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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K



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

For the fiscal year ended: September 30, 2007



| ̈ | 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



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ARCHON CORPORATION

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|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)                       



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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 ̈an accelerated filer ̈or a non-accelerated filer  x

The aggregate market value of
the common stock held by non-affiliates of the registrant was approximately $52,822,284. The market value was computed by reference to the closing price of the common stock as of March 31, 2007.

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.



|          |  |       |  |                 
|--------- |  | ----- |  | ----------------
|6,280,931 |  | as of |  | January 14, 2008

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, 2006

TABLE
OF CONTENTS



|         |  |                                                                                       |  |         
|-------- |  | ------------------------------------------------------------------------------------- |  | --------
|         |  |                                                                                       |  | Page No.
|PART I   |  |                                                                                       |  |         
|Item 1.  |  | Business                                                                              |  | 1       
|         |  | General                                                                               |  | 1       
|         |  | Hotel and Casino Operations                                                           |  | 1       
|         |  | Investment Properties                                                                 |  | 2       
|         |  | Land Held for Development                                                             |  | 3       
|         |  | Nevada Regulations and Licensing                                                      |  | 4       
|Item 1A. |  | Risk Factors                                                                          |  | 7       
|Item 2.  |  | Properties                                                                            |  | 8       
|Item 3.  |  | Legal Proceedings                                                                     |  | 9       
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                   |  | 10      
|         |  |                                                                                      
|PART II  |  |                                                                                       |  |         
|Item 5.  |  | Market for the Registrants Common Stock and Related Security Holders Matters         |  | 10      
|Item 6.  |  | Selected Financial Data                                                               |  | 12      
|Item 7.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 13      
|Item 7A. |  | Market Risk Disclosure                                                                |  | 23      
|Item 8.  |  | Financial Statements                                                                  |  | 24      
|Item 9.  |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  |  | 53      
|Item 9A. |  | Controls and Procedures                                                               |  | 53      
|         |  |                                                                                      
|PART III |  |                                                                                       |  |         
|Item 10. |  | Directors and Executive Officers of the Registrant                                    |  | 54      
|Item 11. |  | Executive Compensation                                                                |  | 57      
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management                        |  | 60      
|Item 13. |  | Certain Relationships and Related Transactions                                        |  | 61      
|Item 14. |  | Principal Accountant Fees and Services                                                |  | 62      
|         |  |                                                                                      
|PART IV  |  |                                                                                       |  |         
|Item 15. |  | Exhibits                                                                              |  | 63      



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##### Table of Contents

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 investment 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 52.3%, 55.2% and 55.2% in 2007, 2006 and 2005, respectively, of total revenues. The Pioneer contributed 100% in fiscal 2007, 2006 and 2005 to total
gaming revenues. As of September 30, 2007 the Pioneer had approximately 735 slot machines, eight blackjack tables (21), one craps table, one roulette wheel and five other gaming tables. In addition, the Pioneer offers keno.

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



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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 56%, 64% and 57% in fiscal years 2007, 2006 and 2005, 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 31, 2007, the Company employed 12 executive and administrative personnel and the Pioneer employed approximately 544 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 which
permits compacts that allow 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.

Investment Properties

The Company acquired investment 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 non-recourse 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 55 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 non-recourse first mortgage indebtedness. The building is located on approximately 20 acres of the property. 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.

See also
Item 2., Properties.



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Land Held for Development

The Company owns, through its wholly owned subsidiary Sahara Las Vegas Corp.
(SLVC), an approximately 27-acre parcel of real property on the Strip. In connection with the acquisition of the property, the Company assumed an operating lease under which a water theme park operated. The lease was terminated
September 30, 2004. The Company presently leases the property to two different lessees for an aggregate amount of $364,000 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, a Nevada corporation and subsidiary of Archon Corporation entered into an Option Agreement (the
Agreement) between SLVC and LVTI LLC, a Delaware limited liability company (LVTI). Pursuant to the Agreement, SLVC granted to LVTI an option (the Option) to purchase an approximately 27 acre parcel of real
property located on Las Vegas Boulevard South (the Property) or, alternatively, SLVCs membership interest in a limited liability company (LVT LLC) that may be formed and into which the Property would be contributed.

The initial purchase price to be paid by LVTI for purchase of the Property or the
membership interest in LVT LLC was $450 million. LVTI paid an initial deposit of $5.0 million on June 27, 2006. The Agreement also provided for a second deposit of $40.0 million due on or before September 22, 2006, and additional monthly
payments of approximately $2.2 million in each month commencing on the 13thcalendar month following the date the second deposit is paid until the closing
of the exercise of the Option. The 30-day due diligence period ended and LVTI did not terminate the Agreement. Upon exercise of the Option, the initial deposit and the second deposit will be credited against the total purchase price. The Agreement
provides for certain adjustments to the purchase price if certain easements are entered into with respect to the Property prior to the closing. The Option may be exercised by LVTI at any time between the last day of the 12thcalendar month and the last day of the 18thcalendar month
following the date on which the second deposit is paid; provided that the option term may be extended by up to 30 days if SLVC does not give written notice to LVTI of the option term expiration as required by the Agreement. The first and second
deposits and any additional monthly payments paid to SLVC prior to termination of the Agreement will be retained by SLVC upon termination of the Agreement without exercise of the option, except under certain circumstances specified in the Agreement.

Pursuant to a First Amendment of the Agreement, LVTI elected to pay to the Company $750,000 to extend the date on
which the second deposit of $40.0 million was due from September 22, 2006 to December 31, 2006. Pursuant to a Second Amendment, LVTI elected to pay to the Company $1.2 million to further extend the date on which the second deposit of $40.0
million was due from December 31, 2006 to March 31, 2007. Pursuant to a Third and a Fourth Amendment to the Agreement, LVTI elected to pay to the Company two additional payments in April 2007 totaling $500,000 to further extend the date on
which the second deposit was due from March 31, 2007 to May 31, 2007. LVTI paid the $40.0 million second deposit on May 25, 2007. Additionally, the initial purchase price was increased from $450 million to $475 million. Pursuant to a
Fifth Amendment, three months, to be exercised in the discretion of LVTI, were added to the Option term, extending the end of the Option term from March 31, 2008 to June 30, 2008. LVTI will pay a fee of $2.9 million (Carry Option
Payments) for each of the three month extensions utilized, with a proration for any partial month utilized. All Carry Option Payments and all monthly option extension payments are nonrefundable and will not be applied against the purchase
price under the Agreement.

The nonrefundable payment of $5.0 million and a nonrefundable extension fee of $750,000 were recorded as
deferred revenue, at September 30, 2006. The Company received an additional nonrefundable extension fee of $1.2 million in December 2006 which was also recorded as deferred revenue at March 31, 2007. The Company received additional
nonrefundable extension fees of $500,000 in April 2007 and the nonrefundable second deposit payment of $40.0 million on May 25, 2007, which payments were also recorded as deferred revenue at June 30, 2007. On September 27, 2007, the
Company received an additional option extension fee of $2,329,167, which was recorded as deferred revenue at September 30, 2007.

The
obligations of SLVC and LVTI to consummate the transactions contemplated by the Agreement are subject to the satisfaction or waiver of customary closing conditions.



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The Company has guaranteed the obligations of SLVC under the Agreement.

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.

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



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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 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.



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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.

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.



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|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 a 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.

On August 27, 2007, the following institutional investors: D. E. Shaw Laminar Portfolios, L.L.C., LC Capital Master Fund, Ltd, LC Capital/Capital Z SPV, LP, Magten Asset Management Corp, Mercury Real Estate
Securities Fund LP, Mercury Real Estate Securities Offshore Fund Limited, Black Horse Capital LP, Black Horse Capital (QP) LP, Black Horse Capital Offshore Ltd, and Plainfield Special Situations Master Fund Limited filed an action against the
registrant in the United States District Court for The District of Nevada entitled D.E. Shaw Laminar Portfolios, LLC; et al. v. Archon Corporation, 2:07-CV-01146-PMP-LRL (D. Nev.). The Complaint was subsequently amended to add an additional party
plaintiff (collectively, the Laminar 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 Laminar Plaintiffs full compensation of any and all available damages suffered by the Laminar 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 Laminar 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 Laminar 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. In November 2007, and subsequent to the end of the Companys fiscal year ended September 30, 2007, the Laminar Plaintiffs filed a
motion for partial summary judgment on liability. The Company responded, and the parties will await a ruling from the Court following the Plaintiffs filing of its reply brief.

Also subsequent to the end of the Companys fiscal year, two other former holders of the Exchangeable Redeemable Preferred Stock filed Complaints in
the United States District Court, District of Nevada, entitled Rainero v. Archon Corporation, District of Nevada Case No. 2:07-cv-01553 and Leeward Capital, L.P. v. Archon Corporation, District of Nevada Case
No. 2:08-cv-00007, both alleging essentially the same claim as the first Complaint. If the plaintiffs 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 which, if applied to all the then outstanding shares of Exchangeable Redeemable Preferred Stock, including the shares held by the Companys officers and directors, would increase the redemption price in excess of $15.2 million.



7



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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 to meet its debt or other obligations.

Our Outstanding Debt Obligations Subject us to Additional Risks.The Company has a mortgage note obligation which matured in late December 2006 with an extension until January 2008 in the approximate
amount of $10.1 million. The Bank has informed the Company of its commitment to extend the maturity date of the note obligation to January 2009. The documentation process for the extension may go beyond the January 15, 2008, maturity, however,
all original terms and conditions will remain in effect until the new loan documents are executed. Although the Company believes the banks commitment to extend the maturity date of the loan will be made formal in the near-term, it can not give
any assurances that the extension will occur. However, the bank has informed the Company it intends to extend the maturity date to January 2009.



|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 investment 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 non-recourse 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 investment property in Gaithersburg, Maryland is located on 55 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 non-recourse first mortgage
indebtedness. The building is located on approximately 20 acres of the property. 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 Company owns approximately 27 acres of real property located on the Strip. See Item 1.,
BusinessLand Held for Development.



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|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 14, 2008, the holders of 4,238,159 shares of the Exchangeable Redeemable Preferred Stock have surrendered their shares and
received payment of the redemption price.

On August 27, 2007, the following institutional investors: D. E. Shaw Laminar Portfolios,
L.L.C., LC Capital Master Fund, Ltd, LC Capital/Capital Z SPV, LP, Magten Asset Management Corp, Mercury Real Estate Securities Fund LP, Mercury Real Estate Securities Offshore Fund Limited, Black Horse Capital LP, Black Horse Capital (QP) LP, Black
Horse Capital Offshore Ltd, and Plainfield Special Situations Master Fund Limited filed an action against the registrant in the United States District Court for The District of Nevada entitled D.E. Shaw Laminar Portfolios, LLC; et al. v. Archon
Corporation, 2:07-CV-01146-PMP-LRL (D. Nev.). The Complaint was subsequently amended to add an additional party plaintiff (collectively, the Laminar 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 Laminar Plaintiffs full compensation of any and all
available damages suffered by the Laminar 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 Laminar 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 Laminar Plaintiffs attorneys fees, expenses and costs incurred in enforcing the their rights; and (v) seeks such other and further relief as the Court may deem appropriate. In November 2007,
and subsequent to the end of the Companys fiscal year ended September 30, 2007, the Laminar Plaintiffs filed a motion for partial summary judgment on liability. The Company responded, and the parties will await a ruling from the Court
following the Plaintiffs filing of its reply brief.

Also subsequent to the end of the Companys fiscal year, two former holders
of the Exchangeable Redeemable Preferred Stock filed Complaints in the United States District Court, District of Nevada, entitled Rainero v. Archon Corporation, District of Nevada Case No. 2:07-cv-01553, and Leeward Capital, L.P. v.
Archon Corporation, District of Nevada Case No. 2:08-cv-00007, both alleging essentially the same claim as the first Complaint. If the plaintiffs 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 which, if applied to all the then outstanding shares of Exchangeable Redeemable Preferred Stock, including the shares held by the Companys officers and directors, would increase the
redemption price in excess of $15.2 million.

Douglas Medley v. Pioneer Hotel & Casino/Archon Corporation:

The Company was a defendant in a lawsuit entitled Douglas Medley v. Pioneer Hotel & Casino/Archon Corporationdated March
2006. The complaint alleged that unpaid wages for overtime and the plaintiff was seeking approximately $160,000 in damages. The Company defended this lawsuit vigorously and no reserve was recorded under the provisions of Statement of Accounting
Standards (SFAS) No. 5 for this matter, as management did not believe that it was probable that a liability had incurred. The lawsuit was recently settled for nuisance value and the Company obtained a full release from the Plaintiff
in the action.



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In addition, the Company is subject to various lawsuits relating to routine matters incidental to its
business. The Company does not believe that the outcome of such litigation, in the aggregate, will have a material adverse effect on the Company.



|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 14, 2008 was $46.50 per share. The tables below set forth the high and low closing prices by
quarter for the fiscal years ended September 30, 2007 and 2006 of the common stock, as reported by the OTCBB.



|             |  |              |       |               |   |              |  |               |       |  |   |      
|------------ |  | ------------ | ----- | ------------- | - | ------------ |  | ------------- | ----- |  | - | -----
|             |  | FirstQuarter |       | SecondQuarter |   | ThirdQuarter |  | FourthQuarter
|Fiscal 2007  |  |              |       |               |   |              |  |               |       |  |   |      
|High         |  | $            | 38.00 |               | $ | 39.50        |  | $             | 54.75 |  | $ | 52.00
|Low          |  |              | 31.25 |               |   | 31.75        |  |               | 38.50 |  |   | 39.55
|             |  |              |       |              
|Fiscal 2006: |  |              |       |               |   |              |  |               |       |  |   |      
|High         |  | $            | 39.28 |               | $ | 38.50        |  | $             | 44.95 |  | $ | 44.00
|Low          |  |              | 37.00 |               |   | 30.75        |  |               | 32.25 |  |   | 31.00

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 550 common stockholders of record as of January 14, 2008.



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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, 2007. The graph assumes that the value of the investment in the Company and in each index was $100 on September 30, 2002, and assumes that all dividends were reinvested.

LOGO



|                      |  |         |        |         |   |         |  |         |        |         |   |          |  |   |          |  |   |         
|--------------------- |  | ------- | ------ | ------- | - | ------- |  | ------- | ------ | ------- | - | -------- |  | - | -------- |  | - | --------
|                      |  | 9/30/02 |        | 9/30/03 |   | 9/30/04 |  | 9/30/05 |        | 9/30/06 |   | 9/30/07 
|Archon Corporation    |  | $       | 100.00 |         | $ | 113.73  |  | $       | 274.51 |         | $ | 1,480.78 |  | $ | 1,290.20 |  | $ | 1,852.94
|S&P 500               |  |         | 100.00 |         |   | 124.40  |  |         | 141.65 |         |   | 159.01   |  |   | 176.17   |  |   | 205.13  
|Dow Jones US Gambling |  |         | 100.00 |         |   | 126.84  |  |         | 176.37 |         |   | 190.32   |  |   | 240.23   |  |   | 366.49  



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##### Table of Contents

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

The table below
sets forth a summary of selected financial data of the Company for the years ended September 30, 2007, 2006, 2005, 2004 and 2003:



|                                              |  |                                                  |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|--------------------------------------------- |  | ------------------------------------------------ | ------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                              |  | 2007                                             |         |   | 2006 |   |         | 2005 |  |   | 2004    |   |  | 2003 |        
|                                              |  | (dollars in thousands, except per share amounts) |        
|Net operating revenues (1)                    |  | $                                                | 45,179  |   |      | $ | 45,154  |      |  | $ | 43,688  |   |  | $    | 45,693  |   |  | $ | 46,161  |  
|Net income (loss), net of taxes               |  |                                                  | 607     |   |      |   | (3,356  | )    |  |   | (4,912  | ) |  |      | (1,882  | ) |  |   | (7,847  | )
|Net income (loss) applicable to common shares |  |                                                  | (779    | ) |      |   | (4,867  | )    |  |   | (6,423  | ) |  |      | (3,444  | ) |  |   | (9,374  | )
|Net income (loss) per common share            |  |                                                  | (0.12   | ) |      |   | (0.78   | )    |  |   | (1.03   | ) |  |      | (0.55   | ) |  |   | (1.51   | )
|Total assets                                  |  |                                                  | 219,982 |   |      |   | 198,050 |      |  |   | 199,638 |   |  |      | 206,932 |   |  |   | 237,390 |  
|Long-term debt, less current portion          |  |                                                  | 74,381  |   |      |   | 77,042  |      |  |   | 79,499  |   |  |      | 82,057  |   |  |   | 148,698 |  
|Exchangeable redeemable preferred stock(2)    |  |                                                  | 0       |   |      |   | 9,445   |      |  |   | 9,445   |   |  |      | 9,674   |   |  |   | 9,926   |  

---

|(1) | Net operating revenues for fiscal years 2003 through 2007 represent primarily
operations at the Pioneer and revenues from investment properties.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The Company had not declared dividends on its preferred stock since fiscal 1996.
Dividends of approximately $1.4 million, $1.5 million, $1.5 million, $1.6 million and $1.5 million for fiscal 2007, 2006, 2005, 2004 and 2003, 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. Previously, the Company had repurchased and retired 985,932 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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|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
subsequently divested certain of these properties. Presently, the Company operates the Pioneer in Laughlin, Nevada. The Company also owns Strip property that may be sold pursuant to an Agreement entered into in fiscal 2006 whereby the Optionee has
the right to purchase the property from the Company for $475 million.

The Companys property in Laughlin, Nevada 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. Management believes Laughlin has now become a
mature market with marginal growth forecasted for the next few years based on its current plans.

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

Management believes the recent revenue and expense trends in its Laughlin hotel/casino property may not change significantly over the next few years.

Critical Accounting Policies and Estimates

Managements Discussion and Analysis of Financial Condition
and Results of Operations discuss Archons consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. 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 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:

Allowance for Doubtful Accounts. We allow for an estimated amount of receivables that may not be collected. We estimate our allowance for
doubtful accounts using a specific formula applied to aged receivables as well as a specific review of large balances. Historical experience is considered, as are customer relationships, in determining specific reserves.

Long-Lived Assets. We have a significant investment in long-lived property and equipment. We estimate that the undiscounted future cash
flows expected to result from the use of these assets exceeds the current carrying



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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. We estimate useful lives for our 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, we would record an impairment charge. We review useful lives and obsolescence and we assess commercial viability of these assets periodically.

Income Taxes. 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. 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, an adjustment to the valuation allowance would increase income in the period in which the profit is realized.

RESULTS OF OPERATIONS  FISCAL 2007 COMPARED TO FISCAL 2006

General

During fiscal 2007, the Companys net operating revenues were relatively equal to the prior year, and operating expenses decreased approximately $3.5
million, resulting in an increase of approximately $3.5 million in operating income. The improvement in operating results was primarily due to a decrease in corporate stock based compensation expenses of approximately $3.1 million, and a $1.4
million gain on the sale of assets, offset by an increase of $1.0 million in operating expenses.

Consolidated

Net Operating Revenues.Consolidated net operating revenues for the year ended September 30, 2007 were relatively unchanged from the
year ended September 30, 2006. Revenues from the investment properties were the same in each of the fiscal years. While overall net revenues remained unchanged, net revenues decreased approximately $1.0 million during fiscal 2007 at the Pioneer
compared to the 2006 fiscal year, following the declining trend of gaming revenues in Laughlin. SLVC net revenues increased during fiscal 2007, by $0.2 million as compared to the 2006 fiscal year. Sahara Resorts (SR) net revenues
increased during fiscal 2007, by $0.4 million, as compared to the 2006 fiscal year. The SLVC and SR increases are associated with interest income resulting from improved cash flows.

In fiscal 2007, 66% of the Companys net revenues were derived from the Pioneer and 27% from investment properties. The Companys business
strategy at the Pioneer emphasizes slot and video poker machine play. For fiscal 2007, approximately 66% of the Pioneers net revenues were derived from casino operations. Approximately 91% of gaming revenues at the Pioneer were derived from
slot and video poker machines, while 7% of such revenues were from table games and 2% was from other gaming activities such as keno.

Operating Expenses.Total operating expenses decreased approximately $3.5 million, or 9%, to $36.8 million for the year ended September 30, 2007, from $40.3 million for the year ended September 30, 2006. Total
operating expenses as a percentage of net revenues decreased to 82% for the year ended September 30, 2007 from 89% for the year ended September 30, 2006. The decrease in operating expenses was principally the result of a decrease of
approximately $3.1 million in stock-based compensation expense and a $1.4 million gain on the sale of the Cambridge building, partially offset by an increase of $1.0 million in Corporate and Pioneer operating expenses.

Operating Income. Consolidated operating income for the year ended September 30, 2007 was $8.3 million, an approximate $3.5 million
increase from $4.8 million for the year ended September 30, 2006. While total revenues remained relatively flat, operating expenses were reduced approximately $2.0 million, combined with a $1.5 million gain on disposal of assets.



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##### Table of Contents

Interest Expense. Consolidated interest expense for the year ended September 30, 2007
was $8.5 million, a $0.4 million decrease compared to $8.9 million for the year ended September 30, 2009, primarily due to a decrease in interest expense associated with non-recourse debt of the investment properties.

Interest and Other Income. Interest and other income for the year ended September 30, 2007 was $1.0 million, an increase of $0.8
million from $0.2 million for the year ended September 30, 2006. The increase in interest and other income is a result of increased cash flows 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 provision of $0.3 million (an approximate
34% rate) for the year ended September 30, 2007, a change of $0.7 million from a $0.4 million tax benefit (an approximate 11% rate) for the year ended September 30, 2006. Certain expenses, principally related to stock-based
compensation expense, recorded in fiscal year 2006 were not deductible for income tax purposes.

Preferred Share Dividends.
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. For the year ended September 30, 2007, dividends of approximately $1.4 million were
accrued on the preferred stock for the purposes of calculating net income applicable to common shares. The dividend rate increased to its maximum rate of 16.0% effective October 1, 2003.

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 $1.0 million, or approximately 3%, to $30.0
million for the year ended September 30, 2007 from $31.0 million for the year ended September 30, 2006.

Gross casino revenues
decreased approximately $1.3 million, or 5.2%, to $23.6 million for the year ended September 30, 2007 from $24.9 million for the year ended September 30, 2006. Slot and video poker revenues decreased approximately $1.1 million, or 5%, to
$21.5 million for the year ended September 30, 2007 from $22.6 million for the year ended September 30, 2006. Other gross gaming revenues, including table games, decreased approximately $0.2 million, or 9%, to $2.1 million for the year
ended September 30, 2007 year compared to $2.3 million for the 2006 year. Management believes this decrease was a result of declining market trends in the local area. Casino promotional allowances decreased $0.2 million, or 3%, to $6.0 million
in year ended September 30, 2007 compared to $6.2 million for year ended September 30, 2006 primarily due to the aforementioned decline in the local gaming market.

Hotel revenues decreased $0.1 million, or 4%, to $2.9 million for the year ended September 30, 2007 from $3.0 million in fiscal 2006 due to a
decrease in the average daily room rate. Food and beverage revenues were relatively stable at $7.4 million for both years. Other revenues increased $0.3 million, or 15%, to $2.2 million for the year ended September 30, 2007 from $1.9 million
for the year ended September 30, 2006 due to increased retail sales.

Operating Expenses.Operating expenses increased
$0.5 million, or 2%, to $32.5 million for the year ended September 30, 2007 from $31.0 million for the year ended September 30, 2006. Operating expenses as a percentage of net revenues increased to 105% in fiscal 2007 from 100% in fiscal
2006.

Casino expenses decreased $0.3 million, or 2%, to $13.6 million for the year ended September 30, 2007 from $13.9 million for
the year ended September 30, 2006, primarily related to a decrease in casino promotional allowances. Casino expenses as a percentage of casino revenues increased to 58% for the year ended September 30, 2007 from 56% for the year ended
September 30, 2006.



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##### Table of Contents

Hotel expenses increased $0.1 million, or 10%, to $1.2 million for the year ended September 30, 2007
compared to $1.1 for the year ended September 30, 2006, primarily due to the increase in payroll expenses related to the minimum wage increases. Food and beverage expenses increased $0.4 million, or 9%, to $4.3 million in fiscal 2007 from $3.9
million in fiscal 2006, primarily due to the increase in payroll related to the minimum wage increase. Food and beverage expenses as a percentage of revenues increased to 58% for the 2007 year from 53% for the 2006 year. Other expenses increased
$0.3 million, or 17%, to $1.9 million for the year ended September 30, 2007 compared to $1.6 million for the year ended September 30, 2006 due to cost of sales related to the increase in retail revenues. Other expenses as a percentage of
other revenues increased to 85% for the 2007 year from 84% for the 2006 year.

Selling, general and administrative expenses increased $0.1
million, or 2%, to $4.4 million for the year ended September 30, 2007 compared to $4.4 million for the year ended September 30, 2006. Selling, general and administrative expenses as a percentage of revenues increased to 15% for the 2007
year from 14% for the 2006 year. 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 3%, to $4.0 million in fiscal year 2007 compared to $3.9 million for the year ended September 30, 2006. Utilities and property expenses as a percentage of revenues remained unchanged at 13%. Depreciation and amortization expenses
decreased $0.2 million, or 8%, to $2.0 million in the year ended September 30, 2007 from $2.2 million in the year ended September 30, 2006. The Pioneer recorded a loss of $20,000 on the disposal of slot machines in the prior year compared
to no activity in the current year.

Interest Expense. Interest expense decreased $0.1 million, or 10%, to $1.3 million for
the year ended September 30, 2007 from $1.4 million for the year ended September 30, 2006, primarily due to the reduction of debt.

RESULTS OF
OPERATIONS  FISCAL 2006 COMPARED TO FISCAL 2005

General

During fiscal 2006, the Companys net operating revenues increased approximately $1.5 million and operating expenses decreased approximately $1.1
million, resulting in an increase of approximately $2.6 million in operating income. The improvement in operating results was primarily due to approximately $1.0 million received as reimbursements of amounts previously expended on behalf of an
affiliated company, an improvement of $0.8 million in operating results at the Pioneer and a $0.8 million decrease in stock-based compensation.

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.
Christopher Lowden, son of Paul W. Lowden, is a limited partner in Dukes LLC which was the managing member of Dukes Casino, a casino managed and operated by a subsidiary of the Company. 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 three months ended September 30, 2006, the Company received approximately $1.0 million from Dukes LLC. According to the terms
of the various agreements, the Company may continue to receive approximately $60,000 per month for approximately 40 months as well as a payment in approximately 2 years of approximately $280,000 and a final payment of approximately $1.0 million in
approximately 4 years. The Company can not give assurance that these payments will occur and plans to record any future recoveries as received.



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Consolidated

Net Operating Revenues.Consolidated net operating revenues for the year ended September 30, 2006 were $45.2 million, a $1.5 million, or 3%, increase from $43.7 million for the year ended
September 30, 2005. Income from investment properties was $12.4 million in each of the fiscal years. Net revenues increased approximately $1.3 million to $31.0 million during fiscal 2006 at the Pioneer compared to $29.7 million for the 2005
fiscal year.

In fiscal 2006, 69% of the Companys net revenues were derived from the Pioneer and 27% from investment properties. The
Companys business strategy at the Pioneer emphasizes slot and video poker machine play. For fiscal 2006, approximately 80% of the Pioneers net revenues were derived from casino operations. Approximately 91% of gaming revenues at the
Pioneer were derived from slot and video poker machines, while 8% of such revenues were from table games and 1% was from other gaming activities such as keno.

Operating Expenses.Total operating expenses decreased approximately $1.1 million, or 3%, to $40.3 million for the year ended September 30, 2006 from $41.4 million for the year ended
September 30, 2005. Total operating expenses as a percentage of net revenues decreased to 89% for the year ended September 30, 2006 from 95% for the year ended September 30, 2005. The decrease in operating expenses was principally the
result of a decrease of approximately $0.8 million in stock-based compensation expense and a $0.8 million reimbursement of legal expenses from an affiliate partially offset by an increase of $0.5 million in operating expenses at the Pioneer.

Operating Income. Consolidated operating income for the year ended September 30, 2006 was $4.8 million, an approximate
$2.5 million increase from $2.3 million for the year ended September 30, 2005. Operating income increased by $0.8 million at the Pioneer.

Interest Expense. Consolidated interest expense for the year ended September 30, 2006 was $8.9 million, a $2.2 million decrease compared to $11.1 million for the year ended September 30, 2005, primarily due to a
decrease in interest expense associated with non-recourse debt of the investment properties.

Interest and Other Income.
Interest and other income for the year ended September 30, 2006 was $0.2 million, a decrease of $1.1 million from $1.3 million for the year ended September 30, 2005. In fiscal 2005, the Company had $0.1 million from net gains on sales of
marketable securities and $0.9 million of income from other investments and other assets.

Income Tax.The Company recorded a
federal income tax benefit of $0.4 million (an approximate 11% rate) for the year ended September 30, 2006 compared to $2.6 million (an approximate 35% tax rate) for the year ended September 30, 2005. Certain expenses, principally related
to stock-based compensation expense, recorded in fiscal year 2006 were not deductible for income tax purposes.

Preferred Share
Dividends. Undeclared preferred share dividends are not recorded in the stockholders equity section of the balance sheet as the Company may elect at its sole discretion whether to redeem its preferred stock. However, dividends of
approximately $1.5 million for fiscal years 2006 and 2005 accrued on the preferred stock for purposes of calculating net loss applicable to common shares. The dividend rate increased to its maximum rate of 16.0% effective October 1, 2003.



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##### Table of Contents

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 increased $1.3 million, or approximately 4%, to $31.0 million for the year ended September 30, 2006 from $29.7 million for the year ended September 30, 2005.

Gross casino revenues increased approximately $0.8 million, or 3%, to $24.9 million for the year ended September 30, 2006 from $24.1 million for the
year ended September 30, 2005. Slot and video poker revenues increased approximately $0.9 million, or 4%, to $22.6 million for the year ended September 30, 2006 from $21.7 million for the year ended September 30, 2005. Other gross
gaming revenues, including table games, were relatively unchanged at $2.3 million for the 2006 year compared to $2.4 million for the 2005 year. Management believes this increase was a result of improved marketing strategies to attract local
customers. Casino promotional allowances increased $0.6 million, or 11%, to $6.2 million in fiscal year 2006 compared to $5.6 million for fiscal year 2005 primarily due to the aforementioned increase in slot and video poker revenues and certain
changes in marketing strategies.

Hotel revenues increased $0.2 million, or 6%, to $3.0 million for the year ended September 30, 2006
from $2.8 million in fiscal 2005, due to an increase in occupancy rate partially offset by a decrease in the average daily room rate. Food and beverage revenues increased $0.5 million, or 8%, to $7.4 million for the year 2006 from $6.9 million for
the 2005 year, primarily due to the increase in casino promotional allowances. Other revenues increased $0.4 million, or 28%, to $1.9 million in the current year from $1.5 million in the prior year due to increased retail sales.

Operating Expenses.Operating expenses increased $0.5 million, or 2%, to $31.0 million for the year ended September 30, 2006 from
$30.5 million for the year ended September 30, 2005. Operating expenses as a percentage of net revenues decreased to 100% in fiscal 2006 from 103% in fiscal 2005.

Casino expenses increased $0.8 million, or 6%, to $13.9 million for the year ended September 30, 2006 from $13.1 million for the year ended September 30, 2005, primarily related to increase in casino
promotional allowances. Casino expenses as a percentage of casino revenues increased to 56% for the year ended September 30, 2006 from 54% for the year ended September 30, 2005.

Hotel expenses were relatively unchanged at $1.1 million for the year ended September 30, 2006 compared to $1.0 for the year ended
September 30, 2005 as the Pioneer was able to increase occupancy without increasing costs. Food and beverage expenses decreased $0.2 million, or 5%, to $3.9 million in fiscal 2005 from $4.1 million in fiscal 2005, primarily due to a decrease in
the cost of food sales associated with a change in food promotions. Food and beverage expenses as a percentage of food and beverage revenues decreased to 53% for the 2006 year from 60% for the 2005 year. Other expenses increased $0.4 million, or
38%, to $1.6 million for the year ended September 30, 2006 compared to $1.2 million for the year ended September 30, 2005 due to the increase in retail sales. Other expenses as a percentage of other revenues increased to 84% for the 2006
year from 78% for the 2005 year.

Selling, general and administrative expenses decreased $0.1 million, or 2%, to $4.4 million for the year
ended September 30, 2006 compared to $4.5 million for the year ended September 30, 2005. Selling, general and administrative expenses as a percentage of revenues decreased to 14% for the 2006 year from 15% for the 2005 year. 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 were unchanged at $3.9 million for the years ended
September 30, 2006 and 2005. Utilities and property expenses as a percentage of revenues remained unchanged at 13%. Depreciation and amortization expenses decreased $0.3 million, or 11%, to $2.2 million in the year ended September 30, 2006
from $2.5 million in the year ended September 30, 2005. The Pioneer recorded a loss of $0.2 million on the disposal of older slot machines in the prior year compared to $20,000 in the current year.



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##### Table of Contents

Interest Expense. Interest expense increased $0.1 million, or 11%, to $1.4 million for the
year ended September 30, 2006 from $1.3 million for the year ended September 30, 2005, primarily due to the increase in the prime lending rate.

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

Contractual Obligations and Commitments

The following table summarizes the Companys fiscal year contractual obligations and commitments as of September 30,
2007 for the fiscal years ending September 30, 2008, 2009, 2010, 2011, 2012, 2013 and thereafter:



|                    |  |                        |        |      |   |       |  |      |       |      |   |                    |  |       |       |  |   |        |  |   |        
|------------------- |  | ---------------------- | ------ | ---- | - | ----- |  | ---- | ----- | ---- | - | ------------------ |  | ----- | ----- |  | - | ------ |  | - | -------
|                    |  | Payments Due By Period
|                    |  | 2008                   |        | 2009 |   | 2010  |  | 2011 |       | 2012 |   | 2013 andThereafter |  | Total
|                    |  | (Amounts in Thousands)
|Non-recourse debt:  |  |                        |        |      |   |       |  |      |       |      |   |                    |  |       |       |  |   |        |  |   |        
|Gaithersburg        |  | $                      | 2,491  |      | $ | 2,828 |  | $    | 3,186 |      | $ | 3,573              |  | $     | 3,987 |  | $ | 29,555 |  | $ | 45,620 
|Sovereign           |  |                        | 0      |      |   | 0     |  |      | 0     |      |   | 0                  |  |       | 0     |  |   | 31,199 |  |   | 31,199 
|Long-term debt:     |  |                        |        |      |   |       |  |      |       |      |   |                    |  |       |       |  |   |        |  |   |        
|Equipment           |  |                        | 1,143  |      |   | 52    |  |      | 0     |      |   | 0                  |  |       | 0     |  |   | 0      |  |   | 1,195  
|Mortgage obligation |  |                        | 9,798  |      |   | 0     |  |      | 0     |      |   | 0                  |  |       | 0     |  |   | 0      |  |   | 9,798  
|Operating leases:   |  |                        |        |      |   |       |  |      |       |      |   |                    |  |       |       |  |   |        |  |   |        
|Ground lease        |  |                        | 371    |      |   | 373   |  |      | 373   |      |   | 373                |  |       | 373   |  |   | 24,702 |  |   | 26,565 
|Corporate offices   |  |                        | 59     |      |   | 30    |  |      | 0     |      |   | 0                  |  |       | 0     |  |   | 0      |  |   | 89     
|                    |  |                        |        |      |   |       |  |      |       |      |   |                    |  |       |       |  |   |        |  |   |        
|                    |  | $                      | 13,862 |      | $ | 3,283 |  | $    | 3,559 |      | $ | 3,946              |  | $     | 4,360 |  | $ | 85,456 |  | $ | 114,466
|                    |  |                        |        |      |   |       |  |      |       |      |   |                    |  |       |       |  |   |        |  |   |        

The Company is required to make the following cash interest payments related to the above debt
obligations: (i) Non-recourse debt$7.0 million (2008), $6.8 million (2009), $6.6 million (2010), $6.3 million (2011), $6.0 million (2012) and $33.8 million (2013 and thereafter); and (ii) Long-term debt$10 million (2008),
$0.0 million (2009), $0.0 million (2010), $0.0 million (2011) $0.4 million (2007), $0.0 million (2012) and $0.0 million (2013 and thereafter).

Our ability to service our contractual obligations and commitments 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 our control. In addition, we will be dependent on the continued
ability of the tenants in the investment 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 non-recourse debt obligations related to the properties. Based upon the financial condition of the tenants, management does not foresee any problems in the timely satisfaction of future obligations by third parties.

A non-recourse obligation related to the Massachusetts property of approximately $25.7 million matured and was paid by the tenant during
the three months ended June 30, 2005. The tenant of the property was required to make this payment subject to a lease agreement. Based upon the financial condition of the tenant, management does not foresee any problems in the timely
satisfaction of future obligations by third parties.



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Liquidity and Capital Resources

Mortgage Note Obligation  The Company has a mortgage note obligation which matured in late December 2006 with an extension until January 2008
in the approximate amount of $10.1 million. The Bank has informed the Company of its commitment to extend the maturity date of the note obligation to January 2009. The documentation process for the extension may go beyond the January 15, 2008,
maturity, however, all original terms and conditions will remain in effect until the new loan documents are executed. Existing terms include monthly principal and interest payments of $98,000 with interest at a rate of prime plus 1% and a balloon
payment of approximately $9.7 million in January 2008 with no prepayment penalties. The extended note will continue to be secured by the land owned on the Strip by the Company and by a personal guaranty of the Companys Chairman of the Board
and CEO, Paul W. Lowden. Although the Company believes the banks commitment to extend the maturity date of the loan will be made formal in the near-term, it can not give any assurances that the extension will occur. However, the bank has
informed the Company it intends to extend the maturity date to January 2009.

As of September 30, 2007, the Company held cash and cash
equivalents of $27.5 million compared to $6.2 million at September 30, 2006. In addition, the Company had $7.3 million in investment in marketable securities at September 30, 2007 compared to $6.0 million at September 30, 2006.
Management believes that through cash flow generated from 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, 2008. The investment 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 was approximately $3.0 million for the year ended September 30, 2007 remaining nearly equal to approximately $3.1
million for the year ended September 30, 2006.

Cash Flows from Investing Activities. Cash provided by investing
activities was $42.2 million during the year ended September 30, 2007, compared to cash provided by investing activities of $6.9 million during the year ended September 30, 2006. This increase is primarily related to the nonrefundable
option payment of approximately $44.0 million received during the year ended September 30, 2007, compared to the nonrefundable option payment of approximately $5.8 million received in the year ended September 30, 2006.

Cash Flows from Financing Activities.Cash used in financing activities was approximately $23.4 million during the year ended
September 30, 2007 compared to $5.9 million during the year ended September 30, 2006. During fiscal 2007, the Company paid $20.1 million for redeemable preferred stock and paid $2.9 million on debt and non-recourse debt. During fiscal
2006, the Company paid $6.6 million on debt and non-recourse debt and borrowed $0.7 million from a margin account.

The Companys
primary source of operating cash is from the Pioneers operations, from interest income on available cash and cash equivalents, 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 $5.8 million through September 30, 2006. During fiscal 2007, the Company received an additional $44.0 million including extension fees and an additional option payment. 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 investment properties is contractually committed to reducing the non-recourse indebtedness issued or assumed in connection with the acquisition of the investment properties. Under the two leases, the tenants are
responsible for substantially all obligations related to those properties.

In October 1995, the Company acquired an approximately 27-acre
parcel on the Strip which was recorded at approximately $21.5 million. The Company leases the property to two different lessees for an aggregate amount of $364,000 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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##### Table of Contents

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.

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.

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 14, 2008, the holders of 4,234,872 shares of the Exchangeable Redeemable Preferred Stock have surrendered their shares and received payment of the redemption price.

On August 27, 2007, the following institutional investors: D. E. Shaw Laminar Portfolios, L.L.C., LC Capital Master Fund, Ltd, LC Capital/Capital Z
SPV, LP, Magten Asset Management Corp, Mercury Real Estate Securities Fund LP, Mercury Real Estate Securities Offshore Fund Limited, Black Horse Capital LP, Black Horse Capital (QP) LP, Black Horse Capital Offshore Ltd, and Plainfield Special
Situations Master Fund Limited filed an action against the registrant in the United States District Court for The District of Nevada entitled D.E. Shaw Laminar Portfolios, LLC; et al. v. Archon Corporation, 2:07-CV-01146-PMP-LRL (D. Nev.). The
Complaint was subsequently amended to add an additional party plaintiff (collectively, the Laminar Plaintiffs). The Amended Complaint: (a) 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



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##### Table of Contents

Laminar Plaintiffs full compensation of any and all available damages suffered by the Laminar Plaintiffs as a result of the Companys breach of the
Certificate; (b) 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 Laminar Plaintiffs full
compensation of any and all available damages suffered as a result of the Companys anticipatory breach of the Certificate; (c) 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; (d) seeks an order from the Court calling for the Company to reimburse the Laminar Plaintiffs attorneys fees, expenses and costs
incurred in enforcing the their rights; and (e) seeks such other and further relief as the Court may deem appropriate. In November 2007, and subsequent to the end of the Companys fiscal year ended September 30, 2007, the Laminar
Plaintiffs filed a motion for partial summary judgment on liability. The Company responded, and the parties will await a ruling from the Court following the Plaintiffs filing of its reply brief.

Also subsequent to the end of the Companys fiscal year, two other former holders of the Exchangeable Redeemable Preferred Stock filed Complaints in
the United States District Court, District of Nevada, entitled Rainero v. Archon Corporation, District of Nevada Case No. 2:07-cv-01553, and Leeward Capital, L.P. v. Archon Corporation, District of Nevada Case No. 2:08-cv-00007,
both alleging essentially the same claim as the first Complaint. If the plaintiffs 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 which, if applied
to all the then outstanding shares of Exchangeable Redeemable Preferred Stock, including the shares held by the Companys officers and directors, would increase the redemption price in excess of $15.2 million.

Recently Issued Accounting Standards

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 clarifies that a noncontrolling (minority) interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS 160 will be effective for the
Companys fiscal year beginning October 1, 2009, but will not likely have any effect on the Companys consolidated financial statements.

SFAS NO. 159: In February 2007, the FASB issued SFAS 159, The Fair Value Option for Financial Assets and Financial Liabilities, which provides companies an option to report selected financial
assets and liabilities at fair value. Adoption of SFAS 159 is optional for the Company but only if SFAS 157 is adopted concurrently. The Company is currently evaluating the possible impact that adopting SFAS No. 159 will have on its
consolidated financial statements.

SFAS NO. 157: In September 2006, the FASB issued SFAS No. 157, Fair Value
Measurements which establishes a framework for measuring fair value and enhanced disclosures about fair value measurements. The measurement and disclosure requirements are effective for the Company beginning in the first quarter of fiscal 2009,
except with respect to non-financial assets and liabilities for which the effective will be one year later. We are currently evaluating whether SFAS No. 157 will result in a change to our fair value measurements.

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.



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##### Table of Contents

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 investment properties are generally
borne by the tenants. 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 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 non-recourse debt, the Company has total interest-bearing debt of approximately $11.0 million,
of which approximately $9.8 million bears interest at a variable rate (9.25% at September 30, 2007). 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, 2007. 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, 2007, 2006 and 2005



|                                                                                                             |  |         
|------------------------------------------------------------------------------------------------------------ |  | --------
|                                                                                                             |  | Page No.
|Report of Independent Registered Public Accounting Firm  Piercy Bowler Taylor & Kern                        |  | 25      
|Report of Independent Registered Public Accounting Firm  Ernst & Young LLP                                  |  | 26      
|Consolidated Balance Sheets as of September 30, 2007 and 2006                                                |  | 27      
|Consolidated Statements of Operations for the Years Ended September 30, 2007, 2006 and 2005                  |  | 29      
|Consolidated Statements of Comprehensive Income (Loss) for the Years Ended September 30, 2007, 2006 and 2005 |  | 30      
|Consolidated Statements of Stockholders Equity for the Years Ended September 30, 2007, 2006 and 2005        |  | 31      
|Consolidated Statements of Cash Flows for the Years Ended September 30, 2007, 2006 and 2005                  |  | 32      
|Notes to Consolidated Financial Statements                                                                   |  | 33      

Financial Statement Schedules are omitted because of the absence of conditions under which they
are required or because the information is included in the financial statements or the notes thereto.



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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,
2007, and the related consolidated statements of operations, stockholders equity and cash flows for the year 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. The consolidated financial statements of the Company as of September 30, 2006 and for the years ended September 30, 2006 and 2005, were audited by other auditors whose report dated
December 21, 2006, expressed an unqualified opinion on those financial statements.

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, 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 14, 2008

/s/ Piercy Bowler Taylor & Kern

Certified Public Accountants



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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 sheet of Archon Corporation and Subsidiaries (the Company) as of September 30, 2006
(Restated), and the related consolidated statements of operations, stockholders equity and cash flows for the years ended September 30, 2006 (Restated as to the Statement of Cash Flows) and 2005. These financial statements are the
responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. 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, 2006 (Restated), and the consolidated results of their operations and their cash flows for the years ended September 30, 2006
(Restated as to the Statement of Cash Flows) and 2005, in conformity with accounting principles generally accepted in the United States.

As described in
Note 2, Restatement of 2006 Financial Statements, the Company has restated previously issued financial statements as of and for the year ended December 31, 2006.

Las Vegas, Nevada

December 21, 2006

/s/ Ernst & Young LLP



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##### Table of Contents

Archon Corporation and Subsidiaries

Consolidated Balance Sheets

as of September 30,



|                                         |  |      |             |   |            |   |             |  
|---------------------------------------- |  | ---- | ----------- | - | ---------- | - | ----------- | -
|                                         |  | 2007 |             |   | 2006       |  
|                                         |  |      |             |   | (Restated) |  
|ASSETS                                   |  |      |             |   |            |   |             |  
|Current assets:                          |  |      |             |   |            |   |             |  
|Cash and cash equivalents                |  | $    | 27,484,222  |   |            | $ | 6,187,533   |  
|Investment in marketable securities      |  |      | 10,997,088  |   |            |   | 6,011,225   |  
|Accounts receivable, net                 |  |      | 1,054,493   |   |            |   | 1,096,333   |  
|Inventories                              |  |      | 405,378     |   |            |   | 414,033     |  
|Prepaid expenses and other               |  |      | 1,148,669   |   |            |   | 1,045,654   |  
|                                         |  |      |             |   |            |   |             |  
|Total current assets                     |  |      | 41,089,850  |   |            |   | 14,754,778  |  
|                                         |  |     
|Property held for sale                   |  |      | 21,504,400  |   |            |   | 21,504,400  |  
|                                         |  |     
|Property and equipment:                  |  |      |             |   |            |   |             |  
|Rental property held for investment, net |  |      | 124,954,638 |   |            |   | 127,364,625 |  
|Land used in operations                  |  |      | 7,925,589   |   |            |   | 8,125,589   |  
|Buildings and improvements               |  |      | 34,413,872  |   |            |   | 35,082,588  |  
|Machinery and equipment                  |  |      | 8,646,190   |   |            |   | 9,234,649   |  
|Accumulated depreciation                 |  |      | (26,160,177 | ) |            |   | (25,664,662 | )
|                                         |  |      |             |   |            |   |             |  
|Property and equipment, net              |  |      | 149,780,112 |   |            |   | 154,142,789 |  
|                                         |  |     
|Other assets                             |  |      | 7,607,362   |   |            |   | 7,648,201   |  
|                                         |  |      |             |   |            |   |             |  
|Total assets                             |  | $    | 219,981,724 |   |            | $ | 198,050,168 |  
|                                         |  |      |             |   |            |   |             |  

See the accompanying Notes to Consolidated Financial Statements.



27



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##### Table of Contents

Archon Corporation and Subsidiaries

Consolidated Balance Sheets  (continued)

as of September 30,



|                                                                                                                                                                                                                                                 |  |      |             |   |            |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | ----------- | - | ---------- | - | ----------- | -
|                                                                                                                                                                                                                                                 |  | 2007 |             |   | 2006       |  
|                                                                                                                                                                                                                                                 |  |      |             |   | (Restated) |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                                             |  |      |             |   |            |   |             |  
|Current liabilities:                                                                                                                                                                                                                             |  |      |             |   |            |   |             |  
|Accounts payable                                                                                                                                                                                                                                 |  | $    | 4,008,754   |   |            | $ | 2,770,938   |  
|Interest payable                                                                                                                                                                                                                                 |  |      | 1,361,092   |   |            |   | 1,310,796   |  
|Accrued and other liabilities                                                                                                                                                                                                                    |  |      | 3,711,881   |   |            |   | 3,524,408   |  
|Exchangeable redeemable preferred stock  unredeemed                                                                                                                                                                                             |  |      | 428,768     |   |            |   | 0           |  
|Current portion of debt                                                                                                                                                                                                                          |  |      | 10,940,905  |   |            |   | 11,427,277  |  
|Current portion of non-recourse debt                                                                                                                                                                                                             |  |      | 2,490,198   |   |            |   | 2,195,326   |  
|                                                                                                                                                                                                                                                 |  |      |             |   |            |   |             |  
|Total current liabilities                                                                                                                                                                                                                        |  |      | 22,941,598  |   |            |   | 21,228,745  |  
|Debt  less current portion                                                                                                                                                                                                                      |  |      | 52,408      |   |            |   | 223,306     |  
|Non-recourse debt  less current portion                                                                                                                                                                                                         |  |      | 74,328,402  |   |            |   | 76,818,600  |  
|Deferred income taxes                                                                                                                                                                                                                            |  |      | 28,753,889  |   |            |   | 27,245,317  |  
|Deferred rent and other accrued liabilities                                                                                                                                                                                                      |  |      | 42,082,116  |   |            |   | 45,051,567  |  
|Proceeds from land sale option                                                                                                                                                                                                                   |  |      | 49,751,667  |   |            |   | 5,750,000   |  
|Commitments and contingencies (see Note 15)                                                                                                                                                                                                      |  |      |             |   |            |   |             |  
|Stockholders equity:                                                                                                                                                                                                                            |  |      |             |   |            |   |             |  
|Common stock, $.01 par value; authorized-100,000,000 shares; issued and outstanding  6,280,931 and 6,672,281 shares                                                                                                                             |  |      | 62,809      |   |            |   | 66,723      |  
|Preferred stock, exchangeable, redeemable 16.0% cumulative, stated at $2.14 liquidation value, authorized-10,000,000 shares; issued and
outstanding  4,413,777 shares on September 30, 2006 with cumulative dividends in arrears of $12,302,741 |  |      | 0           |   |            |   | 9,445,483   |  
|Additional paid-in capital                                                                                                                                                                                                                       |  |      | 61,482,194  |   |            |   | 61,482,194  |  
|Accumulated deficit                                                                                                                                                                                                                              |  |      | (63,507,905 | ) |            |   | (51,098,102 | )
|Accumulated other comprehensive income                                                                                                                                                                                                           |  |      | 4,122,320   |   |            |   | 1,924,109   |  
|                                                                                                                                                                                                                                                 |  |      |             |   |            |   |             |  
|                                                                                                                                                                                                                                                 |  |      | 2,159,418   |   |            |   | 21,820,407  |  
|Less treasury common stock  4,875 shares, at cost                                                                                                                                                                                               |  |      | (87,774     | ) |            |   | (87,774     | )
|                                                                                                                                                                                                                                                 |  |      |             |   |            |   |             |  
|Total stockholders equity                                                                                                                                                                                                                       |  |      | 2,071,644   |   |            |   | 21,732,633  |  
|                                                                                                                                                                                                                                                 |  |      |             |   |            |   |             |  
|Total liabilities and stockholders equity                                                                                                                                                                                                       |  | $    | 219,981,724 |   |            | $ | 198,050,168 |  
|                                                                                                                                                                                                                                                 |  |      |             |   |            |   |             |  

See the accompanying Notes to Consolidated Financial Statements.



28



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##### Table of Contents

Archon Corporation and Subsidiaries

Consolidated Statements of Operations

For the Years Ended September 30,



|                                                                         |  |      |            |   |      |   |            |      |  |   |             |  
|------------------------------------------------------------------------ |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ----------- | -
|                                                                         |  | 2007 |            |   | 2006 |   |            | 2005 | 
|Revenues:                                                                |  |      |            |   |      |   |            |      |  |   |             |  
|Casino                                                                   |  | $    | 23,620,598 |   |      | $ | 24,919,899 |      |  | $ | 24,119,395  |  
|Hotel                                                                    |  |      | 2,849,349  |   |      |   | 2,955,969  |      |  |   | 2,782,506   |  
|Food and beverage                                                        |  |      | 7,392,665  |   |      |   | 7,433,296  |      |  |   | 6,914,157   |  
|Investment properties                                                    |  |      | 12,402,248 |   |      |   | 12,402,247 |      |  |   | 12,402,247  |  
|Other                                                                    |  |      | 4,943,226  |   |      |   | 3,685,589  |      |  |   | 3,088,930   |  
|                                                                         |  |      |            |   |      |   |            |      |  |   |             |  
|Gross revenues                                                           |  |      | 51,208,086 |   |      |   | 51,397,000 |      |  |   | 49,307,235  |  
|Less casino promotional allowances                                       |  |      | (6,029,493 | ) |      |   | (6,243,334 | )    |  |   | (5,619,377  | )
|                                                                         |  |      |            |   |      |   |            |      |  |   |             |  
|Net operating revenues                                                   |  |      | 45,178,593 |   |      |   | 45,153,666 |      |  |   | 43,687,858  |  
|                                                                         |  |      |            |   |      |   |            |      |  |   |             |  
|Operating expenses:                                                      |  |      |            |   |      |   |            |      |  |   |             |  
|Casino                                                                   |  |      | 13,634,799 |   |      |   | 13,874,582 |      |  |   | 13,051,698  |  
|Hotel                                                                    |  |      | 1,185,252  |   |      |   | 1,074,335  |      |  |   | 1,040,601   |  
|Food and beverage                                                        |  |      | 4,280,358  |   |      |   | 3,923,775  |      |  |   | 4,138,451   |  
|Other                                                                    |  |      | 1,898,900  |   |      |   | 1,634,239  |      |  |   | 1,204,775   |  
|Selling, general and administrative:                                     |  |      |            |   |      |   |            |      |  |   |             |  
|Corporate                                                                |  |      | 4,368,540  |   |      |   | 5,776,989  |      |  |   | 7,634,409   |  
|Other                                                                    |  |      | 3,608,705  |   |      |   | 3,807,060  |      |  |   | 3,550,890   |  
|Utilities and property expenses                                          |  |      | 4,761,520  |   |      |   | 4,702,539  |      |  |   | 4,702,176   |  
|Depreciation and amortization                                            |  |      | 4,552,391  |   |      |   | 5,502,009  |      |  |   | 5,834,726   |  
|Loss on sale/disposal of assets                                          |  |      | 152        |   |      |   | 14,523     |      |  |   | 244,648     |  
|                                                                         |  |      |            |   |      |   |            |      |  |   |             |  
|Total operating expenses                                                 |  |      | 38,290,617 |   |      |   | 40,310,051 |      |  |   | 41,402,374  |  
|                                                                         |  |      |            |   |      |   |            |      |  |   |             |  
|Operating income                                                         |  |      | 6,887,976  |   |      |   | 4,843,615  |      |  |   | 2,285,484   |  
|Interest expense                                                         |  |      | (8,456,538 | ) |      |   | (8,854,722 | )    |  |   | (11,059,577 | )
|Interest and other income                                                |  |      | 1,042,539  |   |      |   | 244,926    |      |  |   | 1,268,134   |  
|                                                                         |  |      |            |   |      |   |            |      |  |   |             |  
|Loss before income tax benefit and discontinued operations               |  |      | (526,023   | ) |      |   | (3,766,181 | )    |  |   | (7,505,959  | )
|Federal income tax benefit                                               |  |      | 184,001    |   |      |   | 410,472    |      |  |   | 2,594,181   |  
|                                                                         |  |      |            |   |      |   |            |      |  |   |             |  
|Loss before discontinued operations                                      |  |      | (342,022   | ) |      |   | (3,355,709 | )    |  |   | (4,911,778  | )
|                                                                         |  |      |            |   |      |   |            |      |  |   |             |  
|Discontinued operations  gain on sale, net of tax provision of $510,596 |  |      | 948,250    |   |      |   | 0          |      |  |   | 0           |  
|                                                                         |  |      |            |   |      |   |            |      |  |   |             |  
|Net income (loss)                                                        |  |      | 606,228    |   |      |   | (3,355,709 | )    |  |   | (4,911,778  | )
|Dividends earned on preferred shares                                     |  |      | (1,385,337 | ) |      |   | (1,511,277 | )    |  |   | (1,511,277  | )
|                                                                         |  |      |            |   |      |   |            |      |  |   |             |  
|Net loss applicable to common shares                                     |  | $    | (779,109   | ) |      | $ | (4,866,986 | )    |  | $ | (6,423,055  | )
|                                                                         |  |      |            |   |      |   |            |      |  |   |             |  
|Average common shares outstanding                                        |  |      | 6,386,473  |   |      |   | 6,235,931  |      |  |   | 6,229,015   |  
|                                                                         |  |      |            |   |      |   |            |      |  |   |             |  
|Average common and common equivalent shares outstanding                  |  |      | 6,386,473  |   |      |   | 6,235,931  |      |  |   | 6,229,015   |  
|                                                                         |  |      |            |   |      |   |            |      |  |   |             |  
|Basic income (loss) per common share:                                    |  |      |            |   |      |   |            |      |  |   |             |  
|From continuing operations                                               |  | $    | (0.27      | ) |      | $ | (0.78      | )    |  | $ | (1.03       | )
|From discontinued operations                                             |  |      | 0.15       |   |      |   | 0          |      |  |   | 0           |  
|                                                                         |  |      |            |   |      |   |            |      |  |   |             |  
|Net basic loss per share                                                 |  | $    | (0.12      | ) |      | $ | (0.78      | )    |  | $ | (1.03       | )
|                                                                         |  |      |            |   |      |   |            |      |  |   |             |  
|Diluted income per common and common equivalent shares outstanding       |  | $    | n/a        |   |      | $ | n/a        |      |  | $ | n/a         |  
|                                                                         |  |      |            |   |      |   |            |      |  |   |             |  

See the accompanying Notes to Consolidated Financial Statements.



29



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##### Table of Contents

Archon Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

For the Years Ended September 30,



|                                                                                                                              |  |      |           |      |   |            |      |  |   |            |  
|----------------------------------------------------------------------------------------------------------------------------- |  | ---- | --------- | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                                                                                              |  | 2007 |           | 2006 |   |            | 2005 | 
|Net income (loss)                                                                                                             |  | $    | 606,228   |      |   | (3,355,709 | )    |  | $ | (4,911,778 | )
|Unrealized gain on marketable securities, net of income taxes of $1,184, $302, and $199 in 2007, 2006, and 2005, respectively |  |      | 2,198,211 |      |   | 561,031    |      |  |   | 371,005    |  
|                                                                                                                              |  |      |           |      |   |            |      |  |   |            |  
|Comprehensive income (loss)                                                                                                   |  | $    | 2,804,439 |      | $ | (2,794,678 | )    |  | $ | (4,540,773 | )
|                                                                                                                              |  |      |           |      |   |            |      |  |   |            |  

See the accompanying Notes to Consolidated Financial Statements.



30



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Archon Corporation and Subsidiaries

Consolidated Statements of Stockholders Equity

For the Years Ended September 30, 2007, 2006 and 2005



|                                         |  |             |        |   |                |   |            |                          |  |   |                    |   |  |                                     |             |               |  |   |           |  |   |         |   |  |   |             |  
|---------------------------------------- |  | ----------- | ------ | - | -------------- | - | ---------- | ------------------------ |  | - | ------------------ | - |  | ----------------------------------- | ----------- | ------------- |  | - | --------- |  | - | ------- | - |  | - | ----------- | -
|                                         |  | CommonStock |        |   | PreferredStock |   |            | AdditionalPaid-InCapital |  |   | AccumulatedDeficit |   |  | AccumulatedOtherComprehensiveIncome |             | TreasuryStock |  |   | Total     | 
|Balances, September 30, 2004             |  | $           | 62,214 |   |                | $ | 9,673,553  |                          |  | $ | 54,582,364         |   |  | $                                   | (42,830,615 | )             |  | $ | 992,023   |  | $ | (87,774 | ) |  | $ | 22,391,765  |  
|Net loss                                 |  |             |        |   |                |   |            |                          |  |   |                    |   |  |                                     | (4,911,778  | )             |  |   |           |  |   |         |   |  |   | (4,911,778  | )
|Preferred stock redeemed and retired     |  |             |        |   |                |   | (228,070   | )                        |  |   | (188,340           | ) |  |                                     |             |               |  |   |           |  |   |         |   |  |   | (416,410    | )
|Exercise of stock options                |  |             | 145    |   |                |   |            |                          |  |   | 19,275             |   |  |                                     |             |               |  |   |           |  |   |         |   |  |   | 19,420      |  
|Stock-based compensation expense         |  |             |        |   |                |   |            |                          |  |   | 3,929,634          |   |  |                                     |             |               |  |   |           |  |   |         |   |  |   | 3,929,634   |  
|Unrealized gain on marketable securities |  |             |        |   |                |   |            |                          |  |   |                    |   |  |                                     |             |               |  |   | 371,055   |  |   |         |   |  |   | 371,055     |  
|                                         |  |             |        |   |                |   |            |                          |  |   |                    |   |  |                                     |             |               |  |   |           |  |   |         |   |  |   |             |  
|Balances, September 30, 2005             |  |             | 62,359 |   |                |   | 9,445,483  |                          |  |   | 58,342,933         |   |  |                                     | (47,742,393 | )             |  |   | 1,363,078 |  |   | (87,774 | ) |  |   | 21,383,686  |  
|Net loss                                 |  |             |        |   |                |   |            |                          |  |   |                    |   |  |                                     | (3,355,709  | )             |  |   |           |  |   |         |   |  |   | (3,355,709  | )
|Exercise of stock options                |  |             | 4,364  |   |                |   |            |                          |  |   |                    |   |  |                                     |             |               |  |   |           |  |   |         |   |  |   | 4,364       |  
|Stock-based compensation expense         |  |             |        |   |                |   |            |                          |  |   | 3,139,261          |   |  |                                     |             |               |  |   |           |  |   |         |   |  |   | 3,139,261   |  
|Unrealized gain on marketable securities |  |             |        |   |                |   |            |                          |  |   |                    |   |  |                                     |             |               |  |   | 561,031   |  |   |         |   |  |   | 561,031     |  
|                                         |  |             |        |   |                |   |            |                          |  |   |                    |   |  |                                     |             |               |  |   |           |  |   |         |   |  |   |             |  
|Balances, September 30, 2006             |  |             | 66,723 |   |                |   | 9,445,483  |                          |  |   | 61,482,194         |   |  |                                     | (51,098,102 | )             |  |   | 1,924,109 |  |   | (87,774 | ) |  |   | 21,732,633  |  
|Net income                               |  |             |        |   |                |   |            |                          |  |   |                    |   |  |                                     | 606,228     |               |  |   |           |  |   |         |   |  |   | 606,228     |  
|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         |   |  | $                                   | (63,508,209 | )             |  | $ | 4,122,320 |  | $ | (87,774 | ) |  | $ | 2,071,340   |  
|                                         |  |             |        |   |                |   |            |                          |  |   |                    |   |  |                                     |             |               |  |   |           |  |   |         |   |  |   |             |  

See the accompanying Notes to Consolidated Financial Statements.



31



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Archon Corporation and Subsidiaries

Consolidated Statements of Cash Flows

For the Years Ended September 30,



|                                                                                |  |            |             |   |      |   |            |      |  |   |             |  
|------------------------------------------------------------------------------- |  | ---------- | ----------- | - | ---- | - | ---------- | ---- |  | - | ----------- | -
|                                                                                |  | 2007       |             |   | 2006 |   |            | 2005 | 
|                                                                                |  | (Restated) |            
|Cash flows from operating activities:                                           |  |            |             |   |      |   |            |      |  |   |             |  
|Net income (loss)                                                               |  | $          | 606,228     |   |      | $ | (3,355,709 | )    |  | $ | (4,911,778  | )
|Gain on sale of discontinued component, net of tax                              |  |            | (948,250    | ) |      |   | 0          |      |  |   | 0           |  
|Adjustments to reconcile net loss to net cash provided by operating activities: |  |            |             |   |      |   |            |      |  |   |             |  
|Depreciation and amortization                                                   |  |            | 4,552,391   |   |      |   | 5,502,009  |      |  |   | 5,834,726   |  
|Interest expense from amortization of debt issuance costs                       |  |            | 294,106     |   |      |   | 379,032    |      |  |   | 615,976     |  
|Stock-based compensation expense                                                |  |            | 0           |   |      |   | 3,139,261  |      |  |   | 3,929,634   |  
|Bad debts                                                                       |  |            | 0           |   |      |   | (17,701    | )    |  |   | 36,916      |  
|Loss on sale of assets, continuing operations                                   |  |            | 152         |   |      |   | 14,523     |      |  |   | 244,648     |  
|Change in assets and liabilities:                                               |  |            |             |   |      |   |            |      |  |   |             |  
|Accounts receivable                                                             |  |            | 41,840      |   |      |   | (26,634    | )    |  |   | 2,197,754   |  
|Inventories                                                                     |  |            | 8,655       |   |      |   | (58,574    | )    |  |   | (61,297     | )
|Prepaid expenses and other                                                      |  |            | (103,015    | ) |      |   | (284,347   | )    |  |   | 44,272      |  
|Deferred income taxes                                                           |  |            | (185,372    | ) |      |   | (410,472   | )    |  |   | (2,594,181  | )
|Other assets                                                                    |  |            | (253,419    | ) |      |   | 176,547    |      |  |   | (255,069    | )
|Accounts payable                                                                |  |            | 1,237,816   |   |      |   | 674,332    |      |  |   | (41,471     | )
|Interest payable                                                                |  |            | 50,296      |   |      |   | 55,700     |      |  |   | (684,654    | )
|Accrued expenses and other liabilities                                          |  |            | 187,473     |   |      |   | 326,740    |      |  |   | (862,212    | )
|Other liabilities                                                               |  |            | (2,969,451  | ) |      |   | (2,969,450 | )    |  |   | 26,957,686  |  
|                                                                                |  |            |             |   |      |   |            |      |  |   |             |  
|Net cash provided by operating activities                                       |  |            | 2,519,450   |   |      |   | 3,145,257  |      |  |   | 30,450,950  |  
|                                                                                |  |            |             |   |      |   |            |      |  |   |             |  
|Cash flows from investing activities:                                           |  |            |             |   |      |   |            |      |  |   |             |  
|Proceeds from sale of discontinued component                                    |  |            | 1,800,000   |   |      |   | 63,203     |      |  |   | 0           |  
|Proceeds from sale of assets                                                    |  |            | 9,683       |   |      |   | 0          |      |  |   | 0           |  
|Payments received for sale or extension of land purchase option                 |  |            | 44,001,667  |   |      |   | 5,750,000  |      |  |   | 0           |  
|Capital expenditures                                                            |  |            | (540,551    | ) |      |   | (186,744   | )    |  |   | (458,926    | )
|Marketable securities purchased                                                 |  |            | (1,752,760  | ) |      |   | (199,131   | )    |  |   | (946,133    | )
|Marketable securities sold                                                      |  |            | 148,760     |   |      |   | 1,855,000  |      |  |   | 111,459     |  
|Investment in partnerships                                                      |  |            | 0           |   |      |   | (410,333   | )    |  |   | (825,000    | )
|                                                                                |  |            |             |   |      |   |            |      |  |   |             |  
|Net cash provided by (used in) investing activities                             |  |            | 43,666,799  |   |      |   | 6,871,995  |      |  |   | (2,118,600  | )
|                                                                                |  |            |             |   |      |   |            |      |  |   |             |  
|Cash flows from financing activities:                                           |  |            |             |   |      |   |            |      |  |   |             |  
|Proceeds from long-term debt                                                    |  |            | 0           |   |      |   | 683,069    |      |  |   | 2,408,865   |  
|Paid on long-term debt and obligation under capital lease                       |  |            | (2,852,596  | ) |      |   | (6,633,860 | )    |  |   | (31,669,935 | )
|Preferred stock acquired                                                        |  |            | (22,033,050 | ) |      |   | 0          |      |  |   | (416,410    | )
|Stock options exercised                                                         |  |            | 450         |   |      |   | 4,364      |      |  |   | 19,420      |  
|Cancellation of stock options exercised                                         |  |            | (4,364      | ) |      |   | 0          |      |  |   | 0           |  
|                                                                                |  |            |             |   |      |   |            |      |  |   |             |  
|Net cash used in financing activities                                           |  |            | (24,889,560 | ) |      |   | (5,946,427 | )    |  |   | (29,658,060 | )
|                                                                                |  |            |             |   |      |   |            |      |  |   |             |  
|Increase (decrease) in cash and cash equivalents                                |  |            | 21,296,689  |   |      |   | 4,070,825  |      |  |   | (1,325,710  | )
|Cash and cash equivalents, beginning of year                                    |  |            | 6,187,533   |   |      |   | 2,116,708  |      |  |   | 3,442,418   |  
|                                                                                |  |            |             |   |      |   |            |      |  |   |             |  
|Cash and cash equivalents, end of year                                          |  | $          | 27,484,222  |   |      | $ | 6,187,533  |      |  | $ | 2,116,708   |  
|                                                                                |  |            |             |   |      |   |            |      |  |   |             |  

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, 2007, 2006 and 2005



|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 investment
properties in Dorchester, Massachusetts and Gaithersburg, Maryland. In June 2006, the Company entered into an option agreement whereby it sold an option to another party for the purchase of the real estate it owns on the Strip for a total sale price
of $475 million, subject to the terms of the agreement.



|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

Investments which mature within 90 days from the date of purchase are treated as cash equivalents. These investments are stated at cost which approximates
their market value.

Investment in Marketable Securities

Debt securities available-for-sale are stated at 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, 2007 and 2006 include investments in corporate bonds.

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, 2007 and 2006, equity securities available-for-sale included investments in common and preferred stocks.



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Included in Other income with the consolidated statements of operations are approximately
$174,000, $(8,000) and $112,000 of realized gains/(losses) for the years ended September 30, 2007, 2006 and 2005, respectively. The Company recorded approximately $2,198,000, $561,000 and $371,000 of other comprehensive gain associated with
unrealized gains or losses on these securities during the years ended September 30, 2007, 2006 and 2005, respectively.

The following
is a summary of available-for-sale marketable securities as of September 30, 2007 and 2006:



|                  |  |      |           |                |   |                  |  |                     |         |  |   |          
|----------------- |  | ---- | --------- | -------------- | - | ---------------- |  | ------------------- | ------- |  | - | ---------
|                  |  | 2007
|                  |  | Cost |           | UnrealizedGain |   | UnrealizedLosses |  | Market orFair Value
|Debt securities   |  | $    | 549,975   |                | $ | 1,250            |  | $                   | 172,886 |  | $ | 1,123,339
|Equity securities |  |      | 3,287,403 |                |   | 3,665,453        |  |                     | 43,184  |  |   | 6,164,672
|                  |  |      |           |                |   |                  |  |                     |         |  |   |          
|Total             |  | $    | 3,837,378 |                | $ | 3,666,703        |  | $                   | 216,070 |  | $ | 7,288,011
|                  |  |      |           |                |   |                  |  |                     |         |  |   |          



|                  |  |      |           |                |   |                  |  |                     |         |  |   |          
|----------------- |  | ---- | --------- | -------------- | - | ---------------- |  | ------------------- | ------- |  | - | ---------
|                  |  | 2006
|                  |  | Cost |           | UnrealizedGain |   | UnrealizedLosses |  | Market orFair Value
|Debt securities   |  | $    | 745,000   |                | $ | 0                |  | $                   | 137,182 |  | $ | 607,818  
|Equity securities |  |      | 2,306,056 |                |   | 3,158,424        |  |                     | 61,073  |  |   | 5,403,407
|                  |  |      |           |                |   |                  |  |                     |         |  |   |          
|Total             |  | $    | 3,051,056 |                | $ | 3,158,424        |  | $                   | 198,255 |  | $ | 6,011,225
|                  |  |      |           |                |   |                  |  |                     |         |  |   |          

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 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

The Company periodically assesses the recoverability of property and equipment and evaluates such assets
for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Asset impairment is determined to exist if estimated future cash flows, undiscounted and without interest charges, are
less than the carrying amount in accordance with Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.

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

Debt
Issuance Costs

Loan issuance costs incurred in connection with financing the acquisition of investment 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.



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Deferred Revenue from Sale and Extension of Land Purchase Option

The deferred revenue from sale and extension of land purchase option at September 30, 2007 and 2006 include 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. See Note 4. Revenue from the option transactions are deferred and are to be recognized upon closing of title relative to
the related land sale or expiration of the option.

Slot Club Liability

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. Included in accrued expenses is approximately $1.4 million at September 30, 2007 and 2006, 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 $518,280, $547,407 and $441,862 for the years ended September 30, 2007, 2006 and 2005, respectively, 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. Gross revenues include the retail value
of room, food, beverage and other services provided gratuitously to customers, which are deducted to arrive at net revenue. The estimated cost of providing these promotional services has been reported in the accompanying consolidated statements of
operations as an expense. The table below summarizes the departments costs of such services (dollars in thousands):



|                  |  |      |       |      |   |       |  |   |      
|----------------- |  | ---- | ----- | ---- | - | ----- |  | - | -----
|                  |  | 2007 |       | 2006 |   | 2005 
|Food and beverage |  | $    | 4,330 |      | $ | 4,531 |  | $ | 4,061
|Hotel             |  |      | 499   |      |   | 436   |  |   | 409  
|Other             |  |      | 203   |      |   | 201   |  |   | 195  
|                  |  |      |       |      |   |       |  |   |      
|Total             |  | $    | 5,032 |      | $ | 5,168 |  | $ | 4,665
|                  |  |      |       |      |   |       |  |   |      



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##### Table of Contents

Rental revenue from investment 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 Note 6

Income Taxes

The Company accounts for income taxes under SFAS No. 109, Accounting for Income Taxes (SFAS 109). In accordance with SFAS 109, deferred income taxes reflect the net effects of (i) temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes, and (ii) operating loss and tax credit carryforwards.

Accounting for
Stock-Based Compensation

On October 1, 2005, the Company adopted the fair value recognition provisions of SFAS 123R,
Share-Based Payment. Prior to October 1, 2005, it accounted for share-based payments under the recognition and measurement provisions of APB Opinion No. 25, Accounting for Stock Issued to Employees(APB 25), and
related Interpretations, as permitted by SFAS 123, Accounting for Stock-Based Compensation. In accordance with APB 25, no compensation cost was required to be recognized for options granted that had an exercise price equal to the market value
of the underlying common stock on the date of grant.

The Company adopted SFAS 123R using the modified-prospective-transition method.
Accordingly, results for the prior periods have not been restated. There was no net impact on the Companys net loss for the year ended September 30, 2006, a result of adopting the fair value recognition provisions of SFAS 123R.

For options granted after October 1, 2005, and valued in accordance with SFAS 123R, 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.



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##### Table of Contents

The following table illustrates the effect on net loss and loss per share for the year ended
September 30, 2005, as if the Company had applied the fair value recognition provisions of SFAS 123R, Accounting for Stock-Based Compensation, to stock-based employee compensation (in thousands except for per share amounts):



|                                                                                                                                            |  |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | - | ------ | -
|Net loss applicable to common shares                                                                                                        |  | $ | (6,423 | )
|Add: Compensation cost recorded on the consolidated statements of operations, net of related tax effects                                    |  |   | 2,554  |  
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects |  |   | (2,383 | )
|                                                                                                                                            |  |   |        |  
|Pro forma net loss applicable to common shares                                                                                              |  | $ | (6,252 | )
|                                                                                                                                            |  |   |        |  
|Loss per common share:                                                                                                                      |  |   |        |  
|As reported                                                                                                                                 |  | $ | (1.03  | )
|                                                                                                                                            |  |   |        |  
|Pro forma                                                                                                                                   |  | $ | (1.03  | )
|                                                                                                                                            |  |   |        |  

The assumptions used in estimating the fair value of each option grant on the date of grant using
the Black-Scholes option pricing model for options granted in 2007 and 2006 and in the pro forma calculations in the foregoing table for 2005 (dollars in thousands, except per share data) are as follows:



|                                                             |  |      |  |      |       |   |      |   |       |  
|------------------------------------------------------------ |  | ---- |  | ---- | ----- | - | ---- | - | ----- | -
|                                                             |  | 2007 |  | 2006 |       |   | 2005 |  
|Weighted average assumptions:                                |  |      |  |      |       |   |      |   |       |  
|Expected stock price volatility                              |  | N/A  |  |      | 42.0  | % |      |   | 80.0  | %
|Risk-free interest rate                                      |  | N/A  |  |      | 8.82  | % |      |   | 5.0   | %
|Expected option lives (in years)                             |  | N/A  |  |      | 3     |   |      |   | 2     |  
|Expected dividend yield                                      |  | N/A  |  |      | N/A   |   |      |   | N/A   |  
|Estimated fair value of options, net of tax effect           |  | N/A  |  | $    | 1,722 |   |      | $ | 1,399 |  
|Estimated fair value of options per share, net of tax effect |  | N/A  |  | $    | 0.17  |   |      | $ | 0.22  |  

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.



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##### Table of Contents

Other Income

Other income consists primarily of investment income including realized gains (losses) from the sale of marketable securities and equity in net income (loss) of unconsolidated entities carried on the equity method of
accounting. See Note 6.

Income (Loss) Per Share

The Company presents its per share results in accordance with SFAS No. 128, Earnings Per Share (SFAS 128). SFAS 128 requires the presentation of basic net loss per share and diluted net loss per
share. Basic per share amounts are computed by dividing net loss 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.

Dilutive stock options of approximately 704,860, 830,000 and 830,000, respectively were not included in the computation of
diluted net loss per share for the years ended September 30, 2007, 2006 and 2005 since the Company incurred a net loss during those periods and the effect would be antidilutive.

The Company called for the redemption of all outstanding shares of its Exchangeable Redeemable Preferred Stock on and as of August 31, 2007, 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 4,238,159 shares of the Exchangeable Redeemable Preferred Stock have surrendered their shares and received payment of the redemption price.

Restatement of 2006 Financial Statements

The balance sheet and statement of cash flows as of and for the year ended September 30, 2006, have been restated to correct errors in the classification of $5.8 million related to a sale and extension of a land purchase option from current
to noncurrent liabilities, since it did not meet the definition of current liabilities contained in FASB Current Text, Section B05, Balance Sheet Classification: Current Assets and Current Liabilities, and from the determination
of cash flows from operating activities to investing activities. As a result of the change in the reclassification the statement of cash flows, cash flows from operating activities went from $8,895,257 to $3,145,257 and cash flows from investing
activities went from $1,121,995 to $6,871,995.



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##### Table of Contents

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

Accounts
receivable at September 30, 2007 and 2006 consisted of the following:



|                                      |  |      |           |   |      |   |           |  
|------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|                                      |  | 2007 |           |   | 2006 |  
|Casino and hotel                      |  | $    | 147,879   |   |      | $ | 177,849   |  
|Rental properties                     |  |      | 950,018   |   |      |   | 950,018   |  
|                                      |  |      |           |   |      |   |           |  
|Subtotal                              |  |      | 1,097,897 |   |      |   | 1,127,867 |  
|Less: allowance for doubtful accounts |  |      | (43,404   | ) |      |   | (31,534   | )
|                                      |  |      |           |   |      |   |           |  
|Total                                 |  | $    | 1,054,493 |   |      | $ | 1,096,333 |  
|                                      |  |      |           |   |      |   |           |  

Changes in the allowance for doubtful accounts for the years ended September 30, 2007, 2006,
and 2005 were as follows:



|                           |  |      |        |   |      |   |         |      |  |   |          |  
|-------------------------- |  | ---- | ------ | - | ---- | - | ------- | ---- |  | - | -------- | -
|                           |  | 2007 |        |   | 2006 |   |         | 2005 | 
|Balance, beginning of year |  | $    | 31,534 |   |      | $ | 76,893  |      |  | $ | 195,875  |  
|Provision                  |  |      | 14,060 |   |      |   | (17,701 | )    |  |   | 36,916   |  
|Accounts written-off       |  |      | (2,190 | ) |      |   | (27,658 | )    |  |   | (155,898 | )
|                           |  |      |        |   |      |   |         |      |  |   |          |  
|Balance, end of year       |  | $    | 43,404 |   |      | $ | 31,534  |      |  | $ | 76,893   |  
|                           |  |      |        |   |      |   |         |      |  |   |          |  



|4. | PROPERTY HELD FOR SALE
|-- | ----------------------

The Company owns,
through its wholly owned subsidiary Sahara Las Vegas Corp. (SLVC), an approximately 27-acre parcel of real property on the Las Vegas Strip (the Property). In connection with the acquisition of the property, the Company
assumed an operating lease under which a water theme park operated. The lease was terminated September 30, 2004. The Company presently leases the property to two different lessees for an aggregate amount of $364,000 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, a Nevada
corporation and subsidiary of Archon Corporation entered into an Option Agreement (the Agreement) between SLVC and LVTI LLC, a Delaware limited liability company (LVTI). Pursuant to the Agreement, SLVC granted to LVTI an
option (the Option) to purchase the Property or, alternatively, SLVCs membership interest in a limited liability company (LVT LLC) that may be formed and into which the Property would be contributed.

The initial purchase price to be paid by LVTI for purchase of the Property or the membership
interest in LVT LLC was $450 million. LVTI paid an initial deposit of $5.0 million on June 27, 2006. The Agreement also provided for a second deposit of $40.0 million due on or before September 22, 2006, and additional monthly payments of
approximately $2.2 million in each month commencing on the 13th calendar month following the date the second deposit is paid until the closing of the exercise of the Option. The 30-day due diligence period ended and LVTI did not terminate
the Agreement. Upon exercise of the Option, the initial deposit and the second deposit will be credited against the total purchase price. The Agreement provides for certain adjustments to the purchase price if certain easements are entered into with
respect to the Property prior to the closing. The Option may be exercised by LVTI at any time between the last day of the 12thcalendar month and the last day of the 18thcalendar month following the date on which the second
deposit is paid; provided that the option term may be extended by up to 30 days if SLVC does not give written notice to LVTI of the option term expiration as required by the Agreement. The first and second deposits and any additional monthly
payments paid to SLVC prior to termination of the Agreement will be retained by SLVC upon termination of the Agreement without exercise of the option, except under certain circumstances specified in the Agreement.



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##### Table of Contents

Pursuant to a First Amendment of the Agreement, LVTI elected to pay to the Company $750,000 to extend the
date on which the second deposit of $40.0 million was due from September 22, 2006 to December 31, 2006. Pursuant to a Second Amendment, LVTI elected to pay to the Company $1.2 million to further extend the date on which the second deposit
of $40.0 million was due from December 31, 2006 to March 31, 2007. Pursuant to a Third and a Fourth Amendment to the Agreement, LVTI elected to pay to the Company two additional payments in April 2007 totaling $500,000 to further extend
the date on which the second deposit was due from March 31, 2007 to May 31, 2007. LVTI paid the $40.0 million second deposit on May 25, 2007. Additionally, the initial purchase price was increased from $450 million to $475 million.
Pursuant to a Fifth Amendment, three months, to be exercised in the discretion of LVTI, were added to the Option term, extending the end of the Option term from March 31, 2008 to June 30, 2008. LVTI will pay a fee of $2.9 million
(Carry Option Payments) for each of the three month extensions utilized, with a proration for any partial month utilized. All Carry Option Payments and all monthly option extension payments are nonrefundable and will not be applied
against the purchase price under the Agreement.

The nonrefundable payment of $5.0 million and a nonrefundable extension fee of $750,000
were recorded as deferred revenue, at September 30, 2006. The Company received an additional nonrefundable extension fee of $1.2 million in December 2006 which was recorded as deferred revenue at March 31, 2007. The Company received
additional nonrefundable extension fees of $500,000 in April 2007 and the nonrefundable second deposit payment of $40.0 million on May 25, 2007, which payments were recorded as deferred revenue at June 30, 2007. The Company received a
Carry Option Payment of $2.3 million in the quarter ended September 30, 2007, which was also recorded as deferred revenue.

The
obligations of SLVC and LVTI to consummate the transactions contemplated by the Agreement are subject to the satisfaction or waiver of customary closing conditions.

The Company has guaranteed the obligations of SLVC under the Agreement.



|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 non-recourse 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, 2007 and 2006 in the amounts of $42.0 million and $45.0 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 non-recourse 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. Deferred rent at September 30, 2006 in the amount of
$2.9 million is included in Other assets on the accompanying Consolidated Balance Sheet. See Note 7



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##### Table of Contents

|6. | OTHER ASSETS
|-- | ------------

Included in Other assets at
September 30, 2007 and 2006, are unamortized loan issue costs and excess rental income earned over amounts paid aggregating approximately $6.8 million and $4.6 million, respectively.

Also, other assets at September 30, 2007 and 2006 include $0.1 million of a residential mortgage loan, representing a loan originally to an
unaffiliated third party under a master loan agreement. The loan was purchased by the Company for the principal amount, plus accrued interest. On August 31, 2007, the original lender signed an assignment of deed of trust to transfer ownership
of the mortgage contract to Archon. The mortgage agreement bears interest at the prime rate plus 2%. The original lender is indirectly wholly-owned by the Companys President, Chief Executive Officer and majority stockholder, and a director of
the Company, is also the president of the original lender.

Other assets also included an unconsolidated investee of the Company, a 50%
owned LLC that has the following financial profile as of September 30, 2007 and 2006, (dollars in thousands):



|                    |  |               |     |      |   |    
|------------------- |  | ------------- | --- | ---- | - | ---
|                    |  | September 30,
|                    |  | 2007          |     | 2006
|Current assets      |  | $             | 187 |      | $ | 173
|Total assets        |  |               | 950 |      |   | 973
|Current liabilities |  |               | 121 |      |   | 115
|Total liabilities   |  |               | 149 |      |   | 282
|Total equity        |  |               | 801 |      |   | 691

Summarized operating information about this unconsolidated investee for the fiscal years ended
September 30, 2007 and 2006 (dollars in thousands) follows:



|              |  |      |       |      |   |      
|------------- |  | ---- | ----- | ---- | - | -----
|              |  | 2007 |       | 2006
|Revenues      |  | $    | 1,743 |      | $ | 1,978
|Pretax income |  |      | 213   |      |   | 398  

This entity is indebted to a bank in the amount of $0.1 million and $0.2 million as of
September 30, 2007 and 2006 respectively. The debt is secured by a deed of trust and is guaranteed by the Company.



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

Loans Payable

As of September 30, 2007, the Companys loans payable were comprised primarily of the following obligations: a loan payable to a bank with a
balance of approximately $9.8 million, secured by land held for development on the Strip, monthly payments of approximately $98,000, including interest of prime plus 1% (9.25% at September 30, 2007) with a balloon payment of approximately $9.7
million in January 2008 and various loans with a total balance of $1.2 million collateralized by slot and other equipment with interest rates up to 10.0%, current monthly principal payments of approximately $60,000 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 investment properties in Massachusetts and Maryland. At September 30, 2007, the Company
was not in compliance with this covenant.



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##### Table of Contents

Non-Recourse 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 non-recourse 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, 2007 are as follows:



|           |  |      |           
|---------- |  | ---- | ----------
|           |  | 2007
|2008       |  | $    | 13,431,101
|2009       |  |      | 2,880,712 
|2010       |  |      | 3,185,888 
|2011       |  |      | 3,573,478 
|2012       |  |      | 3,986,926 
|Thereafter |  |      | 60,753,806
|           |  |      |           
|Total      |  | $    | 87,811,911
|           |  |      |           



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

All non-cancelable leases have been
classified as operating leases. Under most leasing arrangements, the Company pays the taxes, insurance and the operating expenses related to the leased property.

At September 30, 2007 the Company had an operating lease for real property that expires in 2078 and operating leases for corporate offices. The Company had no significant property and equipment under capital
leases at September 30, 2007.

Future minimum lease payments as of September 30, 2007 are as follows:



|           |  |      |           
|---------- |  | ---- | ----------
|           |  | 2007
|2008       |  | $    | 432,257   
|2009       |  |      | 402,557   
|2010       |  |      | 372,857   
|2011       |  |      | 372,857   
|2012       |  |      | 372,857   
|Thereafter |  |      | 24,639,652
|           |  |      |           
|Total      |  | $    | 26,593,037
|           |  |      |           

Rent expense was $439,021, 313,435 and $629,470 on all operating leases for the years ended
September 30, 2007, 2006 and 2005, respectively.



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|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 14, 2008, the holders of 4,234,872 shares of the Exchangeable Redeemable Preferred Stock have surrendered their shares and received payment of the redemption price.

On August 27, 2007, the following institutional investors: D. E. Shaw Laminar Portfolios, L.L.C., LC Capital Master Fund, Ltd, LC Capital/Capital Z
SPV, LP, Magten Asset Management Corp, Mercury Real Estate Securities Fund LP, Mercury Real Estate Securities Offshore Fund Limited, Black Horse Capital LP, Black Horse Capital (QP) LP, Black Horse Capital Offshore Ltd, and Plainfield Special
Situations Master Fund Limited filed an action against the registrant in the United States District Court for The District of Nevada entitled D.E. Shaw Laminar Portfolios, LLC; et al. v. Archon Corporation, 2:07-CV-01146-PMP-LRL (D. Nev.). The
Complaint was subsequently amended to add an additional party plaintiff (collectively, the Laminar 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 Laminar Plaintiffs full compensation of any and all available damages suffered by the Laminar 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 Laminar 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 Laminar
Plaintiffs attorneys fees, expenses and costs incurred in enforcing the their rights; and (v) seeks such other and further relief as the Court may deem appropriate. In November 2007, and subsequent to the end of the Companys
fiscal year ended September 30, 2007, the Laminar Plaintiffs filed a motion for partial summary judgment on liability. The Company responded, and the parties will await a ruling from the Court following the Plaintiffs filing of its reply
brief.

Also subsequent to the end of the Companys fiscal year, two other former holders of the Exchangeable Redeemable Preferred
Stock filed Complaints in the United States District Court, District of Nevada, entitled Rainero v. Archon Corporation, District of Nevada Case No. 2:07-cv-01553 and Leeward Capital, L.P. v Archon Corporation, District of Nevada Case
No. 2:08-cv-00007, both alleging essentially the same claim as the first Complaint. If the plaintiffs 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 which, if applied to all the then outstanding shares of Exchangeable Redeemable Preferred Stock, including the shares held by the Companys officers and directors, would increase the redemption price in excess of $15.2 million.



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

The Companys Stock
Option Plan provided for the grant of up to 1.2 million shares of its common stock to key employees. The Stock Option Plan provided for both incentive stock options and non-qualified stock options. Stock option grants had generally vested over
a three-year period from the employees hire date. The Stock Option Plan ceased granting options as of September 30, 2003 as the plan had expired. However, in July 2005, the Stock Option Plan was reinstated for an additional 10-year
period. During fiscal 2005, there were 300,000 fully vested stock options granted under the Stock Option Plan. No options were granted during the fiscal years 2007 and 2006. As of September 30, 2007, 2006 and 2005, there were approximately
704,860, 830,000 and 830,000 options, respectively, outstanding and exercisable under the Stock Option Plan. During fiscal years 2007, 2006 and 2005, 45,000, 436,350 and 2,000 options, respectively, were exercised.



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The outstanding options have expiration dates through 2015 and have an average remaining life of
approximately 3.4 years. The average exercise price of the outstanding options at September 30, 2007 is approximately $9.30.

In
December 1995, the Company adopted the 1995 Non-Employee Director Stock Option Plan (the Non-Employee Director Plan) that provided for the grant of up to 100,000 shares of its common stock to the directors. Under the Non-Employee
Director Plan, directors were automatically granted an option to purchase 12,500 shares of the common stock at an exercise price equal to the market value of such shares on the date of such election to the board. Stock option grants vested
immediately. The Non-Employee Director Plan ceased granting options on March 21, 2002. As of September 30, 2007, 2006 and 2005, there were 12,500, 25,000 and 25,000 options, respectively, outstanding and exercisable under this plan. During
fiscal years 2007 and 2005, 12,500 options were exercised, respectively. During fiscal year 2006 no options were granted or exercised. The outstanding options have an expiration date through 2007 and have an average remaining life of less than a
year. The average exercise price of the outstanding options at September 30, 2007 is approximately $1.00.

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, 2007, 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.

There were no unvested share-based payments as of October 1, 2005 and no share-based payments have been granted subsequent to October 1, 2005. However, effective in March and April 2006, certain stock options were extended for an
additional period of exercise and the Company recorded stock-based compensation expense of approximately $1.4 million during the year ended September 30, 2006.



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The following table summarizes stock option activity during fiscal 2007 under all plans:



|                                           |  |                       |  |                                          |      |                                              |           |                                 |   |       
|------------------------------------------ |  | --------------------- |  | ---------------------------------------- | ---- | -------------------------------------------- | --------- | ------------------------------- | - | ------
|                                           |  | NumberofShares(000s) |  | Weighted-AverageExercise Price Per Share |      | Weighted- Average Remaining Contractual Term |           | AggregateIntrinsicValue($000s)
|Options outstanding at September 30, 2006: |  | 830                   |  | $                                        | 8.05 |                                              | 4.5 years |                                 | $ | 24,656
|Granted                                    |  | 0                     |  |                                          | N/A  |                                              | N/A       |                                 |   | N/A   
|Exercised                                  |  | 45                    |  | $                                        | 1.50 |                                              | 0 years   |                                 |   | N/A   
|Canceled                                   |  | 80                    |  | $                                        | 1.50 |                                              | 0 years   |                                 |   | N/A   
|                                           |  |                       |  |                                         
|Options outstanding at September 30, 2007: |  | 705                   |  | $                                        | 9.30 |                                              | 3.4 years |                                 | $ | 10,829
|Options exercisable at September 30, 2007: |  | 705                   |  | $                                        | 9.30 |                                              | 3.4 years |                                 | $ | 10,829

As of September 30, 2007, there was no unrecognized compensation cost related to unvested
stock options. There were no unvested shares at September 30, 2007.



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|11. | FEDERAL INCOME TAXES
|--- | --------------------

The provision
(benefit) for income taxes attributable to pre-tax income (loss) consisted of:



|                          |  |                        |     |      |   |      |      |  |   |        |  
|------------------------- |  | ---------------------- | --- | ---- | - | ---- | ---- |  | - | ------ | -
|                          |  | 2007                   |     | 2006 |   |      | 2005 | 
|                          |  | (dollars in thousands) |    
|Current                   |  | $                      | 0   |      | $ | 0    |      |  | $ | 0      |  
|Deferred                  |  |                        | 327 |      |   | (410 | )    |  |   | (2,594 | )
|                          |  |                        |     |      |   |      |      |  |   |        |  
|Total provision (benefit) |  | $                      | 327 |      | $ | (410 | )    |  | $ | (2,594 | )
|                          |  |                        |     |      |   |      |      |  |   |        |  

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



|                         |  |                        |     |      |   |        |      |  |   |        |  
|------------------------ |  | ---------------------- | --- | ---- | - | ------ | ---- |  | - | ------ | -
|                         |  | 2007                   |     | 2006 |   |        | 2005 | 
|                         |  | (dollars in thousands) |    
|Amount at statutory rate |  | $                      | 317 |      | $ | (1,318 | )    |  | $ | (2,594 | )
|Stock options            |  |                        | 0   |      |   | 603    |      |  |   | 0      |  
|Tax credits              |  |                        | 0   |      |   | 199    |      |  |   | 0      |  
|Other                    |  |                        | 10  |      |   | 106    |      |  |   | 0      |  
|                         |  |                        |     |      |   |        |      |  |   |        |  
|Total                    |  | $                      | 327 |      | $ | (410   | )    |  | $ | (2,594 | )
|                         |  |                        |     |      |   |        |      |  |   |        |  

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



|                                                              |  |                        |         |   |      |   |         |  
|------------------------------------------------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | -
|                                                              |  | 2007                   |         |   | 2006 |  
|                                                              |  | (dollars in thousands) |        
|Deferred tax liabilities:                                     |  |                        |         |   |      |   |         |  
|Prepaid expenses                                              |  | $                      | 224     |   |      | $ | 304     |  
|Other property and equipment, net                             |  |                        | 28,027  |   |      |   | 29,275  |  
|Land                                                          |  |                        | 2,236   |   |      |   | 2,236   |  
|Unrealized gains                                              |  |                        | 2,072   |   |      |   | 1,036   |  
|                                                              |  |                        |         |   |      |   |         |  
|Deferred tax liabilities                                      |  |                        | 32,559  |   |      |   | 32,851  |  
|                                                              |  |                        |         |   |      |   |         |  
|Deferred tax assets:                                          |  |                        |         |   |      |   |         |  
|Net operating loss carryforward                               |  |                        | 3,021   |   |      |   | 4,027   |  
|Allowance for uncollectible accounts and contracts receivable |  |                        | 71      |   |      |   | 51      |  
|Other                                                         |  |                        | 214     |   |      |   | 536     |  
|Stock option                                                  |  |                        | 0       |   |      |   | 496     |  
|Deferred payroll                                              |  |                        | 173     |   |      |   | 169     |  
|Tax credits and charitable contribution carryover             |  |                        | 326     |   |      |   | 326     |  
|                                                              |  |                        |         |   |      |   |         |  
|Deferred tax assets                                           |  |                        | 3,805   |   |      |   | 5,605   |  
|                                                              |  |                        |         |   |      |   |         |  
|Net deferred tax (liability)                                  |  | $                      | (28,754 | ) |      | $ | (27,246 | )
|                                                              |  |                        |         |   |      |   |         |  

At September 30, 2007 the Company had a net operating loss carryforward for regular income
tax purposes of approximately $60.0 million, which will fully expire by the year 2025 and begins expiring in 2010. AMT credits of



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approximately $268,000 are carried forward indefinitely. Charitable contributions of approximately $166,000 will fully expire in 2009 and begin expiring in
2007. Included in this amount is approximately $53.0 million for which the Company has not taken benefit in its financial statements until an uncertainty related to the tax deduction is resolved.

The Company continues to record tax benefits for its taxable losses as it believes that it is more likely than not that tax provisions from future
taxable income from operations or from the sale of assets will be sufficient to offset the tax benefits currently recorded.



|12. | FAIR VALUE OF FINANCIAL INSTRUMENTS
|--- | -----------------------------------

The Company
estimates the fair value of its unredeemed preferred stock to be approximately $0.4 million at September 30, 2007 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 value, except for its non-recourse debt associated with an investment 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 cost at September 30, 2007 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
non-recourse debt of the Company.



|13. | BENEFIT PLANS
|--- | -------------

The Company has a savings
plan (the Savings Plan) qualified under Section 401(k) of the 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 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 Companys matching contributions paid in 2007, 2006 and 2005 were $59,000, $55,000 and $49,000, respectively.



|14. | RELATED PARTIES
|--- | ---------------

The Company has entered
into a Patent Rights and Royalty Agreement with the brother of the Companys Chairman of the Board (Chairman) and CEO with respect to certain gaming technology for which he had 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. The Company also has an understanding with the patentholder
that it will pay for the costs of commercial development of the technology. For the three years ended September 30, 2007, 2006 and 2005, the Company had expended approximately $0.4 million for commercial development of the technology, of which
$30,000 was expensed in fiscal 2006 and $50,000 in fiscal 2005. No additional costs had been expended during the fiscal year ended September 30, 2007. No royalties were paid to the patentholder during the periods presented.

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 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 2-year period ended June 30, 2006, the Company expended approximately $0.8 million in legal fees in 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 $0.8 million has been credited against legal expense and the balance has been included in operating income in the fiscal 2006
consolidated statement of operations. 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 payments due under the settlement with Dukes to the Company directly according to the terms of the settlement agreement.



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##### Table of Contents

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 to the terms of the settlement agreement.

See Note 6 for information regarding
transactions between the Company and J & J Mortgage.



|15. | CONTINGENCIES AND COMMITMENTS
|--- | -----------------------------

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 such matters, management does not believe that the outcome of such litigation, in the aggregate, will have a material adverse effect on the Company.



|16. | DISCONTINUED OPERATIONS
|--- | -----------------------

In October 2006,
the Company sold real estate with a net book value of $0.3 million for $1.8 million. A disposal gain of $0.9 million, net of taxes of $0.5 million, on the sale was recorded as discontinued operations. Operations of the discontinued component for all
periods presented contain no revenues and only immaterial expenses that are equal to net operating cash outflows. Accordingly, they are included in continuing operations for all periods in the accompanying consolidated statements of operations and
cash flows.



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##### Table of Contents

|17. | SUPPLEMENTAL STATEMENT OF CASH FLOWS INFORMATION
|--- | ------------------------------------------------

Supplemental statement of cash flows information for the years ended September 30, 2007, 2006 and 2005 consisted of:



|                                                                                |  |                        |       |      |   |       |  |   |       
|------------------------------------------------------------------------------- |  | ---------------------- | ----- | ---- | - | ----- |  | - | ------
|                                                                                |  | 2007                   |       | 2006 |   | 2005 
|                                                                                |  | (dollars in thousands)
|Operating activities:                                                           |  |                        |       |      |   |       |  |   |       
|Cash paid during the year for interest                                          |  | $                      | 8,093 |      | $ | 8,386 |  | $ | 11,128
|                                                                                |  |                        |      
|Investing and financing non-cash activities:                                    |  |                        |       |      |   |       |  |   |       
|Acquisition of machinery and equipment financed with proceeds of long-term debt |  | $                      | 0     |      | $ | 286   |  | $ | 0     



|18. | SEGMENT INFORMATION
|--- | -------------------

The Companys
operations are in the hotel/casino industry and investment properties. The Companys hotel/casino operations are conducted at the Pioneer in Laughlin, Nevada. As discussed above, the Company owns investment (rental) properties in Massachusetts
and Maryland, which were acquired in March 2001. Other and Eliminations below includes financial information for the Companys corporate operations, adjusted to reflect eliminations upon consolidation.



50



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##### Table of Contents

Segment information for the years ended September 30, 2007, 2006 and 2005 consisted of:



|                                      |  |                        |         |   |      |   |         |      |  |   |         |  
|------------------------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                      |  | 2007                   |         |   | 2006 |   |         | 2005 | 
|                                      |  | (dollars in thousands) |        
|Pioneer Hotel:                        |  |                        |         |   |      |   |         |      |  |   |         |  
|Net operating revenues                |  | $                      | 30,037  |   |      | $ | 30,985  |      |  | $ | 29,697  |  
|Operating loss                        |  |                        | (1,518  | ) |      |   | (46     | )    |  |   | (839    | )
|Depreciation and amortization         |  |                        | 2,034   |   |      |   | 2,200   |      |  |   | 2,477   |  
|Interest expense                      |  |                        | 1,292   |   |      |   | 1,439   |      |  |   | 1,291   |  
|Interest and other income             |  |                        | 12      |   |      |   | 12      |      |  |   | 11      |  
|Net loss before income taxes          |  |                        | (2,799  | ) |      |   | (1,473  | )    |  |   | (2,119  | )
|Capital expenditures (2)              |  |                        | 263     |   |      |   | 462     |      |  |   | 179     |  
|Identifiable assets (1)               |  |                        | 28,937  |   |      |   | 30,100  |      |  |   | 31,380  |  
|                                      |  |                        |        
|Investment Properties:                |  |                        |         |   |      |   |         |      |  |   |         |  
|Net operating revenues                |  | $                      | 12,402  |   |      | $ | 12,402  |      |  | $ | 12,402  |  
|Operating income                      |  |                        | 9,992   |   |      |   | 9,230   |      |  |   | 9,230   |  
|Depreciation and amortization         |  |                        | 2,410   |   |      |   | 3,172   |      |  |   | 3,172   |  
|Interest expense                      |  |                        | 7,348   |   |      |   | 7,494   |      |  |   | 9,897   |  
|Interest and other income             |  |                        | 4       |   |      |   | 2       |      |  |   | 1       |  
|Net income (loss) before income taxes |  |                        | 2,648   |   |      |   | 1,738   |      |  |   | (666    | )
|Capital expenditures (2)              |  |                        | 0       |   |      |   | 0       |      |  |   | 0       |  
|Identifiable assets (1)               |  |                        | 130,386 |   |      |   | 132,911 |      |  |   | 136,065 |  
|                                      |  |                        |        
|Other and Eliminations:               |  |                        |         |   |      |   |         |      |  |   |         |  
|Net operating revenues                |  | $                      | 2,740   |   |      | $ | 1,767   |      |  | $ | 1,589   |  
|Operating loss                        |  |                        | (1,586  | ) |      |   | (4,340  | )    |  |   | (6,106  | )
|Depreciation and amortization         |  |                        | 108     |   |      |   | 130     |      |  |   | 186     |  
|Interest expense                      |  |                        | (183    | ) |      |   | (78     | )    |  |   | (129    | )
|Interest and other income             |  |                        | 1,027   |   |      |   | 231     |      |  |   | 1,256   |  
|Net income (loss) before income taxes |  |                        | (375    | ) |      |   | (4,031  | )    |  |   | (4,721  | )
|Capital expenditures (2)              |  |                        | 278     |   |      |   | 10      |      |  |   | 280     |  
|Identifiable assets (1)               |  |                        | 60,659  |   |      |   | 35,039  |      |  |   | 32,193  |  
|                                      |  |                        |        
|Total:                                |  |                        |         |   |      |   |         |      |  |   |         |  
|Net operating revenues                |  | $                      | 45,179  |   |      | $ | 45,154  |      |  | $ | 43,688  |  
|Operating income                      |  |                        | 6,888   |   |      |   | 4,844   |      |  |   | 2,285   |  
|Depreciation and amortization         |  |                        | 4,552   |   |      |   | 5,502   |      |  |   | 5,835   |  
|Interest expense                      |  |                        | 8,457   |   |      |   | 8,855   |      |  |   | 11,059  |  
|Interest and other income             |  |                        | 1,043   |   |      |   | 245     |      |  |   | 1,268   |  
|Net income (loss) before income taxes |  |                        | (526    | ) |      |   | (3,766  | )    |  |   | (7,506  | )
|Capital expenditures (2)              |  |                        | 541     |   |      |   | 472     |      |  |   | 459     |  
|Identifiable assets (1)               |  |                        | 219,982 |   |      |   | 198,050 |      |  |   | 199,638 |  



---

|(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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|19. | QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
|--- | -------------------------------------------



|                                               |  |                                                 |        |   |      |   |        |  
|---------------------------------------------- |  | ----------------------------------------------- | ------ | - | ---- | - | ------ | -
|                                               |  | 2007                                            |        |   | 2006 |  
|                                               |  | (dollars in thousands,except per share amounts) |       
|Revenues:                                      |  |                                                 |        |   |      |   |        |  
|First Quarter                                  |  | $                                               | 11,082 |   |      | $ | 10,439 |  
|Second Quarter                                 |  |                                                 | 11,864 |   |      |   | 12,449 |  
|Third Quarter                                  |  |                                                 | 11,132 |   |      |   | 11,126 |  
|Fourth Quarter                                 |  |                                                 | 11,101 |   |      |   | 11,140 |  
|                                               |  |                                                 |        |   |      |   |        |  
|Total                                          |  | $                                               | 45,179 |   |      | $ | 45,154 |  
|                                               |  |                                                 |        |   |      |   |        |  
|Operating income:                              |  |                                                 |        |   |      |   |        |  
|First Quarter                                  |  | $                                               | 2,881  |   |      | $ | 1,285  |  
|Second Quarter                                 |  |                                                 | 2,169  |   |      |   | 2,875  |  
|Third Quarter                                  |  |                                                 | 1,368  |   |      |   | 434    |  
|Fourth Quarter                                 |  |                                                 | 470    |   |      |   | 250    |  
|                                               |  |                                                 |        |   |      |   |        |  
|Total                                          |  | $                                               | 6,888  |   |      | $ | 4,844  |  
|                                               |  |                                                 |        |   |      |   |        |  
|Net income (loss):                             |  |                                                 |        |   |      |   |        |  
|First Quarter                                  |  | $                                               | 554    |   |      | $ | (530   | )
|Second Quarter                                 |  |                                                 | 72     |   |      |   | 482    |  
|Third Quarter                                  |  |                                                 | (272   | ) |      |   | (1,152 | )
|Fourth Quarter                                 |  |                                                 | 253    |   |      |   | (2,156 | )
|                                               |  |                                                 |        |   |      |   |        |  
|Total                                          |  | $                                               | 607    |   |      | $ | (3,356 | )
|                                               |  |                                                 |        |   |      |   |        |  
|Net income (loss) applicable to common shares: |  |                                                 |        |   |      |   |        |  
|First Quarter                                  |  | $                                               | 176    |   |      | $ | (908   | )
|Second Quarter                                 |  |                                                 | (306   | ) |      |   | 104    |  
|Third Quarter                                  |  |                                                 | (650   | ) |      |   | (1,529 | )
|Fourth Quarter                                 |  |                                                 | 1      |   |      |   | (2,534 | )
|                                               |  |                                                 |        |   |      |   |        |  
|Total                                          |  | $                                               | (779   | ) |      | $ | (4,867 | )
|                                               |  |                                                 |        |   |      |   |        |  
|Net income (loss) per common share:            |  |                                                 |        |   |      |   |        |  
|First Quarter                                  |  | $                                               | 0.02   |   |      | $ | (0.15  | )
|Second Quarter                                 |  |                                                 | (0.05  | ) |      |   | 0.02   |  
|Third Quarter                                  |  |                                                 | (0.10  | ) |      |   | (0.25  | )
|Fourth Quarter                                 |  |                                                 | (0.01  | ) |      |   | (0.40  | )
|                                               |  |                                                 |        |   |      |   |        |  
|Total                                          |  | $                                               | (0.12  | ) |      | $ | (0.78  | )
|                                               |  |                                                 |        |   |      |   |        |  

Operating income (loss) amounts have been adjusted to reflect a reclassification of amortization
of loan issue costs from depreciation and amortization to interest expense for 2007 and 2006.



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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. Included for consideration in the
evaluation is the independent accountants identification, in its required communications letter relating to the audit for the year ended September 30, 2007, to the Companys Audit Committee, of a material weakness in the Companys
accounting resources during 2007 required for recording financial transactions and preparing financial statements. Management has determined that the appropriate remedy will be the retention of a third party consultant to assist with these tasks
going forward. Other than noted herein, our Chief Executive Officer and Principal Accounting Officer concluded that disclosure controls and procedures are effective.

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. Except as noted above, there have not been any other 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, President and Chief Executive Officer         
|Suzanne Lowden           |  | Director, Executive Vice President, Treasurer and Assistant Secretary
|John W. Delaney (2)      |  | Director                                                             
|Howard E. Foster (1)     |  | Director                                                             
|William J. Raggio (1)(2) |  | Director                                                             
|Richard Taggart (1)      |  | Director                                                             
|Kevin Hanratty           |  | Secretary                                                            
|Grant L. Siler           |  | Principal Accounting Officer                                         

---

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

|(2) | Member of the Compensation Committee 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, 63, 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 2008.

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. 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, reporter, writer and producer of television news. In December 2005, Mrs. Lowden was nominated to and continues to serve on the board of the Muscular Dystrophy Association as its Treasurer. Mrs. Lowden serves as chairman of the
Nevada Republican party. Mrs. Lowden is married to Paul W. Lowden. 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, 59, 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, 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, 63, has served as a special director of the Company elected by holders of the Companys
Exchangeable, Redeemable Preferred Stock since May 2000. Since 1980, Mr. Foster has been the President of Howard Foster and Company, an investment advisor firm 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 expires at the annual meeting of stockholders in 2009, or, if earlier, the date on which all dividend arrearages on the Exchangeable Redeemable Preferred Stock
have been paid. 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. On November 12, 2007, Mr. Foster was appointed as a director of the Company. Mr. Fosters term 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,
80, 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. He currently has been designated director emeritus. Mr. Raggios term as a director of the Company expires at the annual meeting of
stockholders in 2008.

Richard H. Taggart

Richard Taggart, 65, has served as a special director of the Companys Exchangeable, Redeemable Preferred Stock since October 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, 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, Boulder Dam Council of the Boy Scouts of America Executive Board and the Las Vegas Country Club Mr. Taggarts term as a special director of the Company
expires at the annual meeting of stockholders in 2010, or, if earlier, the date on which all dividend arrearages on the Exchangeable Redeemable Preferred Stock have been paid. The Company called all outstanding shares of its Exchangeable Redeemable
Preferred Stock for redemption on and as of August



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31, 2007, at a redemption price of $5.241 per share, which sum included accrued and unpaid dividends to the date of redemption. On November 12, 2007,
Mr. Taggart was appointed as a director of the Company. Mr. Taggarts term expires at the annual meeting of stockholders in 2010.

Kevin
Hanratty

Kevin M. Hanratty, Esq., 32, has served as the Companys In-House Counsel since January 2004. Prior to joining
the Company, Mr. Hanratty worked as an associate for the law firm of Kravitz Schnitzer Sloane Johnson & Eberhardy, a Nevada based defense firm primarily focused on litigation and defense of claims brought against Nevada based casino
companies. Prior to this position, Mr. Hanratty worked at the Clark County District Attorneys office for approximately four years and worked in the Clark County District Attorneys Office Appellate Division.

Grant L. Siler

Grant L. Siler, 54, 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% 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 2006, 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.



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|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, 2007, 2006 and 2005 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.

Summary Compensation Table



|                            |  |                     |  |            |         |          |   |         |                                |  |                          |   |  |   |        |    
|--------------------------- |  | ------------------- |  | ---------- | ------- | -------- | - | ------- | ------------------------------ |  | ------------------------ | - |  | - | ------ | ---
|                            |  | Annual Compensation | 
|Name and Principal Position |  | FiscalYear          |  | Salary ($) |         | Bonus($) |   |         | Other AnnualCompensation($)(1) |  | All OtherCompensation($) |  
|Paul W. Lowden              |  | 2007                |  | $          | 550,000 |          | $ | 200,000 | (2)                            |  | $                        | 0 |  | $ | 43,358 | (3)
|President, Chairman         |  | 2006                |  |            | 550,000 |          |   | 200,000 | (2)                            |  |                          | 0 |  |   | 37,203 | (3)
|of the Board and CEO        |  | 2005                |  |            | 550,000 |          |   | 200,000 | (2)                            |  |                          | 0 |  |   | 64,846 | (3)



|(1) | The Company provides perquisites and other personal benefits, including automobiles to its senior executives and provides such persons complimentary privileges at the restaurants
and bars of the Companys hotel-casino. It is impractical to ascertain the extent to which such privileges are utilized for personal rather than business purposes. However, after reasonable inquiry, the Company believes the value of all such
perquisites and other personal benefits is less than the lesser of $50,000 or 10% of the total salary and bonus reported for the person named above.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | See Compensation Arrangements with Mr. Lowden.
|--- | ------------------------------------------------

|(3) | All Other Compensation for Mr. Lowden in fiscal 2007 includes $7,404 of life insurance premiums paid by the Company for the benefit of Mr. Lowden, auto and gas
reimbursement of $7,843 for the benefit of Mr. Lowden, payment of $18,660 for household services for the benefit of Mr. Lowden, medical reimbursement of $6,076 for the benefit of Mr. Lowden and $3,375 of matching contributions made by
the Company to the Retirement Savings 401(k) Plan for the benefit of Mr. Lowden. All Other Compensation for Mr. Lowden in fiscal 2006 includes $7,404 of life insurance premiums paid by the Company for the benefit of
Mr. Lowden, auto and gas reimbursement of $4,017 for the benefit of Mr. Lowden, payment of $19,800 for household services for the benefit of Mr. Lowden, medical reimbursement of $2,682 for the benefit of Mr. Lowden and $3,300 of
matching contributions made by the Company to the Retirement Savings 401(k) Plan for the benefit of Mr. Lowden. All Other Compensation for Mr. Lowden in fiscal 2005 includes $7,272 of life insurance premiums paid by the Company
for the benefit of Mr. Lowden, auto and gas reimbursement of $5,413 for the benefit of Mr. Lowden, payment of $17,525 for household services for the benefit of Mr. Lowden, medical reimbursement of $31,661 for the benefit of
Mr. Lowden and $2,975 of matching contributions made by the Company to the Retirement Savings 401(k) Plan for the benefit of Mr. Lowden.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Compensation Arrangements with Mr. Lowden

The Compensation Committee approved Mr. Lowdens
compensation package for fiscal year 2007, which provided for an annual base salary of $550,000. Additionally, in recognition of Mr. Lowdens efforts, the Compensation Committee approved a bonus in the amount of $200,000 payable in
bi-weekly installments throughout fiscal year 2007.



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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.

Prior to March 31, 2002, upon first being elected to the board of directors, each non-employee director received options
to purchase 12,500 shares of common stock at an exercise price equal to the fair market value of the common stock on the date of grant. Such options fully vested at the date of grant. The non-employee director stock option plan, pursuant to which
such options were granted, ceased granting options in March 2002.

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, 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, 2007, 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



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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 2007 was approximately $59,036 of which
approximately $3,375 and $2,692 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 J & J Mortgage, 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 $700,000 of
commercial and residential loans originally funded by J & J Mortgage 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 2007 through 2005, 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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##### Table of Contents

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

The following sets forth information regarding beneficial ownership of the common stock and the exchangeable redeemable preferred stock of the Company, as of December 20, 2006, by (i) each person known to be
the beneficial owner of more than 5% of the outstanding common stock or preferred 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)                                |  | 4,900,144            | (2)(3) |  | 74.7    | %
|Suzanne Lowden                                    |  | 4,792                | (4)(5) |  | *       |  
|John W. Delaney                                   |  | 13,750               |        |  | *       |  
|William J. Raggio                                 |  | 17,972               |        |  | *       |  
|Howard Foster                                     |  | 5,300                |        |  | *       |  
|Richard H. Taggart                                |  | 1,700                |        |  | *       |  
|All Directors and Officers as a group (7 persons) |  | 4,943,658            |        |  | 75.4    | %



|* | 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 279,510 shares that may be acquired upon the exercise of outstanding stock options.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Includes 804,941 shares held by LICO, which is wholly owned by Mr. Lowden.
|--- | --------------------------------------------------------------------------

|(4) | Includes 4,521 shares held by Mrs. Lowden as custodian for a child and excludes shares beneficially owned by Mrs. Lowden reflected in the table.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Includes 1,262 shares held by Mrs. Lowden as custodian for a child and excludes shares beneficially owned by Mrs. Lowden reflected in the table.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

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

The Company believes that all transactions 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 are married to one another.

The Company has entered into a Patent Rights and Royalty Agreement with David Lowden, 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 has granted the Company an exclusive five-year license
expiring in January 2007 in the United States with respect to the technology, which will be automatically renewed for additional two-year terms unless Archon terminates the agreement within thirty days prior to the renewal or the agreement is
otherwise earlier terminated in accordance with its terms. 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, 2007 the Company had expended
approximately $400,000 for commercial development of the technology.

In December 2003, Dukes closed its casino operations. The
Company operated Dukes operations. The Company also loaned Dukes approximately $1.4 million. The Company wrote-off its investment in Dukes and recorded a reserve for its receivable from Dukes of approximately $1.5 million
during a prior fiscal year and it has no further asset exposure from Dukes. The Company made the determination to reserve the entire amount invested in and owed from Dukes, as the collateral value securing the receivable was deemed
insignificant subsequent to the closure of the casino.

During an approximate 2-year period ended June 30, 2006, the Company had
expended approximately $800,000 in legal fees associated with Dukes litigation against a contractor. Dukes had entered into an agreement to reimburse the Company for legal fees and other amounts owed the Company depending on potential
amounts recovered from the litigation. Through September 30, 2007, the Company received approximately $1.7 million, of which $800,000 has been credited against legal expense and the balance has been included in operating income in the fiscal
2006 consolidated statement of operations. 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 to the terms of the settlement agreement.

During fiscal 2001 through fiscal 2003, the Company purchased an aggregate of $700,000 of commercial and residential loans originally funded by J & J
Mortgage to unaffiliated third parties. The loans were purchased by the Company for the principal amount, plus accrued interest, if any. J & J Mortgage is owned by LICO, which in turn is owned by Paul W. Lowden. John W. Delaney is the president
of J & J Mortgage.

William J. Raggio, a director of the Company, is a shareholder and member of the law firm of Jones Vargas. During
fiscal year 2007 through 2005, the Company retained Jones Vargas to advise the Company regarding various legal matters, and the Company continues to engage Jones Vargas for legal representation.

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.



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

The
following fees were billed by Piercy Bowler Taylor & Kern and Ernst & Young, LLP for services provided to the Company for the fiscal years ended September 30, 2007 and 2006:



|                   |  |      |         |      |   |        
|------------------ |  | ---- | ------- | ---- | - | -------
|                   |  | 2007 |         | 2006
|Audit Fees:        |  | $    | 184,251 |      | $ | 184,156
|Audit Related Fees |  |      | 15,799  |      |   | 26,094 
|Tax Fees           |  |      | 0       |      |   | 0      

Audit fees are the aggregate fees billed for professional services rendered in connection with the
engagement to audit the Companys annual financial statements for the fiscal years ended September 30, 2007 and 2006 including the reviews of the financial statements included in the Companys Form 10-Qs for those fiscal years.

Audit related fees billed for fiscal 2007 and 2006 are for professional services rendered in connection with the audit of the
Companys 401(k) retirement plan for the years ended December 31, 2006 and December 2005, respectively.

In 2007 and 2006, no
fees were paid to Piercy Bowler Taylor & Kern and Ernst & Young, LLP pursuant to the de minimus exception to the pre-approval policy permitted under the Securities and Exchange Act of 1934, as amended.

The Audit Committee Guidelines for Pre-Approval of Independent Auditor Services is attached to this 10-K as Exhibit 14.1. During the fiscal year
ended September 30, 2007, all services provided by the external auditor were pre-approved by the Companys Audit Committee.



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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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|              |  |                                                                                                                                                                                                                                                                    
|------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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         |  | Non-Recourse Note S-BNK Dorchester Operations, LLC 10.20% A-1 Note due June 30, 2005. (10)                                                                                                                                                                         
|              | 
|10.19         |  | Non-Recourse 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*                                                                                                                                                                                                                            
|              | 
|23.2          |  | Consent of Ernst & Young LLP *                                                                                                                                                                                                                                     
|              | 
|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.*                                          



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|              |  |                                                                                                                                                                                                                           
|------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Exhibit                                                                                                                                                                                                    
|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.*
|              | 
|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.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                 |  |                    |  |                          
|---------------- |  | ------------------ |  | -------------------------
|                 |  | ARCHON CORPORATION
|                 |  |                   
|January 14, 2008 |  | 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     |  | Chairman of the Board and President (Principal Executive Officer) |  | January 14, 2008
|Paul W. Lowden         |  |                                                                   | 
|                       |  |                                                                  
|/s/ John Delaney       |  | Director                                                          |  | January 14, 2008
|John Delaney           |  |                                                                   |  |                 
|                       |  |                                                                  
|/s/ Suzanne Lowden     |  | Director                                                          |  | January 14, 2008
|Suzanne Lowden         |  |                                                                   |  |                 
|                       |  |                                                                  
|/s/ William J. Raggio  |  | Director                                                          |  | January 14, 2008
|William J. Raggio      |  |                                                                   |  |                 
|                       |  |                                                                  
|/s/ Howard E. Foster   |  | Director                                                          |  | January 14, 2008
|Howard E. Foster       |  |                                                                   |  |                 
|                       |  |                                                                  
|/s/ Richard H. Taggart |  | Director                                                          |  | January 14, 2008
|Richard H. Taggart     |  |                                                                   |  |                 
|                       |  |                                                                  
|/s/ Kevin Hanratty     |  | Secretary                                                         |  | January 14, 2008
|Kevin Hanratty         |  |                                                                   |  |                 
|                       |  |                                                                  
|/s/ Grant L. Siler     |  | Principal Accounting Officer                                      |  | January 14, 2008
|Grant L. Siler         |  |                                                                   |  |                 



66