the tenant is responsible for substantially all obligations
related to the property.

The Companys rental property in Gaithersburg, Maryland is located on 51 acres and includes one building
with approximately 342,000 square feet of commercial office space. The property was acquired for $62.6 million, plus



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debt issuance costs of $2.7 million. The Company paid $9.9 million in cash and issued $55.4 million in nonrecourse first mortgage indebtedness. The property
is under a net lease through 2014 with a single tenant with an investment grade credit rating. Under the lease, the tenant is responsible for substantially all obligations related to the property. The Gaithersburg, Maryland, property was under
contract to be sold if certain conditions precedent were satisfied by December 31, 2008, or by a later date if the deadline had been extended pursuant to the terms of the contract. The buyers right to extend the deadline was not
exercised, and the contract expired on December 31, 2008. See Notes 6 and 20, Consolidated Financial Statements

The
Company owns approximately 27 acres of real property located on the Strip. See Item 1., Business  Land Held for Development



|Item 3. | LEGAL PROCEEDINGS
|------- | -----------------

Mercury Real Estate Securities
Fund, LP and Mercury Real Estate Securities Offshore Limited v. Archon Corporation

The Company called all outstanding shares of
its Exchangeable Redeemable Preferred Stock for redemption on and as of August 31, 2007, at a redemption price of $5.241 per share, which sum included accrued and unpaid dividends to the date of redemption. From and after August 31, 2007,
all shares of the Exchangeable Redeemable Preferred Stock ceased to be outstanding and to accrue dividends. As of January 09, 2009, the holders of 4,259,252 shares of the Exchangeable Redeemable Preferred Stock have surrendered their shares and
received payment of the redemption price.

On August 27, 2007, a group of institutional investors filed an action, in Nevada, against the
registrant. The Complaint was subsequently amended to add an additional party plaintiff (collectively, the Plaintiffs). The Amended Complaint: (i) seeks a finding by the Court that the Company has breached its obligations under the
Companys Certificate of Designation of the Preferred Stock, dated September 30, 1993 (the Certificate), and awarding the Plaintiffs full compensation of any and all available damages suffered by the Plaintiffs as a result of the
Companys breach of the Certificate; (ii) seeks a finding by the Court that the Companys issuance of its redemption notice with an improper redemption price is an anticipatory breach of a material term of the Certificate and awarding the
Plaintiffs full compensation of any and all available damages suffered as a result of the Companys anticipatory breach of the Certificate; (iii) seeks a declaration by the Court that the dividends be properly calculated and compounded per the
terms of the Certificate in an amount no less than $7,235,351 up through and including the date of final judgment; (iv) seeks an order from the Court calling for the Company to reimburse the Plaintiffs attorneys fees, expenses and costs
incurred in enforcing their rights; and (v) seeks such other and further relief as the Court may deem appropriate. The Plaintiffs, thereafter, filed a motion for partial summary judgment (the Motion), seeking a ruling from the court that
the Company breached its obligations under the Certificate of Designation by calculating the redemption price as it did. The Court granted that Motion on August 8, 2008, finding the language of the Certificate of Designation to be unambiguous and
that the redemption price should have been calculated differently. The Court has not yet issued a monetary judgment against the Company. Mediation of certain issues is planned for the near future and the Company intends on appealing the adverse
decision of the court on the Motion, if necessary. The Company is also considering its rights and remedies against third parties in the event that it does not prevail on its interpretation of the Certificate of Designation of the Preferred Stock.

Also subsequent to the end of the Companys fiscal year, two former holders of the Exchangeable Redeemable Preferred Stock filed
Complaints, both alleging essentially the same claim as the first complaint related to the case set forth immediately above. If the plaintiffs in these two additional actions are correct, the redemption price as of August 31, 2007 should have been
$8.69 per share and not $5.241 per share as calculated by the Company. If applied to all the then outstanding shares of Exchangeable Redeemable Preferred Stock, including the shares held by the Companys officers and directors, valuation of the
redemption price at $8.69 per share would increase the redemption price in excess of $15.2 million.

Management is unable to estimate the
minimum liability that may be incurred, if any, as a result of the outcome of each of the above matters and, therefore, has made no provision in the financial statements for liability related to these cases.



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##### Table of Contents

|Item 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- | ---------------------------------------------------

None

PART II



|Item 5. | MARKET FOR THE REGISTRANTS COMMON STOCK AND RELATED SECURITY HOLDERS MATTERS
|------- | -----------------------------------------------------------------------------

The Companys common stock is traded on the Over the Counter Bulletin Board (the OTCBB) under the symbol ARHN.

The closing price of the Common Stock on January 09, 2009 was $23.00 per share. The tables below set forth the high and low closing prices by
quarter for the fiscal years ended September 30, 2008 and 2007 of the common stock, as reported by the OTCBB.



|            |  |               |       |               |   |              |  |               |       |  |   |      
|----------- |  | ------------- | ----- | ------------- | - | ------------ |  | ------------- | ----- |  | - | -----
|            |  | First Quarter |       | SecondQuarter |   | ThirdQuarter |  | FourthQuarter
|Fiscal 2008 |  |               |       |               |   |              |  |               |       |  |   |      
|High        |  | $             | 51.75 |               | $ | 50.00        |  | $             | 40.75 |  | $ | 39.00
|Low         |  |               | 43.85 |               |   | 33.25        |  |               | 34.50 |  |   | 31.00
|            |  |               |       |              
|Fiscal 2007 |  |               |       |               |   |              |  |               |       |  |   |      
|High        |  | $             | 38.00 |               | $ | 39.50        |  | $             | 54.75 |  | $ | 52.00
|Low         |  |               | 31.25 |               |   | 31.75        |  |               | 38.50 |  |   | 39.55

The Company has never paid cash dividends on its Common Stock, nor does it anticipate paying such
dividends in the foreseeable future. There were approximately 400 common stockholders of record as of January 09, 2009.



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Performance Graph

The following graph compares the cumulative total return on the Companys common stock with the cumulative total return of the Standard & Poors 500, the Dow Jones US Gambling index for the
five-year period ended September 30, 2008. The graph assumes that the value of the investment in the Company and in each index was $100 on September 30, 2003 and assumes that all dividends were reinvested.

LOGO



|* | $100 invested on September 30, 2003 in stock & index-including reinvestment of dividends.
|- | -----------------------------------------------------------------------------------------

Fiscal year ending September 30.



|                      |  |         |        |         |   |         |  |         |          |         |   |          |  |   |          |  |   |         
|--------------------- |  | ------- | ------ | ------- | - | ------- |  | ------- | -------- | ------- | - | -------- |  | - | -------- |  | - | --------
|                      |  | 9/30/03 |        | 9/30/04 |   | 9/30/05 |  | 9/30/06 |          | 9/30/07 |   | 9/30/08 
|Archon Corporation    |  | $       | 100.00 |         | $ | 241.38  |  | $       | 1,302.07 |         | $ | 1,134.48 |  | $ | 1,629.31 |  | $ | 1,070.69
|S&P 500               |  |         | 100.00 |         |   | 113.87  |  |         | 127.82   |         |   | 141.62   |  |   | 164.90   |  |   | 128.66  
|Dow Jones US Gambling |  |         | 100.00 |         |   | 139.04  |  |         | 150.05   |         |   | 189.39   |  |   | 288.93   |  |   | 126.03  



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|Item 6. | SELECTED FINANCIAL DATA
|------- | -----------------------

The table below
sets forth a summary of selected financial data of the Company and its subsidiaries for the years ended September 30, 2008, 2007, 2006, 2005 and 2004:



|                                              |  |                                                                                  |         |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|--------------------------------------------- |  | -------------------------------------------------------------------------------- | ------- | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                              |  | 2008                                                                             |         | 2007 |   |         | 2006 |  |   | 2005    |   |  | 2004 |        
|                                              |  | Not covered by auditors report (dollars in thousands, except per share amounts) |        
|Net operating revenues(1)                     |  | $                                                                                | 43,031  |      | $ | 45,179  |      |  | $ | 45,154  |   |  | $    | 43,688  |   |  | $ | 45,693  |  
|Net income (loss)                             |  |                                                                                  | 58,802  |      |   | 607     |      |  |   | (3,356  | ) |  |      | (4,912  | ) |  |   | (1,882  | )
|Net income (loss) applicable to common shares |  |                                                                                  | 58,802  |      |   | (779    | )    |  |   | (4,867  | ) |  |      | (6,423  | ) |  |   | (3,444  | )
|Net income (loss) per common share            |  |                                                                                  | 9.27    |      |   | (0.12   | )    |  |   | (0.78   | ) |  |      | (1.03   | ) |  |   | (0.55   | )
|Total assets                                  |  |                                                                                  | 209,974 |      |   | 219,982 |      |  |   | 198,050 |   |  |      | 199,638 |   |  |   | 206,932 |  
|Long-term debt, less current portion          |  |                                                                                  | 71,501  |      |   | 74,381  |      |  |   | 77,042  |   |  |      | 79,499  |   |  |   | 82,057  |  
|Exchangeable redeemable preferred stock(2)    |  |                                                                                  | 215     |      |   | 429     |      |  |   | 9,445   |   |  |      | 9,445   |   |  |   | 9,674   |  



|(1) | Net operating revenues for fiscal years 2004 through 2008 are derived primarily from operations at the Pioneer and
revenues from the rental properties.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | The Companys Board of Directors had not declared dividends on its preferred stock since fiscal 1996. Dividends of
approximately $1.4 million, $1.5 million, $1.5 million, and $1.6 million for fiscal 2007, 2006, 2005 and 2004 respectively, had not been declared and were in arrears until August 31, 2007, at which date all shares were called for redemption.
The Company redeemed its outstanding exchangeable redeemable preferred stock at $5.241 per share. As of January 09, 2009, the Company had repurchased and retired 4,259,252 shares of exchangeable redeemable preferred stock. The legal proceeding
set forth in Item 3 relates to the exchangeable redeemable preferred stock.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|Item 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

GENERAL

Overview of Business Operations and Trends

The Company, historically, has owned, managed and operated hotel/casino properties through a number of acquisitions or developments, and it has recently
divested itself of certain of these properties. Presently, the Company operates the Pioneer in Laughlin, Nevada. The Company also owns Strip property that had been subject to an option agreement entered into in fiscal 2006 whereby the optionee had
the right to purchase the property from the Company for $475 million. The Company through a wholly-owned subsidiary formally terminated the Agreement by written notice on June 3, 2008 when a required payment of $2.9 million was not received.

The Pioneer has experienced a flattening and, to a certain extent, a decline of its revenues over the last few years after experiencing
strong revenue and profit growth in the early 1990s. Management believes the growth of casino properties on Native American lands in such locations as California and Arizona within the last several years caused revenue declines and caused the
Company to focus on market definition and development in Laughlin to maintain profitability. Harsh economic conditions impacting customers, including high fuel costs, has significantly reduced disposable income, and limited their travel and gaming
practices. Management believes Laughlin is a mature market with marginal growth forecasted for the next few years based on its current plans. Management believes the recent revenue and expense trends in its Laughlin hotel/casino property may not
change significantly over the next few years, or until the current economic conditions and trends begin to reverse.

The Company also owns
rental properties on the East Coast but these rental properties do not contribute significant profitability or net cash flow to the Company.

Rental Properties

During fiscal year 2001, the Company acquired certain rental properties as part of a
Section 1031 exchange. The rental properties are located in Gaithersburg, Maryland and Dorchester, Massachusetts. The Company acquired the properties and nonrecourse debt associated with the properties which are subject to long-term leases.
Tenants remit payments to banks according to the terms of the leases and notes. The payments are used to liquidate the nonrecourse debt obligations. Rental income is recorded by the Company on a straight-line basis and totals approximately $12.4
million annually and will remain at this level until approximately 2020. The buildings are also being depreciated on a straight-line basis and the depreciation expense is approximately $3.2 million annually and will remain at this level until
approximately 2020 or until the assets are sold, otherwise disposed of or become impaired. Interest expense is also recorded based on the outstanding nonrecourse debt remaining to be paid based on unamortized loan issue costs and remaining debt
amortization timetables. At any time during the life of the leases and debt amortization, the fair market values of the properties may be different than its book values. Interest is presently being expensed at approximately $7.0 million annually and
will decrease in relation to debt principal reductions through 2020. The Gaithersburg, Maryland, property was under contract to be sold if certain conditions precedent were satisfied by December 31, 2008, or by a later date if the deadline had
been extended pursuant to the terms of the contract. The buyers right to extend the deadline was not exercised, and the contract expired on December 31, 2008. See Notes 6 and 20, Consolidated Financial Statements

Critical Accounting Policies and Estimates

The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses during the



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reporting period. On an ongoing basis, management evaluates its estimates and judgments, including those related to customer incentives, bad debts,
inventories, investments, estimated useful lives for depreciable and amortizable assets, valuation reserves and estimated cash flows in assessing the recoverability of long-lived assets, estimated liabilities for slot club bonus point programs,
income taxes, contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Management believes the following critical accounting policies, among others, affects its more significant judgments and estimates used in the
preparation of its consolidated financial statements:

Long-Lived Assets. The Company has a significant investment in
long-lived property and equipment. Management reviews useful lives and obsolescence and assesses commercial viability of these assets periodically, at least annually. Based on these reviews, management estimates 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 in the estimate of these undiscounted future cash flows could necessitate an impairment charge that would adversely affect
operating results. Management also estimates useful lives for its assets based on historical experience, estimates of assets commercial lives, and the likelihood of technological obsolescence. Should the actual useful life of a class of assets
differ from the estimated useful life, the Company would record an impairment charge. We review useful lives and obsolescence and we assess commercial viability of these assets periodically.

Income Taxes. The Company has recorded deferred tax assets related to net operating losses as the Company is able to offset these assets
with deferred tax liabilities. Realization of the net deferred tax assets is dependent on the Companys ability to generate profits from operations or from the sale of long-lived assets that would reverse the temporary differences which
established the deferred tax liabilities. There can be no assurance that the Company will generate profits from operations or sell those assets or will generate profits from sales if they were to occur in the future. In the event the Company does
generate profits from sales of long-lived assets in the future a valuation allowance may need to be recorded, which would impact the Companys future results of operations. Annualized effective income tax rates for calculating interim period
provisions and benefits have been estimated to be not significantly different than the estimated annual effective rate and the statutory rate. Although Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), Accounting
for Uncertainty in Income Taxes  An Interpretation of FASB Statement No. 109, became effective for the year ending September 30, 2008, based on its evaluation, management determined that FIN 48 did not have a material effect on
the financial statements or the net operating loss carryovers or the related deferred tax assets or valuation allowance.

Recently Issued
Accounting Standards

SFAS NO. 161: In March 2008, the FASB issued SFAS 161,
Disclosures about Derivative Instruments and Hedging Activities  an Amendment of SFAS 133. SFAS 161, which will require enhanced disclosures regarding the impact on financial position, financial performance, and cash flows, will
be effective for us beginning on October 1, 2009. However, since we do not now have, nor do we contemplate issuing or obtaining any derivative instruments, or engaging in any hedging activities, in the foreseeable future, we do not
currently expect any effect on our future financial statements of adopting SFAS 161.

SFAS NO. 160:
In December 2007, the Financial Accounting Standards Board (FASB) issued Statement of Accounting Standards (SFAS) No. 160, Noncontrolling Interests in Consolidated Financial Statements. It requires that a noncontrolling (minority)
interest in a subsidiary, including a consolidatable variable interest entity should be reported as equity in the consolidated financial statements. SFAS 160 will not likely have any effect on the Companys consolidated financial
statements since we do not presently have and are not contemplating investing in, establishing or acquiring a subsidiary with a noncontrolling interest. SFAS 160 will be effective, if applicable, for the Companys fiscal year beginning
October 1, 2009.

SFAS NO. 157 and 159: In September 2006, the FASB issued SFAS 157, Fair Value
Measurements. SFAS 157 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted



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in the United States, and expands disclosure about fair value measurements. In February 2007, the FASB issued SFAS 159, The Fair Value Option for
Financial Assets and Financial Liabilities  Including an Amendment of FASB Statement 115, which will permit the option of choosing to measure certain eligible items at fair value at specified election dates and report unrealized gains and
losses in earnings. We have no present intention of opting to adopt SFAS 159. SFAS 157 will become effective for us for financial assets and liabilities carried at fair value for fiscal year 2009 but will not become effective for nonfinancial
assets until fiscal year 2010 (including interim periods within those years). We do not now expect any other effects of SFAS 157 since it is unlikely that we will choose to value assets or liabilities at fair value.

SFAS NO. 141R: In December 2007, the FASB issued SFAS 141(R), Business Combinations. This Statement replaces SFAS 141, Business
Combinations. This Statement retains the fundamental requirements in Statement 141 that the acquisition method of accounting (which Statement 141 called the purchase method) be used for all business combinations and for an acquirer to be
identified for each business combination. While we have not yet evaluated this statement for the impact, if any, that SFAS 141R might have on its consolidated financial statements, in the event we make any business combination or other covered
acquisitions after September 30, 2009.

FIN 48. In July 2006, the FASB issued Interpretation No. 48,
Accounting for Uncertainty in Income Taxes (FIN 48). The provisions are effective for us beginning in the first quarter of fiscal 2008. Based on our analysis of our tax provisions, deferred tax assets and the related valuation
allowance, we expect that the financial impact, if any, of applying the provisions of FIN 48 to all tax positions will not result in any adjustment to the opening deficit or other material impact to our consolidated financial statements or related
disclosures upon the initial adoption of FIN 48.

RESULTS OF OPERATIONS  FISCAL 2008 COMPARED TO FISCAL 2007

General

During fiscal 2008, the
Companys consolidated net operating revenues decreased approximately $2.0 million, and operating expenses increased approximately $11.2 million, resulting in a decrease of approximately $13.2 million in operating income. The decline in
operating results was primarily due to an increase in corporate stock based compensation expenses of approximately $2.4 million and the loss incurred on the impairment of Pioneer assets of $11.0 million, partially offset by a decrease in other
operating expenses.

Consolidated

Net Operating Revenues.Consolidated net operating revenues for the year ended September 30, 2008 decreased by approximately $2.0 million from the year ended September 30, 2007. Revenues from the rental properties
were the same in each of the fiscal years under the leases in place. Net revenues decreased approximately $4.7 million during fiscal 2008 at the Pioneer compared to the 2007 fiscal year, as a result of a marketwide declining trend of gaming revenues
in Laughlin discussed in greater detail below. SLVC net revenues increased during fiscal 2008, by $2.7 million as compared to the 2007 fiscal year, resulting from increased property rent revenue.

In fiscal 2008, 59% of the Companys net revenues were derived from the Pioneer and 29% from rental properties. The Companys business strategy
at the Pioneer emphasizes slot and video poker machine play. For fiscal 2008, approximately 58% of the Pioneers net revenues were derived from casino operations. Approximately 90% of gaming revenues at the Pioneer were derived from slot and
video poker machines, while 8% of such revenues were from table games and 2% was from other gaming activities such as keno.

Operating Expenses.Total operating expenses increased approximately $11.2 million, or 29%, to $49.5 million for the year ended September 30, 2008, from $38.3 million for the year ended September 30, 2007. Total
operating expenses as a percentage of net revenues increased to 115% for the year ended September 30, 2008 from 85% for the year ended September 30, 2007. The increase in operating expenses was principally the result of an



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increase of approximately $2.4 million in stock-based compensation expense, combined with an $11.0 million loss on the impairment of Pioneer assets,
partially offset by decreases in casino, hotel and other operating expenses totaling $2.2 million. The decreases in casino, hotel and other operating expenses were a result of lower revenues and business levels.

Interest Expense. Consolidated interest expense for the year ended September 30, 2008 was $8.2 million, a $0.2 million decrease
compared to $8.4 million for the year ended September 30, 2007, primarily due to a decrease in the principal balances of the nonrecourse debt of the rental properties.

Gain on Termination of Land Sale Option. During the year ended September 30, 2008, the Company realized income of $67.1 million from
nonrefundable deposits associated with a terminated land sale option, on an owned rental property.

Gain from Settlement of
Liabilities. During the year ended September 30, 2008, the Company realized a gain of $1.3 million, from the settlement of a debt associated with the Pioneer.

Interest and Other Income. Interest and other income for the year ended September 30, 2008 was approximately $3.6 million, an increase
of $2.6 million from $1.0 million for the year ended September 30, 2007. The increase in interest and other income is a result of increased cash flows from option extension payments related to the Agreement granted to LVTI to purchase an
approximately 27 acre parcel of real property located on the Strip.

Income Tax.The Company recorded a federal income tax
benefit of approximately $1.3 million (an approximate 2% rate) for the year ended September 30, 2008, a change of $1.5 million from a $0.2 million tax benefit (an approximate 11% rate) for the year ended September 30, 2007. The benefit
consisted primarily of the NOL carryforward from prior years.

Pioneer

General.Casino, hotel and food/beverage revenues and expenses at the Pioneer comprise the majority of consolidated casino, hotel and
food/beverage revenues and expenses included in the Companys consolidated statements of operations and are discussed separately below.

Net Operating Revenues. Net revenues at the Pioneer decreased $4.7 million, or approximately 16%, to $25.4 million for the year ended September 30, 2008 from $30.0 million for the year ended September 30, 2007.

Gross casino revenues decreased approximately $3.2 million, or 14%, to $20.4 million for the year ended September 30, 2008 from $23.6
million for the year ended September 30, 2007. Slot and video poker revenues decreased approximately $3.1 million, or 14%, to $15.3 million for the year ended September 30, 2008 from $18.4 million for the year ended September 30,
2007. Other gross gaming revenues, including table games, decreased approximately $0.2 million, or 8%, to approximately $1.9 million for the year ended September 30, 2008 compared to $2.1 million for the 2007 year. Management believes this
decrease was a result of declining market trends in the local area. Casino promotional allowances decreased $0.4 million, or 7%, to $5.6 million in year ended September 30, 2008 compared to $6.0 million for year ended September 30, 2007
primarily due to the aforementioned decline in the local gaming market.

Hotel revenues decreased $0.6 million, or 23%, to $2.2 million for
the year ended September 30, 2008 from $2.8 million in fiscal 2007 due to a decrease in the number of rooms occupied. Food and beverage revenues decreased $0.2 million, or 3%, to $7.2 million for the year ended September 30, 2008 from $7.4
million for the year ended September 30, 2007. Other revenues decreased $1.0 million, or 46%, to $1.2 million for the year ended September 30, 2008 from $2.2 million for the year ended September 30, 2007 due to decreased retail sales.

Operating Expenses.Operating expenses increased $8.1 million, or 26%, to $39.7 million for the year ended
September 30, 2008 from $31.6 million for the year ended September 30, 2007, as a result of a loss of $11.0 million related to the impairment of assets, offset by a $2.9 million reduction in expenses associated with reduced customer



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activity since many such expenses vary with related revenues and for other reasons noted below. Operating expenses as a percentage of net revenues increased
to 113% in fiscal 2008 from 105% in fiscal 2007.

Casino expenses decreased $1.4 million, or 10%, to $12.3 million for the year ended
September 30, 2008 from $13.7 million for the year ended September 30, 2007, primarily related to a decrease in casino promotional allowances. Casino expenses as a percentage of casino revenues increased to 60% for the year ended
September 30, 2008 from 58% for the year ended September 30, 2007.

Hotel expenses decreased $0.2 million, or 13%, to $1.0
million for the year ended September 30, 2008, compared to $1.2 million for the year ended September 30, 2007, primarily due to a reduction in the number of hotel rooms rented. Hotel expenses as a percentage of revenues increased to 47%
for the 2008 year from 42% for the 2007 year. Food and beverage expenses were relatively equal at $4.3 million for both years. Food and beverage expenses as a percentage of revenues increased to 60% for the 2008 year from 58% for the 2007 year.
Other expenses decreased $0.9 million, or 47%, to $1.0 million for the year ended September 30, 2008 compared to $1.9 million for the year ended September 30, 2007 due to the decrease in retail revenues. Other expenses as a percentage of
other revenues decreased to 84% for the 2008 year from 85% for the 2007 year.

Selling, general and administrative expenses decreased $0.1
million, or 2%, to $4.4 million for the year ended September 30, 2008 compared to $4.5 million for the year ended September 30, 2007. Selling, general and administrative expenses as a percentage of revenues increased to 17% for the 2008
year from 15% for the 2007 year. The decrease in selling, general and administrative expenses was a result of lower business levels. These expenses increased as a percentage of revenues due to fixed costs associated with service contracts.
Pioneers selling, general and administrative expenses are greater than the consolidated total due to the elimination of intercompany transactions in consolidation. Utilities and property expenses increased $0.1 million, or 2%, to $4.1 million
in fiscal year 2008 compared to $4.0 million for the year ended September 30, 2007. Utilities and property expenses as a percentage of revenues increased to 16% for the 2008 year from 13% for the 2007 year. Energy consumption decreased as a
result of lower business levels and energy efficient lighting and signage changes, but were more than offset by energy rate increases. Depreciation expenses decreased $0.5 million, or 25%, to $1.5 million in the year ended September 30, 2008,
from $2.0 million in the year ended September 30, 2007.

Interest Expense. Interest expense remained relatively
unchanged at $1.3 million for the year ended September 30, 2008 and 2007.

LIQUIDITY AND CAPITAL RESOURCES; TRENDS AND FACTORS RELEVANT TO FUTURE
OPERATIONS

The United States has been experiencing a recession that has resulted in highly curtailed economic activity including, among
other things, reduced casino gaming and declining real estate values, both nationwide and particularly in the southern Nevada local market. The effects and duration of these developments and related uncertainties on the Companys future
operations and cash flows cannot be estimated at this time but may likely be significant.

Contractual Obligations and Commitments

The following table summarizes the Companys fiscal year contractual obligations and commitments as of September 30, 2008 for the
fiscal years ending September 30, 2009, 2010, 2011, 2012, 2013, 2014 and thereafter:



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##### Table of Contents

|                    |  |                        |        |      |   |       |  |      |       |      |   |                    |  |       |       |  |   |        |  |   |       
|------------------- |  | ---------------------- | ------ | ---- | - | ----- |  | ---- | ----- | ---- | - | ------------------ |  | ----- | ----- |  | - | ------ |  | - | ------
|                    |  | Payments Due By Period
|                    |  | 2009                   |        | 2010 |   | 2011  |  | 2012 |       | 2013 |   | 2014 andThereafter |  | Total
|                    |  | (Amounts in Thousands)
|Nonrecourse debt:   |  |                        |        |      |   |       |  |      |       |      |   |                    |  |       |       |  |   |        |  |   |       
|Gaithersburg        |  | $                      | 2,829  |      | $ | 3,186 |  | $    | 3,573 |      | $ | 3,987              |  | $     | 4,448 |  | $ | 2,803  |  | $ | 20,826
|Sovereign           |  |                        | 0      |      |   | 0     |  |      | 0     |      |   | 0                  |  |       | 0     |  |   | 31,199 |  |   | 31,199
|Long-term debt:     |  |                        |        |      |   |       |  |      |       |      |   |                    |  |       |       |  |   |        |  |   |       
|Equipment           |  |                        | 82     |      |   | 0     |  |      | 0     |      |   | 0                  |  |       | 0     |  |   | 0      |  |   | 82    
|Mortgage obligation |  |                        | 9,844  |      |   | 0     |  |      | 0     |      |   | 0                  |  |       | 0     |  |   | 0      |  |   | 9,844 
|Operating leases:   |  |                        |        |      |   |       |  |      |       |      |   |                    |  |       |       |  |   |        |  |   |       
|Ground lease        |  |                        | 388    |      |   | 388   |  |      | 388   |      |   | 388                |  |       | 388   |  |   | 25,237 |  |   | 27,177
|Corporate offices   |  |                        | 31     |      |   | 0     |  |      | 0     |      |   | 0                  |  |       | 0     |  |   | 0      |  |   | 31    
|                    |  |                        |        |      |   |       |  |      |       |      |   |                    |  |       |       |  |   |        |  |   |       
|                    |  | $                      | 13,174 |      | $ | 3,574 |  | $    | 3,961 |      | $ | 4,375              |  | $     | 4,836 |  | $ | 59,239 |  | $ | 89,159
|                    |  |                        |        |      |   |       |  |      |       |      |   |                    |  |       |       |  |   |        |  |   |       

The Company is required to make the following cash interest payments related to the above debt
obligations: (i) Nonrecourse debt - $6.8 million (2009), $6.6 million (2010), $6.3 million (2011), $6.0 million (2012), $5.8 million (2013) and $28.5 million (2014 and thereafter); and (ii) Long-term debt - $0.6 million (2009), $0.0
million (2010), $0.0 million (2011), $0.0 million (2012) $0.0 million (2013), and $0.0 million (2014 and thereafter).

The
Companys ability to service its contractual obligations and commitments, other than the nonrecourse debt, will be dependent on the future performance of the Pioneer, which will be affected by, among other things, prevailing economic conditions
and financial, business and other factors, including competitive pressure from the expansion of Native American gaming facilities in the southwest United States, certain of which are beyond the Companys control. In addition, the Company will
be dependent on the continued ability of the tenants in the rental properties in Gaithersburg, Maryland and Dorchester, Massachusetts to make payments pursuant to the leases with the Company. The payments under the leases are contractually committed
to be used to make payments on the Companys nonrecourse debt obligations related to the properties.

Effective May 20, 2008, the
Company completed a new bank credit facility for $29.0 million of which $9.8 million is outstanding and $19.2 million remains available to the Company. The bank credit facility is due on May 20, 2009 and its interest rate is a floating
commercial loan rate publicly announced from time-to-time (the Colonial Bank Base Rate) with a floor of 6%. The interest rate is currently at 6.25%. The debt is guaranteed by the Companys primary shareholder, who is also the CEO
and Chairman of the Board, and his wife, who is the Executive Vice President, Secretary and Treasurer of the Company.

Liquidity and Capital
Resources

Mortgage Note Obligation.The Company has a balloon payment due in May 20, 2009 of approximately
$9.8 million related to debt owed to a bank. The Company has cash reserves sufficient to pay the obligation in full when it becomes due and payable on May 20, 2009. The debt obligation is secured by 27 acres of land owned on the Las Vegas Strip
and is personally guaranteed by the Companys primary shareholder, who is also the CEO and Chairman of the Board, and his wife, who is the Executive Vice President, Secretary and Treasurer of the Company.

As of September 30, 2008, the Company held cash and cash equivalents of $37.9 million compared to $27.5 million at September 30, 2007. In
addition, the Company had $5.7 million in investment in marketable securities at September 30, 2008 compared to $11.0 million at September 30, 2007. Management believes that cash flow generated through its casino operations and its short
and long-term investments, the Company will have sufficient available cash and cash resources to meet its cash requirements through the twelve-month period ending September 30, 2009. The rental properties were structured such that future
tenants payments cover future required mortgage payments.

Cash Flows from Operating Activities. The Companys
cash provided by operations increased $0.7 million in the year ended September 30, 2008 compared to the year ended September 30, 2007.



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Cash Flows from Investing Activities. Cash provided by investing activities decreased $29.8
million during the year ended September 30, 2008, compared to the year ended September 30, 2007. This decrease is primarily related to the nonrefundable option payment of approximately $17.4 million received during the year ended
September 30, 2008, compared to the nonrefundable option payment of approximately $44.0 million received in the year ended September 30, 2007.

Cash Flows from Financing Activities.Cash used in financing activities increased $18.3 million during the year ended September 30, 2008 compared to the year ended September 30, 2007. During
fiscal 2008, the Company received $9.6 million in loan proceeds, paid $2.6 million for common stock purchased and retired, $0.2 million for redeemable preferred stock, and $13.4 million on debt and nonrecourse debt. During fiscal 2007, the Company
paid $22.0 million for redeemable preferred stock, and $2.9 million on debt and nonrecourse debt.

The Companys primary source of
operating cash is from the Pioneers operations, from interest income on available cash and cash equivalents, to a lesser extent, from leasing real estate owned in Las Vegas, Nevada and from investments in marketable securities. From
time-to-time, transactions involving the sale of certain land or other assets also contribute to the Companys cash balances as evidenced by the recent sale of the Agreement for the purchase of the Companys Las Vegas strip property
whereby the Company received $67.1 million through September 30, 2008. During fiscal 2008, the Company received $17.4 million of these funds. The Company has used, and plans to use, these proceeds to reduce certain short-term debt obligations,
purchase marketable securities and for general corporate purposes.

Rental income from the Companys two rental properties is
contractually committed to reducing the nonrecourse indebtedness issued or assumed in connection with the acquisition of the rental properties. Under the two leases, the tenants are responsible for substantially all obligations related to those
properties.

The Company owns an approximately 27-acre parcel on the Strip which was recorded at approximately $21.5 million that it leases
to two different lessees for an aggregate amount of $0.4 million per month. Both leases may be terminated by the Company with sixty days written notice in the event the property is sold to a third party.

Pioneer

Pioneers principal uses
of cash are for payments of rent and capital expenditures to maintain the facility and administrative expenses incurred in operating a casino. The Company has implemented changes in personnel and promotional programs and installed new slot equipment
to address the decreases in revenues and operating income. One of managements main focuses is to recapture market share in the Laughlin market. Management, however, can give no assurance that market share will be recaptured in its Laughlin
market as its competition in the market typically has greater capital resources than does the Pioneer.

Termination of Option to Purchase Las
Vegas Boulevard Land

The Company owns, through its wholly owned subsidiary, SLVC, an approximately 27-acre parcel of land (the
Property) located on the east side of Las Vegas Boulevard South, just south of Sahara Avenue. The Company presently leases the Property to two different lessees for an aggregate amount of $0.4 million per month. Both leases may be
terminated with sixty days written notice in the event the Property is sold to a third party.

On June 24, 2006, SLVC entered into an
Option Agreement (the Agreement) between SLVC and LVTI, LLC, a Delaware limited liability company (LVTI), granting LVTI the option to purchase the Property on certain terms and conditions. Pursuant to the Agreement, LVTI was
required to make a payment to SLVC in the amount of $2.9 million on or before June 2, 2008. LVTI failed to make the June 2008 payment, and SLVC formally terminated the Agreement by written notice on June 3, 2008. A Confirmation of
Termination of Option Agreement was executed by both SLVC and LVTI, and this document was recorded in the Office of the Clark County, Nevada Recorder on June 10, 2008. As a result of the termination of the Agreement, the Company has realized
$67.1 million of income during the period ended June 30, 2008. This income is the sum of all payments made to SLVC under the terms of the Agreement prior to termination of the option. See Note 20, Consolidated Financial Statements



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##### Table of Contents

Dukes Casino

Prior to fiscal 2007, the Company had loaned approximately $1.4 million to Dukes  Sparks (Dukes), a Nevada limited-liability company. The Company, through its wholly-owned subsidiary,
Archon Sparks Management Company, operated Dukes casino. Christopher Lowden, son of Paul W. Lowden, was a limited partner in the company that was a managing member of Dukes. The Company also acquired a $100,000 Class B member interest in
Dukes. In December 2003, Dukes closed its casino operations.

Throughout the latter half of calendar 2004 through June 30,
2006, the Company financed certain legal costs totaling approximately $0.8 million associated with certain arbitration between Dukes LLC and a general contractor. The Company had previously written-off its investment in and receivables from
Dukes LLC, related to the operation of Dukes Casino, of approximately $1.5 million in the fiscal year ended September 30, 2003. In January 2005, the American Arbitration Association awarded Dukes LLC approximately $4.9 million
against the general contractor for a casino renovation at Dukes Casino. The Company has an agreement with Dukes LLC whereby the Company is to be reimbursed for legal and certain other costs related to the arbitration as well as recovery
of amounts previously written-off, which in total may exceed $3 million. However, due to various contingencies surrounding the enforcement, collection or settlements with Dukes LLC and the general contractor, management can give no assurance
of the timing or the amount it will ultimately receive. During the year ended September 30, 2007, the Company received approximately $0.7 million from Dukes LLC. The Company has negotiated with Dukes-Sparks, LLC and obtained an assignment
of all future payments under the judgment and settlement with the general contractor for the casino project. The general contractor has been notified of the assignment and will be making all future payments due under the settlement with
Dukes-Sparks, LLC to the Company directly according with the terms of the settlement agreement. Since September 2007, the Company has received timely payments under the terms of the settlement agreement with Dukes LLC from the general
contractor responsible for the judgment.

Redemption of the Companys Preferred Stock and Redemption Price Disputes.

The Company called all outstanding shares of its Exchangeable Redeemable Preferred Stock for redemption on and as of August 31, 2007, at a
redemption price of $5.241 per share, which sum included accrued and unpaid dividends to the date of redemption. From and after August 31, 2007, all shares of the Exchangeable Redeemable Preferred Stock ceased to be outstanding and to accrue
dividends. As of January 09, 2009, the holders of 4,259,252 shares of the Exchangeable Redeemable Preferred Stock have surrendered their shares and received payment of the redemption price.

On August 27, 2007, a group of institutional investors filed an action, in Nevada, against the registrant. The Complaint was subsequently amended to add
an additional party plaintiff (collectively, the Plaintiffs). The Amended Complaint: (i) seeks a finding by the Court that the Company has breached its obligations under the Companys Certificate of Designation of the Preferred
Stock, dated September 30, 1993 (the Certificate), and awarding the Plaintiffs full compensation of any and all available damages suffered by the Plaintiffs as a result of the Companys breach of the Certificate; (ii) seeks a
finding by the Court that the Companys issuance of its redemption notice with an improper redemption price is an anticipatory breach of a material term of the Certificate and awarding the Plaintiffs full compensation of any and all available
damages suffered as a result of the Companys anticipatory breach of the Certificate; (iii) seeks a declaration by the Court that the dividends be properly calculated and compounded per the terms of the Certificate in an amount no less than
$7,235,351 up through and including the date of final judgment; (iv) seeks an order from the Court calling for the Company to reimburse the Plaintiffs attorneys fees, expenses and costs incurred in enforcing their rights; and (v) seeks
such other and further relief as the Court may deem appropriate. The Plaintiffs, thereafter, filed a motion for partial summary judgment (the Motion), seeking a ruling from the court that the Company breached its obligations under the
Certificate of Designation by calculating the redemption price as it did. The Court granted that Motion on August 8, 2008, finding the language of the Certificate of Designation to be unambiguous and that the redemption price should have been
calculated differently. The Court has not yet issued a monetary judgment against the Company. Mediation of certain issues is planned for the near future and the Company intends on appealing the adverse decision of the court on the Motion, if
necessary. The Company is also considering its rights and remedies against third parties in the event that it does not prevail on its interpretation of the Certificate of Designation of the Preferred Stock.



19



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##### Table of Contents

Also subsequent to the end of the Companys fiscal year, two former holders of the Exchangeable
Redeemable Preferred Stock filed Complaints, both alleging essentially the same claim as the first complaint related to the case set forth immediately above. If the plaintiffs in these two additional actions are correct, the redemption price as of
August 31, 2007 should have been $8.69 per share and not $5.241 per share as calculated by the Company. If applied to all the then outstanding shares of Exchangeable Redeemable Preferred Stock, including the shares held by the Companys
officers and directors, valuation of the redemption price at $8.69 per share would increase the redemption price in excess of $15.2 million.

Management is unable to estimate the minimum liability that may be incurred, if any, as a result of the outcome of each of the above matters and, therefore, has made no provision in the financial statements for liability related to these
cases.

Effects of Inflation

The Company has been generally successful in recovering costs associated with inflation through price adjustments in its hotel room rates. Expenses of operating the Companys rental properties are generally borne by the tenants.
Primarily due to competitive market and other economic pressures any such future increases in costs associated with casino operations and maintenance of properties may not be completely recovered by the Company.

Private Securities Litigation Reform Act

Certain statements in this Annual Report on Form 10-K which are not historical facts are forward-looking statements, such as statements relating to future operating results, existing and expected competition, financing and refinancing
sources and availability and plans for future development, expansion or sale activities, capital expenditures, expansion of business operations into new areas and the payment of certain obligations by third parties. Such forward-looking statements
involve a number of risks and uncertainties that may significantly affect the Companys liquidity and operating results in the future and, accordingly, actual results may differ materially from those expressed in any forward-looking statements.
Such risks and uncertainties include, but are not limited to, those related to effects of competition, leverage and debt service, general economic conditions, changes in gaming laws or regulations (including the legalization of gaming in various
jurisdictions) and risks related to development activities and the startup of non-gaming operations.



|Item 7A. | MARKET RISK DISCLOSURE
|-------- | ----------------------

Market risk is the
risk of loss arising from changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. Excluding its nonrecourse debt, the Company has total interest-bearing debt of approximately $12.8 million,
of which approximately $9.8 million bears interest at a variable rate (6.25% at September 30, 2008). Therefore, the Company maintains certain market rate risk related to this debt. A change in the interest rates of 1% would cause an approximate
$100,000 change in the amount of interest the Company would incur based on the amount of variable debt outstanding at September 30, 2008. Any future borrowings with variable interest rate terms will be exposed to this same market rate risk.

The Company holds investments in various available-for-sale securities; however, exposure to price risk arising from the ownership of
these investments is not material to the Companys consolidated financial position, results of operations or cash flow as historically price fluctuations of these securities have not been material.



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##### Table of Contents

|Item 8. | FINANCIAL STATEMENTS
|------- | --------------------

INDEX

TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007



|                                                                                                       |  |         
|------------------------------------------------------------------------------------------------------ |  | --------
|                                                                                                       |  | Page No.
|Report of Independent Registered Public Accounting Firm                                                |  | 22      
|Consolidated Balance Sheets as of September 30, 2008 and 2007                                          |  | 23      
|Consolidated Statements of Operations for the Years Ended September 30, 2008 and 2007                  |  | 25      
|Consolidated Statements of Comprehensive Income (Loss) for the Years Ended September 30, 2008 and
2007 |  | 27      
|Consolidated Statements of Stockholders Equity for the Years Ended September 30, 2008 and
2007        |  | 28      
|Consolidated Statements of Cash Flows for the Years Ended September 30, 2008 and 2007                  |  | 29      
|Notes to Consolidated Financial Statements                                                             |  | 30      



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##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of Archon Corporation:

We have
audited the accompanying consolidated balance sheets of Archon Corporation and Subsidiaries (the Company) as of September 30, 2008 and 2007, and the related consolidated statements of operations, stockholders equity and cash
flows for the years then ended. 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 audit.

We conducted our audit 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. We were not engaged to perform an audit of the Companys 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, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of September 30, 2008 and 2007, and the consolidated
results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.

Las Vegas, Nevada

January 12, 2009

/s/ Piercy
Bowler Taylor & Kern

Certified Public Accountants



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##### Table of Contents

Archon Corporation and Subsidiaries

Consolidated Balance Sheets

as of
September 30,



|                                         |  |      |             |   |      |   |             |  
|---------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                         |  | 2008 |             |   | 2007 |  
|ASSETS                                   |  |      |             |   |      |   |             |  
|Current assets:                          |  |      |             |   |      |   |             |  
|Cash and equivalents                     |  | $    | 37,973,564  |   |      | $ | 27,484,222  |  
|Investment in marketable securities      |  |      | 5,731,337   |   |      |   | 10,997,088  |  
|Accounts receivable, net                 |  |      | 144,810     |   |      |   | 1,054,493   |  
|Inventories                              |  |      | 342,379     |   |      |   | 405,378     |  
|Prepaid expenses and other               |  |      | 1,371,281   |   |      |   | 1,148,669   |  
|                                         |  |      |             |   |      |   |             |  
|Total current assets                     |  |      | 45,563,371  |   |      |   | 41,089,850  |  
|Property held for sale                   |  |      | 21,504,400  |   |      |   | 21,504,400  |  
|Property and equipment:                  |  |      |             |   |      |   |             |  
|Rental property held for investment, net |  |      | 122,354,178 |   |      |   | 124,954,638 |  
|Land used in operations                  |  |      | 3,925,589   |   |      |   | 7,925,589   |  
|Buildings and improvements               |  |      | 7,951,200   |   |      |   | 34,413,872  |  
|Machinery and equipment                  |  |      | 1,816,546   |   |      |   | 8,646,190   |  
|Accumulated depreciation                 |  |      | (782,999    | ) |      |   | (26,160,177 | )
|                                         |  |      |             |   |      |   |             |  
|Property and equipment, net              |  |      | 135,264,514 |   |      |   | 149,780,112 |  
|Other assets                             |  |      | 7,641,889   |   |      |   | 7,607,362   |  
|                                         |  |      |             |   |      |   |             |  
|Total assets                             |  | $    | 209,974,174 |   |      | $ | 219,981,724 |  
|                                         |  |      |             |   |      |   |             |  

The accompanying notes are an integral part of these consolidated financial statements.



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##### Table of Contents

Archon Corporation and Subsidiaries

Consolidated Balance Sheets  (continued)

as of September 30,



|                                                                                                                                                          |  |      |             |   |      |   |             |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                                                                                                                          |  | 2008 |             |   | 2007 |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                      |  |      |             |   |      |   |             |  
|Current liabilities:                                                                                                                                      |  |      |             |   |      |   |             |  
|Loans payable                                                                                                                                             |  | $    | 9,843,691   |   |      | $ | 0           |  
|Accounts payable                                                                                                                                          |  |      | 2,848,701   |   |      |   | 4,008,754   |  
|Interest payable                                                                                                                                          |  |      | 219,233     |   |      |   | 1,361,092   |  
|Other accrued expenses                                                                                                                                    |  |      | 4,474,276   |   |      |   | 3,711,881   |  
|Exchangeable redeemable preferred stock - unredeemed                                                                                                      |  |      | 214,972     |   |      |   | 428,768     |  
|Current portion of debt                                                                                                                                   |  |      | 82,057      |   |      |   | 10,940,905  |  
|Current portion of nonrecourse debt                                                                                                                       |  |      | 2,828,304   |   |      |   | 2,490,198   |  
|                                                                                                                                                          |  |      |             |   |      |   |             |  
|Total current liabilities                                                                                                                                 |  |      | 20,511,234  |   |      |   | 22,941,598  |  
|Debt - less current portion                                                                                                                               |  |      | 441         |   |      |   | 52,408      |  
|Nonrecourse debt - less current portion                                                                                                                   |  |      | 71,500,098  |   |      |   | 74,328,402  |  
|Deferred income taxes                                                                                                                                     |  |      | 23,242,864  |   |      |   | 28,753,889  |  
|Deferred rent income                                                                                                                                      |  |      | 39,112,665  |   |      |   | 42,082,116  |  
|Deferred gain from sale and extensions of land purchase option                                                                                            |  |      | 0           |   |      |   | 49,751,667  |  
|                                                                                                                                                          |  |      |             |   |      |   |             |  
|Total liabilities                                                                                                                                         |  |      | 154,367,302 |   |      |   | 217,910,080 |  
|                                                                                                                                                          |  |      |             |   |      |   |             |  
|Stockholders equity:                                                                                                                                     |  |      |             |   |      |   |             |  
|Common stock, $.01 par value; authorized-100,000,000 shares; issued and outstanding  6,329,177 and 6,280,931 shares                                      |  |      | 63,292      |   |      |   | 62,809      |  
|Preferred stock, exchangeable, redeemable 16.0% cumulative $2.14 per share liquidation value, authorized - 10,000,000 shares; none issued and
outstanding |  |      | 0           |   |      |   | 0           |  
|Additional paid-in capital                                                                                                                                |  |      | 63,300,848  |   |      |   | 61,482,194  |  
|Accumulated deficit                                                                                                                                       |  |      | (6,582,794  | ) |      |   | (63,507,905 | )
|Accumulated other comprehensive income (loss)                                                                                                             |  |      | (974,978    | ) |      |   | 4,122,320   |  
|                                                                                                                                                          |  |      |             |   |      |   |             |  
|                                                                                                                                                          |  |      | 55,806,368  |   |      |   | 2,159,418   |  
|Notes receivable from principal stockholders                                                                                                              |  |      | (111,722    | ) |      |   | 0           |  
|Less treasury common stock  4,875 shares, at cost                                                                                                        |  |      | (87,774     | ) |      |   | (87,774     | )
|                                                                                                                                                          |  |      |             |   |      |   |             |  
|Total stockholders equity                                                                                                                                |  |      | 55,606,872  |   |      |   | 2,071,644   |  
|                                                                                                                                                          |  |      |             |   |      |   |             |  
|Total liabilities and stockholders equity                                                                                                                |  | $    | 209,974,174 |   |      | $ | 219,981,724 |  
|                                                                                                                                                          |  |      |             |   |      |   |             |  

The accompanying notes are an integral part of these consolidated financial statements.



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##### Table of Contents

Archon Corporation and Subsidiaries

Consolidated Statements of Operations

For the Years Ended September 30,



|                                                                       |  |      |            |   |      |   |            |  
|---------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                                       |  | 2008 |            |   | 2007 |  
|Revenues:                                                              |  |      |            |   |      |   |            |  
|Casino                                                                 |  | $    | 20,398,198 |   |      | $ | 23,620,598 |  
|Hotel                                                                  |  |      | 2,207,771  |   |      |   | 2,849,349  |  
|Food and beverage                                                      |  |      | 7,192,525  |   |      |   | 7,392,665  |  
|Rental properties                                                      |  |      | 12,402,247 |   |      |   | 12,402,248 |  
|Other                                                                  |  |      | 6,610,598  |   |      |   | 4,943,226  |  
|                                                                       |  |      |            |   |      |   |            |  
|Gross revenues                                                         |  |      | 48,811,339 |   |      |   | 51,208,086 |  
|Less casino promotional allowances                                     |  |      | (5,612,217 | ) |      |   | (6,029,493 | )
|                                                                       |  |      |            |   |      |   |            |  
|Net operating revenues                                                 |  |      | 43,199,122 |   |      |   | 45,178,593 |  
|                                                                       |  |      |            |   |      |   |            |  
|Operating expenses:                                                    |  |      |            |   |      |   |            |  
|Casino                                                                 |  |      | 12,267,519 |   |      |   | 13,634,799 |  
|Hotel                                                                  |  |      | 1,030,598  |   |      |   | 1,185,252  |  
|Food and beverage                                                      |  |      | 4,336,752  |   |      |   | 4,280,358  |  
|Other                                                                  |  |      | 1,020,767  |   |      |   | 1,898,900  |  
|Selling, general and administrative:                                   |  |      |            |   |      |   |            |  
|Corporate                                                              |  |      | 7,188,527  |   |      |   | 4,368,540  |  
|Other                                                                  |  |      | 3,481,169  |   |      |   | 3,608,705  |  
|Utilities and property expenses                                        |  |      | 4,886,664  |   |      |   | 4,761,520  |  
|Depreciation and amortization                                          |  |      | 4,279,169  |   |      |   | 4,552,391  |  
|Loss on impairment of assets                                           |  |      | 11,000,000 |   |      |   | 0          |  
|Loss (gain) on sale / disposal of assets                               |  |      | (7,628     | ) |      |   | 152        |  
|                                                                       |  |      |            |   |      |   |            |  
|Total operating expenses                                               |  |      | 49,483,537 |   |      |   | 38,290,617 |  
|                                                                       |  |      |            |   |      |   |            |  
|Operating income (loss)                                                |  |      | (6,284,415 | ) |      |   | 6,887,976  |  
|Other income and (expense):                                            |  |      |            |   |      |   |            |  
|Interest expense                                                       |  |      | (8,209,714 | ) |      |   | (8,456,538 | )
|Gain on termination of land sale option                                |  |      | 67,130,836 |   |      |   | 0          |  
|Gain from settlement of liabilities                                    |  |      | 1,278,600  |   |      |   | 0          |  
|Interest and other income                                              |  |      | 3,616,566  |   |      |   | 1,042,539  |  
|                                                                       |  |      |            |   |      |   |            |  
|Income (loss) before income tax benefit and discontinued operations    |  |      | 57,531,873 |   |      |   | (526,023   | )
|Federal income tax benefit                                             |  |      | 1,270,121  |   |      |   | 184,001    |  
|                                                                       |  |      |            |   |      |   |            |  
|Income (loss) from continuing operations                               |  |      | 58,801,994 |   |      |   | (342,022   | )
|                                                                       |  |      |            |   |      |   |            |  
|Discontinued operations  disposal gain, net of income tax of $510,596 |  |      | 0          |   |      |   | 948,250    |  
|                                                                       |  |      |            |   |      |   |            |  
|Net income                                                             |  |      | 58,801,994 |   |      |   | 606,228    |  
|Dividends earned on preferred shares                                   |  |      | 0          |   |      |   | (1,385,337 | )
|                                                                       |  |      |            |   |      |   |            |  
|Net income (loss) applicable to common shares                          |  | $    | 58,801,994 |   |      | $ | (779,109   | )
|                                                                       |  |      |            |   |      |   |            |  

The accompanying notes are an integral part of these consolidated financial statements.



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##### Table of Contents

Archon Corporation and Subsidiaries

Consolidated Statements of Operations (continued)

For the Years Ended
September 30,



|                                                        |  |      |           |      |   |           |  
|------------------------------------------------------- |  | ---- | --------- | ---- | - | --------- | -
|                                                        |  | 2008 |           | 2007 |  
|Average common shares outstanding                       |  |      | 6,345,715 |      |   | 6,386,473 |  
|                                                        |  |      |           |      |   |           |  
|Average common and common equivalent shares outstanding |  |      | 7,004,303 |      |   | 6,386,473 |  
|                                                        |  |      |           |      |   |           |  
|Basic income (loss) per common share                    |  |      |           |      |   |           |  
|From continuing operations                              |  | $    | 9.27      |      | $ | (0.27     | )
|From discontinued operations                            |  |      | N/A       |      |   | 0.15      |  
|                                                        |  |      |           |      |   |           |  
|Net basic income (loss) per common share                |  | $    | 9.27      |      | $ | (0.12     | )
|                                                        |  |      |           |      |   |           |  
|Diluted income per common share:                        |  |      |           |      |   |           |  
|From continuing operations                              |  | $    | 8.40      |      |   | N/A       |  
|From discontinued operations                            |  |      | N/A       |      |   | N/A       |  
|                                                        |  |      |           |      |   |           |  
|Net diluted income per common share                     |  | $    | 8.40      |      |   | N/A       |  
|                                                        |  |      |           |      |   |           |  

The accompanying notes are an integral part of these consolidated financial statements.



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##### Table of Contents

Archon Corporation and Subsidiaries

Consolidated Statements Comprehensive Income (Loss)

For the Years Ended September 30,



|                                                                                                    |  |      |            |   |      |   |          
|--------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------
|                                                                                                    |  | 2008 |            |   | 2007
|Net income                                                                                          |  | $    | 58,801,994 |   |      | $ | 606,228  
|Unrealized gain (loss) on marketable securities, net of income taxes of $(2,744,700) and $1,183,652 |  |      | (5,097,298 | ) |      |   | 2,198,211
|                                                                                                    |  |      |            |   |      |   |          
|Comprehensive income                                                                                |  | $    | 53,704,696 |   |      | $ | 2,804,439
|                                                                                                    |  |      |            |   |      |   |          

The accompanying notes are an integral part of these consolidated financial statements.



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Archon Corporation and Subsidiaries

Consolidated Statements of Stockholders Equity

For the Years Ended September 30, 2008 and 2007



|                                         |  |             |        |   |                |   |            |                          |  |   |                    |   |  |                                            |             |   |                                 |   |            |               |  |   |          |   |  |   |         |   |  |   |             |  
|---------------------------------------- |  | ----------- | ------ | - | -------------- | - | ---------- | ------------------------ |  | - | ------------------ | - |  | ------------------------------------------ | ----------- | - | ------------------------------- | - | ---------- | ------------- |  | - | -------- | - |  | - | ------- | - |  | - | ----------- | -
|                                         |  | CommonStock |        |   | PreferredStock |   |            | AdditionalPaid-InCapital |  |   | AccumulatedDeficit |   |  | AccumulatedOtherComprehensiveIncome (Loss) |             |   | NotesReceivableFromStockholders |   |            | TreasuryStock |  |   | Total    |  
|Balances, October 1, 2006                |  | $           | 66,723 |   |                | $ | 9,445,483  |                          |  | $ | 61,482,194         |   |  | $                                          | (51,098,102 | ) |                                 | $ | 1,924,109  |               |  | $ | 0        |   |  | $ | (87,774 | ) |  | $ | 21,732,633  |  
|Net income                               |  |             |        |   |                |   |            |                          |  |   |                    |   |  |                                            | 606,532     |   |                                 |   |            |               |  |   |          |   |  |   |         |   |  |   | 606,532     |  
|Preferred stock redeemed and retired     |  |             |        |   |                |   | (9,445,483 | )                        |  |   |                    |   |  |                                            | (13,016,335 | ) |                                 |   |            |               |  |   |          |   |  |   |         |   |  |   | (22,461,818 | )
|Exercise of stock options                |  |             | 450    |   |                |   |            |                          |  |   |                    |   |  |                                            |             |   |                                 |   |            |               |  |   |          |   |  |   |         |   |  |   | 450         |  
|Cancellation of stock options exercised  |  |             | (4,364 | ) |                |   |            |                          |  |   |                    |   |  |                                            |             |   |                                 |   |            |               |  |   |          |   |  |   |         |   |  |   | (4,364      | )
|Unrealized gain on marketable securities |  |             |        |   |                |   |            |                          |  |   |                    |   |  |                                            |             |   |                                 |   | 2,198,211  |               |  |   |          |   |  |   |         |   |  |   | 2,198,211   |  
|                                         |  |             |        |   |                |   |            |                          |  |   |                    |   |  |                                            |             |   |                                 |   |            |               |  |   |          |   |  |   |         |   |  |   |             |  
|Balances, September 30, 2007             |  |             | 62,809 |   |                |   | 0          |                          |  |   | 61,482,194         |   |  |                                            | (63,507,905 | ) |                                 |   | 4,122,320  |               |  |   | 0        |   |  |   | (87,774 | ) |  |   | 2,071,644   |  
|Net income                               |  |             |        |   |                |   |            |                          |  |   |                    |   |  |                                            | 58,801,994  |   |                                 |   |            |               |  |   |          |   |  |   |         |   |  |   | 58,801,994  |  
|Common shares purchased and retired      |  |             | (646   | ) |                |   |            |                          |  |   | (704,081           | ) |  |                                            | (1,876,883  | ) |                                 |   |            |               |  |   |          |   |  |   |         |   |  |   | (2,581,610  | )
|Exercise of stock options                |  |             | 1,129  |   |                |   |            |                          |  |   | 111,721            |   |  |                                            |             |   |                                 |   |            |               |  |   | (111,722 | ) |  |   |         |   |  |   | 1,128       |  
|Stock-based compensation expense         |  |             |        |   |                |   |            |                          |  |   | 2,411,014          |   |  |                                            |             |   |                                 |   |            |               |  |   |          |   |  |   |         |   |  |   | 2,411,014   |  
|Unrealized loss on marketable securities |  |             |        |   |                |   |            |                          |  |   |                    |   |  |                                            |             |   |                                 |   | (5,097,298 | )             |  |   |          |   |  |   |         |   |  |   | (5,097,298  | )
|                                         |  |             |        |   |                |   |            |                          |  |   |                    |   |  |                                            |             |   |                                 |   |            |               |  |   |          |   |  |   |         |   |  |   |             |  
|Balances, September 30, 2008             |  | $           | 63,292 |   |                | $ | 0          |                          |  | $ | 63,300,848         |   |  | $                                          | (6,582,794  | ) |                                 | $ | (974,978   | )             |  | $ | (111,722 | ) |  | $ | (87,774 | ) |  | $ | 55,606,872  |  
|                                         |  |             |        |   |                |   |            |                          |  |   |                    |   |  |                                            |             |   |                                 |   |            |               |  |   |          |   |  |   |         |   |  |   |             |  

The accompanying notes are an integral part of these consolidated financial statements



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Archon Corporation and Subsidiaries

Consolidated Statements of Cash Flows

For the Years Ended September 30,



|                                                                                         |  |      |             |   |            |   |             |  
|---------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---------- | - | ----------- | -
|                                                                                         |  | 2008 |             |   | 2007       |  
|                                                                                         |  |      |             |   | (Restated) |  
|Cash flows from operating activities:                                                    |  |      |             |   |            |   |             |  
|Net income                                                                               |  | $    | 58,801,994  |   |            | $ | 606,228     |  
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |      |             |   |            |   |             |  
|Depreciation and amortization                                                            |  |      | 4,279,169   |   |            |   | 4,552,391   |  
|Interest expense from amortization of debt issuance costs                                |  |      | 380,661     |   |            |   | 294,106     |  
|Stock-based compensation expense                                                         |  |      | 2,411,014   |   |            |   | 0           |  
|Gain on termination of land sale purchase option                                         |  |      | (67,130,836 | ) |            |   | 0           |  
|Gain from settlement of liabilities                                                      |  |      | (1,278,600  | ) |            |   | 0           |  
|Loss on impairment of assets                                                             |  |      | 11,000,000  |   |            |   | 0           |  
|Disposal gain, discontinued component, net of tax effect                                 |  |      | 0           |   |            |   | (948,250    | )
|Loss (gain) on sale of assets, continuing operations                                     |  |      | (7,628      | ) |            |   | 152         |  
|Loss on sale of marketable securities                                                    |  |      | 2,353,836   |   |            |   | 0           |  
|Change in assets and liabilities:                                                        |  |      |             |   |            |   |             |  
|Accounts receivable                                                                      |  |      | 909,683     |   |            |   | 41,840      |  
|Inventories                                                                              |  |      | 62,999      |   |            |   | 8,655       |  
|Prepaid expenses and other                                                               |  |      | (222,612    | ) |            |   | (103,015    | )
|Deferred income taxes                                                                    |  |      | (4,927,031  | ) |            |   | (185,372    | )
|Other assets                                                                             |  |      | (153,202    | ) |            |   | (253,267    | )
|Accounts payable                                                                         |  |      | 118,547     |   |            |   | 1,237,816   |  
|Interest payable                                                                         |  |      | (1,141,859  | ) |            |   | 50,296      |  
|Accrued expenses and other current liabilities                                           |  |      | 762,395     |   |            |   | 187,473     |  
|Other liabilities                                                                        |  |      | (2,969,451  | ) |            |   | (2,959,603  | )
|                                                                                         |  |      |             |   |            |   |             |  
|Net cash provided by operating activities                                                |  |      | 3,249,079   |   |            |   | 2,519,450   |  
|                                                                                         |  |      |             |   |            |   |             |  
|Cash flows from investing activities:                                                    |  |      |             |   |            |   |             |  
|Proceeds from disposal of discontinued components                                        |  |      | 0           |   |            |   | 1,800,000   |  
|Proceeds from sale of assets, continuing operations                                      |  |      | 20,035      |   |            |   | 9,683       |  
|Payments received on sale or extension of land purchase option                           |  |      | 17,379,169  |   |            |   | 44,001,667  |  
|Capital expenditures                                                                     |  |      | (775,978    | ) |            |   | (540,551    | )
|Marketable securities purchased                                                          |  |      | (12,831,498 | ) |            |   | (1,752,760  | )
|Marketable securities sold or redeemed                                                   |  |      | 10,062,121  |   |            |   | 148,760     |  
|                                                                                         |  |      | 0           |   |            |   | 0           |  
|                                                                                         |  |      |             |   |            |   |             |  
|Net cash provided by investing activities                                                |  |      | 13,853,849  |   |            |   | 43,666,799  |  
|                                                                                         |  |      |             |   |            |   |             |  
|Cash flows from financing activities:                                                    |  |      |             |   |            |   |             |  
|Proceeds from long-term debt                                                             |  |      | 9,581,705   |   |            |   | 0           |  
|Payments on debt and obligation under capital lease                                      |  |      | (13,401,013 | ) |            |   | (2,852,596  | )
|Common stock purchased and retired                                                       |  |      | (2,581,611  | ) |            |   | 0           |  
|Preferred stock redeemed and retired                                                     |  |      | (213,796    | ) |            |   | (22,033,050 | )
|Stock options exercised                                                                  |  |      | 1,129       |   |            |   | 450         |  
|Cancellation of stock options exercised                                                  |  |      | 0           |   |            |   | (4,364      | )
|                                                                                         |  |      |             |   |            |   |             |  
|Net cash used in financing activities                                                    |  |      | (6,613,586  | ) |            |   | (24,889,560 | )
|                                                                                         |  |      |             |   |            |   |             |  
|Increase in cash and cash equivalents                                                    |  |      | 10,489,342  |   |            |   | 21,296,689  |  
|Cash and cash equivalents, beginning of year                                             |  |      | 27,484,222  |   |            |   | 6,187,533   |  
|                                                                                         |  |      |             |   |            |   |             |  
|Cash and cash equivalents, end of year                                                   |  | $    | 37,973,564  |   |            | $ | 27,484,222  |  
|                                                                                         |  |      |             |   |            |   |             |  

See the accompanying Notes to Consolidated Financial Statements.



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ARCHON CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended September 30, 2008, and 2007



|1. | BASIS OF PRESENTATION AND GENERAL INFORMATION
|-- | ---------------------------------------------

Archon Corporation, (the Company or Archon), is a Nevada corporation. The Companys primary business operations are conducted through a wholly-owned subsidiary corporation, Pioneer Hotel Inc. (PHI),
which operates the Pioneer Hotel & Gambling Hall (the Pioneer) in Laughlin, Nevada. In addition, the Company, owns real estate on Las Vegas Boulevard South (the Strip) in Las Vegas, Nevada, and also owns rental
properties in Dorchester, Massachusetts and Gaithersburg, Maryland.



|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- | ------------------------------------------

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Archon
and its wholly-owned subsidiaries. Amounts representing the Companys investment in less than majority-owned companies in which a significant equity ownership interest is held are accounted for on the equity method. All significant intercompany
accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make
estimates that affect the reported amounts. Actual results may differ from estimates.

Cash Equivalents

Highly liquid investments that mature or are otherwise contractually redeemable in cash within 90 days from the date of purchase are treated as cash
equivalents. These investments are stated at cost which approximates their market value.

Uninsured Deposits

At various times during the period and subsequently, the Company maintained account balances that exceeded federally insured limits, and the risk of
losses related to such concentrations may be increasing as a result of economic developments.

Investment in Marketable Securities

Debt securities available-for-sale are stated at fair market value with unrealized gains or losses determined by the specific
identification method and reported as a component of accumulated other comprehensive income. Debt securities available-for-sale at September 30, 2008 and 2007 include investments in corporate bonds.



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Equity securities available-for-sale are reported at fair value with unrealized gains or losses reported
as a component of accumulated other comprehensive income. Realized and unrealized gains and losses are determined by the specific identification method. At September 30, 2008 and 2007, investments in equity securities available-for-sale
included common and preferred stocks.

Included in Other income on the consolidated statements of operations are approximately
$2,354,000 and $175,000 of realized gains for the years ended September 30, 2008 and 2007, respectively. The Company recorded approximately $(5,097,298) and $2,198,211 of other comprehensive income (loss) associated with unrealized gains
(losses) on these investments during the years ended September 30, 2008 and 2007, respectively. Through December 31, 2008, the Company experienced a $2.8 million further decline in the value of these investments.

The following is a summary of available-for-sale marketable securities as of September 30, 2008 and 2007:



|                  |  |      |           |                |   |                  |  |                     |           |  |   |           
|----------------- |  | ---- | --------- | -------------- | - | ---------------- |  | ------------------- | --------- |  | - | ----------
|                  |  | 2008
|                  |  | Cost |           | UnrealizedGain |   | UnrealizedLosses |  | Market orFair Value
|Debt securities   |  | $    | 2,402,471 |                | $ | 0                |  | $                   | 282,655   |  | $ | 2,119,816 
|Equity securities |  |      | 4,828,832 |                |   | 197,658          |  |                     | 1,414,969 |  |   | 3,611,521 
|                  |  |      |           |                |   |                  |  |                     |           |  |   |           
|Total             |  | $    | 7,231,303 |                | $ | 197,658          |  | $                   | 1,697,624 |  | $ | 5,731,337 
|                  |  |      |           |                |   |                  |  |                     |           |  |   |           
|                  | 
|                  |  | 2007
|                  |  | Cost |           | UnrealizedGain |   | UnrealizedLosses |  | Market orFair Value
|Debt securities   |  | $    | 1,294,975 |                | $ | 1,250            |  | $                   | 172,886   |  | $ | 1,123,339 
|Equity securities |  |      | 3,348,603 |                |   | 6,568,330        |  |                     | 43,184    |  |   | 9,873,749 
|                  |  |      |           |                |   |                  |  |                     |           |  |   |           
|Total             |  | $    | 4,643,578 |                | $ | 6,569,580        |  | $                   | 216,070   |  | $ | 10,997,088
|                  |  |      |           |                |   |                  |  |                     |           |  |   |           

Inventories

Food, beverage, gift shop and other inventories are stated at the lower of first-in, first-out cost or market.

Property and Equipment

Property and equipment, including rental properties, is stated at cost less
accumulated depreciation and amortization. Costs of maintenance and repairs of property and equipment are expensed as incurred. Depreciated and amortization are provided over the estimated useful lives of the assets, which for leasehold improvements
is limited to the remaining term of the leases. See Note 9

Depreciation is computed by the straight-line method over the shorter of the
estimated useful lives or lease terms. The length of depreciation periods for buildings and improvements is seven to 40 years and for machinery and equipment three to 15 years.

During the quarter ended September 30, 2008, an impairment loss of $11 million was recorded with respect to the Pioneer operating assets.



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Long-Lived Assets

The Company applies the provision of Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144), to all long lived assets.
SFAS 144 addresses accounting and reporting for impairment and disposal of long-lived assets. The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with SFAS 144. SFAS 144 requires impairment
losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets carrying amounts. In that event, a loss
is recognized in the fourth quarter, based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market
values are reduced for the cost of disposal. Based on its review, management of the Company believes that, as of September 30, 2008, there was a significant impairment of its long-lived assets in the amount of $11.0 million and accordingly,
property and equipment was written down to its net realizable value.

Debt Issuance Costs

Loan issuance costs incurred in connection with financing the acquisition of rental property are included in other assets in the accompanying consolidated
balance sheets and are being amortized over the remaining loan period on the straight-line method, which approximates the effective interest method.

Deferred Gain from Sale and Extension of Land Purchase Option

The deferred gain from sale and extension of
land purchase option at September 30, 2007 included nonrefundable payments received from a third party in connection with the sale and extension of an option to purchase a parcel of land on the Las Vegas Strip owned by the Company. Gain from
the option transaction was deferred and was recognized in the year ended September 30, 2008, upon termination of the option. See Note 4

Slot
Club Liability

The Pioneer has a program called the Bounty Hunter Round-Up Club (the Club) that was
established to encourage repeat business from frequent and active slot and table game customers. A member of the Club accumulates points in the members account for play on slot machines and table games that can be redeemed for cash, free
gifts, food and beverages and additional points redeemable for free play. Included in accrued expenses is approximately $1.3 and $1.4 million at September 30, 2008 and 2007, for estimated redemption value of points accumulated by patrons.

Revenue Recognition

Casino revenue is recorded as gaming wins less losses. Hotel, food and beverage, entertainment and other operating revenues are recognized as services are performed. Casino revenues are recognized net of certain sales incentives in
accordance with Emerging Issues Task Force (EITF) Issue 01-9 Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendors Products)(EITF 01-9).Accordingly, cash incentives to customers for
gambling, and the cash value of points and coupons earned by the slot club members totaling $427,497 and $518,280 for the years ended September 30, 2008 and 2007, have been recognized as a direct reduction of casino revenue.

Advance deposits on rooms, if any, are recorded as deferred revenue until services are provided to the customer. Revenues include the retail amount of
room, food, beverage and other services provided gratuitously to customers totaling $5.6 million and $6.0 million for the years ended September 30, 2008 and 2007. The estimated cost of providing these promotional services has been reported in
the accompanying consolidated statements of operations as an expense of each department granting complimentary services. The table below summarizes the departments costs of such services (dollars in thousands):



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|                  |  |      |       |      |   |      
|----------------- |  | ---- | ----- | ---- | - | -----
|                  |  | 2008 |       | 2007
|Food and beverage |  | $    | 3,963 |      | $ | 4,330
|Hotel             |  |      | 498   |      |   | 499  
|Other             |  |      | 109   |      |   | 203  
|                  |  |      |       |      |   |      
|Total             |  | $    | 4,570 |      | $ | 5,032
|                  |  |      |       |      |   |      

Rental revenue from rental properties is recognized as earned on a straight-line basis over the
term of the lease. When rental payments received exceed rents earned and recognized, the difference is recorded as other liabilities, and conversely, when rents earned and recognized exceed rental payments received, the difference is recorded as
other assets. See Notes 6 and 20

Accounting for Stock-Based Compensation

The Company uses the straight-line method for expense attribution, and it will also estimate forfeitures and only recognize expense for those shares
expected to vest.

The assumptions used in estimating the fair value of each option grant on the date of grant using the
Black-Scholes-Merton option pricing model for options granted in 2008 and 2007 (dollars in thousands, except per share data) are as follows:



|                                                             |  |      |       |   |      |    
|------------------------------------------------------------ |  | ---- | ----- | - | ---- | ---
|                                                             |  | 2008 |       |   | 2007
|Weighted average assumptions:                                |  |      |       |   |      |    
|Expected stock price volatility                              |  |      | 21.0  | % |      | N/A
|Risk-free interest rate                                      |  |      | 1.52  | % |      | N/A
|Expected option lives (in years)                             |  |      | 3     |   |      | N/A
|Expected dividend yield                                      |  |      | N/A   |   |      | N/A
|Estimated fair value of options, net of tax effect           |  | $    | 1,569 |   |      | N/A
|Estimated fair value of options per share, net of tax effect |  | $    | 0.25  |   |      | N/A

The Black-Scholes-Merton option valuation model requires the input of highly subjective
assumptions, including the expected life of the stock-based award and stock price volatility. The assumptions listed above represent managements best estimates, but these estimates involve inherent uncertainties and the application of
management judgment. As a result, if other assumptions had been used, our recorded and pro forma stock-based compensation expense could have been materially different from that depicted above. In addition, we are required to estimate the expected
forfeiture rate and only recognize expense for those shares expected to vest. If our actual forfeiture rate is materially different from our estimate, the share-based compensation expense could be materially different.

Legal Defense Costs

The Company does
not accrue for estimated future legal and related defense costs, if any, to be incurred in connection with outstanding or threatened litigation and other disputed matters but, rather, records such as period costs when the services are rendered.

Income (Loss) Per Share

Basic per share amounts are computed by dividing net income by average shares outstanding during the period, while diluted per share amounts reflect the impact of additional dilution for all potentially dilutive securities, such as stock
options.



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##### Table of Contents

Dilutive stock options of approximately 704,860 were not included in a dilution computation for the year
ended September 30, 2007, since the Company incurred a net loss applicable to common shares during that period, the effect would be antidilutive and, therefore, no diluted loss per share is presented.

As of August 31, 2007, the Company called for the redemption of all outstanding shares of its Exchangeable Redeemable Preferred Stock on and at a
redemption price of $5.241 per share, which sum included earned and unpaid dividends to the date of redemption. From and after August 31, 2007, all shares of the Exchangeable Redeemable Preferred Stock ceased to be outstanding and to earn
dividends. As of the date of the preparation of these financial statements, the holders of 4,258,312 shares of the Exchangeable Redeemable Preferred Stock have surrendered their shares and received payment of the redemption price.

Reclassifications

Certain minor
reclassifications have been made in prior years consolidated financial statements to conform to the presentations used in fiscal 2008.



|3. | ACCOUNTS RECEIVABLE, NET
|-- | ------------------------

Accounts
receivable at September 30, 2008 and 2007 consisted of the following:



|                                      |  |      |         |   |      |   |           |  
|------------------------------------- |  | ---- | ------- | - | ---- | - | --------- | -
|                                      |  | 2008 |         |   | 2007 |  
|Casino and hotel                      |  | $    | 183,032 |   |      | $ | 147,879   |  
|Rental properties                     |  |      | 0       |   |      |   | 950,018   |  
|                                      |  |      |         |   |      |   |           |  
|Subtotal                              |  |      | 183,032 |   |      |   | 1,097,897 |  
|Less: allowance for doubtful accounts |  |      | (38,222 | ) |      |   | (43,404   | )
|                                      |  |      |         |   |      |   |           |  
|Total                                 |  | $    | 144,810 |   |      | $ | 1,054,493 |  
|                                      |  |      |         |   |      |   |           |  

Changes in the allowance for doubtful accounts for the years ended September 30, 2008 and
2007 were as follows:



|                           |  |      |        |   |      |   |        |  
|-------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                           |  | 2008 |        |   | 2007 |  
|Balance, beginning of year |  | $    | 43,404 |   |      | $ | 31,534 |  
|Provision                  |  |      | (4,457 | ) |      |   | 14,060 |  
|Accounts written-off       |  |      | (725   | ) |      |   | (2,190 | )
|                           |  |      |        |   |      |   |        |  
|Balance, end of year       |  | $    | 38,222 |   |      | $ | 43,404 |  
|                           |  |      |        |   |      |   |        |  



|4. | TERMINATION OF OPTION TO PURCHASE LAS VEGAS BOULEVARD LAND
|-- | ----------------------------------------------------------

The Company owns, through its wholly owned subsidiary, Sahara Las Vegas Corp. (SLVC), an approximately 27-acre parcel of land (the Property) located on the east side of Las Vegas Boulevard
South, just south of Sahara Avenue. The Company presently leases the Property to two different lessees for an aggregate amount of $0.4 million per month. Both leases may be terminated with sixty days written notice in the event the Property is sold
to a third party.



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On June 24, 2006, SLVC entered into an Option Agreement (the Agreement) between SLVC and
LVTI, LLC, a Delaware limited liability company (LVTI), granting LVTI the option to purchase the Property on certain terms and conditions. Pursuant to the Agreement, LVTI was required to make a payment to SLVC in the amount of $2.9
million on or before June 2, 2008. LVTI failed to make the June 2008 payment, and SLVC formally terminated the Agreement by written notice on June 3, 2008. A Confirmation of Termination of Option Agreement was executed by both SLVC and
LVTI, and this document was recorded in the Office of the Clark County, Nevada Recorder on June 10, 2008. As a result of the termination of the Agreement, the Company has realized $67.1 million of income during the year ended September 30,
2008. This income is the sum of all payments made to SLVC under the terms of the Agreement prior to termination of the option. See Note 20



|5. | RENTAL PROPERTY HELD FOR INVESTMENT
|-- | -----------------------------------

The
property in Dorchester, Massachusetts includes several buildings used for commercial office space. The property is under a net lease through 2020 with a single tenant. Under the lease, the tenant is responsible for substantially all obligations
related to the property. The property was acquired for approximately $82.4 million plus $0.5 million in debt issuance costs. The Company paid $5.6 million in cash and assumed $77.3 million in nonrecourse debt associated with the property. The
Company allocated approximately $15.0 million of the purchase price to land and the balance to building and improvements. The loan issue costs incurred to acquire the property recorded in other assets in the accompanying Consolidated Balance Sheets
are being amortized over the remaining loan period. Deferred rental revenue at September 30, 2008 and 2007 in the amounts of $39.0 million and $42.0 million, respectively, is presented on the accompanying Consolidated Balance Sheets. See Note 7

The property in Gaithersburg, Maryland, is a building used for commercial office space. The property is under a net lease through 2014
with a single tenant. Under the lease, the tenant is responsible for substantially all obligations related to the property. The property was acquired for $62.6 million, plus debt issuance costs of $2.7 million. The Company paid $9.9 million in cash
and issued $55.4 million in nonrecourse first mortgage indebtedness. The Company allocated approximately $23.0 million of the purchase price to land, $3.0 million to machinery and equipment and the balance to building and improvements. The expenses
incurred to acquire the property (approximately $2.7 million) are recorded in other assets in the accompanying Consolidated Balance Sheets and are being amortized over the remaining loan period. See Notes 6 and 7



|6. | SALE OF GAITHERSBURG PROPERTY
|-- | -----------------------------

Commencing
December 15, 2003, SFHI, LLC, owned by SFHI, Inc., a wholly owned subsidiary of the Company, and Avalon Bay Communities, Inc. a Maryland corporation (Avalon Bay), entered into various agreements wherein the parties jointly sought
certain approvals and consents from the City of Gaithersburg, Maryland (the City), of plans to develop a 51-acre parcel of land (the Property) located within the City and now owned by the Company. The preliminary agreements
stated that if the Company and Avalon Bay were successful in obtaining the necessary developmental approvals and consents, the Company would then sell the Property to Avalon Bay. While preliminary discussions with the City have not been successful
and the required approvals have not been obtained, efforts continue in this regard.

Alternatively, the Company and Avalon Bay have been
seeking a formal commitment from Montgomery County, Maryland, (the County) for the County to acquire the Property through a property exchange with Avalon Bay. The County has conducted testing and physical inspections of the Property to
further that property exchange proposal and to determine its feasibility.

In November 2008, the Company and Avalon Bay drafted and
executed a Restated Purchase and Sale Contract (the Contract), reflecting the $78.5 million purchase price. In addition to other terms and conditions, the Contract



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provided that approvals and other conditions to closing the sale must be satisfied or waived by Avalon Bay on or before December 31, 2008, or by a later
date if the deadline had been extended pursuant to the terms of the Contract. Avalon Bay did not exercise its right to extend the deadline, and therefore, the Contract expired on December 31, 2008. See Note 20



|7. | DEBT
|-- | ----

Loans Payable

As of September 30, 2008, the Companys loans payable were comprised primarily of the following obligations: a bank credit facility for $29.0
million of which $9.8 million is outstanding and $19.2 million remains available to the Company, secured by land held for development or sale on the Strip, monthly payments of approximately $51,000, including interest of a floating commercial loan
rate publicly announced from time-to-time (the Colonial Bank Base Rate)with a floor of 6% (6.25% at September 30, 2008) with a balloon payment of approximately $9.8 million in May 2009, and various loans with a total balance of $0.1
million collateralized by slot and other equipment with interest rates up to 10.0%, current monthly principal payments of approximately $7,000 with maturities thru September 2009.

The Companys loan with a balance of approximately $9.8 million includes a financial covenant which requires the Company to maintain certain levels
of earnings before interest, taxes, depreciation and amortization without including financial results related to the Companys rental properties in Massachusetts and Maryland.

Nonrecourse Debt Obligations

The Company assumed $77.3 million of indebtedness,
consisting of approximately $75.1 million of first mortgage indebtedness, $43.9 million with an interest rate of 10.2% and $31.2 million with an interest rate of 12.18% and $2.1 million of indebtedness under of the Internal Revenue Code of 1986, as
amended, (the Code) Section 467 (Section 467), in connection with its acquisition on March 2, 2001 of the commercial office building located in Dorchester, Massachusetts. The building is under a net lease through
June 2020, requiring that the lease payments be applied to the outstanding indebtedness. The first mortgage indebtedness is nonrecourse and matures in June 2020 to coincide with the end of the lease term.

The Company issued approximately $55.4 million of first mortgage debt with a 7.01% interest rate per annum in connection with its acquisition of a
commercial office building located in Gaithersburg, Maryland. The building is under lease through April 2014. The monthly lease payments are applied against the outstanding indebtedness. Monthly principal and interest payments amortize the debt to
approximately $22.3 million by the end of the lease in April 2014. The Company anticipates that the future tenant payments related to the net leases will be sufficient to fund required payments under the first mortgage notes and Section 467
debt. See Note 5

The scheduled maturities of long-term debt as of September 30, 2008 are as follows:



|           |  |   |           
|---------- |  | - | ----------
|2009       |  | $ | 2,910,361 
|2010       |  |   | 3,186,329 
|2011       |  |   | 3,573,478 
|2012       |  |   | 3,986,926 
|2013       |  |   | 4,447,563 
|Thereafter |  |   | 56,306,243
|           |  |   |           
|Total      |  | $ | 74,410,900
|           |  |   |           



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|8. | LEASES
|-- | ------

At September 30, 2008 the
Company had a noncancellable operating lease for real property that expires in 2078 and other minor operating leases for corporate offices. Under most of the leases, the Company, as lessee, pays the taxes, insurance and the operating expenses
related to the leased property

Future aggregate minimum lease payments as of September 30, 2008 are as follows:



|           |  |   |           
|---------- |  | - | ----------
|2009       |  | $ | 418,645   
|2010       |  |   | 387,757   
|2011       |  |   | 387,757   
|2012       |  |   | 387,757   
|2013       |  |   | 387,757   
|Thereafter |  |   | 25,236,547
|           |  |   |           
|Total      |  | $ | 27,206,220
|           |  |   |           

Rent expense was $443,703 and $439,021 on all operating leases for the years ended
September 30, 2008 and 2007, respectively.



|9. | REDEMPTION OF THE COMPANYS PREFERRED STOCK AND REDEMPTION PRICE DISPUTES.
|-- | --------------------------------------------------------------------------

The Company called all outstanding shares of its Exchangeable Redeemable Preferred Stock for redemption on and as of August 31, 2007, at a redemption
price of $5.241 per share, which sum included accrued and unpaid dividends to the date of redemption. From and after August 31, 2007, all shares of the Exchangeable Redeemable Preferred Stock ceased to be outstanding and to accrue dividends. As
of January 9, 2009, the holders of 4,259,252 shares of the Exchangeable Redeemable Preferred Stock have surrendered their shares and received payment of the redemption price.

On August 27, 2007, a group of institutional investors filed an action, in Nevada, against the registrant. The Complaint was subsequently amended to
add an additional party plaintiff (collectively, the Plaintiffs). The Amended Complaint: (i) seeks a finding by the Court that the Company has breached its obligations under the Companys Certificate of Designation of the
Preferred Stock, dated September 30, 1993 (the Certificate), and awarding the Plaintiffs full compensation of any and all available damages suffered by the Plaintiffs as a result of the Companys breach of the Certificate;
(ii) seeks a finding by the Court that the Companys issuance of its redemption notice with an improper redemption price is an anticipatory breach of a material term of the Certificate and awarding the Plaintiffs full compensation of any
and all available damages suffered as a result of the Companys anticipatory breach of the Certificate; (iii) seeks a declaration by the Court that the dividends be properly calculated and compounded per the terms of the Certificate in an
amount no less than $7,235,351 up through and including the date of final judgment; (iv) seeks an order from the Court calling for the Company to reimburse the Plaintiffs attorneys fees, expenses and costs incurred in enforcing
their rights; and (v) seeks such other and further relief as the Court may deem appropriate. The Plaintiffs, thereafter, filed a motion for partial summary judgment (the Motion), seeking a ruling from the court that the Company
breached its obligations under the Certificate of Designation by calculating the redemption price as it did. The Court granted that Motion on August 8, 2008, finding the language of the Certificate of Designation to be unambiguous and that the
redemption price should have been calculated differently. The Court has not yet issued a monetary judgment against the Company. Mediation of certain issues is planned for the near future and the Company intends on appealing the adverse decision of
the court



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on the Motion, if necessary. The Company is also considering its rights and remedies against third parties in the event that it does not prevail on its
interpretation of the Certificate of Designation of the Preferred Stock.

Also subsequent to the end of the Companys fiscal year, two
former holders of the Exchangeable Redeemable Preferred Stock filed Complaints, both alleging essentially the same claim as the first complaint related to the case set forth immediately above. If the plaintiffs in these two additional actions are
correct, the redemption price as of August 31, 2007 should have been $8.69 per share and not $5.241 per share as calculated by the Company. If applied to all the then outstanding shares of Exchangeable Redeemable Preferred Stock, including the
shares held by the Companys officers and directors, valuation of the redemption price at $8.69 per share would increase the redemption price in excess of $15.2 million.

Management is unable to estimate the minimum liability that may be incurred, if any, as a result of the outcome of each of the above matters and,
therefore, has made no provision in the financial statements for liability related to these cases.



|10. | STOCK OPTION PLAN
|--- | -----------------

The Companys Stock
Option Plan provides for the grant of up to 1.2 million shares of its common stock to key employees. The Stock Option Plan provides for both incentive stock options and non-qualified stock options. Stock option grants generally vest over a
three-year period from the employees hire date. During the fiscal year ended September 30, 2008, 441,500 options were granted. No options were granted during the fiscal year 2007. As of September 30, 2008 and 2007, there were
approximately 741,500 and 704,860 options, respectively, outstanding and exercisable under the Stock Option Plan. During fiscal years 2008 and 2007, 112,850 and 45,000 options, respectively, were exercised.

The outstanding options have expiration dates through 2018 and have an average remaining life of approximately 8.3 years. The average exercise price of
the outstanding options at September 30, 2008 is approximately $28.08.

SFHI Inc., SLVC and PHI (collectively, the
Subsidiaries), have adopted subsidiary stock option plans (the Subsidiary Plans). The Subsidiary Plans provide for the grant of options by each of the Subsidiaries with respect to an aggregate of up to 10% of the outstanding
shares of such Subsidiarys Common Stock to employees, non-employee directors, consultants or affiliates of the Company or the Subsidiaries. The purpose of the Subsidiary Plans is to enable the Subsidiaries and the Company to attract, retain
and motivate their employees, non-employee directors, consultants and affiliates by providing for or increasing the proprietary interest of such persons in the Subsidiaries. As of September 30, 2008, no options had been granted under any of the
Subsidiary Plans.

The compensation committee approved an extension of other previously issued stock options which otherwise would have
expired. A charge of approximately $1.0 million related to this extension of stock options was recorded, net of taxes.

The following table
summarizes stock option activity during fiscal 2008 under all plans:



|                                           |  |                       |  |                                        |       |                                          |           |                                 |   |        |  
|------------------------------------------ |  | --------------------- |  | -------------------------------------- | ----- | ---------------------------------------- | --------- | ------------------------------- | - | ------ | -
|                                           |  | NumberofShares(000s) |  | Weighted-AverageExercisePricePer Share |       | Weighted-AverageRemainingContractualTerm |           | AggregateIntrinsicValue($000s) |  
|Options outstanding at September 30, 2007: |  | 692                   |  | $                                      | 9.45  |                                          | 3.4 years |                                 | $ | 10,829 |  
|Granted                                    |  | 442                   |  |                                        | 33.25 |                                          | 9.5 years |                                 |   | N/A    |  
|Exercised                                  |  | 113                   |  |                                        | 1.00  |                                          | 0 years   |                                 |   | N/A    |  
|Canceled                                   |  | 279                   |  |                                        | 1.00  |                                          | 0 years   |                                 |   | N/A    |  
|Options outstanding at September 30, 2008: |  | 742                   |  |                                        | 28.09 |                                          | 8.3 years |                                 |   | (5,829 | )
|Options exercisable at September 30, 2008: |  | 742                   |  |                                        | 28.09 |                                          | 8.3 years |                                 |   | (5,829 | )



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As of September 30, 2008, there was no unrecognized compensation cost related to unvested stock
options. There were no unvested shares at September 30, 2008.



|11. | COMMON STOCK TENDER OFFER
|--- | -------------------------

During the fiscal
year ended September 30, 2008, the Company offered to purchase up to 600,000 shares of its Common Stock, par value $.01 per share, at a price of $40.00 per share, upon the terms and subject to the conditions set forth in its Offer to Purchase
dated May 19, 2008 and filed with the SEC on or about the same date. The offer was made available to all shareholders but stated a preference for odd-lot shareholders owning fewer than 100 total shares. The Offer to Purchase was concluded on
June 20, 2008. A total of 62,604 shares of Common Stock were tendered and eligible for purchase by the Company. The Company purchased all 62,604 shares for a total price of approximately $2.5 million.



|12. | INCOME TAXES
|--- | ------------

The provision (benefit) for
income taxes attributable to continuing operations consisted of:



|                          |  |                        |        |   |      |   |    
|------------------------- |  | ---------------------- | ------ | - | ---- | - | ---
|                          |  | 2008                   |        |   | 2007
|                          |  | (dollars in thousands)
|Current                   |  | $                      | (4,256 | ) |      | $ | 0  
|Deferred                  |  |                        | 2,986  |   |      |   | 327
|                          |  |                        |        |   |      |   |    
|Total provision (benefit) |  | $                      | (1,270 | ) |      | $ | 327
|                          |  |                        |        |   |      |   |    

The provision (benefit) for income taxes attributable to continuing operations differs from the
amount computed at the federal income tax statutory rate as a result of the following:



|                                          |  |                        |         |   |      |   |    
|----------------------------------------- |  | ---------------------- | ------- | - | ---- | - | ---
|                                          |  | 2008                   |         |   | 2007
|                                          |  | (dollars in thousands)
|Amount at statutory rate                  |  | $                      | 20,136  |   |      | $ | 317
|NOL carryforward benefit from prior year  |  |                        | (23,136 | ) |      |   | 0  
|Effect of using AMT taxable income        |  |                        | (453    | ) |      |   | 0  
|Effect of using AMT NOL carryforward      |  |                        | 2,721   |   |      |   | 0  
|Effect of using AMT rates and adjustments |  |                        | (552    | ) |      |   | 0  
|Other                                     |  |                        | 14      |   |      |   | 10 
|                                          |  |                        |         |   |      |   |    
|Total                                     |  | $                      | (1,270  | ) |      | $ | 327
|                                          |  |                        |         |   |      |   |    



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The components of the net deferred tax liability consisted of the following:



|                                                              |  |                        |         |   |      |   |         |  
|------------------------------------------------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | -
|                                                              |  | 2008                   |         |   | 2007 |  
|                                                              |  | (dollars in thousands) |        
|Deferred tax liabilities:                                     |  |                        |         |   |      |   |         |  
|Prepaid expenses                                              |  | $                      | 380     |   |      | $ | 224     |  
|Fixed asset cost, depreciation and amortization, net          |  |                        | 24,497  |   |      |   | 28,027  |  
|Land                                                          |  |                        | 2,236   |   |      |   | 2,236   |  
|Unrealized gains                                              |  |                        | 0       |   |      |   | 2,072   |  
|Other                                                         |  |                        | 231     |   |      |   | 0       |  
|                                                              |  |                        |         |   |      |   |         |  
|Deferred tax liabilities                                      |  |                        | 27,344  |   |      |   | 32,559  |  
|                                                              |  |                        |         |   |      |   |         |  
|Deferred tax assets:                                          |  |                        |         |   |      |   |         |  
|Net operating loss carryforward                               |  |                        | 2,219   |   |      |   | 3,021   |  
|Allowance for uncollectible accounts and contracts receivable |  |                        | 15      |   |      |   | 71      |  
|Unrealized loss                                               |  |                        | 525     |   |      |   |         |  
|Stock option                                                  |  |                        | 844     |   |      |   | 0       |  
|Deferred payroll                                              |  |                        | 172     |   |      |   | 173     |  
|Tax credits and charitable contribution carryover             |  |                        | 326     |   |      |   | 326     |  
|Other                                                         |  |                        | 0       |   |      |   | 2140    |  
|                                                              |  |                        |         |   |      |   |         |  
|Deferred tax assets                                           |  |                        | 4,101   |   |      |   | 3,805   |  
|                                                              |  |                        |         |   |      |   |         |  
|Net deferred tax (liability)                                  |  | $                      | (23,243 | ) |      | $ | (28,754 | )
|                                                              |  |                        |         |   |      |   |         |  

At September 30, 2008 the Company had a net operating loss carryforward for regular income
tax purposes of approximately $6.3 million, which will fully expire by the year 2025 and begins expiring in 2010.

FIN
48. In July 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48). The provisions were effective for us beginning in the first quarter of fiscal 2008. Based on our
analysis of our tax provisions, deferred tax assets and the related valuation allowance, there was no effect of applying the provisions of FIN 48 to all tax positions on our fiscal 2008 consolidated financial statements, nor to the opening deficit
or related disclosures.



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|13. | FAIR VALUE OF FINANCIAL INSTRUMENTS
|--- | -----------------------------------

The
Company estimates the fair value of its unredeemed preferred stock to be approximately $0.2 million at September 30, 2008 based upon the redemption price of $5.241 per share. The Company estimates that its debt and all other financial
instruments have a fair value that approximates their recorded amounts, except for its nonrecourse debt associated with a rental property owned in Massachusetts. The debt, which bears interest at 12.18% and matures in 2020, has an estimated fair
value of approximately $6 million greater than its carrying amount at September 30, 2008 of approximately $31.2 million. The interest rate used to discount the notes and estimate the fair value was 7%, the same interest rate that is associated
with similar nonrecourse debt of the Company.



|14. | EMPLOYEE BENEFIT PLANS
|--- | ----------------------

The Company has a
savings plan (the Savings Plan) for its eligible employees that is qualified under Section 401(k) of the Internal Revenue Code. The Plan covers substantially all employees, including the Companys executive officers. Employee
contributions to the Plan are discretionary. The Plan allows eligible employees to contribute, on a pre-tax basis, up to 6% of their gross salary to the plan; the Company is obligated to match 25% of such employee contributions made. Employees may
also contribute, on a pre-tax basis, up to an additional 9% of their gross salary, and, on a post-tax basis, up to an additional 10% of their salary. Such contributions are not matched by the Company. The Companys matching contributions paid
in 2008 and 2007 were $67,000 and $59,000, respectively.



|15. | RELATED PARTIES
|--- | ---------------

The Company has entered
into a Patent Rights and Royalty Agreement with the brother of the Companys Chairman of the Board of Directors and CEO, with respect to certain gaming technology for which he has been issued a patent. The Company agreed to pay certain royalty
payments with respect to the technology incorporated into gaming devices placed in operation, as well as costs related to maintain the patent. The patentholder granted the Company an exclusive five-year license that expired in January 2007 in the
United States with respect to the technology, but which automatically renewed until 2009 and will renew for an additional two-year term unless the Company terminates the agreement up to more than thirty days prior to the renewal. The Company also
has an understanding with the patentholder that it will pay for the costs of any commercial development of the technology. The Company had expended approximately $0.4 million for commercial development of the technology. No additional costs had been
expended during the fiscal years ended September 30, 2008 and 2007.

Prior to fiscal 2004, the Company operated Dukes casino
(Dukes) in Sparks, Nevada, and invested $100,000 in Dukes and loaned Dukes approximately $1.4 million. One of Dukes partners is the son of the Companys Board Chairman and CEO. In December 2003, Dukes
closed its casino operations, and the Company wrote-off its investment in and receivable from Dukes net of a previously recorded 100% allowance of approximately $1.5 million. The Company made the determination at the time that the collateral
value securing the receivable was deemed insignificant subsequent to the closure of the casino.

During an approximate two-year period
ended prior to the year ended September 30, 2007, the Company expended approximately $800,000 in legal fees on behalf of Dukes in its litigation against a contractor, although the Company was not a party to the litigation. Dukes had
agreed to reimburse the Company for legal fees and other amounts owed the Company depending on potential amounts recovered, if any from the litigation. Through September 30, 2007, the Company received approximately $1.7 million, of which
$800,000 has been credited against legal expense with the balance included in operating income in the prior year. The Company has negotiated with Dukes and obtained an assignment of all future payments under the judgment and settlement with the
general contractor for the project. The general contractor has been notified of the assignment and will be making all future



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payments due under the settlement with Dukes to the Company directly according to the terms of the settlement agreement. During the year ended
September 30, 2008, the Company has received timely payments totaling $912,000 under the terms of the settlement agreement with Dukes LLC from the general contractor responsible for the judgment.



|16. | CONTINGENCIES
|--- | -------------

Some holders of the
Companys Exchangeable Redeemable Preferred Stock have filed various complaints against the Company asserting that the accrued and unpaid dividend portion of the redemption price had been incorrectly calculated and the total redemption price
should have been as much as $15.2 million greater than the $23.1 million set aside by the Company and are seeking a declaratory judgment and an award of damages. If the plaintiffs are correct, the redemption price as of August 31, 2007, would
have been $8.69 per share and not $5.241 per share as calculated by the Company. The Company will continue to vigorously defend these lawsuits and has both procedural and substantive defenses.

In addition, the Company is subject to various lawsuits relating to routine matters incidental to its business. Although unable to estimate the minimum
costs, if any, ultimately to be incurred in these and the foregoing matters, and accordingly no provision has been made therefore, management does not believe that the outcome of such litigation, in the aggregate, will have a material adverse effect
on the Companys future financial position, results of operations or cash flows.

The United States has recently been experiencing a
recession that has resulted in highly curtailed economic activity including, among other things, reduced casino gaming and declining real estate values, both nationwide and particularly in the southern Nevada local market. The effects and duration
of these developments and related uncertainties on the Companys future operations and cash flows cannot be estimated at this time but may likely be significant. In addition, the Company frequently has cash and equivalents on deposit
substantially in excess of federally-insured limits, and the risk of losses related to such concentrations may be increasing as a result of recent economic developments. However, the extent of loss, if any, to be sustained as a result of a
future financial institution failure, is not subject to estimation at this time.



|17. | DISCONTINUED OPERATIONS
|--- | -----------------------

In October 2006,
the Company sold real estate with a net book value of $400,000 for $1.8 million. A gain of $900,000, net of taxes of $500,000, on the sale was recorded in discontinued operations.



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|18. | SUPPLEMENTAL STATEMENT OF CASH FLOWS INFORMATION
|--- | ------------------------------------------------

Supplemental statement of cash flows information for the years ended September 30, 2008 and 2007 consisted of:



|                                       |  |                        |       |      |   |      
|-------------------------------------- |  | ---------------------- | ----- | ---- | - | -----
|                                       |  | 2008                   |       | 2007
|                                       |  | (dollars in thousands)
|Operating activities:                  |  |                        |       |      |   |      
|Cash paid during the year for interest |  | $                      | 7,829 |      | $ | 8,093



|19. | SEGMENT INFORMATION
|--- | -------------------

The Companys
continuing operations are in the hotel/casino industry and rental properties. The Companys hotel/casino operations are conducted at the Pioneer in Laughlin, Nevada. As discussed above, the Company owns rental properties in Massachusetts and
Maryland. Other and Eliminations below includes financial information for the Companys corporate operations, adjusted to reflect eliminations upon consolidation.

Segment information for continuing operations only for the years ended September 30, 2008 and 2007 consisted of:



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|                                      |  |                        |         |   |      |   |         |  
|------------------------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | -
|                                      |  | 2008                   |         |   | 2007 |  
|                                      |  | (dollars in thousands) |        
|Pioneer Hotel:                        |  |                        |         |   |      |   |         |  
|Net operating revenues                |  | $                      | 25,371  |   |      | $ | 30,037  |  
|Operating loss                        |  |                        | (14,294 | ) |      |   | (1,518  | )
|Depreciation and amortization         |  |                        | 1,534   |   |      |   | 2,034   |  
|Interest expense                      |  |                        | 1,262   |   |      |   | 1,292   |  
|Interest and other income             |  |                        | 11      |   |      |   | 12      |  
|Loss before income taxes              |  |                        | (14,267 | ) |      |   | (2,799  | )
|Capital expenditures(2)               |  |                        | 632     |   |      |   | 263     |  
|Identifiable assets(1)                |  |                        | 16,104  |   |      |   | 28,937  |  
|Rental Properties:                    |  |                        |         |   |      |   |         |  
|Net operating revenues                |  | $                      | 12,402  |   |      | $ | 12,402  |  
|Operating income                      |  |                        | 9,802   |   |      |   | 9,992   |  
|Depreciation and amortization         |  |                        | 2,600   |   |      |   | 2,410   |  
|Interest expense                      |  |                        | 7,138   |   |      |   | 7,348   |  
|Interest and other income             |  |                        | 3       |   |      |   | 4       |  
|Net income before income taxes        |  |                        | 2,667   |   |      |   | 2,648   |  
|Capital expenditures(2)               |  |                        | 0       |   |      |   | 0       |  
|Identifiable assets(1)                |  |                        | 126,634 |   |      |   | 130,386 |  
|Other (Including) Eliminations:       |  |                        |         |   |      |   |         |  
|Net operating revenues                |  | $                      | 5,258   |   |      | $ | 2,740   |  
|Operating loss                        |  |                        | (1,961  | ) |      |   | (1,586  | )
|Depreciation and amortization         |  |                        | 145     |   |      |   | 108     |  
|Interest expense                      |  |                        | (190    | ) |      |   | (183    | )
|Interest and other income             |  |                        | 3,771   |   |      |   | 1,027   |  
|Net income (loss) before income taxes |  |                        | 69,132  |   |      |   | (375    | )
|Capital expenditures(2)               |  |                        | 99      |   |      |   | 278     |  
|Identifiable assets(1)                |  |                        | 67,236  |   |      |   | 60,659  |  
|Consolidated:                         |  |                        |         |   |      |   |         |  
|Net operating revenues                |  | $                      | 43,031  |   |      | $ | 45,179  |  
|Operating income                      |  |                        | (6,453  | ) |      |   | 6,888   |  
|Depreciation and amortization         |  |                        | 4,279   |   |      |   | 4,552   |  
|Interest expense                      |  |                        | 8,210   |   |      |   | 8,457   |  
|Interest and other income             |  |                        | 3,785   |   |      |   | 1,043   |  
|Net income (loss) before income taxes |  |                        | 57,532  |   |      |   | (526    | )
|Capital expenditures(2)               |  |                        | 731     |   |      |   | 541     |  
|Identifiable assets(1)                |  |                        | 209,974 |   |      |   | 219,982 |  



|(1) | Identifiable assets represent total assets less elimination for intercompany items.
|--- | -----------------------------------------------------------------------------------



|(2) | Includes acquisition of capital assets through non-cash activities.
|--- | -------------------------------------------------------------------



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|20. | SUBSEQUENT EVENT
|--- | ----------------

Option Agreement

On December 22, 2008, SLVC, a wholly owned subsidiary of Archon Corporation, entered into an Option Agreement with Las Vegas Towers,
LLC (LVT), a Delaware limited liability company, in which SLVC granted LVT an option to purchase SLVCs approximately 27-acre parcel of land located at 2600 Las Vegas Boulevard South, Las Vegas, Nevada.

The Option Agreement designates the purchase price to acquire the land at $618.0 million.

Simultaneous with the execution of the Option Agreement, SLVC executed a Contingent Warrant (the Warrant) to Purchase Series A Preferred
Stock (the Preferred Stock), entitling LVT to purchase 60,000 shares of Series A Preferred Stock of SLVC upon terms and conditions set forth in the Warrant. The designation and amount of the Preferred Stock as well as the powers,
preferences and relative, participating, optional and other special rights of the shares of the series of this Preferred Stock and the qualifications, limitations or restrictions thereof are set forth in the Certificate of Designation, Preferences
and Rights of the Series A Preferred Stock (the Certificate) also dated December 22, 2008. Should LVT exercise the Warrant prior to its expiration on April 1, 2009, then the Option Agreement shall remain valid until
March 31, 2010. However, should LVT fail to exercise the Warrant before it expires, then the Option Agreement will terminate on March 31, 2009.

Gaithersburg Property

On December 10, 2008, Archon Corporation (the Company) filed a Form
8-K, to which the Amended and Restated Purchase and Sale Contract (the Contract), described on Page 9, Note 4 of the Companys Quarterly Report 10-Q for the quarter ended June 30, 2008, was appended. The Contract was for the
sale of the Companys property located in Gaithersburg, Maryland, to Avalon Bay Communities, Inc., a Maryland corporation (Avalon Bay). In addition to other terms and conditions, the Contract provided for a deadline of
December 31, 2008, for closing of the sale. The closing deadline could have been extended by Avalon Bay, up to a maximum of 180 days, by the payment of extension fees into escrow of $50,000 per month, which fees would have been applicable to
the purchase price, but would have been non-refundable in the event Avalon Bay did not complete the purchase. Avalon Bay did not exercise its right to extend the closing date deadline, and, therefore, the Contract expired on December 31, 2008.



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|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

We maintain disclosure controls and procedures that are designed to ensure that information required to
be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and that such information is accumulated and communicated to our management, including our
Chief Executive Officer and Principal Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and
procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision
and with the participation of management, including our Chief Executive Officer and Principal Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our Chief
Executive Officer and Principal Accounting Officer concluded that disclosure controls and procedures are effective, except as noted in the following paragraph.

In connection with the audit of our consolidated financial statements for the year ended September 30, 2008, our independent registered accounting firm, Piercy Bowler Taylor and Kern, Certified Public
Accountants, reported to the audit committee of our Board of directors that they observed inadequate review and approval of certain aspects of the accounting process that is considered to be a material weakness in internal control. Management
intends to design a formal review checklist to be used in connection with the financial reporting process to assure that all matters of significance are appropriately addressed each quarter.

Changes in Internal Controls

As part
of our normal operations, we update our internal controls as necessary to accommodate any modifications to our business processes or accounting procedures. There have not been any changes in our internal controls or in other factors that materially
affected, or are reasonably likely to materially affect these controls as of the end of the period covered by this report.



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PART III



|Item 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
|-------- | --------------------------------------------------

Directors and Executive Officers

The following is a list of the current executive officers and directors of the Company:



|                        |  |                                                                          
|----------------------- |  | -------------------------------------------------------------------------
|Name                    |  | Position with the Company                                                
|                        | 
|Paul W. Lowden          |  | Chairman of the Board of Directors, President and Chief Executive Officer
|Suzanne Lowden          |  | Director, Executive Vice President, Secretary and Treasurer              
|John W. Delaney(2)      |  | Director                                                                 
|Howard E. Foster(1)     |  | Director                                                                 
|William J. Raggio(1)(2) |  | Director                                                                 
|Richard H. Taggart(1)   |  | Director                                                                 
|Grant L. Siler          |  | Principal Accounting Officer                                             



|(1) | Member of the Audit Committee of the Board of Directors of the Company.
|--- | -----------------------------------------------------------------------



|(2) | Member of the Compensation Committee of the Board of Directors of the Company.
|--- | ------------------------------------------------------------------------------

The age, present position with the Company, and principal occupation during the past five years of each director and executive officer named above is set
forth below:

Paul W. Lowden

Paul Lowden, 64, has served as President, Chairman of the Board and Chief Executive Officer of the Company since its formation in September 1993. Mr. Lowden held the same positions with the Companys predecessor, Sahara Resorts,
from 1982 through September 1993. Mr. Lowden is married to Suzanne Lowden. Mr. Lowdens term as a director of the Company expires at the annual meeting of stockholders in 2011.

Suzanne Lowden

Suzanne Lowden, 55, has
served as a director and Executive Vice President of the Company since its formation, and had served as a director of Sahara Resorts since 1987. Mrs. Lowden was elected Vice President of Sahara Resorts in July 1992. She is also a founding board
member of Commercial Bank of Nevada which was acquired by Colonial Bank in 1998. Mrs. Lowden sits on the Board of Directors of Colonial Bank of Nevada. Mrs. Lowden served as a Nevada State Senator from November 1992 through 1996. She
worked for the CBS affiliate in Las Vegas from 1977 to 1987 as an anchorwoman and reporter. Mrs. Lowden serves on the Board of Directors of the Muscular Dystrophy Association and has been elected as the chairman of the finance committee and
treasurer. Mrs. Lowden serves as chairman of the Nevada Republican party. Mrs. Lowden and Director Paul W. Lowden have been married for 26 years. Mrs. Lowdens term as a director of the Company expires at the annual meeting of
stockholders in 2010.



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John W. Delaney

John W. Delaney, 60, has served as a director of the Company since January 1997. Mr. Delaney is currently president and chief executive officer of Central Banc Corporation., a mortgage banking firm, located in
Bellevue, Washington where he has been employed since 1978. Mr. Delaneys term as a director of the Company expires at the annual meeting of stockholders in 2009.

Howard E. Foster

Howard E. Foster, 64, director of the Company elected by holders of
the Companys Preferred Stock since May 2000. Since 1980, Mr. Foster has been the President of Howard Foster and Company, an investment advisor firm located in San Rafael, California and specializing in small capitalization stocks,
turnaround situations and financially distressed companies. Prior to that time, Mr. Foster served as Chief Financial Officer of two publicly-held companies, Associated Products and Bio-Rad Laboratories, and previously worked in the audit, tax
and management consulting divisions of Arthur Andersen & Co. Mr. Foster has served on the Boards of Directors of Bio-Rad Laboratories, Barringer Technologies and Nevada National Bancorporation, where he served as a director elected by
preferred stockholders of Nevada National Bancorporation. Mr. Fosters term as a special director of the Company was scheduled to expire at the Annual Meeting of stockholders in 2009, or, if earlier, the date on which the Preferred Stock
interest is no longer represented on the Board. The Company called all outstanding shares of its Exchangeable Redeemable Preferred Stock for redemption on and as of August 31, 2007, thereupon terminating the terms of the special directors. On
November 12, 2007, Mr. Foster was appointed as a Director of the Company with a term that expires at the Annual Meeting of stockholders in 2009.

The Board of Directors of the Company considers Mr. Foster to be an independent financial expert within the meaning of Item 401 (h) (2) of Regulation S-K, which generally means the Company believes
Mr. Foster has an understanding of generally accepted accounting principles; the ability to assess the general application of such principles; experience preparing, auditing, analyzing, or evaluating financial statements similar to the
Companys; an understanding of internal control over financial reporting; and an understanding of audit committee functions.

William J.
Raggio

William J. Raggio, 81, has served as a director, Vice President, Secretary and Corporate Counsel of the Company since
its formation in September 1993 until May 1999. Mr. Raggio held the same position with Sahara Resorts from 1982 until September 1993. Mr. Raggio resigned his position on the Board of Directors of the Company and certain of its subsidiaries
in May 1999 due to a potential conflict caused by his position on the board of another gaming company, a position that Mr. Raggio no longer holds. Mr. Raggio was reappointed to the Board of Directors of the Company in December 2000.
Mr. Raggio is a shareholder and member of the law firm Jones Vargas of Reno, Nevada. Since 1972 he has been a Nevada State Senator. Mr. Raggio was a director of Sierra Health Services, Inc., a Nevada corporation until May 2006.
Mr. Raggios term as a director of the Company expires at the annual meeting of stockholders in 2011.

Richard H. Taggart

Richard H. Taggart, 66, has served as a director of the Company elected by holders of the Companys Preferred Stock since May 2006
when he was appointed by the Board of Directors to fill a resignation. Over a twenty-six year career, Mr. Taggart held various positions, such as, senior executive vice president, subsidiary president and board and executive committee
member at Valley Bank and its parent, Valley Capital Corporation, where he retired from banking in 1992. He currently serves on the Boards of Colonial Bank of Nevada, and the Las Vegas Country Club. He also serves on the Boulder Dam Council of the
Boy Scouts of America Advisory Committee. Mr. Taggarts term as a special director of the Company was scheduled to expire at the Annual Meeting of stockholders in 2010, or, if earlier, the date on which the Preferred Stock interest is no
longer represented on the Board. The Company called all outstanding shares of its Exchangeable Redeemable Preferred Stock for redemption on and as of August 31,



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2007, thereupon terminating the terms of the special directors. On November 12, 2007, Mr. Taggart was appointed as a director of the Company with a
term that expires at the Annual Meeting of stockholders in 2010.

Grant L. Siler

Grant L. Siler, 55, was appointed Principal Accounting Officer in July 2007. Prior to being appointed as Principal Accounting Officer, Mr. Siler
served as Controller of the Pioneer Hotel & Gambling Hall from May 2001 to July 2007. Prior to joining the Company, Mr. Siler served as Controller of the Flamingo Hilton Laughlin from August 1993 to May 2001.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Companys executive officers and directors, and persons who own more than 10.0% of a registered class of the Companys
equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. People who are subject to the reporting obligations of Section 16(a) are required by SEC regulations to furnish the Company
with copies of all forms they file pursuant to Section 16(a).

Based solely on our review of the copies of the reports we received and
written representations from the Companys executive officers, directors and holders of 10% of the common stock, the Company believes that, during fiscal year 2008, there were no forms filed late with the SEC.

Code of Ethics

Pursuant to
Item 406 of Regulation S-K, the Company adopted a Code of Ethics governing the behavior of the Companys principal executive and senior financial officers.



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

Set forth below is
information concerning compensation for services in all capacities to the Company and its affiliates for the fiscal years ended September 30, 2008 and 2007 of Paul W. Lowden, the Chief Executive Officer. There were no other current executive
officers serving as such at the end of the Companys fiscal year ended September 30, 2007 that earned a total annual salary and bonus in excess of $100,000 during the fiscal year ended September 30, 2007. Mr. Siler, the
Companys Principal Financial Officer, was hired in this position on July 2, 2007. The Companys former Chief Financial Officer, Mr. John M. Garner, resigned effective January 19, 2007.



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Summary Compensation Table



|                                                  |  |      |  |           |         |          |   |                |  |                 |   |                                      |   |                                                                         |  |                              |   |          |   |       |  |   |        |  |   |        
|------------------------------------------------- |  | ---- |  | --------- | ------- | -------- | - | -------------- |  | --------------- | - | ------------------------------------ | - | ----------------------------------------------------------------------- |  | ---------------------------- | - | -------- | - | ----- |  | - | ------ |  | - | -------
|Name and Principal Position                       |  | Year |  | Salary($) |         | Bonus($) |   | StockAwards($) |  | OptionAwards($) |   | Non-EquityIncentivePlanCompen-sation |   | Change InPensionValue andNonqualifiedDeferredCompen-sationEarnings($(2) |  | All OtherCompen-sation($)(3) |   | Total($)
|Paul W. Lowden,(1)                                |  | 2008 |  | $         | 550,000 |          | $ | 200,000        |  | $               | 0 |                                      | $ | 0                                                                       |  | $                            | 0 |          | $ | 3,875 |  | $ | 39,380 |  | $ | 793,255
|President, CEO and Chairman of the Board          |  | 2007 |  |           | 550,000 |          |   | 200,000        |  |                 | 0 |                                      |   | 0                                                                       |  |                              | 0 |          |   | 3,375 |  |   | 39,983 |  |   | 793,358
|Suzanne Lowden                                    |  | 2008 |  |           | 136,182 |          |   | 6,797          |  |                 | 0 |                                      |   | 0                                                                       |  |                              | 0 |          |   | 985   |  |   | 9,642  |  |   | 153,606
|Executive Vice President, Secretary and Treasurer |  | 2007 |  |           | 85,500  |          |   | 1554           |  |                 | 0 |                                      |   | 0                                                                       |  |                              | 0 |          |   | 641   |  |   | 18,679 |  |   | 106,374
|Grant L. Siler                                    |  | 2008 |  |           | 113,357 |          |   | 3,203          |  |                 | 0 |                                      |   | 0                                                                       |  |                              | 0 |          |   | 1,652 |  |   | 258    |  |   | 118,470
|Principal Financial Officer                       |  | 2007 |  |           | 23,077  |          |   | 0              |  |                 | 0 |                                      |   | 0                                                                       |  |                              | 0 |          |   | 288   |  |   | 0      |  |   | 23,365 



|(1) | See Compensation Arrangements with Mr. Lowden. Compensation for Mr. Lowden in 2007
includes annual base salary of $550,000 and bonus of $200,000.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Matching contributions made by the Company to the Retirement Savings 401(k) Plan.
|--- | ---------------------------------------------------------------------------------



|(3) | Please see the table below, All Other Compensation Table.
|--- | -----------------------------------------------------------

All Other Compensation Table



|                                                  |  |      |  |                        |       |                   |   |                       |  |                                |     |                      |   |          |  |   |        |  |   |       
|------------------------------------------------- |  | ---- |  | ---------------------- | ----- | ----------------- | - | --------------------- |  | ------------------------------ | --- | -------------------- | - | -------- |  | - | ------ |  | - | ------
|Name and Principal Position                       |  | Year |  | Life InsurancePremiums |       | AutoReimbursement |   | GasolineReimbursement |  | HouseholdServicesReimbursement |     | MedicalReimbursement |   | Total($)
|Paul W. Lowden,                                   |  | 2008 |  | $                      | 7,404 |                   | $ | 8,034                 |  | $                              | 0   |                      | $ | 21,577   |  | $ | 2,365  |  | $ | 39,380
|President, CEO and Chairman of the Board          |  | 2007 |  |                        | 7,404 |                   |   | 7,478                 |  |                                | 365 |                      |   | 18,660   |  |   | 6,076  |  |   | 39,983
|Suzanne Lowden                                    |  | 2008 |  |                        | 258   |                   |   | 5,702                 |  |                                | 0   |                      |   | 0        |  |   | 3,682  |  |   | 9,642 
|Executive Vice President, Secretary and Treasurer |  | 2007 |  |                        | 138   |                   |   | 6,774                 |  |                                | 229 |                      |   | 0        |  |   | 11,538 |  |   | 18,679
|Grant L. Siler                                    |  | 2008 |  |                        | 258   |                   |   | 0                     |  |                                | 0   |                      |   | 0        |  |   | 0      |  |   | 258   
|Principal Financial Officer                       |  | 2007 |  |                        | 0     |                   |   | 0                     |  |                                | 0   |                      |   | 0        |  |   | 0      |  |   | 0     



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2008-2007 Grants of Plan-Based Awards Table



|                                                  |  |           |              |                                                               |           |                                                           |         |                                                      |              |                                                              |           |                                       |         |                                             |  |         |  |  |  |   |       |  |         
|------------------------------------------------- |  | --------- | ------------ | ------------------------------------------------------------- | --------- | --------------------------------------------------------- | ------- | ---------------------------------------------------- | ------------ | ------------------------------------------------------------ | --------- | ------------------------------------- | ------- | ------------------------------------------- |  | ------- |  |  |  | - | ----- |  | --------
|                                                  |  | GrantDate |              | Estimated Future PayoutsUnder Non-EquityIncentive Plan Awards |           | Estimated Future PayoutsUnder EquityIncentive Plan Awards |         | AllOtherStockAwards:NumberofSharesofStockorUnits (#) |              | AllOtherOptionAwards:NumberofSecuritiesUnderlyingOptions (#) |           | ExerciseorBasePriceOptionAwards($/Sh) |         | GrantDateforFairValueofStockAndOptionAwards
|Name                                              |  |           | Threshold($) |                                                               | Target($) |                                                           | Max.($) |                                                      | Threshold(#) |                                                              | Target(#) |                                       | Max.(#) |                                             |  |         | 
|Paul W. Lowden,                                   |  | 2008      |              |                                                               |           |                                                           |         |                                                      |              |                                                              |           |                                       |         |                                             |  | 375,000 |  |  |  | $ | 33.25 |  | 03/17/08
|President, CEO and Chairman of the Board          |  | 2007      |              |                                                               |           |                                                           |         |                                                      |              |                                                              |           |                                       |         |                                             |  | 0       |  |  |  |   |       |  |         
|Suzanne Lowden                                    |  | 2008      |              |                                                               |           |                                                           |         |                                                      |              |                                                              |           |                                       |         |                                             |  | 15,000  |  |  |  |   | 33.25 |  | 03/17/08
|Executive Vice President, Secretary and Treasurer |  | 2007      |              |                                                               |           |                                                           |         |                                                      |              |                                                              |           |                                       |         |                                             |  | 0       |  |  |  |   |       |  |         
|Grant L. Siler                                    |  | 2008      |              |                                                               |           |                                                           |         |                                                      |              |                                                              |           |                                       |         |                                             |  | 1,500   |  |  |  |   | 32.00 |  | 09/17/08
|Principal Financial Officer                       |  | 2007      |              |                                                               |           |                                                           |         |                                                      |              |                                                              |           |                                       |         |                                             |  | 0       |  |  |  |   |       |  |         

Compensation Arrangements with Mr. Lowden (President, Chairman of the Board and CEO)

The Compensation Committee of the Company approved Mr. Lowdens compensation package for fiscal year 2008, which provided
for an annual base salary of $550,000 (the same base salary paid to Mr. Lowden in 2007). Additionally, in recognition of Mr. Lowdens important efforts to the Company, and his extra service to the Company in directly guarantying the
obligations of the Company to its lending bank, the Compensation Committee approved an annual incentive (bonus) to Mr. Lowden in the amount of $200,000 in 2008 (the same incentive bonus paid in 2007). To further assist the Company, and to
maintain good cash flow, this incentive bonus is payable to Mr. Lowden in bi-weekly installments throughout fiscal year 2007.

What are the Objectives of the Companys Compensation Program?The Compensation Program at the Company is designed to facilitate long term and stable management. The Company has diverse activities ranging from gaming to
property ownership and the range of expertise necessary for its proper operation is not easily located. Mr. Lowden is knowledgeable about the current activities of the Company and the future opportunities the Company may be presented in the
near, mid and long-term. As the only compensated executive-level manager of the Company, and in addition as its majority shareholder, the Compensation Program is primarily directed towards insuring that Mr. Lowden is reasonably compensated for
his services.

What is the Compensation Program Designed to Award?The Compensation Program recognizes a number of factors as
an indicator of the propriety of base salary and as a basis for determining reasonable incentives. Those factors include: (a) the cost associated with locating suitable and experienced replacement executive management, including the cost of
additional benefits; (b) the cost of locating experienced outsourcing for certain tasks associated with the duties now performed; (c) periodic results associated with the management of Companys assets and the success of executive
management in the creation of long term shareholder value; (d) difficulties in the industry and the economy as a whole leading to the necessary devolution of extraordinary effort and time and, (e) the degree of personal risk
experienced by the executive manager in the Company. This final criteria takes into account the fact that Mr. Lowden has been asked to personally guaranty the obligations of the Company (which is an unusual aspect of such an executive
officers duties) and, therefore, creates opportunities for reduced rates of interest on borrowings as the loans are thereby risk-rated at more favorable levels. This last criteria exposes Mr. Lowden to risk not normally faced by similar
executives.



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What are Each of the Elements of the Companys Compensation Program?As presently
configured, the Compensation Program for the Company has three primary elements: First, and primarily, to establish a base rate of salary for its primary executive officer, Mr. Lowden. Second, to establish an annual incentive, if any, to be
paid to its primary executive officer, Mr. Lowden. And, third, to issue on a periodic basis, those certain stock option grants, if any, to directors, officers and/or employees according to the plan(s) previously approved by the shareholders of
the Company and still in effect.

The Company favors current compensation over deferred compensation arrangements. In addition, the Company
favors cash over non-cash compensation.

Which Elements was Mr. Lowden Eligible to Receive in Each of the Years in the Summary
Compensation Table? Who Determines Compensation?Mr. Lowden has received all three elements of compensation in previous years. In 2008 and 2007, however, he received only a base salary and an annual incentive (bonus).
Mr. Lowdens base salary and incentives have remained constant in each of those years and have not been increased. Mr. Lowden received 375,000 stock options in 2008, which constitutes the third element of his compensation, but none
were granted in 2007. Mr. Lowdens compensation reflected his experience, effort and performance. Mr. Lowden played an important role in the option transaction referenced above and the Board felt that his salary and incentives were
well within the range of executive managers with such major financial obligations to monitor and process. The decision as to Mr. Lowdens compensation (as to all three elements) is addressed and determined entirely by the Board of
Directors after Mr. Lowden first recuses himself from that decision.

Compensation of Directors

Directors who are not employees of the Company or its affiliates receive $24,000 annually and $1,000 per board meeting attended, $800 per committee
meeting attended as a member and $900 per committee meeting attended as Chairman.

The Company requires all members of the Board of
Directors to comply with all Company policies prior to attending a newly elected directors first meeting of the Board of Directors. These requirements include filing a gaming application with the Nevada Gaming Authorities and executing a
confidentiality agreement, as well as compliance and disclosure statements. Until such time as an elected individual has complied with these requirements, he or she is not entitled to the benefits of the directorship position, including any director
fees or stock option awards that would otherwise be paid or granted.

Compensation Plans

Stock Option Plan

The Companys Stock
Option Plan provided for the grant of options up to an aggregate of 1,239,070 shares of its common stock to key employees as determined by the Compensation Committee. The Stock Option Plan provided for both incentive stock options and non-qualified
stock options. The Company ceased granting options under the Stock Option Plan as of September 30, 2003 as the plan had expired in 2002. However, the shareholders, in July 2005, approved amending the plan whereby the plan was extended until
2012 As of September 30, 2007, there were approximately 692,000 options outstanding under the Stock Option Plan and approximately 434,000 options which are available for issuance under the Stock Option Plan.

1998 Subsidiary Stock Option Plans

The
Company and certain of its subsidiaries, SFHI, Inc., Sahara Las Vegas Corp., and Pioneer Hotel Inc., have adopted Subsidiary Plans. The Subsidiary Plans provide for the grant of options by each of the Subsidiaries with respect to an aggregate of up
to 10% of the outstanding shares of such Subsidiarys common stock to employees,



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non-employee directors, consultants or affiliates of the Company or the Subsidiaries. The purpose of the Subsidiary Plans is to enable the Subsidiaries, the
Company and any subsidiaries of the Company or Subsidiaries to attract, retain and motivate their employees, non-employee directors, consultants and affiliates by providing for or increasing the proprietary interest of such persons in the
Subsidiaries. Certain of the agreements under which the Companys long-term debt is issued provide that if the Company ceases to own, directly or indirectly, 100% of the outstanding capital stock of specified Subsidiaries, an event of default
will occur or an offer to repurchase the debt must be made. As a result, the Subsidiary Plans provide that options granted under the Subsidiary Plans may not be exercised if the exercise would result in a default, or require an offer to repurchase
the outstanding debt, under any agreement with respect to long-term debt of the Company or any of its Subsidiaries. As of September 30, 2008, no options had been granted under any Subsidiary Plans.

Savings Plan

The Company has adopted a
savings plan qualified under Section 401(k) of the Code (the Savings Plan). The Savings Plan covers substantially all employees, including the Companys executive officers. Employee contributions to the Savings Plan are
discretionary. The Savings Plan allows eligible employees to contribute, on a pre-tax basis, up to 6% of their gross salary to the plan; the Company matches 25% of such employee contributions made. Employees may also contribute, on a pre-tax basis,
up to an additional 9% of their gross salary, and, on a post-tax basis, up to an additional 10% of their salary. Such contributions are not matched by the Company. The matching expense in fiscal 2008 was approximately $66,651 of which approximately
$3,875 and $2,638 were contributed by the Company to the account of Mr. Lowden and all other executive officers as a group, respectively, as matches for employee contributions made.

Compensation Committee Interlocks and Insider Participation

The members of the compensation
committee, John W. Delaney and William J. Raggio, are non-employee directors. Mr. Delaney has never been an officer of the Company or of any of its subsidiaries. Mr. Delaney is the president of Central Banc Mortgage Corporation, a mortgage
banking company of which Paul W. Lowden is a director and sole stockholder. During fiscal 2001 through fiscal 2003, the Company purchased from J & J Mortgage an aggregate of $0.7 million of commercial and residential loans originally funded by
Central Banc Mortgage Corporation to unaffiliated third parties. See Item 13, Certain Relationships and Related Transactions.

William J. Raggio, who from 1982 to 1999 served as Vice-President, Secretary and General Counsel of the Company and its predecessors, is a shareholder and a member of the law firm of Jones Vargas. During fiscal years 2008 and 2007, the
Company retained Jones Vargas to advise the Company regarding various legal matters, and the Company continues to engage Jones Vargas for legal representation.



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|Item 12 | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|------- | --------------------------------------------------------------

The following sets forth information regarding beneficial ownership of the common stock of the Company, as of January 9, 2009, by (i) each person known to be the beneficial owner of more than 5% of the
outstanding common stock; (ii) each director of the Company; and (iii) all directors and officers of the Company as a group.



|                                                  |  |                      |     |  |         |  
|------------------------------------------------- |  | -------------------- | --- |  | ------- | -
|Named Beneficial Owner                            |  | Shares ofCommonStock |     |  | Percent |  
|Paul W. Lowden(1)                                 |  | 4,995,634            | (2) |  | 74.5    | %
|Suzanne Lowden                                    |  | 15,271               | (3) |  | *       |  
|John W. Delaney                                   |  | 28,750               | (3) |  | *       |  
|Howard Foster                                     |  | 15,300               | (4) |  | *       |  
|William J. Raggio                                 |  | 32,972               | (3) |  | *       |  
|Richard H. Taggart                                |  | 11,700               | (5) |  | *       |  
|Grant L. Siler                                    |  | 1,500                | (6) |  | *       |  
|All Directors and Officers as a group (7 persons) |  | 5,099,627            |     |  | 76.1    | %



|* | Less than 1.0%
|- | --------------



|(1) | The address for Paul W. Lowden is c/o Archon Corporation, 4336 Losee Road, Suite 5, North Las Vegas, Nevada 89030. The
shares owned by each person, or by the group, and the shares included in the total number of shares outstanding have been adjusted, and the percentage owned (where such percentage exceeds 1%) has been computed, in accordance with Rule 13d-3(d)(1)
under the Securities Exchange Act of 1934.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Includes 1,732,470 shares held by LICO, which is wholly owned by Mr. Lowden and 375,000 shares that may be acquired
upon the exercise of outstanding stock options.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Includes 15,000 shares that may be acquired upon the exercise of outstanding stock options.
|--- | -------------------------------------------------------------------------------------------



|(4) | Includes 5,300 shares owned directly or beneficially by Mr. Foster and 10,000 shares that may be acquired upon the
exercise of outstanding stock options.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | Includes 10,000 shares that may be acquired upon the exercise of outstanding stock options.
|--- | -------------------------------------------------------------------------------------------



|(6) | Includes 1,500 shares that may be acquired upon the exercise of outstanding stock options.
|--- | ------------------------------------------------------------------------------------------



|Item 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
|-------- | ----------------------------------------------

The Company, through its Board of Directors and Committees, believes that the relationships noted below do not adversely impact the Company and the events mentioned below are on terms at least as favorable to the Company as would have been
obtained from an unrelated third party.

Paul W. Lowden and Suzanne Lowden have been married to one another for 26 years.

The Company has entered into a Patent Rights and Royalty Agreement with David Lowden, the brother of Paul W. Lowden, with respect to certain gaming
technology for which David Lowden has been issued a patent. The Company has agreed to pay certain royalty payments with respect to the technology incorporated into gaming devices placed in operation, as well as costs related to maintain the patent.
David Lowden granted the Company an exclusive five-year license which initially expired in January 2007 in the United States with respect to the technology, which automatically renews for additional two-year terms unless the Company terminates the
agreement within thirty days prior to the renewal or the agreement is otherwise earlier terminated in accordance with its terms. The license automatically renewed for an additional two-year period now expiring in January 2009. The Company also has
an understanding with David Lowden that it will pay for the costs of commercial development of the technology. As of September 30, 2008, the Company had expended approximately $0.4 million for commercial development of the technology. No costs
were expensed in fiscal years 2008 and 2007.



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##### Table of Contents

During fiscal years 2001 through 2003, the Company purchased an aggregate of $0.7 million of commercial
and residential loans originally funded by Central Banc Mortgage Corporation to unaffiliated third parties. The loans were purchased by the Company for the principal amount, plus accrued interest, if any. Central Banc Mortgage Corporation is owned
by LICO, which in turn is owned by Paul W. Lowden. John W. Delaney is the president of Central Banc Mortgage Corporation. At September 30, 2008, the Company was owed approximately $55,000 from Central Banc Mortgage Corporation related to these
transactions.

William J. Raggio, a director of the Company, is a shareholder and member of the law firm of Jones Vargas. During fiscal
years 2008 and 2007, the Company retained Jones Vargas to advise the Company regarding various legal matters, and the Company continues to engage Jones Vargas for legal representation. The primary contact for legal work is Alan Rabkin, Esq., a
member of the firm. During fiscal year 2008 the Company made payments to the Law Firm of Jones Vargas in the amount of approximately $0.5 million.

See Executive Compensation  Compensation Arrangements with Mr. Lowden for information regarding certain bonus arrangements for Mr. Lowden and obligations of LICO, a company wholly-owned by Mr. Lowden, owed
to the Company.



|Item 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|-------- | --------------------------------------

The
following fees were incurred with Piercy Bowler Taylor & Kern for services provided to the Company relative to the fiscal years ended September 30, 2008 and 2007:



|                   |  |      |         |      |   |        
|------------------ |  | ---- | ------- | ---- | - | -------
|                   |  | 2008 |         | 2007
|Audit Fees:        |  | $    | 228,478 |      | $ | 213,063
|Audit Related Fees |  |      | 27,479  |      |   | 15,799 
|Tax Fees           |  |      | 0       |      |   | 0      

Audit fees are the aggregate fees incurred for professional services rendered in connection with
the engagements to audit the Companys annual financial statements for the fiscal years ended September 30, 2008 and 2007 including the reviews of the Companys interim financial statements included in its quarterly reports on Form
10-Q for those fiscal years.

Audit related fees billed are for professional services rendered in connection with the audit of the
Companys 401(k) retirement plan relative to the calendar years 2007 and 2006, which ended during the Companys fiscal years ended September 30, 2008 and 2007.

In the fiscal years ended September 30, 2008 and 2007, no fees were incurred with Piercy Bowler Taylor & Kern pursuant to the de
minimums exception to the pre-approval policy permitted under the Securities and Exchange Act of 1934, as amended.



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##### Table of Contents

PART IV



|Item 15. | EXHIBITS
|-------- | --------



|(a) | 1. and 2. Financial Statements and Schedules
|--- | --------------------------------------------

The
financial statements filed as part of this report are listed in the Index to Consolidated Financial Statements under Item 8.



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

The following are filed as Exhibits to this
Annual Report on Form 10-K:



|              |  |                                                                                                                                                                                                                                                                   
|------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Exhibit                                                                                                                                                                                                                                            
|              | 
|3.1           |  | Articles of Incorporation and Bylaws of the Company (Previously filed with the Securities and Exchange Commission as an exhibit to the Companys S-4 (No. 33-67864) Registration Statement on
Form 10-K dated June 15, 1982 and incorporated herein by reference.)
|              | 
|3.2           |  | Certificate of Designation for Exchangeable Redeemable Preferred Stock. (Previously filed with the Securities and Exchange Commission as an exhibit to the Companys Registration Statement
on Form S-4 (No. 33-67864) and incorporated herein by reference.)     
|              | 
|3.3           |  | Amended and Restated By-laws of Santa Fe Gaming Corporation. (12)                                                                                                                                                                                                 
|              | 
|10.1          |  | Notes secured by liens on office building in Las Vegas, Nevada in the original principal amounts of $301,598.05, $23,337.96 and $649,063.99 bearing interest at 10%, 11% and 131/2% per annum, respectively. (1)                                                  
|              | 
|10.2          |  | Key Employee Stock Option Plan. (2)                                                                                                                                                                                                                               
|              | 
|10.3          |  | Lease Modification Letter dated August 24, 1995 by and between Wet N Wild Nevada, Inc. and Sahara Corporation. (3)                                                                                                                                               
|              | 
|10.4          |  | Management Agreement by and between Pioneer Hotel and Santa Fe Gaming Corporation dated as of December 30, 1998. (5)                                                                                                                                              
|              | 
|10.5          |  | Right of First Refusal dated November 15, 1999 by and among Station Casinos, Inc., SFGC and SFHI. (6)                                                                                                                                                             
|              | 
|10.6          |  | Non-Competition Agreement dated November 15, 1999 by and among Station Casinos, Inc., SFHI, SLVC, and SFGC. (6)                                                                                                                                                   
|              | 
|10.7          |  | First Amendment to Non-Competition Agreement dated November 16, 1999 by and among Station Casinos, Inc., SFHI, SLVC, and SFGC. (6)                                                                                                                                
|              | 
|10.8          |  | Shareholders Agreement dated as of June 12, 2000 among Station Casino, Inc., Paul W. Lowden, David G. Lowden and Christopher W. Lowden. (7)                                                                                                                       
|              | 
|10.9          |  | Lease Agreement between HAHF Pioneer, LLC as landlord and Pioneer Hotel Inc., as tenant dated December 29, 2000. (9)                                                                                                                                              
|              | 
|10.10         |  | Exchange Agreement among Pioneer LLC, as transferor; Pioneer Hotel Inc., as tenant; HAHF Pioneer LLC as transferee and Heller Affordable House of Florida, Inc., dated December 29, 2000. (9)                                                                     
|              | 
|10.11         |  | Purchase Contract by and between David Bralove, as trustee of the Gaithersburg Realty Trust and Santa Fe Hotel, Inc. dated February 28, 2001. (10)                                                                                                                



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##### Table of Contents

|              |  |                                                                                                                                                                                                                                                                    
|------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Exhibit                                                                                                                                                                                                                                             
|              | 
|10.12         |  | Promissory Note dated February 28, 2001 by and between SFHI, LLC and Lehman Brothers Holdings Inc., d/b/a Lehman Capital, a division of Lehman Brothers Holdings Inc. (10)                                                                                         
|              | 
|10.13         |  | Deed of Trust and Security Agreement dated February 28, 2001 by and between SFHI, LLC and Lehman Brothers Holdings Inc., d/b/a Lehman Capital, a division of Lehman Brothers Holdings Inc.
(10)                                                                    
|              | 
|10.14         |  | 75 Lease Agreement by and between REII-Gaithersburg, Maryland, L.L.C. and GE Information Services, Inc. dated January 29, 1999. (10)                                                                                                                               
|              | 
|10.15         |  | Assignment of Lease and Rents dated February 28, 2001 by and between Gaithersburg Realty Trust and SFHI, LLC. (10)                                                                                                                                                 
|              | 
|10.16         |  | Contract dated December 8, 2000 by and between S-BNK#2 Investors, L.P. and Santa Fe Hotel Inc. (10)                                                                                                                                                                
|              | 
|10.17         |  | First Amendment dated December 26, 2000 to Contract dated December 8, 2000 by and between S-BNK#2 Investors, L.P. and Santa Fe Hotel Inc. (10)                                                                                                                     
|              | 
|10.18         |  | Nonrecourse Note S-BNK Dorchester Operations, LLC 10.20% A-1 Note due June 30, 2005. (10)                                                                                                                                                                          
|              | 
|10.19         |  | Nonrecourse Note S-BNK Dorchester Operations, LLC 12.18% A-2 Note due June 30, 2020. (10)                                                                                                                                                                          
|              | 
|10.20         |  | Mortgage, Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing financing Statement dated as of June 30, 2000 between S-BNK Dorchester Operations, LLC.
and First Security Bank, National Association as Indenture Trustee. (10)
|              | 
|10.21         |  | Lease Agreement dated June 30, 2000 by and between S-BNK Dorchester Operations, LLC and Sovereign Bank. (10)                                                                                                                                                       
|              | 
|10.22         |  | Indenture dated as of June 30, 2000 between S-BNK Dorchester Operations, LLC. and First Security Bank, National Association as Indenture Trustee. (10)                                                                                                             
|              | 
|10.23         |  | Patent Rights Royalty Agreement dated as of January 2, 2002 between Archon Corporation and David G. Lowden. (11)                                                                                                                                                   
|              | 
|10.24         |  | Subordinated Loan Agreement dated October 8, 2002 between Archon Corporation and Dukes-Sparks, LLC. (13)                                                                                                                                                          
|              | 
|10.25         |  | Lease dated October 4, 2002 between Archon Corporation and Dukes Casino. (13)                                                                                                                                                                                     
|              | 
|10.26         |  | Option Agreement dated October 8, 2002 between Endeavors North LLC and Archon Corporation. (13)                                                                                                                                                                    
|              | 
|10.27         |  | Loan Agreement dated December 15, 2003 between Colonial Bank, Archon Corporation and Sahara Las Vegas Corp. (14)                                                                                                                                                   
|              | 
|10.28         |  | Security Agreement and Second Deed of Trust Dated October 8, 2002 (15)                                                                                                                                                                                             
|              | 
|10.29         |  | Demand Note dated February 6, 2003 in favor of Archon Corporation. (16)                                                                                                                                                                                            
|              | 
|21            |  | Subsidiaries of Archon Corporation (17)                                                                                                                                                                                                                            
|              | 
|23.1          |  | Consent of Piercy Bowler Taylor & Kern*                                                                                                                                                                                                                            
|              | 
|31.1          |  | Certification of Paul W. Lowden, Principal Executive Officer, pursuant to Rule 13a- 15(e) or 15d-15(e) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.*                                          
|              | 
|31.2          |  | Certification of Grant L. Siler, Principal Accounting Officer, pursuant to Rule 13a- 15(e) or 15d-15(e) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.*                                         



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##### Table of Contents

|              |  |                                                                                                                                 
|------------- |  | --------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Exhibit                                                                                                          
|              | 
|32.0          |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*



|* | Filed concurrently herewith.
|- | ----------------------------

FOOTNOTES TO EXHIBITS



|(1) | Previously filed with the Securities and Exchange Commission as an exhibit to the Registration Statement on Form S-1 (No. 33-13214) of Sahara Casino Partners, L.P. and incorporated
herein by reference.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Previously filed with the Securities and Exchange Commission as an exhibit to Sahara Gaming Corporations Annual Report on Form 10-K for the year ended September 30, 1993
and incorporated herein by reference.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Previously filed with the Securities and Exchange Commission as an exhibit to Sahara Gaming Corporations Report on Form 10-K for the year ended September 30, 1995 and
incorporated herein by reference.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | Previously filed with the Securities and Exchange Commission as an exhibit to Santa Fe Gaming Corporations Report on Form 10-Q for the quarter ended March 30, 1999 and
incorporated herein by reference.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | Previously filed with the Securities and Exchange Commission as an exhibit to Santa Fe Gaming Corporations Report on Form 10-Q for the quarter ended June 30, 1999 and
incorporated herein by reference.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(6) | Previously filed with the Securities and Exchange Commission as an exhibit to Santa Fe Gaming Corporations Report on Form 8-K dated November 15, 1999 and incorporated
herein by reference.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(7) | Previously filed with the Securities and Exchange Commission as an exhibit to Santa Fe Gaming Corporations Report on Form 10-Q for the quarter ended June 30, 2000 and
incorporated herein by reference.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(8) | Previously filed with the Securities and Exchange Commission as an exhibit to Santa Fe Gaming Corporations Report on Form 8-K dated June 12, 2000 and incorporated herein
by reference.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(9) | Previously filed with the Securities and Exchange Commission as an exhibit to Santa Fe Gaming Corporations Report on Form 8-K dated December 29, 2000 and incorporated
herein by reference.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(10) | Previously filed with the Securities and Exchange Commission as an exhibit to Archon Corporations Report on Form 10-Q for the quarter ended March 31, 2001 and
incorporated herein by reference.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(11) | Previously filed with the Securities and Exchange Commission as an exhibit to Archon Corporations Report on Form 10-Q for the quarter ended June 30, 2002 and incorporated
herein by reference.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(12) | Previously filed with the Securities and Exchange Commission as an exhibit to Archon Corporations Report on Form 10-Q dated August 20, 2003 and incorporated herein by
reference.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(13) | Previously filed with the Securities and Exchange Commission as an exhibit to Archon Corporations Report on Form 10-K dated December 30, 2002 and incorporated herein by
reference.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(14) | Previously filed with the Securities and Exchange Commission as an exhibit to Archon Corporations Report on Form 8-K dated January 13, 2004 and incorporated herein by
reference.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(15) | Previously filed with the Securities and Exchange Commission as an exhibit to Archon Corporations Report on Form 10-Q dated August 20, 2003 and incorporated herein by
reference.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(16) | Previously filed with the Securities and Exchange Commission as an exhibit to Archon Corporations Report on Form 10-Q dated February 14, 2003 and incorporated herein by
reference.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(17) | Previously filed with the Securities and Exchange Commission as an exhibit to Archon Corporations Report on Form 10-K/A (Amendment No. 1) dated January 23, 2004 and
incorporated herein by reference.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(18) | Previously filed with the Securities and Exchange Commission as an exhibit to Archon Corporations Proxy Statement on Schedule 14A dated May 7, 2004 and incorporated
herein by reference.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



58



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##### Table of Contents

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.



|                |  |  |  |                    |  |                          
|--------------- |  |  |  | ------------------ |  | -------------------------
|                |  |  |  | ARCHON CORPORATION
|                |  |  | 
|January 9, 2009 |  |  |  | By:                |  | /s/ Paul W. Lowden       
|(Date Signed)   |  |  |  |                    |  | Paul W. Lowden, President

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



|                                          |  |                                                                  |  |                
|----------------------------------------- |  | ---------------------------------------------------------------- |  | ---------------
|Signature                                 |  | Title                                                            |  | Date           
|                                          |  |                                                                 
|/s/ Paul W. Lowden Paul W. Lowden         |  | Chairman of the Board and President(Principal Executive Officer) |  | January 9, 2009
|                                          |  |                                                                 
|/s/ John Delaney John Delaney             |  | Director                                                         |  | January 9, 2009
|                                          |  |                                                                 
|/s/ Suzanne Lowden Suzanne Lowden         |  | Director                                                         |  | January 9, 2009
|                                          |  |                                                                 
|/s/ William J. Raggio William J. Raggio   |  | Director                                                         |  | January 9, 2009
|                                          |  |                                                                 
|/s/ Howard E. Foster Howard E. Foster     |  | Director                                                         |  | January 9, 2009
|                                          |  |                                                                 
|/s/ Richard H. Taggart Richard H. Taggart |  | Director                                                         |  | January 9, 2009
|                                          |  |                                                                 
|/s/ Grant L. Siler Grant L. Siler         |  | Principal Accounting Officer                                     |  | January 9, 2009



59