**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D. C. 20549**





**FORM
      10-Q**


(Mark
                One)x
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d)****OF
                THE SECURITIES EXCHANGE ACT OF
                1934**





**FOR
      THE QUARTERLY PERIOD ENDED MARCH 31, 2007**





or


 ̈
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d)****OF
                THE SECURITIES EXCHANGE ACT OF 1934****For
                the transition period from ______________ to
                ______________**





Commission
      file number: **333-06489**





**Indiana**
            
            **THE
                MAJESTIC STAR CASINO, LLC**
            
            **43-1664986****Indiana**
            
            **THE
                MAJESTIC STAR CASINO CAPITAL CORP.**
            
            **35-2100872****Indiana**
            
            **MAJESTIC
                STAR CASINO CAPITAL CORP. II**
            
            **20-3879309**(State
                or other jurisdiction of incorporation or organization)
            
            (Exact
                name of registrant as specified in its charter)
            
            (I.R.S.
                Employer Identification No.)





**301
      FREMONT STREET**


**LAS
      VEGAS, NEVADA 89101**


**(702)
      388 - 2224**


(Address
      of principal executive offices, including zip code, and telephone number,
      including area code)





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to filing requirements for
      the
      past 90 days.





Yes
            x
            No
             ̈





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





Large
                accelerated filer
             ̈
            Accelerated
                filer
             ̈
            Non-accelerated
                filer
            x





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).





Yes
             ̈
            No
            x





As
      of
      March 31, 2007, shares outstanding of each of the registrant’s classes of
      common stock:




**Class**
            **Number of
              shares**Not applicable
            Not applicable











**THE
      MAJESTIC STAR CASINO, LLC AND
      SUBSIDIARIES**


**(A
      Wholly Owned Subsidiary of Majestic Holdco, LLC)**





**Table
      of Contents**





PART
                I
            FINANCIAL
                INFORMATION
            Page
                No.Item
                1.
            Financial
                Statements.Condensed
                Consolidated Balance Sheets as of March 31,
                2007 (unaudited) and December 31, 2006
            1Condensed
                Consolidated Statements of Operations
                for the three months ended March 31, 2007 and 2006
                (unaudited)
            2Condensed
                Consolidated Statements of Cash Flows for the three
                months ended March 31, 2007 and 2006 (unaudited)
            3Notes
                to the Condensed Consolidated Financial Statements
                (unaudited)
            5Item
                2.
            Management’s
                Discussion and Analysis of Financial
                Condition and Results of Operations.
            25Item
                3.
            Quantitative
                and Qualitative Disclosures About
                Market Risk.
            36Item
                4T.
            Controls
                and
                Procedures.
            36PART
                II
            OTHER
                INFORMATIONItem
                1.
            Legal
                Proceedings.
            37Item
                1A.
            Risk
                Factors.
            37Item
                6.
            Exhibits.
            38SIGNATURES
            S-1














**PART
      I**   **FINANCIAL
      INFORMATION**


**Item
      1.**   **Financial
      Statements.**


**THE
      MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES**


**(A
      Wholly Owned Subsidiary of Majestic Holdco, LLC)**


CONDENSED
      CONSOLIDATED BALANCE SHEETS





March
                31,
            
            December
                31,2007
            
            2006
                *ASSETS
            
            (unaudited)Current
                assets:Cash
                and cash equivalents
            
            $
            27,321,223
            
            $
            25,531,924Restricted
                cash
            
            
            3,326,881
            
            
            3,326,881Accounts
                receivable, less allowance for doubtful accounts of $1,029,803
                and$871,448
                as of March 31, 2007 and December 31, 2006, respectively
            
            
            4,730,605
            
            
            7,582,476Inventories
            
            
            1,054,259
            
            
            888,292Prepaid
                expenses and deposits
            
            
            3,530,912
            
            
            2,306,311Receivable
                from affiliate
            
            
            541,326
            
            
            455,270Total
                current assets
            
            
            40,505,206
            
            
            40,091,154Property,
                equipment and improvements, net
            
            
            273,886,878
            
            
            275,735,582Intangible
                assets, net
            
            
            124,530,710
            
            
            125,395,502Goodwill
            
            
            47,431,442
            
            
            47,431,442Other
                assets:Deferred
                financing costs, net of accumulated amortizationof
                $6,598,146 and $5,761,820 as of March 31, 2007 andDecember
                31, 2006, respectively
            
            
            12,246,774
            
            
            13,083,100Deferred
                financing costs, pushed down from Majestic Holdco, net ofaccumulated
                amortization of $650,195 and $523,119, as ofMarch
                31, 2007 and December 31, 2006, respectively
            
            
            2,308,545
            
            
            2,435,620Other
                assets
            
            
            2,795,373
            
            
            2,187,020Total
                other assets
            
            
            17,350,692
            
            
            17,705,740Total
                assets
            
            $
            503,704,928
            
            $
            506,359,420LIABILITIES
                AND MEMBER'S DEFICITCurrent
                liabilities:Accounts
                payable
            
            $
            3,396,471
            
            $
            4,491,600Current
                portion of long-term debt
            
            
            148,887
            
            
            165,421Accrued
                liabilities:Payroll
                and related
            
            
            10,754,301
            
            
            9,116,726Interest
            
            
            22,675,684
            
            
            10,750,630Property
                and franchise taxes
            
            
            10,699,122
            
            
            8,942,975Other
                accrued liabilities
            
            
            12,948,659
            
            
            15,554,947Total
                current liabilities
            
            
            60,623,124
            
            
            49,022,299Long-term
                debt, net of current maturities
            
            
            534,621,019
            
            
            545,736,924Long-term
                portion of capitalized leases
            
            
            37,814
            
            
            67,066Long-term
                debt pushed down from Majestic Holdco, net of discount of
                $10,818,971as
                of March 31, 2007 and $12,376,308 as of December 31, 2006,
                respectively
            
            
            52,681,029
            
            
            51,123,692Total
                liabilities
            
            
            647,962,986
            
            
            645,949,981Member's
                deficit
            
            
            (144,258,058
            )
            
            (139,590,561
            )Total
                liabilities and member's deficit
            
            $
            503,704,928
            
            $
            506,359,420


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





*
      Condensed from audited consolidated financial statements.





1
 ***Table
            of Contents***





**THE
      MAJESTIC STAR CASINO, LLC AND
      SUBSIDIARIES**


**(A
      Wholly Owned Subsidiary of Majestic Holdco, LLC)**


CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS


(unaudited)





For
                The Three Months EndedMarch
                31,2007
            
            2006OPERATING
                REVENUES:Casino
            
            $
            95,130,560
            
            $
            103,885,491Rooms
            
            
            2,544,945
            
            
            2,764,392Food
                and beverage
            
            
            5,875,255
            
            
            4,355,076Other
            
            
            1,882,476
            
            
            1,748,010Gross
                revenues
            
            
            105,433,236
            
            
            112,752,969Less
                promotional allowances
            
            
            13,739,617
            
            
            12,834,835Net
                operating revenues
            
            
            91,693,619
            
            
            99,918,134OPERATING
                COSTS AND EXPENSES:Casino
            
            
            23,658,637
            
            
            22,930,677Rooms
            
            
            1,072,184
            
            
            1,184,204Food
                and beverage
            
            
            2,711,778
            
            
            2,116,372Other
            
            
            503,121
            
            
            258,065Gaming
                taxes
            
            
            22,307,944
            
            
            24,423,328Advertising
                and promotion
            
            
            5,448,233
            
            
            4,150,145General
                and administrative
            
            
            13,938,910
            
            
            15,028,535Corporate
                expense
            
            
            1,723,202
            
            
            1,817,704Economic
                incentive tax - City of Gary
            
            
            1,753,589
            
            
            1,806,989Depreciation
                and amortization
            
            
            8,169,652
            
            
            7,772,749Gain
                on disposal of assets
            
            
            (11,725
            )
            
            (14,990
            )Total
                operating costs and expenses
            
            
            81,275,525
            
            
            81,473,778Operating
                income
            
            
            10,418,094
            
            
            18,444,356OTHER
                INCOME (EXPENSE):Interest
                income
            
            
            212,177
            
            
            136,067Interest
                expense
            
            
            (13,578,690
            )
            
            (13,313,889
            )Interest
                expense - debt pushed down from Majestic Holdco
            
            
            (1,684,414
            )
            
            (1,494,358
            )Other
                non-operating expense
            
            
            (34,665
            )
            
            (27,248
            )Total
                other expense
            
            
            (15,085,592
            )
            
            (14,699,428
            )Net
                (loss) income
            
            $
            (4,667,498
            )
            $
            3,744,928





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





2
 ***Table
            of Contents***







.


**THE
      MAJESTIC STAR CASINO, LLC AND
      SUBSIDIARIES**


**(A
      Wholly Owned Subsidiary of Majestic Holdco, LLC)**


CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS


(unaudited)





For
                The Three Months EndedMarch
                31,2007
            
            2006CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                (loss) income
            
            $
            (4,667,498
            )
            $
            3,744,928Adjustments
                to reconcile net (loss) income to net cashprovided
                by operating activities:Depreciation
            
            
            7,304,860
            
            
            6,907,959Amortization
            
            
            864,792
            
            
            864,790Amortization
                of deferred financing costs
            
            
            836,325
            
            
            784,899Amortization
                of bond discount on 12 1⁄2% senior discount notes anddeferred
                financing costs pushed down from Majestic Holdco
            
            
            1,684,414
            
            
            1,494,358Gain
                on disposal of assets
            
            
            (11,725
            )
            
            (14,990
            )Changes
                in operating assets and liabilities, net of effects of
                acquisition:Accounts
                receivable, net
            
            
            2,851,871
            
            
            389,778Related
                party receivables
            
            
            (86,056
            )
            
            (181,130
            )Inventories
            
            
            (165,967
            )
            
            (5,254
            )Prepaid
                expenses and deposits
            
            
            (1,224,601
            )
            
            (5,904,150
            )Other
                assets
            
            
            11,441
            
            
            (82,815
            )Accounts
                payable
            
            
            (463,024
            )
            
            223,032Accrued
                payroll and other expenses
            
            
            1,637,575
            
            
            1,172,896Accrued
                interest
            
            
            11,925,054
            
            
            11,501,772Other
                accrued liabilities
            
            
            (850,134
            )
            
            (4,514,800
            )Net
                cash provided by operating activities
            
            
            19,647,327
            
            
            16,381,273CASH
                FLOWS FROM INVESTING ACTIVITIES:Increase
                in restricted cash
            
            
            -
            
            
            (136,881
            )Additions
                to property and equipment
            
            
            (6,088,265
            )
            
            (3,161,899
            )Adjustment
                to costs related to Trump Indiana acquisition
            
            
            -
            
            
            188,795Increase
                in Lakefront Capital Improvement Fund
            
            
            (619,795
            )
            
            -Proceeds
                from disposal of equipment
            
            
            11,725
            
            
            168,874Net
                cash used in investing activities
            
            
            (6,696,335
            )
            
            (2,941,111
            )





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





3
 ***Table
            of Contents***





**THE
      MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES**


**(A
      Wholly Owned Subsidiary of Majestic Holdco, LLC)**


CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)


(unaudited)








For
                The Three Months EndedMarch
                31,2007
            
            2006CASH
                FLOWS FROM FINANCING ACTIVITIES:Issuance
                costs for the 9 1⁄2% senior secured notes
            
            $
            -
            
            $
            (48,239
            )Issuance
                costs for the 9 3⁄4% senior notes
            
            
            -
            
            
            (241,463
            )Issuance
                costs for 12 1⁄2% senior discounted notespushed
                down from Majestic Holdco
            
            
            -
            
            
            (76,580
            )Proceeds
                from line of credit
            
            
            1,484,144
            
            
            1,269,560Repayment
                of line of credit
            
            
            (12,600,049
            )
            
            (19,800,000
            )Repayment
                of debt
            
            
            (45,788
            )
            
            (1,022,573
            )Distributions
                to Barden Development, Inc.
            
            
            -
            
            
            (1,392,497
            )Net
                cash used in financing activities
            
            
            (11,161,693
            )
            
            (21,311,792
            )Net
                increase (decrease) in cash and cash equivalents
            
            
            1,789,299
            
            
            (7,871,630
            )Cash
                and cash equivalents, beginning of period
            
            
            25,531,924
            
            
            32,368,249Cash
                and cash equivalents, end of period
            
            $
            27,321,223
            
            $
            24,496,619For
                The Three Months EndedMarch
                31,2007
            
            
            2006Supplemental
                disclosure of cash flow information and non-cash investingand
                financing activities:INTEREST
                PAID:Line
                of credit
            
            $
            813,802
            
            $
            1,164,709City
                of Black Hawk - note payable
            
            
            -
            
            
            15,410Other
            
            
            3,234
            
            
            6,131Total
            
            $
            817,036
            
            $
            1,186,250NON-CASH
                INVESTING AND FINANCING ACTIVITIES:Capital
                assets acquired from incurring accounts payable and accrued
                liabilities
            
            $
            1,237,018
            
            $
            240,048Deferred
                financing and transaction costs related to the Trump
                acquisitionincluded
                in accrued liabilities
            
            
            -
            
            
            129,058Severance
                costs included in goodwill and accrued payroll
            
            
            -
            
            
            444,298Total
            
            $
            1,237,018
            
            $
            813,404








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








4
 ***Table
            of Contents***








**NOTE
      1. ORGANIZATION**





The
      Majestic Star Casino, LLC (the “Company”) is a wholly owned subsidiary of
      Majestic Holdco, LLC (“Majestic Holdco”) which is a wholly owned subsidiary of
      Barden Development, Inc. (“BDI”). The Company was formed on December 8,
      1993, as an Indiana limited liability company to provide gaming and related
      entertainment to the public. The Company commenced gaming operations in the
      City
      of Gary at Buffington Harbor, located in Lake County, Indiana on June 7,
      1996.





The
      Company is a multi-jurisdictional gaming company with operations in three states
      - Indiana, Mississippi and Colorado. The Company owns and operates two riverboat
      gaming facilities located in Gary, Indiana (“Majestic Star” and “Majestic Star
      II”, together the “Majestic Properties”).





The
      Company also owns other subsidiaries that operate the following
“Fitzgeralds-brand” casino properties during the periods presented in the
      accompanying consolidated financial statements:





·
            A
                casino-hotel located in Tunica County, Mississippi (“Fitzgeralds
                Tunica”).





·
            A
                casino located in Black Hawk, Colorado (“Fitzgeralds Black Hawk”).





The
      Company also has the following subsidiaries, which were formed for the purpose
      of facilitating financing transactions.





·
            The
                Majestic Star Casino Capital Corp. (“MSCC”) is a co-obligor with the
                Company for the $300.0 million 9 1⁄2% Senior Secured Notes (the “Senior
                Secured Notes”) due 2010. MSCC has no assets or operations. See Note 6 -
                Long Term Debt.





·
            Majestic
                Star Casino Capital Corp. II (“MSCC II”) was formed in 2005 for the
                purpose of facilitating the offering of the Company’s $200.0 million 9 3⁄4%
                Senior Notes (the “Senior Notes”). MSCC II is a co-obligor with the
                Company for the Senior Notes. MSCC II has no assets or operations.
                See
                Note 6 - Long Term Debt.





Following
      the completion of the defeasance of the remaining Majestic Investor Holdings,
      LLC (“Investor Holdings”) 11.653% notes (“Investor Notes”) on March 6, 2006, we
      terminated the existence of Majestic Investor Capital Corp (an entity created
      to
      facilitate the issuance of the Investor Notes) effective March 6, 2006. We
      also
      merged Majestic Investor, LLC and Investor Holdings into The Majestic Star
      Casino, LLC on March 21, 2006 and March 22, 2006, respectively, thus making
      Barden Mississippi, LLC and Barden Colorado, LLC direct subsidiaries of The
      Majestic Star Casino, LLC.





A
      parking
      garage owned by the Company, through an entity formerly known as Buffington
      Harbor Parking Associates (“BHPA”), was merged into Majestic Star in August
      2006. In addition, Buffington Harbor Riverboats, LLC (“BHR”), the pavilion and
      joint docking facility for Majestic Star and Majestic Star II, was dissolved
      on
      December 31, 2006.





Except
      where otherwise noted, the words “we,” “us,” “our,” and similar terms, as well
      as the “Company,” refer to The Majestic Star Casino, LLC and all of its direct
      and indirect subsidiaries.














5
 ***Table
            of Contents***
 **THE
              MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES**
 **(A
              Wholly Owned Subsidiary of Majestic Holdco, LLC)**
 **NOTES
              TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
              (CONTINUED)**
 **(unaudited)**








**NOTE
      2. BASIS OF PRESENTATION**





The
      accompanying consolidated financial statements are unaudited and include the
      accounts of The Majestic Star Casino, LLC and its wholly owned direct and
      indirect subsidiaries. All inter-company transactions and balances have been
      eliminated. These financial statements have been prepared in accordance with
      U.S
      Generally Accepted Accounting Principles (“GAAP”) for interim financial
      information and with the instructions to Form 10-Q and Article 10 of Regulation
      S-X. Accordingly, certain information and footnote disclosures normally included
      in financial statements have been condensed or omitted. The preparation of
      financial statements in conformity with GAAP requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements and the reported amounts of revenues and expenses
      during the reporting period. Significant estimates incorporated into our
      consolidated financial statements include the estimated useful lives of
      depreciable and amortizable assets, the estimated allowance for doubtful
      accounts receivable, estimated cash flow in assessing the recoverability of
      long
      lived assets and estimated liabilities for our self-insured medical and worker’s
      compensation plans, property taxes, slot club point programs, and litigation,
      claims and assessments. Actual results could differ from those estimates.





In
      the
      opinion of management, all adjustments (which include normal recurring
      adjustments) considered necessary for a fair statement of the results for the
      interim periods have been made. The results for the three months ended
      March 31, 2007 are not necessarily indicative of results to be expected for
      the full fiscal year. The financial statements should be read in conjunction
      with the financial statements and notes thereto included in The Majestic Star
      Casino, LLC’s Annual Report on Form 10-K for the year ended December 31,
      2006.





PUSH
      DOWN
      OF DISCOUNT NOTES FROM MAJESTIC HOLDCO - The Company’s consolidated balance
      sheet as of March 31, 2007 and December 31, 2006 includes the $63.5
      million of 121⁄2% Senior Discount Notes due 2011 (the “Discount Notes”), net of
      discount of $10.8 million and $12.4 million, respectively, issued by Majestic
      Holdco. The Discount Notes are solely the obligation of Majestic Holdco and
      Majestic Holdco, Inc. (the co-issuer with Majestic Holdco) and are unsecured.
      Neither the Company nor any of its direct or indirect subsidiaries guarantees
      the Discount Notes nor are the equity or assets of the Company or its direct
      or
      indirect subsidiaries security for the Discount Notes. Further, the indentures
      governing the Senior Notes and the Senior Secured Notes and the loan and
      security agreement which governs our $80.0 million senior secured credit
      facility (“Senior Secured Credit Facility”) preclude distributions by the
      Company to Majestic Holdco unless certain financial tests are met. In addition
      to the push down of the Discount Notes, the Company is also reflecting $2.3
      million and $2.4 million of Discount Notes’ issuance costs, net of amortization,
      respectively, on its consolidated balance sheets as of March 31, 2007 and
      December 31, 2006. Amortization of issuance costs were $0.1 million for
      both quarters ended March 31, 2007 and 2006, and bond discount was $1.6 million
      and $1.4 million, respectively, on the Company's consolidated
      statements of operations for the quarters ended March 31, 2007 and 2006. A
      likely scenario for the repayment of these Discount Notes is from cash flows
      of
      the Company or a refinancing of the Company’s indebtedness, together with the
      indebtedness of Majestic Holdco. The Discount Notes have been “pushed-down” to
      the Company pursuant to the guidelines of SEC Staff Accounting Bulletin 73
      Topic
      5(J).





CASH
      AND
      CASH EQUIVALENTS - The Company considers cash equivalents to include short-term
      investments with original maturities, or remaining maturities at time of
      purchase, of ninety days or less. Cash equivalents are carried at cost plus
      accrued interest, which approximates fair value. The Company places its cash
      primarily in checking and money market accounts with high credit quality
      financial institutions, which, at times, have exceeded federally insured
      limits.





RESTRICTED
      CASH - At both March 31, 2007 and December 31, 2006, restricted cash consisted
      of $3.3 million, which is held as certificates of deposit that serve as security
      for letters of credit supporting various self-insured worker’s compensation
      programs.








6
 ***Table
            of Contents***
 **THE
            MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES**
 **(A
            Wholly Owned Subsidiary of Majestic Holdco, LLC)**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
            (CONTINUED)**
 **(unaudited)**





PROMOTIONAL
      ALLOWANCES - Cash incentives related to gaming play are recorded as a reduction
      of gross revenues. Such amounts totaled $7.4 million and $8.0 million for the
      quarters ended March 31, 2007 and 2006, respectively. In addition, the
      retail value of accommodations, food and beverage, and other services furnished
      to hotel/casino guests without charge is included in gross revenue and then
      deducted as promotional allowances. The estimated departmental cost of providing
      such promotional allowances is included primarily in casino expenses as
      follows:





For
                The Three Months Ended March 31,2007
            
            2006Rooms
            
            $
            1,108,932
            
            $
            588,356Food
                and Beverage
            
            
            4,228,505
            
            
            2,569,654Other
            
            
            263,530
            
            
            116,866Total
            
            $
            5,600,967
            
            $
            3,274,876





The
      following schedule lists total cash incentives and the retail cost of hotel,
      food, beverage, and other, which comprise total promotional
      allowances.





For
                The Three Months Ended March 31,2007
            
            2006Cash
                based promotional activities
            
            $
            5,443,253
            
            $
            6,162,999Slot
                club and other
            
            
            1,946,022
            
            
            1,795,855Retail
                cost of rooms, food, beverage and other
            
            
            6,350,342
            
            
            4,875,981Total
            
            $
            13,739,617
            
            $
            12,834,835




DOWNLOADABLE PROMOTIONAL CREDITS - At Fitzgeralds Tunica, we have implemented
      promotions that allow customers to download promotional credits directly to
      the
      slot machine. While the Company does not recognize the playing of these credits
      as revenue and the customer cannot redeem credits for cash, any jackpots won
      by
      the customer are a direct reduction in slot revenue.







**NOTE
      3. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS**





The
      Company has adopted or will be required to adopt the following accounting policy
      resulting from the following newly issued standards.





·
            In
                September 2006, the Financial Accounting Standards Board (“FASB”) issued
                FASB No. 157 “Fair Value Measurements”, (“FASB 157”) to establish a
                framework for measuring fair value and expanding disclosures relate 
                to fair value measurements. FASB 157 is effective for financial statements
                for fiscal years beginning after November 15, 2007. The Company is
                evaluating what impact, if any, FASB 157 will have on future
                reporting.


.


·
            In
                February 2007, the FASB issued FASB No. 159, "The Fair Value Option
                for
                Financial Assets and Financial Liabilities". FASB No. 159 permits
                companies to choose to measure many financial instruments and certain
                other items at fair value. The objective is to improve financial
                reporting
                by providing companies with the opportunity to mitigate volatility
                in
                reported earnings caused by measuring related assets and liabilities
                differently without having to apply complex hedge accounting provisions.
                The fair value option established by FASB No. 159 permits all companies
                to
                choose to measure eligible items at fair value at specified election
                dates. At each subsequent reporting date, companies shall report
                in
                earnings any unrealized gains and losses on items for which the fair
                value
                option has been elected. FASB No. 159 is effective as of the beginning
                of
                a company's first fiscal year that begins after November 15, 2007.
                Early
                adoption is permitted as of the beginning of a fiscal year that begins
                on
                or before November 15, 2007, provided the company also elects to
                apply the
                provisions of FASB No. 157, "Fair Value Measurements" (see above).
                We are
                currently evaluating whether to adopt the fair value option under
                FASB No.
                159 and evaluating what impact such adoption would have on our condensed
                consolidated financial statements.








7
 ***Table
            of Contents***
 **THE
            MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES**
 **(A
            Wholly Owned Subsidiary of Majestic Holdco, LLC)**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
            (CONTINUED)**
 **(unaudited)**








**NOTE
      4. RESTRICTED CASH**





As
      part
      of a self-insured worker’s compensation program at Majestic Star, the Company
      was required to post a letter of credit in the amount of $1.0 million to secure
      payment of claims. To collateralize the letter of credit, the bank required
      that
      Majestic Star purchase certificates of deposit totaling $1.0 million. Majestic
      Star II also has a self-insured worker’s compensation program which required a
      $1.0 million letter of credit that is collateralized by a $1.0 million
      certificate of deposit. Our certificates of deposit are recorded in Restricted
      Cash on the Company’s consolidated balance sheets.





To
      secure
      payment of claims under the worker’s compensation programs at Fitzgeralds Tunica
      and Fitzgeralds Black Hawk, the Company was required to post a letter of credit
      of $1.25 million. This letter of credit is secured by a certificate of deposit.





The
      State
      of Mississippi has required Fitzgeralds Tunica to post surety bonds as security
      for current and future sales and gaming revenue tax obligations. Fitzgeralds
      Tunica has four surety bonds: a $0.6 million bond in place with the Mississippi
      State Tax Commission and three $5,000 bonds with the Mississippi Alcoholic
      Beverage Control. These surety bonds are secured only by personal guaranties
      of
      Don H. Barden. If Mr. Barden is required to make payments to the bonding
      companies as a result of the guaranties, the Company will be obligated to
      reimburse Mr. Barden for any such payments.





Our
      Majestic Star and Majestic Star II properties are each required to have a
      $1.0 million surety bond in place with the Indiana Gaming Commission (“IGC”).
      Majestic Star II’s surety bond is in place. Majestic Star’s surety bond has
      not been placed pending surety bond language from the IGC.








**NOTE
      5. INTANGIBLE ASSETS**





The
      gross
      carrying amount and accumulated amortization of the Company’s intangible assets,
      other than goodwill, as of March 31, 2007 and December 31, 2006 are as
      follows:





As
                of March 31, 2007
            
            Gross
                Carrying
            
            Accumulated
            
            Net
                Amount
            
            ExpectedAmount
            
            Amortization
            
            March
                31, 2007
            
            LifeIntangible
                assets:Customer
                relationship
            
            $
            24,540,000
            
            $
            (7,884,410
            )
            $
            16,655,590
            
            
            8
                yrsTrade
                name
            
            
            3,450,000
            
            
            (1,834,880
            )
            
            1,615,120
            
            
            10
                yrsGaming
                license
            
            
            105,700,000
            
            
            -
            
            
            105,700,000
            
            
            indefiniteRiverboat
                excursion license
            
            
            700,000
            
            
            (140,000
            )
            
            560,000
            
            
            15
                yrsTotal
                intangible assets
            
            $
            134,390,000
            
            $
            (9,859,290
            )
            $
            124,530,710As
                of December 31, 2006
            
            
            Gross
                Carrying
            
            
            Accumulated
            
            
            Net
                Amount
            
            
            ExpectedAmount
            
            
            Amortization
            
            
            December
                31, 2006
            
            
            LifeIntangible
                assets:Customer
                relationship
            
            $
            24,540,000
            
            $
            (7,117,534
            )
            $
            17,422,466
            
            
            8
                yrsTrade
                name
            
            
            3,450,000
            
            
            (1,748,630
            )
            
            1,701,370
            
            
            10
                yrsGaming
                license
            
            
            105,700,000
            
            
            -
            
            
            105,700,000
            
            
            indefiniteRiverboat
                excursion license
            
            
            700,000
            
            
            (128,334
            )
            
            571,666
            
            
            15
                yrsTotal
                intangible assets
            
            $
            134,390,000
            
            $
            (8,994,498
            )
            $
            125,395,502





Goodwill
      and indefinite-lived intangible assets are not amortized but are reviewed
      annually for impairment.


8
 ***Table
            of Contents***
 **THE
            MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES**
 **(A
            Wholly Owned Subsidiary of Majestic Holdco, LLC)**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
            (CONTINUED)**
 **(unaudited)**







**NOTE
      6. LONG-TERM DEBT**





March 31,
              2007
            
            December 31,
              2006Long-term
                debt outstanding is as follows:9 1⁄2%
                senior secured notes due 2010
            
            $
            300,000,000
            
            $
            300,000,0009 3⁄4%
                senior notes due 2011
            
            
            200,000,000
            
            
            200,000,000Senior
                secured credit facility
            
            
            34,621,019
            
            
            45,736,924Capitalized
                leases and other debt
            
            
            186,701
            
            
            232,487Total
                long-term debt
            
            
            534,807,720
            
            
            545,969,411Less
                current maturities
            
            
            148,887
            
            
            165,421Total
                long-term debt, net of current maturities
            
            $
            534,658,833
            
            $
            545,803,990





**SENIOR
      SECURED NOTES**





The
      Senior Secured Notes bear interest at a fixed annual rate of 9.5% payable on
      April 15 and October 15 of each year and have a maturity date of October 15,
      2010. The Senior Secured Notes are guaranteed by all of our subsidiaries (other
      than MSCC). The Senior Secured Notes are secured by a pledge of substantially
      all of the Company’s and its subsidiaries’ current and future assets, other than
      certain excluded assets. The Senior Secured Notes are also collateralized by
      our
      equity interests held by Majestic Holdco and our equity interests in the
      subsidiary guarantors.





The
      indenture governing the Senior Secured Notes (the “Senior Secured Notes
      Indenture”) contains covenants which, among other things, restrict the Company’s
      ability to (i) make asset sales; (ii) make certain payments to, or investments
      in, third parties; (iii) incur additional indebtedness or liens on any assets;
      (iv) enter into transactions with affiliates; and (v) sell any restricted
      subsidiaries’ assets. In addition, upon a Change of Control as defined in the
      indenture governing the Senior Secured Notes, the Company will be required
      to
      offer to repurchase all of the outstanding Senior Secured Notes at a cash price
      equal to 101% of the principal amount thereof, plus accrued and unpaid interest
      to the date of repurchase.





On
      or
      after October 15, 2007, the Senior Secured Notes may be redeemed at the
      redemption prices that start at 104.75% of their aggregate principal amount,
      plus accrued and unpaid interest to the date of redemption.





**SENIOR
      NOTES**





The
      Senior Notes bear interest at a fixed annual rate of 9.75 % payable on April
      15
      and October 15 of each year and have a maturity date of January 15, 2011. The
      Senior Notes are guaranteed by all of our subsidiaries (other than MSCC and
      MSCC
      II). The Senior Notes are senior unsecured obligations of the Company, ranking
      equally with all of the Company’s and its subsidiaries’ existing and future
      subordinated indebtedness. The Senior Notes are effectively subordinated to
      the
      Senior Secured Notes and the Company’s Senior Secured Credit
      Facility.





9
 ***Table
            of Contents***
 **THE
            MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES**
 **(A
            Wholly Owned Subsidiary of Majestic Holdco, LLC)**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
            (CONTINUED)**
 **(unaudited)**





The
      indenture governing the Senior Notes (the “Senior Notes Indenture”) contains
      covenants which, among other things, restrict the Company’s ability to (i) make
      asset sales; (ii) make certain payments to, or investments in, third parties;
      (iii) incur additional indebtedness or liens on any assets; (iv) enter into
      transactions with affiliates; and (v) sell any restricted subsidiaries’ assets.
      In addition, upon a Change of Control as defined in the Senior Notes Indenture,
      the Company will be required to offer to repurchase all of the outstanding
      Senior Notes at a cash price equal to 101% of the principal amount thereof,
      plus
      accrued and unpaid interest to the date of repurchase.





On
      or
      after October 15, 2008, the Senior Notes may be redeemed at the redemption
      prices that start at 104.875% of their aggregate principal amount, plus accrued
      and unpaid interest to the date of redemption. Prior to October 15, 2008,
      up to 35% of the original aggregate principal amount of the Senior Notes may
      be
      redeemed at a redemption price of 109.75%, plus accrued and unpaid interest
      to
      the date of redemption with the net proceeds of certain equity
      offerings.





**SENIOR
      SECURED CREDIT FACILITY**





The
      Company has an $80.0 million Senior Secured Credit Facility, which is secured
      by
      all of the equity of the Company and its restricted subsidiaries and by its
      restricted subsidiaries’ current and future assets, other than certain excluded
      assets. The lien on the collateral securing the Senior Secured Credit Facility
      is senior to the lien on the collateral securing the Senior Secured Notes and
      the guarantees of the Senior Secured Notes. Borrowings under the Senior Secured
      Credit Facility bear interest at the Company’s choice of LIBOR plus a range of
      2.50% to 3.00% or the agent bank’s base rate (which approximates the prime rate)
      plus a range of 0.00% to 0.50%. The range is determined based on the Company’s
      EBITDA (as defined in the loan and security agreement governing the Senior
      Secured Credit Facility and amendments thereto). Full payment of any outstanding
      balance under the Senior Secured Credit Facility is due upon maturity in April
      2010. The Company’s Senior Secured Credit Facility contains customary conditions
      to borrowing and contains representations and warranties customary in other
      gaming-related financings. The loan and security agreement governing the Senior
      Secured Credit Facility contains certain financial covenants and restrictions,
      which among other things, restrict indebtedness, investments, distributions
      and
      mergers and require the Company to maintain, as defined in the covenants (as
      amended), minimum EBITDA and interest coverage ratios, which increase
      periodically, and an annual limit on capital expenditures. At March 31,
      2007 and December 31, 2006, the Company had available borrowing capacity
      under the Senior Secured Credit Facility of $45.4 million and $34.3 million,
      respectively.





The
      Company has entered into various amendments to the loan and security agreement
      governing the Senior Secured Credit Facility, the most current of which
      is described below.





On
      March
      15, 2007, the Company entered into Amendment Number Seven (“Amendment Seven”) to
      the Senior Secured Credit Facility. Amendment Seven modified the Company’s
      minimum EBITDA requirement for the 12-month periods ended March 31, 2007, June
      30, 2007 and September 30, 2007 to $65.0 million, respectively, modified the
      minimum EBITDA requirement for the 12-month periods ended December 31, 2007,
      March 31, 2008 and June 30, 2008 to $70.0 million, respectively, and modified
      the minimum EBITDA requirement to $72.0 million and $74.0 million, for the
      12-month periods ended September 30, 2008 and December 31, 2008, respectively.
      Amendment Seven also modified the Company’s interest coverage ratio requirement
      for the 12-month periods ended March 31, 2007, June 30, 2007, September 30,
      2007, December 31, 2007, March 31, 2008 and June 30, 2008, to 1.20:1.0,
      respectively, and modified the interest coverage ratio requirement to 1.25:1.0
      for the 12-month periods ended September 30, 2008 and December 31, 2008,
      respectively.




**OTHER
      DEBT**





The
      Company has various capital leases of approximately $0.2 million and other
      debt
      for equipment. These debt obligations are of a short duration.





10
 ***Table
            of Contents***
 **THE
            MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES**
 **(A
            Wholly Owned Subsidiary of Majestic Holdco, LLC)**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
            (CONTINUED)**
 **(unaudited)**








**DISCOUNT
      NOTES**





The
      Discount Notes with a face value of $63.5 million were issued on December 21,
      2005, with Majestic Holdco receiving net proceeds of approximately $45.1
      million. The net proceeds from the Discount Notes were pushed down to the
      Company. The Discount Notes are not guaranteed by the Company. The Discount
      Notes are senior unsecured obligations of Majestic Holdco, ranking equally
      with
      all of its existing and future senior obligations and senior to all its future
      subordinated indebtedness. The Discount Notes are structurally subordinated
      to
      all of the Company’s indebtedness (including the Senior Notes, the Senior
      Secured Notes and the Senior Secured Credit Facility) and are effectively
      subordinated in respect of the membership interests of the Company pledged
      to
      secure the Company's Senior Secured Credit Facility and the Senior Secured
      Notes. The Discount Notes pay interest semiannually on April 15 and October
      15
      at a rate of 12.5%, which is paid in kind to October 15, 2008. On April 15,
      2009, Majestic Holdco will be required to cash pay the interest on the Discount
      Notes. Since Majestic Holdco has no operations or the ability to generate cash
      flow internally, Majestic Holdco will look to the Company or BDI to fund its
      cash interest expense. The Company is precluded from making distributions to
      Majestic Holdco unless certain financial tests are met. The Discount Notes
      mature on October 15, 2011. A likely scenario for the repayment of these
      Discount Notes is from cash flows of the Company or a refinancing of the
      Company’s indebtedness, together with the indebtedness of Majestic Holdco. The
      Discount Notes have been “pushed down” to the Company pursuant to the guidelines
      of SEC Staff Accounting Bulletin 73 Topic 5(J).





**INTERCREDITOR
      AGREEMENT**





The
      trustee under the Senior Secured Notes Indenture (as collateral agent) and
      Wells
      Fargo Foothill, Inc., the agent under the Senior Secured Credit Facility are
      parties to the intercreditor agreement which provides for the contractual
      subordination of the liens on the collateral securing the Senior Secured Notes
      (and the related guarantees) to the liens on the collateral securing the
      indebtedness under the Senior Secured Credit Facility.





The
      intercreditor agreement, among other things, limits the trustee’s rights in an
      event of default under the Senior Secured Notes. Under the intercreditor
      agreement, if the Senior Secured Notes become due and payable prior to the
      stated maturity or are not paid in full at the stated maturity at a time during
      which there is indebtedness outstanding under the Senior Secured Credit
      Facility, the trustee will not have the right to foreclose upon the collateral
      unless and until the lenders under the Senior Secured Credit Facility fail
      to
      take steps to exercise remedies with respect to or in connection with the
      collateral within 190 days following notice to such lenders of the occurrence
      of
      an event of default under the Senior Secured Notes Indenture. In addition,
      the
      intercreditor agreement prevents the trustee and the holders of the Senior
      Secured Notes from pursuing certain remedies with respect to the collateral
      in
      an insolvency proceeding. The intercreditor agreement also provides that the
      net
      proceeds from the sale of the collateral will first be applied to repay
      indebtedness outstanding under the Senior Secured Credit Facility and thereafter
      to the holders of the Senior Secured Notes.








**NOTE
      7. COMMITMENTS AND CONTINGENCIES**




**LEGAL
      PROCEEDINGS**





Various
      legal proceedings are pending against the Company. Management considers all
      such
      pending proceedings, comprised primarily of personal injury and equal employment
      opportunity claims, to be routine litigation incidental to the Company’s
      business. Except as described in our Annual Report on Form 10-K for the year
      ended December 31, 2006, management believes that the resolution of these
      proceedings will not individually, or in the aggregate, have a material effect
      on the Company’s financial condition, results of operations or cash flows. See
      our Annual Report on Form 10-K for the year ended December 31, 2006 for a
      full description of our legal proceedings.





11
 ***Table
            of Contents***
 **THE
            MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES**
 **(A
            Wholly Owned Subsidiary of Majestic Holdco, LLC)**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
            (CONTINUED)**
 **(unaudited)**








In
      February 2006, the Company’s previous stop-loss health insurance provider
      (“Insurance Provider”), through its third party auditor, contacted the Company
      and requested that the Company provide information to facilitate an audit of
      employee health insurance stop-loss coverage for the years of 2004 and 2005.
      Although the Company had provided the requested information, as a result of
      this
      audit process, the Insurance Provider has withheld payment on ten individual
      claims that are payable under our stop-loss insurance policy with an aggregate
      outstanding value of approximately $0.7 million. After numerous attempts by
      the
      Company to request and facilitate the completion of the audit, the Company
      filed
      suit on May 3, 2007 in United States District Court for the Northern District
      of
      Illinois against the Insurance Provider alleging: (i) Breach of Contract, (ii)
      Unfair Practices in Settling Claims, (iii) Bad Faith, and (iv) Breach of
      Fiduciary Duty. While the Company believes it is entitled to reimbursement
      of
      all claims paid under the obligations of the insurance policy, at this point
      in
      time the Company is unable to assess the amount or likelihood of
      recovery.





**TAX
      MATTERS**





Majestic
      Star Income Tax Protest. The
      Company and its ultimate parent, BDI, have been assessed $2.6 million and $1.3
      million respectively, plus interest, by the Indiana Department of Revenue (the
      “Department”). Additionally, BDI’s non-resident shareholder has been assessed
      $0.2 million, plus penalty and interest. The assessment relates to deductions
      for payments of taxes on adjusted gross gaming revenues the Company’s member
      took in computing adjusted gross income for Indiana state income tax purposes.
      The Department’s position is that the Company had an obligation to withhold and
      remit tax for the non-resident shareholder of its member. The Company, BDI
      and
      BDI’s non-resident shareholder timely filed protests for all tax years at
      issue with the Legal Division of the Department. The Department sustained
      the imposition of negligence penalties on the assessments, but denied the
      protest of the tax amount assessed to the extent that amounts assessed are
      in
      excess of net operating losses available to BDI's non-resident shareholder.
      The Company and BDI have filed petitions with the Indiana Tax Court appealing
      the Department's ruling on the $2.6 million and $1.3 million
      assessments. BDI's non-resident shareholder will be appealing the $0.2
      million assessment with the Indiana Tax Court. No liability has been accrued
      by
      the Company relating to this matter.





The
      Company’s indentures governing the Senior Secured Notes, the Senior Notes, and
      the loan agreement related to the Senior Secured Credit Facility allow the
      Company to make distributions to BDI for tax purposes. Accordingly, should
      BDI
      ultimately be found liable for additional state income taxes to the State of
      Indiana, the Company would make distributions sufficient to pay the additional
      tax. Any payments would be recorded as distributions in Member’s Deficit. The
      Company does not intend to make any distributions for the years in which an
      assessment was received until it has fully evaluated its options with
      BDI.





BHR
      and Majestic Star Sales and Use Tax Assessments. For the years 1998
      through 2004, the Department assessed BHR and Majestic Star $0.9 million for
      unpaid sales and use taxes related to merchandise and other products provided
      to
      the guests and employees of Majestic Star and BHR at no charge and the provision
      of food, provided on a complimentary basis, to the patrons and employees of
      BHR’s members Majestic Star and Trump Indiana, and to Majestic Star directly.
      Based on Hyatt Corp v. Indiana Department of State Revenue, (“Hyatt”), BHR and
      Majestic Star believe that they have no sales and use tax liability for food
      for
      human consumption purchased by it and prepared for serving to its customers
      on a
      complimentary basis. In Hyatt, the petitioner, a hotel operator, sought a refund
      for use tax paid on food purchased for complimentary meals that were provided
      to
      both guests and employees. Hyatt prevailed. Majestic Star and BHR are
      arguing that food prepared for human consumption and provided to customers
      and
      employees on a complimentary basis are not taxable per the Hyatt
      decision. Should the Department prevail with its position that
      sales taxes are due on the value of complimentary meals Majestic Star and BHR
      provided to employees and customers of Majestic Star, the estimated 2005 sales
      tax exposure for the complimentary meals will be an additional $0.1 million.
      Pursuant to the terms of the stock purchase agreement with Trump Entertainment
      Resorts Holdings, L.P. (“TERH”), TERH is obligated to indemnify the Company for
      50% of BHR’s pre-closing tax liabilities. With regard to BHR's sales and use tax
      assessments, the indemnification amount would be $0.4 million. Estimated
      exposure for the year ended December 31, 2006 and the first three months of
      2007, which would be the Company’s obligation only, would be approximately $0.1
      million. On May 1, 2007, the Indiana Tax Court issued a decision in another
      sales and use tax case involving a riverboat casino with facts similar to the
      facts in Majestic Star's and BHR's cases outlined above. In that case, the
      court
      ruled that the provision of food and non-food items on a complimentary basis
      to
      patrons of a riverboat casino did not constitute retail sales subject to Indiana
      sales tax when purchased, was likewise exempt from use tax when such food was
      later prepared and provided to patrons on a complimentary basis. The Department
      has until May 31 to request a Tax Court rehearing in that case or file an appeal
      of the decision with the Indiana Supreme Court.





12
 ***Table
            of Contents***
 **THE
            MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES**
 **(A
            Wholly Owned Subsidiary of Majestic Holdco, LLC)**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
            (CONTINUED)**
 **(unaudited)**








**GAMING
      REGULATIONS**





The
      ownership and operation of riverboat gaming operations in Indiana are subject
      to
      strict state regulation under the Riverboat Gambling Act (the “Act”) and the
      administrative rules promulgated thereunder. The IGC is empowered to administer,
      regulate and enforce the system of riverboat gaming established under the Act
      and has jurisdiction and supervision over all riverboat gaming operations in
      Indiana, as well as over all persons on riverboats where gaming operations
      are
      conducted. The IGC is empowered to regulate a wide variety of gaming and
      non-gaming related activities, including the licensing of suppliers to, and
      employees at, riverboat gaming operations and to approve the form of entity
      qualifiers and intermediary and holding companies. The IGC has broad rulemaking
      power, and it is impossible to predict what effect, if any, an
      amendment to the existing rules or the finalization of proposed rules
      might have on the Company’s operations.





The
      ownership and operation of our casino gaming facilities in Mississippi and
      Colorado are also subject to various state and local regulations in the
      jurisdictions where they are located. In Mississippi, our gaming operations
      are
      subject to the Mississippi Gaming Control Act, and to the licensing and/or
      regulatory control of the Mississippi Gaming Commission, the Mississippi State
      Tax Commission and various state and local regulatory agencies, including liquor
      licensing authorities. In Colorado, our gaming operations are subject to the
      Limited Gaming Act of 1991, which created the Division of Gaming within the
      Colorado Department of Revenue and the Colorado Limited Gaming Control
      Commission, which is empowered to license, implement, regulate and supervise
      the
      conduct of limited gaming. Our Colorado operations are also subject to the
      Colorado Liquor Code and the state and local liquor licensing
      authorities.





The
      Company’s directors, officers, managers and key employees are required to hold
      individual licenses. These requirements vary from jurisdiction to jurisdiction.
      Licenses and permits for gaming operations and for individual licensees are
      subject to revocation or non-renewal for cause. Under certain circumstances,
      holders of our securities are required to secure independent licenses and
      permits.






**NOTE
      8. RELATED PARTY TRANSACTIONS**





**TRANSACTIONS
      BY OR WITH AFFILIATES**





*Pushdown
      of Majestic Holdco Discount Notes.* The
      Company’s financial statements for 2007 and 2006 include the $63.5 million of
      Discount Notes, net of discount of $10.8 million and $12.4 million as of March
      31, 2007 and December 31, 2006, respectively, issued by Majestic Holdco. The
      Discount Notes are solely the obligation of Majestic Holdco and are unsecured.
      Neither the Company nor any of its direct or indirect subsidiaries guarantees
      the Discount Notes nor are the equity or assets of the Company or its direct
      or
      indirect subsidiaries security for the Discount Notes. Further, the Indentures
      governing the Senior Notes and the Senior Secured Notes and the loan and
      security agreement which governs our Senior Secured Credit Facility preclude
      distributions by the Company to Majestic Holdco unless certain financial tests
      are met. A likely scenario for the repayment of these Discount Notes is from
      cash flows of the Company or a refinancing of the Company’s indebtedness,
      including Majestic Holdco. The Discount Notes have been “pushed-down” to the
      Company pursuant to the guidelines of SEC Staff Accounting Bulletin 73 Topic
      5(J).





*Manager
      Agreement.* Distributions to BDI under the Manager Agreement, dated October 7, 2003,
      are governed and limited by the terms of the indentures governing the notes
      and
      by the terms of the Senior Secured Credit Facility. The distributions for each
      fiscal quarter may not exceed 1% of the Company’s consolidated net operating
      revenue and 5% of the Company’s consolidated cash flow (as defined in the
      indenture governing the Senior Secured Notes and the Senior Secured Credit
      Facility) for the immediately preceding fiscal quarter.





During
      the quarter ended March 31, 2006, the Company made distributions totaling $1.4
      million to BDI pursuant to the Manager Agreement. No distributions were made
      during the quarter ended March 31, 2007 as the required interest coverage ratios
      at the Company’s parent, Majestic Holdco, were not attained.  Currently,
      BDI, the Company’s ultimate parent, has elected to defer $4.5 million of manager
      distributions that were payable in 2006.





13
 ***Table
            of Contents***
 **THE
            MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES**
 **(A
            Wholly Owned Subsidiary of Majestic Holdco, LLC)**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
            (CONTINUED)**
 **(unaudited)**








*Barden
      Nevada Expense Sharing Agreement* .
      The
      Company has entered into an expense sharing agreement dated October 7, 2003
      with Barden Nevada. The expense sharing agreement provides for a fee from Barden
      Nevada to the Company in the amount of the greater of (i) $0.5 million per
      year,
      or (ii) the actual amount of certain specified expenses incurred by the Company
      in connection with providing services to Barden Nevada. These transactions
      are
      included in general and administrative expenses in the consolidated statements
      of operations. For both quarters ended March 31, 2007 and 2006, the Company
      charged Barden Nevada $0.4 million pursuant to the expense sharing
      agreement.





*Barden
      Nevada Revolving Promissory Note.* On
      March 9, 2005, Barden Nevada entered into a revolving promissory note with
      the Company, whereby Barden Nevada may request advances from time to time from
      the Company up to $5.0 million. Interest is calculated based on the prime rate
      (as published in the Money Section of the Wall Street Journal), plus the margin
      spread paid by the Company under prime rate borrowings with Wells Fargo
      Foothill, the agent bank under the Company’s Senior Secured Credit Facility.
      Interest is paid quarterly, in arrears. Any costs that are funded by the Company
      and not repaid by Barden Nevada within 30 days will be added to the principal
      amount outstanding. All amounts outstanding under the promissory note are due
      and payable on October 7, 2007 along with the accrued and unpaid interest.
      As of March 31, 2007, there was no principal balance outstanding on
      the promissory note.






**NOTE
      9. SEGMENT INFORMATION**





The
      Majestic Star Casino, LLC, either directly or indirectly through wholly owned
      subsidiaries, owns and operates four casino properties as follows: two riverboat
      casinos and a hotel located in Gary, Indiana; a casino and hotel located in
      Tunica, Mississippi; and a casino located in Black Hawk, Colorado (collectively,
      the “Properties”). The Majestic Properties for 2006 and through the quarter
      ended March 31, 2007 include Majestic Star and Majestic Star II. BHPA was merged
      into Majestic Star on August 4, 2006, and BHR was dissolved into Majestic
      Star on December 31, 2006. Both are shown as if the transactions had been
      completed as of January 1, 2006.





The
      Company identifies its business in three segments based on geographic location.
      The Properties, in each of their segments, market primarily to mid-level gaming
      customers. The major products offered in each segment are as follows: casino,
      hotel rooms (at the Majestic Properties and Fitzgeralds Tunica), and food and
      beverage.





The
      accounting policies of each business segment are the same as those described
      in
      the summary of significant accounting policies in our Annual Report on Form
      10-K
      for the year ended December 31, 2006. There are minimal inter-segment
      sales.





A
      summary
      of the Properties’ operations by business segment and expenditures for additions
      to long-lived assets for the quarters ended March 31, 2007 and
      March 31, 2006 are presented below:








14
 ***Table
            of Contents***
 **THE
            MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES**
 **(A
            Wholly Owned Subsidiary of Majestic Holdco, LLC)**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
            (CONTINUED)**
 **(unaudited)**











For
                The Three Months EndedMarch
                31,2007
            
            2006(amounts
                in thousands)Net
                revenues:Majestic
                Properties
            
            $
            63,223
            
            $
            69,511Fitzgeralds
                Tunica
            
            
            20,520
            
            
            21,733Fitzgeralds
                Black Hawk
            
            
            7,950
            
            
            8,674Total
            
            $
            91,693
            
            $
            99,918Operating
                income:Majestic
                Properties
            
            $
            9,709
            
            $
            14,865Fitzgeralds
                Tunica
            
            
            852
            
            
            3,679Fitzgeralds
                Black Hawk
            
            
            1,610
            
            
            1,742Corporate
                (1)
            
            
            (1,753
            )
            
            (1,842
            )Total
            
            $
            10,418
            
            $
            18,444Segment
                depreciation and amortization:Majestic
                Properties
            
            $
            4,851
            
            $
            5,027Fitzgeralds
                Tunica
            
            
            2,669
            
            
            2,146Fitzgeralds
                Black Hawk
            
            
            620
            
            
            576Corporate
                (1)
            
            
            30
            
            
            24Total
            
            $
            8,170
            
            $
            7,773Expenditure
                for additions to long-lived assets:Majestic
                Properties
            
            $
            1,164
            
            $
            2,166Fitzgeralds
                Tunica
            
            
            4,049
            
            
            502Fitzgeralds
                Black Hawk
            
            
            852
            
            
            489Corporate
                (1)
            
            
            23
            
            
            5Total
            
            $
            6,088
            
            $
            3,162








( 1)  Corporate
      expenses reflect payroll, benefits, travel and other costs associated with
      our
      corporate staff and are not allocated to the properties.





15
 ***Table
            of Contents***
 **THE
            MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES**
 **(A
            Wholly Owned Subsidiary of Majestic Holdco, LLC)**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
            (CONTINUED)**
 **(unaudited)**








**NOTE
      10. SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION**





The
      Majestic Star Casino, LLC is the co-issuer of $300.0 million of Senior Secured
      Notes and $200.0 million of Senior Notes. Under the indentures governing the
      Senior Secured Notes and the Senior Notes and the loan and security
      agreement for the Senior Secured Credit Facility, Majestic Star II,
      Fitzgeralds Tunica and Fitzgeralds Black Hawk are guarantor subsidiaries of
      the
      $300.0 million of Senior Secured Notes.





Our
      supplemental guarantor financial information contains financial information
      for
      The Majestic Star Casino, LLC, The Majestic Star Casino Capital Corp (co-issuer
      of the Senior Secured Notes but an entity with no operations), the guarantor
      subsidiaries and the eliminating entries necessary to consolidate such
      entities.











16
 ***Table
            of Contents***
 **THE
            MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES**
 **(A
            Wholly Owned Subsidiary of Majestic Holdco, LLC)**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
            (CONTINUED)**
 **(unaudited)**





**NOTE
      10. SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION
      (CONTINUED)**





CONDENSED
      CONSOLIDATING BALANCE SHEET


As
      of
      March 31, 2007





The
                Majestic
            
            The
                MajesticStar
                Casino,
            
            Star
                Casino
            
            Guarantor
            
            Eliminating
            
            
            
            TotalLLC
            
            Capital
                Corp.
            
            Subsidiaries
            
            Entries
            
            
            
            ConsolidatedASSETSCurrent
                assets:Cash
                and cash equivalents
            
            $
            8,828,561
            
            $
            -
            
            $
            18,492,662
            
            $
            -
            
            
            
            
            $
            27,321,223Restricted
                cash
            
            
            2,286,881
            
            
            -
            
            
            1,040,000
            
            
            -
            
            
            
            
            
            3,326,881Accounts
                receivable, net
            
            
            981,562
            
            
            -
            
            
            3,749,043
            
            
            -
            
            
            
            
            
            4,730,605Inventories
            
            
            232,222
            
            
            -
            
            
            822,037
            
            
            -
            
            
            
            
            
            1,054,259Prepaid
                expenses and deposits
            
            
            1,876,202
            
            
            -
            
            
            1,654,710
            
            
            -
            
            
            
            
            
            3,530,912Receivable
                from affiliate
            
            
            3,521,042
            
            
            -
            
            
            8,979
            
            
            (2,988,695
            )
            
            (a
            )
            
            541,326Investment
                in subsidiaries
            
            
            127,848,201
            
            
            -
            
            
            -
            
            
            (127,848,201
            )
            
            (b
            )
            
            -Total
                current assets
            
            
            145,574,671
            
            
            -
            
            
            25,767,431
            
            
            (130,836,896
            )
            
            
            
            
            40,505,206Property,
                equipment and improvements, net
            
            
            144,040,124
            
            
            -
            
            
            129,846,754
            
            
            -
            
            
            
            
            
            273,886,878Intangible
                assets, net
            
            
            -
            
            
            -
            
            
            124,530,710
            
            
            -
            
            
            
            
            
            124,530,710Goodwill
            
            
            -
            
            
            -
            
            
            47,431,442
            
            
            -
            
            
            
            
            
            47,431,442Other
                assets:Deferred
                financing and transaction costs, net,related
                to the acquisition of Trump Indiana
            
            
            12,246,774
            
            
            -
            
            
            -
            
            
            -
            
            
            
            
            
            12,246,774Deferred
                financing and transaction costs, net,pushed
                down from Majestic Holdco (d)
            
            
            2,308,545
            
            
            -
            
            
            -
            
            
            -
            
            
            
            
            
            2,308,545Long
                term receivable - related party
            
            
            181,254,846
            
            
            -
            
            
            5,096,232
            
            
            (186,351,078
            )
            
            (a
            )
            
            -Other
                assets
            
            
            1,142,176
            
            
            -
            
            
            1,653,197
            
            
            -
            
            
            
            
            
            2,795,373Total
                other assets
            
            
            196,952,341
            
            
            -
            
            
            6,749,429
            
            
            (186,351,078
            )
            
            
            
            
            17,350,692Total
                assets
            
            $
            486,567,136
            
            $
            -
            
            $
            334,325,766
            
            $
            (317,187,974
            )
            
            
            
            $
            503,704,928LIABILITIES
                AND MEMBER'S DEFICITCurrent
                liabilities:Accounts
                payable
            
            $
            909,479
            
            $
            -
            
            $
            2,486,992
            
            $
            -
            
            
            
            
            $
            3,396,471Current
                portion of long-term debt
            
            
            61,250
            
            
            -
            
            
            87,637
            
            
            -
            
            
            
            
            
            148,887Payable
                to related party
            
            
            41,615
            
            
            -
            
            
            2,947,080
            
            
            (2,988,695
            )
            
            (a
            )
            
            -Accrued
                liabilities:Payroll
                and related
            
            
            3,887,131
            
            
            -
            
            
            6,867,170
            
            
            -
            
            
            
            
            
            10,754,301Interest
            
            
            22,675,684
            
            
            -
            
            
            -
            
            
            -
            
            
            
            
            
            22,675,684Property
                and franchise taxes
            
            
            6,605,356
            
            
            -
            
            
            4,093,766
            
            
            -
            
            
            
            
            
            10,699,122Other
                accrued liabilities
            
            
            4,018,684
            
            
            -
            
            
            8,929,975
            
            
            -
            
            
            
            
            
            12,948,659Total
                current liabilities
            
            
            38,199,199
            
            
            -
            
            
            25,412,620
            
            
            (2,988,695
            )
            
            
            
            
            60,623,124Due
                to related parties
            
            
            5,323,947
            
            
            -
            
            
            181,027,131
            
            
            (186,351,078
            )
            
            (a
            )
            
            -Long-term
                debt, net of current maturities
            
            
            534,621,019
            
            
            300,000,000
            
            
            37,814
            
            
            (300,000,000
            )
            
            (c
            )
            
            534,658,833Long-term
                debt pushed down from Majestic Holdco (e)
            
            
            52,681,029
            
            
            -
            
            
            -
            
            
            -
            
            
            
            
            
            52,681,029Total
                liabilities
            
            
            630,825,194
            
            
            300,000,000
            
            
            206,477,565
            
            
            (489,339,773
            )
            
            
            
            
            647,962,986Member's
                (deficit) equity
            
            
            (144,258,058
            )
            
            (300,000,000
            )
            
            127,848,201
            
            
            172,151,799
            
            
            (b)
                (c
            )
            
            (144,258,058
            )Total
                liabilities and member's (deficit) equity
            
            $
            486,567,136
            
            $
            -
            
            $
            334,325,766
            
            $
            (317,187,974
            )
            
            
            
            $
            503,704,928








17
 ***Table
            of Contents***
 **THE
            MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES**
 **(A
            Wholly Owned Subsidiary of Majestic Holdco, LLC)**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
            (CONTINUED)**
 **(unaudited)**





**NOTE
      10. SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION
      (CONTINUED)**





CONDENSED
      CONSOLIDATING BALANCE SHEET (CONTINUED)


As
      of
      March 31, 2007








(a)
            To
                eliminate intercompany receivables and
                payables.





(b)
            To
                eliminate intercompany accounts and investment in
                subsidiaries.





(c)
            As
                more fully described in Note 6. Long-Term Debt, the Majestic Star
                Casino
                Capital Corp. is a co-obligor of the Senior Secured Notes issued
                by the
                Company. Accordingly, such indebtedness has been presented as an
                obligation of both the issuer and the co-obligor in the above balance
                sheet.





(d)
            Reflects
                the pushdown of deferred financing costs related to the issuance
                of the
                Discount Notes of Majestic Holdco, net of amortization, pursuant
                to SEC
                Staff Accounting Bulletin 73
                Topic 5(J).





(e)
            Reflects
                the pushdown of Majestic Holdco’s Discount Notes pursuant to SEC Staff
                Accounting Bulletin 73
                Topic 5(J).





18
 ***Table
            of Contents***
 **THE
            MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES**
 **(A
            Wholly Owned Subsidiary of Majestic Holdco, LLC)**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
            (CONTINUED)**
 **(unaudited)**





**NOTE
      10. SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION
      (CONTINUED)**





CONDENSED
      CONSOLIDATING BALANCE SHEET


As
      of
      December 31, 2006








The
                Majestic
            
            The
                MajesticStar
                Casino,
            
            Star
                Casino
            
            Guarantor
            
            Eliminating
            
            
            
            TotalLLC
            
            Capital
                Corp.
            
            Subsidiaries
            
            Entries
            
            
            
            ConsolidatedASSETSCurrent
                assets:Cash
                and cash equivalents
            
            $
            9,101,841
            
            $
            -
            
            $
            16,430,083
            
            $
            -
            
            
            
            
            $
            25,531,924Restricted
                cash
            
            
            2,286,881
            
            
            -
            
            
            1,040,000
            
            
            -
            
            
            
            
            
            3,326,881Accounts
                receivable, net
            
            
            2,014,267
            
            
            -
            
            
            5,568,209
            
            
            -
            
            
            
            
            
            7,582,476Inventories
            
            
            196,681
            
            
            -
            
            
            691,611
            
            
            -
            
            
            
            
            
            888,292Prepaid
                expenses and deposits
            
            
            824,865
            
            
            -
            
            
            1,481,446
            
            
            -
            
            
            
            
            
            2,306,311Receivable
                from affiliate
            
            
            6,186,636
            
            
            -
            
            
            -
            
            
            (5,731,366
            )
            
            (a
            )
            
            455,270Investment
                in subsidiaries
            
            
            119,861,069
            
            
            
            
            
            
            
            
            (119,861,069
            )
            
            (b
            )
            
            -Total
                current assets
            
            
            140,472,240
            
            
            -
            
            
            25,211,349
            
            
            (125,592,435
            )
            
            
            
            
            40,091,154Property,
                equipment and improvements, net
            
            
            146,207,554
            
            
            -
            
            
            129,528,028
            
            
            -
            
            
            
            
            
            275,735,582Intangible
                assets, net
            
            
            -
            
            
            -
            
            
            125,395,502
            
            
            -
            
            
            
            
            
            125,395,502Goodwill
            
            
            -
            
            
            -
            
            
            47,431,442
            
            
            -
            
            
            
            
            
            47,431,442Other
                assets:Deferred
                financing and transaction cost, net
            
            
            13,083,100
            
            
            -
            
            
            -
            
            
            -
            
            
            
            
            
            13,083,100Deferred
                financing and transaction cost, net,pushed
                down from Majestic Holdco (d)
            
            
            2,435,620
            
            
            -
            
            
            -
            
            
            -
            
            
            
            
            
            2,435,620Long
                term receivable - related party
            
            
            223,649,437
            
            
            -
            
            
            7,757,546
            
            
            (231,406,983
            )
            
            (a
            )
            
            -Other
                assets
            
            
            503,637
            
            
            -
            
            
            1,683,383
            
            
            -
            
            
            
            
            
            2,187,020Total
                other assets
            
            
            239,671,794
            
            
            -
            
            
            9,440,929
            
            
            (231,406,983
            )
            
            
            
            
            17,705,740Total
                assets
            
            $
            526,351,588
            
            $
            -
            
            $
            337,007,250
            
            $
            (356,999,418
            )
            
            
            
            $
            506,359,420LIABILITIES
                AND MEMBER'S DEFICITCurrent
                liabilities:Accounts
                payable
            
            $
            2,166,672
            
            $
            -
            
            $
            2,324,928
            
            $
            -
            
            
            
            
            $
            4,491,600Current
                portion of long-term debt
            
            
            60,091
            
            
            -
            
            
            105,330
            
            
            -
            
            
            
            
            
            165,421Payable
                to related party
            
            
            2,095
            
            
            -
            
            
            5,729,271
            
            
            (5,731,366
            )
            
            (a
            )
            
            -Accrued
                liabilities:Payroll
                and related
            
            
            3,131,620
            
            
            -
            
            
            5,985,106
            
            
            -
            
            
            
            
            
            9,116,726Interest
            
            
            10,750,630
            
            
            -
            
            
            -
            
            
            -
            
            
            
            
            
            10,750,630Property
                and franchise taxes
            
            
            5,178,856
            
            
            -
            
            
            3,764,119
            
            
            -
            
            
            
            
            
            8,942,975Other
                accrued liabilities
            
            
            5,476,552
            
            
            -
            
            
            10,078,395
            
            
            -
            
            
            
            
            
            15,554,947Total
                current liabilities
            
            
            26,766,516
            
            
            -
            
            
            27,987,149
            
            
            (5,731,366
            )
            
            
            
            
            49,022,299Due
                to related parties
            
            
            42,298,987
            
            
            -
            
            
            189,107,996
            
            
            (231,406,983
            )
            
            (a
            )
            
            -Long-term
                debt, net of current maturities
            
            
            545,752,954
            
            
            300,000,000
            
            
            51,036
            
            
            (300,000,000
            )
            
            (c
            )
            
            545,803,990Long-term
                debt pushed down from Majestic Holdco (e)
            
            
            51,123,692
            
            
            -
            
            
            -
            
            
            -
            
            
            
            
            
            51,123,692Total
                liabilities
            
            
            665,942,149
            
            
            300,000,000
            
            
            217,146,181
            
            
            (537,138,349
            )
            
            
            
            
            645,949,981Member's
                (deficit) equity
            
            
            (139,590,561
            )
            
            (300,000,000
            )
            
            119,861,069
            
            
            180,138,931
            
            
            (b)
                (c
            )
            
            (139,590,561
            )Total
                liabilities and member's deficit
            
            $
            526,351,588
            
            $
            -
            
            $
            337,007,250
            
            $
            (356,999,418
            )
            
            
            
            $
            506,359,420








19
 ***Table
            of Contents***
 **THE
            MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES**
 **(A
            Wholly Owned Subsidiary of Majestic Holdco, LLC)**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
            (CONTINUED)**
 **(unaudited)**








**NOTE
      10. SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION
      (CONTINUED)**





CONDENSED
      CONSOLIDATING BALANCE SHEET (CONTINUED)


As
      of
      December 31, 2006








(a)
            To
                eliminate intercompany receivables and
                payables.





(b)
            To
                eliminate intercompany accounts and investment in
                subsidiaries.





(c)
            As
                more fully described in Note 6, Long-Term Debt, The Majestic Star
                Casino
                Capital Corp. is a co-obligor of the Senior Secured Notes issued
                by the
                Company. Accordingly, such indebtedness has been presented as an
                obligation of both the issuer and the co-obligor in the above balance
                sheet.





(d)
            Reflects
                the pushdown of deferred financing costs related to the issuance
                of the
                Discount Notes of Majestic Holdco, net of amortization, pursuant
                to SEC
                Staff Accounting Bulletin 73 Topic
                5(J).





(e)
            Reflects
                the pushdown of Majestic Holdco’s Discount Notes pursuant to SEC Staff
                Accounting Bulletin 73 Topic 5(J).








20
 ***Table
            of Contents***
 **THE
            MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES**
 **(A
            Wholly Owned Subsidiary of Majestic Holdco, LLC)**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
            (CONTINUED)**
 **(unaudited)**





**NOTE
      10. SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION
      (CONTINUED)**





CONDENSED
      CONSOLIDATING STATEMENT OF OPERATIONS


For
      the
      Three Months Ended March 31, 2007








The
                Majestic
            
            The
                MajesticStar
                Casino,
            
            Star
                Casino
            
            Guarantor
            
            Eliminating
            
            
            
            TotalLLC
            
            Capital
                Corp.
            
            Subsidiaries
            
            Entries
            
            
            
            ConsolidatedOPERATING
                REVENUES:Casino
            
            $
            36,843,659
            
            $
            -
            
            $
            58,286,901
            
            $
            -
            
            
            
            
            $
            95,130,560Rooms
            
            
            -
            
            
            -
            
            
            2,544,945
            
            
            -
            
            
            
            
            
            2,544,945Food
                and beverage
            
            
            2,055,511
            
            
            -
            
            
            3,819,744
            
            
            -
            
            
            
            
            
            5,875,255Other
            
            
            914,052
            
            
            -
            
            
            968,424
            
            
            -
            
            
            
            
            
            1,882,476Gross
                revenues
            
            
            39,813,222
            
            
            -
            
            
            65,620,014
            
            
            -
            
            
            
            
            
            105,433,236Less
                promotional allowances
            
            
            4,940,528
            
            
            -
            
            
            8,799,089
            
            
            -
            
            
            
            
            
            13,739,617Net
                operating revenues
            
            
            34,872,694
            
            
            -
            
            
            56,820,925
            
            
            -
            
            
            
            
            
            91,693,619OPERATING
                COSTS AND EXPENSES:Casino
            
            
            7,387,792
            
            
            -
            
            
            16,270,845
            
            
            -
            
            
            
            
            
            23,658,637Rooms
            
            
            -
            
            
            -
            
            
            1,072,184
            
            
            -
            
            
            
            
            
            1,072,184Food
                and beverage
            
            
            1,251,650
            
            
            -
            
            
            1,460,128
            
            
            -
            
            
            
            
            
            2,711,778Other
            
            
            260,602
            
            
            -
            
            
            242,519
            
            
            -
            
            
            
            
            
            503,121Gaming
                taxes
            
            
            10,353,331
            
            
            -
            
            
            11,954,613
            
            
            -
            
            
            
            
            
            22,307,944Advertising
                and promotion
            
            
            1,319,251
            
            
            -
            
            
            4,128,982
            
            
            -
            
            
            
            
            
            5,448,233General
                and administrative
            
            
            5,943,239
            
            
            -
            
            
            7,995,671
            
            
            -
            
            
            
            
            
            13,938,910Corporate
                expense
            
            
            1,723,202
            
            
            -
            
            
            -
            
            
            -
            
            
            
            
            
            1,723,202Economic
                incentive tax - City of Gary
            
            
            965,452
            
            
            -
            
            
            788,137
            
            
            -
            
            
            
            
            
            1,753,589Depreciation
                and amortization
            
            
            3,060,089
            
            
            -
            
            
            5,109,563
            
            
            -
            
            
            
            
            
            8,169,652Gain
                on disposal of assets
            
            
            -
            
            
            -
            
            
            (11,725
            )
            
            -
            
            
            
            
            
            (11,725
            )Total
                operating costs and expenses
            
            
            32,264,608
            
            
            -
            
            
            49,010,917
            
            
            -
            
            
            
            
            
            81,275,525Operating
                income
            
            
            2,608,086
            
            
            -
            
            
            7,810,008
            
            
            -
            
            
            
            
            
            10,418,094OTHER
                INCOME (EXPENSE):Interest
                income
            
            
            33,210
            
            
            -
            
            
            178,967
            
            
            -
            
            
            
            
            
            212,177Interest
                expense
            
            
            (13,576,846
            )
            
            -
            
            
            (1,844
            )
            
            -
            
            
            
            
            
            (13,578,690
            )Interest
                expense - debt pushed downfrom
                Majestic Holdco (b) (c)
            
            
            (1,684,414
            )
            
            -
            
            
            -
            
            
            -
            
            
            
            
            
            (1,684,414
            )Other
                non-operating expense
            
            
            (34,665
            )
            
            -
            
            
            -
            
            
            -
            
            
            
            
            
            (34,665
            )Equity
                in net income of subsidiaries
            
            
            7,987,131
            
            
            -
            
            
            -
            
            
            (7,987,131
            )
            
            (a
            )
            
            -Total
                other expense
            
            
            (7,275,584
            )
            
            -
            
            
            177,123
            
            
            (7,987,131
            )
            
            
            
            
            (15,085,592
            )Net
                (loss) income
            
            $
            (4,667,498
            )
            $
            -
            
            $
            7,987,131
            
            $
            (7,987,131
            )
            
            
            
            $
            (4,667,498
            )







(a)
            To
              eliminate equity in net income of subsidiaries.  (b)
            Includes
                amortization of deferred financing costs related to the issuance
                of
                Majestic Holdco’s Discount Notes pursuant to SEC Staff Accounting Bulletin
                73 Topic 5(J).





(c)
            Includes
                interest expense on Majestic Holdco’s Discount Notes pursuant to SEC Staff
                Accounting Bulletin 73 Topic 5(J).








21
 ***Table
            of Contents***
 **THE
            MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES**
 **(A
            Wholly Owned Subsidiary of Majestic Holdco, LLC)**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
            (CONTINUED)**
 **(unaudited)**





**NOTE
      10. SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION
      (CONTINUED)**





CONDENSED
      CONSOLIDATING STATEMENT OF OPERATIONS


For
      the
      Three Months Ended March 31, 2006








The
                Majestic
            
            The
                MajesticStar
                Casino,
            
            Star
                Casino
            
            Guarantor
            
            Eliminating
            
            
            
            TotalLLC
            
            Capital
                Corp.
            
            Subsidiaries
            
            Entries
                (a)
            
            
            
            ConsolidatedOPERATING
                REVENUES:Casino
            
            $
            36,449,145
            
            $
            -
            
            $
            67,436,346
            
            $
            -
            
            
            
            
            $
            103,885,491Rooms
            
            
            -
            
            
            -
            
            
            2,764,392
            
            
            -
            
            
            
            
            
            2,764,392Food
                and beverage
            
            
            502,154
            
            
            -
            
            
            3,852,922
            
            
            -
            
            
            
            
            
            4,355,076Other
            
            
            803,710
            
            
            -
            
            
            944,300
            
            
            -
            
            
            
            
            
            1,748,010Gross
                revenues
            
            
            37,755,009
            
            
            -
            
            
            74,997,960
            
            
            -
            
            
            
            
            
            112,752,969Less
                promotional allowances
            
            
            2,527,220
            
            
            -
            
            
            10,307,615
            
            
            -
            
            
            
            
            
            12,834,835Net
                operating revenues
            
            
            35,227,789
            
            
            -
            
            
            64,690,345
            
            
            -
            
            
            
            
            
            99,918,134OPERATING
                COSTS AND EXPENSES:Casino
            
            
            6,336,859
            
            
            -
            
            
            16,593,818
            
            
            -
            
            
            
            
            
            22,930,677Rooms
            
            
            -
            
            
            -
            
            
            1,184,204
            
            
            -
            
            
            
            
            
            1,184,204Food
                and beverage
            
            
            509,162
            
            
            -
            
            
            1,607,210
            
            
            -
            
            
            
            
            
            2,116,372Other
            
            
            7,429
            
            
            -
            
            
            250,636
            
            
            -
            
            
            
            
            
            258,065Gaming
                taxes
            
            
            10,401,865
            
            
            -
            
            
            14,021,463
            
            
            -
            
            
            
            
            
            24,423,328Advertising
                and promotion
            
            
            1,385,138
            
            
            -
            
            
            2,765,007
            
            
            -
            
            
            
            
            
            4,150,145General
                and administrative
            
            
            7,388,502
            
            
            -
            
            
            7,640,033
            
            
            -
            
            
            
            
            
            15,028,535Corporate
                expense
            
            
            1,817,704
            
            
            -
            
            
            -
            
            
            -
            
            
            
            
            
            1,817,704Economic
                incentive tax - City of Gary
            
            
            920,732
            
            
            -
            
            
            886,257
            
            
            -
            
            
            
            
            
            1,806,989Depreciation
                and amortization
            
            
            2,958,610
            
            
            -
            
            
            4,814,139
            
            
            -
            
            
            
            
            
            7,772,749Gain
                on disposal of assets
            
            
            (2,727
            )
            
            -
            
            
            (12,263
            )
            
            -
            
            
            
            
            
            (14,990
            )Total
                operating costs and expenses
            
            
            31,723,274
            
            
            -
            
            
            49,750,504
            
            
            -
            
            
            
            
            
            81,473,778Operating
                income
            
            
            3,504,515
            
            
            -
            
            
            14,939,841
            
            
            -
            
            
            
            
            
            18,444,356OTHER
                INCOME (EXPENSE):Interest
                income
            
            
            74,620
            
            
            -
            
            
            61,447
            
            
            -
            
            
            
            
            
            136,067Interest
                expense
            
            
            (13,292,934
            )
            
            -
            
            
            (20,955
            )
            
            -
            
            
            
            
            
            (13,313,889
            )Interest
                expense - debt pushed downfrom
                Majestic Holdco (b) (c)
            
            
            (1,494,358
            )
            
            -
            
            
            -
            
            
            -
            
            
            
            
            
            (1,494,358
            )Other
                non-operating expense
            
            
            (27,248
            )
            
            -
            
            
            -
            
            
            -
            
            
            
            
            
            (27,248
            )Equity
                in net income of subsidiaries
            
            
            14,980,333
            
            
            -
            
            
            -
            
            
            (14,980,333
            )
            
            (a
            )
            
            -Total
                other expense
            
            
            240,413
            
            
            -
            
            
            40,492
            
            
            (14,980,333
            )
            
            
            
            
            (14,699,428
            )Net
                income
            
            $
            3,744,928
            
            $
            -
            
            $
            14,980,333
            
            $
            (14,980,333
            )
            
            
            
            $
            3,744,928





(a)
            To
                eliminate equity in net income of
                subsidiaries.





(b)
            Includes
                amortization of deferred financing costs related to the issuance
                of
                Majestic Holdco’s Discount Notes pursuant to SEC Staff Bulletin 73 Topic
                5(J).





(c)
            Includes
                interest expense on Majestic Holdco’s Discount Notes pursuant to SEC Staff
                Accounting Bulletin 73 Topic
                5(J).





22
 ***Table
            of Contents***
 **THE
            MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES**
 **(A
            Wholly Owned Subsidiary of Majestic Holdco, LLC)**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
            (CONTINUED)**
 **(unaudited)**








**NOTE
      10. SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION
      (CONTINUED)**





CONDENSED
      CONSOLIDATING STATEMENT OF CASH FLOWS


For
      the
      Three Months Ended March 31, 2007







The
                Majestic
            
            The
                MajesticStar
                Casino,
            
            Star
                Casino
            
            Guarantor
            
            Eliminating
            
            TotalLLC
            
            Capital
                Corp.
            
            Subsidiaries
            
            Entries
            
            ConsolidatedNET
                  CASH PROVIDED BY OPERATING ACTIVITIES (a):
            
            $
            2,511,155
            
            $
            -
            
            $
            17,136,172
            
            $
            -
            
            $
            19,647,327CASH
                FLOWS FROM INVESTING ACTIVITIES:Additions
                to property and equipment
            
            
            (1,186,836
            )
            
            -
            
            
            (5,054,403
            )
            
            152,974
            
            
            (6,088,265
            )Disposals
                of fixed assets
            
            
            152,974
            
            
            -
            
            
            -
            
            
            (152,974
            )
            
            -Increase
                in Lakefront Capital Improvement Fund
            
            
            (619,795
            )
            
            -
            
            
            -
            
            
            -
            
            
            (619,795
            )Proceeds
                from disposal of equipment
            
            
            -
            
            
            -
            
            
            11,725
            
            
            -
            
            
            11,725Net
                cash used in investing activities
            
            
            (1,653,657
            )
            
            -
            
            
            (5,042,678
            )
            
            -
            
            
            (6,696,335
            )CASH
                FLOWS FROM FINANCING ACTIVITIES:Proceeds
                from line of credit
            
            
            1,484,144
            
            
            -
            
            
            -
            
            
            -
            
            
            1,484,144Repayment
                of line of credit
            
            
            (12,600,049
            )
            
            -
            
            
            -
            
            
            -
            
            
            (12,600,049
            )Advances
                from (to) affiliates
            
            
            10,000,000
            
            
            -
            
            
            (10,000,000
            )
            
            -
            
            
            -Repayment
                of debt
            
            
            (14,873
            )
            
            -
            
            
            (30,915
            )
            
            -
            
            
            (45,788
            )Net
                cash used in financing activities
            
            
            (1,130,778
            )
            
            -
            
            
            (10,030,915
            )
            
            -
            
            
            (11,161,693
            )Net
                (decrease) increase in cash and cash equivalents
            
            
            (273,280
            )
            
            -
            
            
            2,062,579
            
            
            -
            
            
            1,789,299Cash
                and cash equivalents, beginning of period
            
            
            9,101,841
            
            
            -
            
            
            16,430,083
            
            
            -
            
            
            25,531,924Cash
                and cash equivalents, end of period
            
            $
            8,828,561
            
            $
            -
            
            $
            18,492,662
            
            $
            -
            
            $
            27,321,223





(a)
            Includes
                amortization of deferred financing costs of $0.1 million and interest
                expense of $1.6 million related to the pushdown of Majestic Holdco’s
                Discount Notes pursuant to SEC Staff Accounting Bulletin 73 Topic
                5(J).











23
 ***Table
            of Contents***
 **THE
            MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES**
 **(A
            Wholly Owned Subsidiary of Majestic Holdco, LLC)**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
            (CONTINUED)**
 **(unaudited)**





**NOTE
      10. SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION
      (CONTINUED)**





CONDENSED
      CONSOLIDATING STATEMENT OF CASH FLOWS


For
      the
      Three Months Ended March 31, 2006








The
                Majestic
            
            The
                MajesticStar
                Casino,
            
            Star
                Casino
            
            Guarantor
            
            Eliminating
            
            TotalLLC
            
            Capital
                Corp.
            
            Subsidiaries
            
            Entries
            
            ConsolidatedNET
                CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (a):
            
            $
            18,995,503
            
            $
            -
            
            $
            (2,614,230
            )
            $
            -
            
            $
            16,381,273CASH
                FLOWS FROM INVESTING ACTIVITIES:Increase
                in restricted cash
            
            
            (136,881
            )
            
            -
            
            
            -
            
            
            -
            
            
            (136,881
            )Adjustment
                to costs related to the Trump Indiana acquisition
            
            
            -
            
            
            -
            
            
            188,795
            
            
            -
            
            
            188,795Additions
                to property and equipment
            
            
            (2,094,672
            )
            
            -
            
            
            (1,067,227
            )
            
            -
            
            
            (3,161,899
            )Merger
                of Majestic Investor Holdings into Majestic Star
            
            
            600,328
            
            
            -
            
            
            (600,328
            )
            
            -
            
            
            -Proceeds
                from disposal of equipment
            
            
            134,068
            
            
            -
            
            
            34,806
            
            
            -
            
            
            168,874Net
                cash used in investing activities
            
            
            (1,497,157
            )
            
            -
            
            
            (1,443,954
            )
            
            -
            
            
            (2,941,111
            )CASH
                FLOWS FROM FINANCING ACTIVITIES:Payment
                of debt issuance costs (b)
            
            
            (366,282
            )
            
            -
            
            
            -
            
            
            -
            
            
            (366,282
            )Repayment
                of line of credit
            
            
            (19,800,000
            )
            
            -
            
            
            -
            
            
            -
            
            
            (19,800,000
            )Proceeds
                from line of credit
            
            
            1,269,560
            
            
            -
            
            
            -
            
            
            -
            
            
            1,269,560Advances
                from (to) affiliates
            
            
            6,850,000
            
            
            -
            
            
            (6,850,000
            )
            
            -
            
            
            -Repayment
                of debt
            
            
            -
            
            
            -
            
            
            (1,022,573
            )
            
            -
            
            
            (1,022,573
            )Distribution
                to Barden Development, Inc.
            
            
            (1,392,497
            )
            
            -
            
            
            -
            
            
            -
            
            
            (1,392,497
            )Net
                cash used in financing activities
            
            
            (13,439,219
            )
            
            -
            
            
            (7,872,573
            )
            
            -
            
            
            (21,311,792
            )Net
                increase (decrease) in cash and cash equivalents
            
            
            4,059,127
            
            
            -
            
            
            (11,930,757
            )
            
            -
            
            
            (7,871,630
            )Cash
                and cash equivalents, beginning of period
            
            
            7,484,580
            
            
            -
            
            
            24,883,669
            
            
            -
            
            
            32,368,249Cash
                and cash equivalents, end of period
            
            $
            11,543,707
            
            $
            -
            
            $
            12,952,912
            
            $
            -
            
            $
            24,496,619








(a)
            Includes
                amortization of deferred financing costs of $0.1 million and interest
                expense of $1.4 million related to the pushdown of Majestic Holdco’s
                Discount Notes pursuant to SEC Staff Accounting Bulletin 73 Topic
                5(J).





(b)
            Includes
                the pushdown of $0.1 million of issuance costs of Majestic Holdco’s
                Discount Notes pursuant to SEC Staff Accounting Bulletin 73 Topic
                5(J).














24
 ***Table
            of Contents***











**ITEM
      2.**  **Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.**








**STATEMENT
      ON FORWARD-LOOKING INFORMATION**





Throughout
      this report we make forward-looking statements. Forward-looking statements
      include the words “may,” “will,” “would,” “could,” “likely,” “estimate,”
“intend,” “plan,” “continue,” “believe,” “expect” or “anticipate” and other
      similar words and include all discussions about our development plans. We do
      not
      guarantee that the transactions and events described in this report will happen
      as described or that any positive trends noted in this report will continue.
      The
      forward-looking statements contained in this report are generally located in
      the
      material set forth under the heading “Management’s Discussion and Analysis of
      Financial Condition and Results of Operations,” but may be found in other
      locations as well. These forward-looking statements generally relate to our
      plans, objectives and expectations for future operations and are based upon
      management’s reasonable estimates of future results or trends. Although we
      believe that our plans and objectives reflected in or suggested by such
      forward-looking statements are reasonable, we may not achieve such plans or
      objectives. You should read this report completely and with the understanding
      that actual future results may be materially different from what we expect.
      We
      will not update forward-looking statements even though our situation may change
      in the future.





For
      a
      more complete description of the risk factors that may affect our business,
      see
      the risk factors set forth in Item 1A., Risk Factors, in the Company’s Annual
      Report on Form 10-K for the year ended December 31, 2006, and as updated in
      Part II of this report, and elsewhere in this report.





All
      future written and verbal forward-looking statements attributable to us or
      any
      person acting on our behalf are expressly qualified in their entirety by the
      cautionary statements contained or referred to in this report. In light of
      these
      risks, uncertainties and assumptions, the forward-looking events discussed
      in
      this report might not occur.





**OVERVIEW**






***The
      Company***





The
      Majestic Star Casino, LLC and its subsidiaries (collectively, the “Company”),
      operate two riverboat gaming facilities located in Gary, Indiana (“Majestic
      Star” and “Majestic Star II”) and two Fitzgeralds brand casino-hotels located in
      Tunica County, Mississippi (“Barden Mississippi” or “Fitzgeralds Tunica”) and
      Black Hawk, Colorado (casino only) (“Barden Colorado” or “Fitzgeralds Black
      Hawk”). The Company has entered into an expense-sharing arrangement with Barden
      Nevada Gaming, LLC (“Barden Nevada” or “Fitzgeralds Las Vegas”) for support
      services. See Note 8 to the Consolidated Financial Statements.








**DEVELOPMENTS
      DURING THE THREE-MONTH PERIOD ENDED MARCH 31, 2007**





***The
      Majestic Properties***





On
      December 21, 2005, the Company purchased the Majestic Star II (formerly
      known as Trump Indiana) from Trump Entertainment Resorts Holdings,
      L.P.  Since
      the
      acquisition, we have spent a significant amount of time and effort to
      incorporate Majestic Star II into our other Gary, Indiana operations.
      However, reductions in marketing and promotions, increased competition,
      disruption to our gaming operations during the transition, the loss of a
      separate, identifiable casino in Trump Indiana, and lack of acceptance of the
      changes we made to our properties by some of our customers have impacted casino
      revenues. As a result of the enhanced marketing and promotions at our
      competitors, and the decline in customer volumes, the Majestic Properties have
      become more aggressive in their marketing and promotions. Management continues
      to add staff in order to provide better service on the casino floor. In
      addition, during the first quarter we took control of all the restaurant
      operations within the Buffington Harbor pavilion. Previously, these restaurants
      were operated by third parties. By taking control we can better utilize these
      restaurants as an amenity for our casino operations by improving the levels
      of
      service and the quality of the food product. Also during the first quarter
      we
      opened up a new restaurant called Wings & Things. Wings & Things
      provides our guests with a convenient fast food option.





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We
      continue to add new slot machines to our gaming floors, which replace older,
      under-performing slot machines. We plan to continue to upgrade our casino floor
      with new slot machines. Some of these new slot machines will replace existing
      slot machines that are leased by the Majestic Properties, which should assist
      in
      reducing costs. During the recent quarter we also remodeled our Superstar
      Lounge, which is exclusively available to our better customers and allows them
      a
      place to relax in an elegant atmosphere off of the casino floor.





The
      strategies and changes mentioned above are beginning to reflect improved casino
      revenues results. As reported by the state of Indiana, the Majestic Properties
      experienced casino revenue growth of 3.1% and 8.4% in March and April of 2007,
      versus March and April of 2006. While the casino revenue growth at the Majestic
      Properties in March 2007 was essentially equivalent to the growth in the
      northwest Indiana market for March, the April 2007 casino revenue growth rate
      at
      the Majestic Properties was nearly double that of the northwest Indiana market
      for April. We also experienced improvements in our admissions in March and
      April
      2007, versus the same two months last year. It should be noted that the
      northwest Indiana market experienced declines in admissions in both
      months.





We
      are
      continuing to make improvements to our facilities in order to sustain casino
      revenue growth. On May 3, 2007 we completed the remodel of Don and Mike’s sports
      bar into a high limit baccarat room, which should attract and cater to our
      Asian
      customers. In conjunction with growing our Asian business, we have upgraded
      our
      player development and hosting programs. In order to differentiate ourselves
      from our competitors and enhance the customer experience, we plan to open an
      entertainment area within the Buffington Harbor pavilion. The entertainment
      venue is anticipated to have 450 seats and offer mid-level entertainment. The
      entertainment venue is anticipated to cost approximately $0.1 million. We are
      currently remodeling the existing steakhouse and plan on re-opening and
      re-branding it as Don B’s. Remodeling is anticipated to be completed by the end
      of May. The new Don B’s Steakhouse will have an upgraded menu and offer a
      superior level of service. We will also continue to refine our marketing and
      promotional programs. As mentioned previously, we have been aggressive with
      our
      marketing and promotional efforts in order to attract customers and capture
      them
      in our club programs. These efforts have had a negative impact on margins.
      We
      will be addressing our aggressiveness going forward in order to improve margins
      while not losing those guests who are truly profitable to our casino operations.





***Fitzgeralds
      Tunica***





Results
      at our Fitzgeralds Tunica property were below expectation in the first quarter
      of 2007. Our property management team believes the competitive environment
      has
      increased over the past few months. Many of our competitors have gaming
      operations along the Mississippi Gulf Coast. Due to hurricanes in 2005, the
      Mississippi Gulf Coast casinos were destroyed or closed. Some of our competitors
      with casino properties in both Tunica and the Gulf Coast used their Tunica
      casinos as an alternative for those players who previously favored the
      Mississippi Gulf Coast casinos. This provided a supply of customers to our
      competitors while new casinos were being built along the Mississippi Gulf Coast.
      Now that new casinos have opened along the Mississippi Gulf Coast, and players
      have migrated back to those properties, our competitors are enhancing their
      marketing and promotions to fill the void of customers lost to the Tunica
      casinos.





Also
      impacting our operating results in the first quarter was a poor win percentage
      in table games. Our win percentage in table games was 10.1% versus a win
      percentage in the first quarter of 2006 of 18.4%. As we have previously
      discussed, the property management team has been implementing various strategies
      to improve the quality of the property’s gaming customer. In table games we grew
      handle by 27.9% over the prior year quarter. Unfortunately, the growth in handle
      was not sufficient to offset the decline in win percentage, and as a result,
      table games revenues declined by $0.7 million. If the property would have
      achieved last year’s table game win percentage, table game revenues would have
      increased $0.6 million over the same period in 2006. We anticipate future
      volatility in our table games revenues as we continue to develop a base of
      customers that allows us to offset significant customer wins with significant
      customer losses. At this point our base of customers is not large enough to
      mitigate the risk of significant swings in our table games
      revenues.





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We
      continue to upgrade the quality of the hotel and are in the second phase of
      a
      $7.0 million hotel remodel project. The second phase has a cost of $3.5 million.
      In 2006 we substantially completed the first phase of the hotel remodel project,
      at a cost of $3.5 million. The hotel remodel project upgrades the hotel front
      desk and lobby area, hotel room corridors and elevator landings and a
      substantial number of the property’s 506 hotel rooms. During the first quarter
      of 2007 approximately 8,000 room nights were lost as a result of the hotel
      remodel project, contributing to a $0.3 million decline in hotel revenue. We
      are
      also in the process of upgrading the first and third floor hotel connectors,
      which are basically the entrance access areas to our casino. These remodel
      projects further our strategy of improving the amenities and look of the
      property to attract and retain a higher worth casino customer.





During
      the second quarter of 2006, property management implemented a program that
      allows customers to directly download promotional credits to the slot machine
      thus eliminating the substantial amount of coupons mailed to and redeemed by
      our
      casino customers. The downloadable promotional credits, when played by the
      customer, are not being recognized as slot revenue, nor are they being
      recognized as promotional allowances; however, any jackpots won would be
      recognized as a reduction in slot revenues. When our marketing and promotional
      efforts were comprised principally of mailing coupons to our customers, those
      coupons, when redeemed, were being reflected in promotional allowances. The
      currency inserted and played off at the slot machine was recognized as revenue
      and any jackpots associated with this play would be a reduction of slot revenue.
      During the first quarter of 2007, casino revenues were reduced by $2.2 million
      as a result of downloadable promotional credits. Offsetting the decline in
      casino revenues as a result of downloadable promotional credits was a $2.3
      million decline in promotional allowances, which was due to the significant
      reduction in cash coupons redeemed. Since downloadable promotional credits
      are
      new our property management team continues to refine the amount of downloadable
      promotional credits given to customers.





***Fitzgeralds
      Black Hawk***





Results
      at our Fitzgeralds Black Hawk property were slightly lower than the same quarter
      last year, as lower net revenues were almost completely offset by reduced
      operating expenses. As we have reported previously, the property has benefited
      over the past couple of years by construction disruptions at major competitor
      casinos. Starting in the second quarter of 2006, many of these construction
      disruptions were abated. Since that period we have seen our casino revenues,
      which comprised approximately 93.5% of our gross revenues in the first quarter
      of 2007, decline. Also impacting our revenues in the first quarter of 2007
      were
      a number of severe storms that struck in the area in January. A reduction in
      operating expenses, principally casino expenses and gaming taxes, have mostly
      offset the decline in revenues. Casino expenses are down due to lower casino
      volumes and the implementation of TITO (ticket-in-ticket-out) slot technology
      in
      2006. TITO slot technology allows us to operate our casino floor more
      efficiently, thus saving on labor. In addition, to facilitate the implementation
      of TITO technology the property acquired new slot machines. The new slot
      machines replaced slot machines that were being leased. The reduction of leased
      slot machines has helped to reduce operating expenses. The reduction in gaming
      taxes is due to our lower casino revenues.





Our
      expansion project continues to move forward. We anticipate the expansion costs
      to be $30.9 million, net of insurance proceeds from the Rohling Inn collapse,
      and to be completed in the late second or early third quarter of 2008. The
      expansion will provide for an additional 400 slot machines and a food
      outlet.






**CONSOLIDATED
      FINANCIAL RESULTS** ******





The
      discussion of our consolidated financial results for the three months ended
      March 31, 2007 is inclusive of the Majestic Star and Majestic Star II
      (collectively, the Majestic Properties), Fitzgeralds Tunica, Fitzgeralds Black
      Hawk, the Company’s corporate overhead and interest expense, and amortization of
      financing costs related to the pushdown of the Discount Notes, as discussed
      below.





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***Discount
      Notes***





Majestic
      Holdco, the Company’s parent, issued, in conjunction with its co-issuer,
      Majestic Holdco, Inc., $63.5 million, net of original issue discount, of
      12 1⁄2% Senior Discount Notes due 2011 (the “Discount Notes”). The Company’s
      consolidated balance sheets as of March 31, 2007 and December 31, 2006
      include the pushdown of Discount Notes of $52.7 million and $51.1 million,
      respectively, net of original issue discount. Also pushed down are financing
      costs of $2.3 million and $2.4 million, both net of amortization as of March
      31,
      2007 and December 31, 2006. The Company is also reflecting $1.7 million and
      $1.5
      million, for the three-month periods ended March 31, 2007 and 2006,
      respectively, of interest expense and amortization of financing costs within
      its
      consolidated statements of operations and cash flows. A likely scenario for
      the
      repayment of these Discount Notes is from cash flows of the Company or a
      refinancing of the Company’s indebtedness, together with the indebtedness of
      Majestic Holdco. The Discount Notes have been “pushed-down” to the Company
      pursuant to the guidelines of SEC Staff Accounting Bulletin 73 Topic 5(J).
      The
      Discount Notes are solely the obligation of Majestic Holdco and its co-issuer,
      Majestic Holdco, Inc. and are unsecured. Neither the Company nor any of its
      direct or indirect subsidiaries guarantees the Discount Notes nor are the equity
      or assets of the Company or its subsidiaries security for the Discount Notes.
      Further, the Indentures governing the Senior Notes and the Senior Secured Notes
      and the loan and security agreement which governs our Senior Secured Credit
      Facility preclude distributions by the Company to Majestic Holdco unless certain
      financial tests are met.





***Consolidated
      Operating Results***





Consolidated
      gross operating revenues decreased $7.3 million, or 6.5 %, from $112.8 million
      in the three-month period ended March 31, 2006 to $105.4 million in the
      three-month period ended March 31, 2007. The decline is primarily due to
      lower gross revenues at the Majestic Properties, Fitzgeralds Tunica and
      Fitzgeralds Black Hawk of $2.9 million, $3.5 million and $0.9 million,
      respectively.





Consolidated
      casino revenues, which comprise 90.2% of consolidated gross revenues, decreased
      $8.8 million, or 8.4%, to $95.1 million, in the three-month period ended
      March 31, 2007, compared to the similar period last year. The decline is
      due to the competitive markets in which our casinos operate, the lingering
      effects of the integration of Majestic Star II into our Gary operations, a
      decline in win percentages, particularly at our Fitzgeralds Tunica property
      and
      the implementation of downloadable promotional credits, again at our Fitzgeralds
      Tunica property.





During
      the first quarter of 2007, promotional allowances, which are deducted from
      gross
      operating revenues to arrive at net revenues, increased to $13.7 million from
      $12.8 million in the same quarter last year. The increase is due to enhanced
      promotional efforts at the Majestic Properties, which increased $3.4 million.
      As
      mentioned above, the Majestic Properties were more aggressive with promotional
      allowances in order to increase customer visits and attract new customers to
      the
      properties. Both Fitzgeralds Tunica and Fitzgeralds Black Hawk had declines
      in
      promotional allowances. Fitzgeralds Tunica’s decline resulted from downloadable
      promotional credits and Fitzgeralds Black Hawk’s decline was the result of lower
      casino volumes.





In
      the
      three-month period ended March 31, 2007, as compared to the same
      three-month period last year, operating expenses declined by $0.2 million.
      Operating expenses were up $1.6 million at Fitzgeralds Tunica, primarily as
      a
      result of greater casino, and advertising and promotional expenses. Operating
      expenses at our other casino properties, and corporate, all declined, with
      operating expenses down $1.1 million at the Majestic Properties, $0.6 million
      at
      Fitzgeralds Black Hawk and $0.1 million at Corporate.




As
      a
      result of a $8.2 million decline in net revenues, which follows from our $7.3
      million decline in gross revenues and the $0.9 million increase in promotional
      allowances, operating income declined by $8.0 million and the Company’s net loss
      increased $8.4 million to a consolidated net loss of $4.7 million.





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**OTHER
      DEVELOPMENTS THAT MAY IMPACT OUR OPERATIONS**




·
            Competition
                in our markets remains intense and continued aggressive marketing
                by our
                competitors in all our markets will require us to maintain a high
                level of
                marketing and promotional expenses. 
 ·
            Enhancements
                to existing casino facilities of our competitors and new casino facilities
                that should open in the second half of 2007 and in 2008 will increase
                the
                level of competition our Majestic Properties experience in northwest
                Indiana. 
 ·
            As
                mentioned previously, Fitzgeralds Tunica’s management team continues to
                make improvements to the property in order to attract customers that
                have
                a higher worth to the casino. Part of the property’s future plans includes
                a high-limit blackjack pit, remodeling the casino floor and opening
                a
                small poker room. Our ability to undertake these projects will be
                contingent on improving cash flow. 
 ·
            The
                Company has other capital plans, which include remodeling our casinos
                in
                order to make them more attractive to our customers and purchasing
                new
                slot machines. Some of these projects may need to be delayed, or
                cancelled, depending upon how our future cash flows
                materialize.

























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**Operating
      Results by Entity**


For
                The Three Months EndedMarch
                31,2007
            
            2006($
                amounts in thousands)Gross
                revenues:Majestic
                Properties
            
            $
            71,501
            
            $
            74,389Fitzgeralds
                Tunica
            
            
            24,784
            
            
            28,296Fitzgeralds
                Black Hawk
            
            
            9,148
            
            
            10,068Total
            
            $
            105,433
            
            $
            112,753Net
                revenues:Majestic
                Properties
            
            $
            63,223
            
            $
            69,511Fitzgeralds
                Tunica
            
            
            20,520
            
            
            21,733Fitzgeralds
                Black Hawk
            
            
            7,950
            
            
            8,674Total
            
            $
            91,693
            
            $
            99,918Casino
                revenues:Majestic
                Properties
            
            $
            66,469
            
            $
            71,129Fitzgeralds
                Tunica
            
            
            20,106
            
            
            23,352Fitzgeralds
                Black Hawk
            
            
            8,556
            
            
            9,404Total
            
            $
            95,131
            
            $
            103,885Operating
                income (loss):Majestic
                Properties
            
            $
            9,709
            
            $
            14,865Fitzgeralds
                Tunica
            
            
            852
            
            
            3,679Fitzgeralds
                Black Hawk
            
            
            1,610
            
            
            1,742Corporate
                (1)
            
            
            (1,753
            )
            
            (1,842
            )Total
            
            $
            10,418
            
            $
            18,444




Operating
                Margin (2):Majestic
                Properties
            
            
            15.4
            %
            
            21.4
            %Fitzgeralds
                Tunica
            
            
            4.2
            %
            
            16.9
            %Fitzgeralds
                Black Hawk
            
            
            20.3
            %
            
            20.1
            %Total
            
            
            11.4
            %
            
            18.5
            %Expenditures
                for additions to long-lived assets:Majestic
                Properties
            
            $
            1,164
            
            $
            2,166Fitzgeralds
                Tunica
            
            
            4,049
            
            
            502Fitzgeralds
                Black Hawk
            
            
            852
            
            
            489Corporate
            
            
            23
            
            
            5Total
            
            $
            6,088
            
            $
            3,162





Notes:


(1)
            Corporate
                expenses reflect payroll, benefits, travel and other costs associated
                with
                our corporate staff and are not allocated to the
                properties.


(2)
            Operating
                margin is calculated by dividing operating income by net
                revenues.





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**FIRST
      QUARTER 2007 COMPARED TO FIRST QUARTER 2006**





**Majestic
      Properties**





Gross
      revenues for the quarter ended March 31, 2007 were $71.5 million compared to
      $74.4 million in the same period in 2006, a decrease of $2.9 million, or 3.9%.
      Casino revenues, which make up 93.0% of the gross revenues, were $66.5 million,
      a decrease of $4.6 million, compared to $71.1 million in the prior year. The
      decline in casino revenues at the Majestic Star properties resulted from
      declines in slot coin in of 3.5%, table games drop of 6.9%, and table games
      hold
      percentage of 1.8%.





For
      the
      quarter ended March 31, 2007, operating income for the Majestic Properties
      was
      $9.7 million compared to $14.9 million for the Majestic Properties in the prior
      year quarter. Most of this decline in operating income is attributable to the
      decreased revenue, but part of it also resulted from increased promotional
      allowances of $3.4 million due to higher complimentary food and beverage
      expenses of $1.3 million as a result of the Majestic Properties taking over
      the
      food and beverage operations in the pavilion during the first quarter of 2007.
      These food and beverage operations were previously operated by third parties,
      who charged the Majestic Properties for meals provided to the casino customers
      of the Majestic Properties. Cash promotions also increased $2.0 million as
      management tried to drive incremental visits to our Gary casinos and enhance
      customer loyalty. Offsetting the above were reductions in gaming taxes of $1.6
      million due to lower casino revenues.




**Fitzgeralds
      Tunica**





Gross
      revenues for the quarter ended March 31, 2007 were $24.8 million at Fitzgeralds
      Tunica compared to $28.3 million in the same period in 2006, a decrease of
      $3.5
      million, or 12.4%. Casino revenues decreased 13.9%, or $3.2 million to $20.1
      million in the first quarter 2007 compared to $23.4 million in the same period
      in 2006. Fitzgeralds Tunica’s table games revenues were down $0.7 million as a
      result of a decline in table games hold percentage from 18.4% in the first
      quarter of 2006 to 10.1% in the first quarter this year. A 27.9% increase in
      table games handle helped offset the decline in table games revenues.
      Additionally, slot revenues were down $2.6 million primarily due to downloadable
      promotional credits. Downloadable promotional credits created a reduction in
      slot revenues by $2.2 million in the first quarter of 2007, which was entirely
      offset by a corresponding reduction in promotional allowances of $2.3 million.
      As a result of the downloadable promotional credit program, we significantly
      reduced the amount of cash coupons mailed and redeemed by our customers. Also,
      contributing to a decline in gross revenues was a $0.3 million decrease in
      room
      revenue resulting from a reduction of nearly 8,000 available room nights for
      rooms taken out of service for an extensive hotel remodeling project during
      the
      first quarter of 2007.





Operating
      income decreased to $0.9 million for 2007 compared to $3.7 million in 2006,
      a
      decrease of $2.8 million, or 76.8%. Other than the decline in casino and hotel
      revenues, which was partly offset by the decline in promotional allowances,
      increased operating expenses resulted in the decrease in operating income.
      Casino expenses and advertising and promotional expenses increased $0.7 million
      and $0.9 million, respectively, due to increased casino payroll, junket and
      guest transportation costs, greater levels of bad debt due to increased casino
      credit and higher player development costs. In addition, depreciation and
      amortization expense increased $0.5 million resulting from the completion of
      the
      first phase of the hotel remodeling project. Offsetting the above were lower
      gaming taxes of $0.4 million resulting from our lower casino revenue. Operating
      expenses have increased as we continue to improve and upgrade not only the
      physical property, but our customers as well.




**Fitzgeralds
      Black Hawk**





Gross
      revenues for the quarter ended March 31, 2007 were $9.1 million compared to
      $10.0 million in 2006, a decrease of $0.9 million, or 9.1%. A decrease in casino
      revenue of $0.8 million is primarily responsible for this decrease as casino
      revenue decreased to $8.6 million for the first quarter of 2007 compared to
      $9.4
      million in the same period in 2006. Revenue at Fitzgeralds Black Hawk was
      negatively impacted by severe winter storm conditions in January, and greater
      levels of advertising and promotions from our competitors during the first
      quarter of 2007 as compared to the year earlier period.





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For
      the
      quarter ended March 31, 2007, Fitzgeralds Black Hawk had operating income of
      $1.6 million compared to $1.7 million in 2006, a decrease of only $0.1 million,
      or 7.6%. Operating expenses declined by $0.6 million primarily due to a
      reduction in casino expenses of $0.4 million as a result of lower payroll and
      slot participation expenses. Many slot machines with slot participation
      agreements in effect during the first quarter of 2006 were replaced with new
      slot machines purchased in the fourth quarter of 2006. Gaming taxes were $0.1
      million lower due to the reduced level of casino revenue.





**Corporate**





Corporate
      operating expense for both quarters ended March 31, 2007 and 2006 was $1.8
      million. Corporate expenses reflect payroll, benefits, travel and other costs
      associated with our corporate staff and are not allocated to the
      properties.





**Other
      income (expense)**





Other
      expense increased by $0.4 million to $15.1 million. The main component of other
      expense is interest expense, which increased $0.3 million due to higher interest
      rates and greater amounts drawn on our credit facility during the first quarter
      of 2007 as compared to the year earlier period. The accretion of the Discount
      Notes added $0.2 million in additional interest expense.








**LIQUIDITY
      AND CAPITAL RESOURCES**





To
      date,
      we have financed our operations with internal cash flows from our operations
      and
      borrowings under our $80.0 million credit facility (the “Senior Secured Credit
      Facility”). We generate substantial cash flows from operating activities. In the
      three months ended March 31, 2007 and 2006, we reported cash flows from
      operating activities of $19.6 million and $16.4 million, respectively. We use
      our cash flows to meet our financial obligations, which consist principally
      of
      financing the daily operations of our casinos, servicing our debt, funding
      capital improvements and projects, making distributions under the Manager
      Agreement and tax distributions to BDI.





The
      Company has significant debt outstanding, including $34.6 million drawn on
      its
      Senior Secured Credit Facility ($45.4 million available to draw), $300.0 million
      of Senior Secured Notes, $200.0 million of Senior Notes and $0.2 million of
      capital leases and other debt. As a result of the significant interest
      associated with our debt obligations and lower than anticipated financial
      performance, in the past, the Company has needed to amend the financial
      covenants of the Senior Secured Credit Facility in order to avoid
      a covenant violation under the Senior Secured Credit Facility (see
      discussion below).





In
      2007,
      in addition to servicing the Company’s significant debt obligations, the Company
      plans to spend a total of approximately $31.6 million on property improvements.
      Included in the $31.6 million is the completion of the remodeling of the
      remaining Fitzgeralds Tunica hotel rooms and purchasing equipment, which
      primarily consists of slot machines. Also included in the $31.6 million is
      the
      Fitzgeralds Black Hawk expansion and re-building of the Rohling Inn, which
      is
      anticipated to cost $16.7 million in 2007 and a total of $30.9 million overall
      (see discussion below). The Company will also be required to make tax
      distributions to its manager based upon the state and federal taxable
      income generated by the Company. Also, the Company’s manager has deferred
      previously allowable distributions. If the Company’s manager were to elect to
      take these distributions, the Company would be required to pay $4.5 million,
      in
      addition to what would be allowable for distributions in 2007 under the Manager
      Agreement.





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The
      Company faces significant competition in each of its markets. In addition,
      in
      the market in which our Majestic Properties compete, new and improved facilities
      are planned to be opened later in 2007 and 2008. These new and improved
      facilities could have a negative impact on the operating cash flows generated
      by
      our Majestic Properties and the Company. If operating cash flows are not at
      a
      level to support the Company’s debt service obligations, planned capital
      expenditures, including the Fitzgeralds Black Hawk expansion, and tax and
      manager distributions, the Company will need to draw on its Senior Secured
      Credit Facility or seek other forms of financing. There is no guarantee that
      such financing would be available to the Company on reasonable terms, if at
      all,
      and the Company’s ability to incur additional debt is restricted by the terms of
      the Senior Secured Credit Facility and the indentures governing our outstanding
      Senior Secured Notes and Senior Notes. The Company may, therefore, be required
      to modify the scope or timing of its planned capital expenditures.





The
      Company will be required to pay any amounts outstanding on the Senior Secured
      Credit Facility, plus accrued interest thereon, in April 2010. In addition,
      beginning April 15, 2009, our parent will likely look to us to distribute
      cash to pay interest on the Discount Notes. Our ability to distribute cash
      to
      Majestic Holdco is limited unless certain financial tests are met. The Senior
      Secured Notes mature in October 2010 and the Senior Notes mature in January
      2011. No assurance can be given that our operating cash flows or proceeds from
      additional financings, if available, will be sufficient for such
      purposes.





The
      Company had unrestricted cash and cash equivalents of $27.3 million at
      March 31, 2007. The Company does not hold excess cash in its bank accounts.
      Any excess cash is used to pay down the Senior Secured Credit Facility. In
      the
      first quarter of 2007, we spent approximately $6.1 million for the purchase
      of
      slot machines, upgrading the Fitzgeralds Tunica hotel and other remodeling
      projects, and the Fitzgeralds Black Hawk expansion .
      In the
      first quarter of 2006, the Company spent $3.2 million for the purchase of new
      slot machines, the integration of slot machines with TITO at all of our
      properties, re-branding Trump Indiana as Majestic Star II and integration of
      our
      computer systems with Trump Indiana.





Fitzgeralds
      Black Hawk is expanding its facility by rebuilding the Masonic Building and
      Rohling Inn properties, as a part of a major casino expansion. Management
      expects the casino expansion to cost approximately $30.9 million, including
      the
      reconstruction of the Masonic Building and Rohling Inn and the purchase of
      associated gaming equipment and other furniture and fixtures. The rebuilt
      Masonic Building will be four stories with a gaming mezzanine, which should
      allow us to add up to 400 slot machines and a food outlet. The Rohling Inn
      will
      be used for administration and contain space for hosting player events. The
      construction on the Rohling Inn is anticipated to be completed in the third
      quarter of 2008 and the Masonic Building by June 2008. A portion of the costs
      to
      re-build the Rohling Inn will be covered by insurance. At this time, the
      insurance company has yet to determine how much of the reconstruction is covered
      under the Company’s policy, but has paid the Company $1.4 million against the
      claim. The Company is allowed, pursuant to the terms of the Senior Secured
      Credit Facility, to spend $25.0 million on the Fitzgeralds Black Hawk expansion.
      Any amounts spent in excess of $25.0 million would come out of the allowable
      annual capital expenditures, as specified in the Senior Secured Credit Facility,
      of $25.0 million in 2007 and $30.0 million in 2008. The Fitzgeralds Black Hawk
      expansion will be funded by cash flow from operations and advances from the
      Senior Secured Credit Facility.





The
      Company continues to evaluate plans to upgrade and improve our casino operations
      at Buffington Harbor in Gary, Indiana. The Company is precluded by the Senior
      Secured Credit Facility from making capital expenditures in excess of $25.0
      million in 2007 and $30.0 million in each year thereafter (excluding up to
      $25.0
      million to expand Fitzgeralds Black Hawk) until the Senior Secured Credit
      Facility matures in 2010. As a result of the Company’s capital expenditure
      limitation, current level of indebtedness and operating cash flows, the Company
      may need to seek partners to provide financing for these projects, receive
      a
      contribution from its member and seek to amend the capital expenditure covenant
      contained within the Senior Secured Credit Facility.





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The
      Company is also exploring the opportunity to replace its two existing gaming
      vessels in Gary, Indiana with a single-level gaming vessel. Management believes,
      with the new and improved casinos planned to open in its Indiana market, such
      a
      vessel may be necessary to remain competitive. The two existing gaming
      vessels are multi-level, which makes it more difficult for guests to move about
      the casinos and less efficient for the Company in operating these casinos,
      as
      opposed to a single-level casino. While no specific cost has been established
      on
      developing a single-level gaming vessel, whatever financing would be necessary
      would be outside of the allowable covenants contained within the Company’s
      Senior Secured Credit Facility and the indentures governing the Senior Secured
      Notes and Senior Notes. Thus, to build the single-level gaming vessel would
      require a significant equity infusion from our member or a partner, or other
      alternative financing.





In
      the
      past the Company had made distributions to fund its member’s income tax
      liabilities and the Company anticipates that it will make future distributions.
      The indentures governing the Senior Secured Notes and the Senior Notes and
      the
      loan and security agreement for the Senior Secured Credit Facility allow for
      distributions to our member to pay income taxes. The ultimate resolution of
      the
      assessments by the Indiana Department of Revenue against the Company and BDI,
      in
      the amount of $4.1 million, plus interest, could have a material impact on
      the
      Company’s liquidity in the period that the taxes are paid, if any, and to the
      extent that if the Company makes distributions to its member for tax purposes
      related to such resolution.





The
      purchase of certain gaming facilities by larger more recognized brand names
      or
      the expansion of gaming in jurisdictions in which gambling is already legal
      (or
      currently illegal) could significantly increase competition for the Company
      and
      thereby require additional investment by the Company in its facilities, gaming
      devices and marketing efforts. If necessary, and to the extent permitted under
      the indentures governing the Senior Secured Notes and Senior Notes, the Company
      would seek additional financing through borrowings of debt or equity financing,
      subject to any governmental approvals. There can be no assurance that additional
      financing, if needed, will be available to the Company or that, if available,
      the financing will be on terms favorable to the Company.





**Credit
      Facility Amendments**





On
      March 15, 2007, the Company entered into Amendment Number Seven (“Amendment
      Seven”) to the Senior Secured Credit Facility. Amendment Seven modifies the
      Company’s minimum EBITDA requirement for the twelve-month periods ended
      March 31, 2007, June 30, 2007 and September 30, 2007, to $65.0
      million, respectively, modifies the minimum EBITDA requirement for the 12-month
      periods ended December 31, 2007, March 31, 2008 and June 30,
      2008, to $70.0 million, respectively, and modifies the minimum EBITDA
      requirement to $72.0 million and $74.0 million for the 12-month periods ended
      September 30, 2008 and December 31, 2008, respectively. Amendment
      Seven also modifies the Company’s interest coverage ratio requirement for the
      12-month periods ended March 31, 2007, June 30, 2007,
      September 30, 2007, December 31, 2007, March 31, 2008 and
      June 30, 2008, to 1.20:1.0, respectively, and modifies the interest
      coverage ratio requirement to 1.25:1.0 for the 12-month periods ended
      September 30, 2008 and December 31, 2008, respectively.





The
      Company was in compliance with the financial covenants contained in the Senior
      Secured Credit Facility at March 31, 2007.








**CRITICAL
      ACCOUNTING POLICIES**





Our
      consolidated financial statements are prepared in accordance with accounting
      principles generally accepted in the United States of America, which require
      our
      management to make estimates and assumptions about the effects of matters that
      are inherently uncertain. We have summarized our significant accounting policies
      in Note 2 to our consolidated financial statements contained in our Annual
      Report on Form 10-K for the year ended December 31, 2006 and in Note 2 to
      the interim financial statements as of March 31, 2007 as contained herein.
      Of our accounting policies, we believe the following may involve a higher degree
      of judgment and complexity.





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*Revenue
      Recognition* —
Casino
      revenue is the net win from gaming activities, which is the difference between
      the amount wagered by our gaming patrons and the amount paid out to our patrons
      as a result of those wagers. Hotel, food and beverage and other revenue are
      recognized at the time the related service is performed. We deduct from our
      gross revenues the retail value of hotel rooms, food, beverage and merchandise
      provided to our casino customers on a complimentary basis. We also deduct from
      our gross revenues the value of certain cash-based promotional activities,
      including cash earned by customers as part of our slot club programs and cash
      coupons mailed to our casino customers.





*Downloadable
      Promotional Credits* —
At
      Fitzgeralds Tunica, we have implemented promotions that allow customers to
      download promotional credits directly to the slot machine. While the Company
      does not recognize the playing of these credits as revenue and the customer
      cannot redeem the credits for cash, any jackpots won by the customer are a
      direct reduction of slot revenue.





*Goodwill
      and Other Intangible Assets* —
We
      have
      approximately $47.4 million of goodwill and $124.5 million of other intangibles
      assets recorded on our balance sheet at March 31, 2007, related to the
      acquisitions of Majestic Star II, Fitzgeralds Tunica and Fitzgeralds Black
      Hawk.
      We regularly evaluate our acquired businesses for potential impairment
      indicators. Additionally, we adopted the provisions of SFAS 142, “Goodwill
      and Other Intangible Assets,” in January 2002, which require us to perform
      impairment testing at least annually. Our judgments regarding the existence
      of
      impairment indicators are based on, among other things, the regulatory, market
      status and operational performance of our acquired businesses. Future events
      could significantly impact our judgments and any resulting impairment loss
      could
      have a material adverse impact on our financial condition and results of
      operations.





*Property
      and Equipment* —
At
      March 31, 2007, we have approximately $273.9 million of net property and
      equipment recorded on our balance sheet. We depreciate our assets on a
      straight-line basis over their estimated useful lives. The estimate of the
      useful lives is based on the nature of the asset as well as our current
      operating strategy. Future events, such as property expansions, new competition
      and new regulations, could result in a change in the manner in which we are
      using certain assets requiring a change in the estimated useful lives of such
      assets. In assessing the recoverability of the carrying value of property and
      equipment, we must make assumptions regarding estimated future cash flows and
      other factors. If these estimates or the related assumptions change in the
      future, we may be required to record impairment charges for these
      assets.





*Casino
      Club Liability* —
All
      of
      our casinos offer programs whereby participants can accumulate points for casino
      wagering that can currently be redeemed for cash, lodging, food and beverages,
      and merchandise. A liability is recorded for the estimate of unredeemed points
      based upon each property’s redemption history. Changes in the program, increases
      in membership and changes in the redemption patterns of the participants can
      impact this liability.





*Self-Insurance* —
The
      Company maintains accruals for self-insured health and worker’s compensation
      programs, which are classified in payroll and related liabilities in the
      consolidated balance sheets. Management and consultants determine the estimates
      of these accruals by periodically evaluating the historical expenses and
      projected trends related to these accruals. Actual results may differ from
      those
      estimates.





*Litigation,
      Claims and Assessments* —
We
      also
      utilize estimates for litigation, claims and assessments. These estimates are
      based upon our knowledge and experience about past and current events and also
      upon reasonable future events. Actual results may differ from those
      estimates.






**RECENTLY
      ISSUED ACCOUNTING PRONOUNCEMENTS**




The
      Company has adopted or will be required to adopt the following accounting
      policies resulting from the following newly issued standards.





·
            In
                September 2006, the Financial Accounting Standards Board (“FASB”) issued
                FASB No. 157 “Fair Value Measurements,” (“FASB 157”) to establish a
                framework for measuring fair value and expanding disclosures related
                to
                fair value measurements. FASB 157 is effective for financial statements
                for fiscal years beginning after November 15, 2007. The Company is
                evaluating what impact FASB 157 will have on future
                reporting.





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·
            In
                February 2007, the FASB issued FASB No. 159, "The Fair Value Option
                for
                Financial Assets and Financial Liabilities". FASB No. 159 permits
                companies to choose to measure many financial instruments and certain
                other items at fair value. The objective is to improve financial
                reporting
                by providing companies with the opportunity to mitigate volatility
                in
                reported earnings caused by measuring related assets and liabilities
                differently without having to apply complex hedge accounting provisions.
                The fair value option established by FASB No. 159 permits all companies
                to
                choose to measure eligible items at fair value at specified election
                dates. At each subsequent reporting date, companies shall report
                in
                earnings any unrealized gains and losses on items for which the fair
                value
                option has been elected. FASB No. 159 is effective as of the beginning
                of
                a company's first fiscal year that begins after November 15, 2007.
                Early
                adoption is permitted as of the beginning of a fiscal year that begins
                on
                or before November 15, 2007, provided the company also elects to
                apply the
                provisions of FASB No. 157, "Fair Value Measurements" (see above).
                We are
                currently evaluating whether to adopt the fair value option under
                FASB No.
                159 and evaluating what impact such adoption would have on our condensed
                consolidated financial statements.








**CONTRACTUAL
      COMMITMENTS**





There
      have been no material changes from the information reported in the Company's
      Annual Report on Form 10-K for the fiscal year ended December 31,
      2006.








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





There
      have been no material changes from the information reported in the Company's
      Annual Report on Form 10-K for the fiscal year ended December 31,
      2006.








**Item
      4T. Controls and
      Procedures.**





As
      of the
      end of the period covered by this report, the Company carried out an evaluation,
      under the supervision and with the participation of the Company's management,
      including its Chief Executive Officer and Chief Financial Officer, of the
      effectiveness of the design and operation of the Company's disclosure controls
      and procedures pursuant to Rule 15d-15 of the Securities Exchange Act of 1934.
      Based upon that evaluation, the Company's Chief Executive Officer and Chief
      Financial Officer concluded that the Company's disclosure controls and
      procedures are effective to cause the material information required to be
      disclosed by the Company in the reports that it files or submits under the
      Securities Exchange Act of 1934 to be recorded, processed, summarized and
      reported within the time periods specified in the SEC's rules and
      forms.





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 Chief Financial
      Officer, as appropriate, to allow timely decisions regarding required
      disclosure. In designing and evaluating the disclosure controls and procedures,
      management recognized that any controls and procedures, no matter how well
      designed and operated, can provide only reasonable assurance of achieving the
      desired control objectives.





There
      have been no changes in the Company's internal controls over financial reporting
      during the quarter ended March 31, 2007 that have materially affected, or
      are reasonably likely to materially affect, the Company's internal controls
      over
      financial reporting.








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**PART
      II**  **OTHER
      INFORMATION**








**Item
      1.**   **Legal
      Proceedings.**





Information
      regarding Legal Proceedings appears in Part I - Item 3 of our Annual Report
      on
      Form 10-K for the fiscal year ended December 31, 2006.





Insurance
      Litigation. In February 2006, the Company’s previous stop-loss health
      insurance provider (“Insurance Provider”), through its third party auditor,
      contacted the Company and requested that the Company provide information to
      facilitate an audit of employee health insurance stop-loss coverage for the
      years of 2004 and 2005. Although the Company had provided the requested
      information, as a result of this audit process, the Insurance Provider has
      withheld payment on ten individual claims that are payable under our stop-loss
      insurance policy with an aggregate outstanding value of approximately $0.7
      million. After numerous attempts by the Company to request and facilitate the
      completion of the audit, the Company filed suit on May 3, 2007 in United States
      District Court for the Northern District of Illinois against the Insurance
      Provider alleging: (i) Breach of Contract, (ii) Unfair Practices in Settling
      Claims, (iii) Bad Faith, and (iv) Breach of Fiduciary Duty. While the Company
      believes it is entitled to reimbursement of all claims paid under the
      obligations of the insurance policy, at this point in time the Company is unable
      to assess the amount or likelihood of recovery.




Majestic
        Star Income Tax Protest. The
        Company and its ultimate parent, BDI, have been assessed $2.6 million and
        $1.3
        million respectively, plus interest, by the Indiana Department of Revenue
        (the
“Department”). Additionally, BDI’s non-resident shareholder has been assessed
        $0.2 million, plus penalty and interest. The assessment relates to deductions
        for payments of taxes on adjusted gross gaming revenues the Company’s member
        took in computing adjusted gross income for Indiana state income tax purposes.
        The Department’s position is that the Company had an obligation to withhold and
        remit tax for the non-resident shareholder of its member. The Company, BDI
        and
        BDI’s non-resident shareholder timely filed protests for all tax years at
        issue with the Legal Division of the Department. The Department sustained
        the imposition of negligence penalties on the assessments, but denied the
        protest of the tax amount assessed to the extent that amounts assessed are
        in
        excess of net operating losses available to BDI's non-resident shareholder.
        The Company and BDI have filed petitions with the Indiana Tax Court appealing
        the Department's ruling on the $2.6 million and $1.3 million
        assessments. BDI's non-resident shareholder will be appealing the $0.2
        million assessment with the Indiana Tax Court. No liability has been accrued
        by
        the Company relating to this matter.
 
 The
        Company’s indentures governing the Senior Secured Notes, the Senior Notes, and
        the loan agreement related to the Senior Secured Credit Facility allow the
        Company to make distributions to BDI for tax purposes. Accordingly, should
        BDI
        ultimately be found liable for additional state income taxes to the State
        of
        Indiana, the Company would make distributions sufficient to pay the additional
        tax. Any payments would be recorded as distributions in Member’s Deficit. The
        Company does not intend to make any distributions for the years in which
        an
        assessment was received until it has fully evaluated its options with
        BDI.
 
 BHR
          and Majestic Star Sales and Use Tax Assessments. For the years 1998
          through 2004, the Department assessed BHR and Majestic Star $0.9 million
          for
          unpaid sales and use taxes related to merchandise and other products provided
          to
          the guests and employees of Majestic Star and BHR at no charge and the
          provision
          of food, provided on a complimentary basis, to the patrons and employees
          of
          BHR’s members Majestic Star and Trump Indiana, and to Majestic Star directly.
          Based on Hyatt Corp v. Indiana Department of State Revenue, (“Hyatt”), BHR and
          Majestic Star believe that they have no sales and use tax liability for
          food for
          human consumption purchased by it and prepared for serving to its customers
          on a
          complimentary basis. In Hyatt, the petitioner, a hotel operator, sought
          a refund
          for use tax paid on food purchased for complimentary meals that were provided
          to
          both guests and employees. Hyatt prevailed. Majestic Star and BHR are
          arguing that food prepared for human consumption and provided to customers
          and
          employees on a complimentary basis are not taxable per the Hyatt
          decision. Should the Department prevail with its position that
          sales taxes are due on the value of complimentary meals Majestic Star and
          BHR
          provided to employees and customers of Majestic Star, the estimated 2005
          sales
          tax exposure for the complimentary meals will be an additional $0.1 million.
          Pursuant to the terms of the stock purchase agreement with Trump Entertainment
          Resorts Holdings, L.P. (“TERH”), TERH is obligated to indemnify the Company for
          50% of BHR’s pre-closing tax liabilities. With regard to BHR's sales and use tax
          assessments, the indemnification amount would be $0.4 million. Estimated
          exposure for the year ended December 31, 2006 and the first three months
          of
          2007, which would be the Company’s obligation only, would be approximately $0.1
          million. On May 1, 2007, the Indiana Tax Court issued a decision in another
          sales and use tax case involving a riverboat casino with facts similar
          to the
          facts in Majestic Star's and BHR's cases outlined above. In that case,
          the court
          ruled that the provision of food and non-food items on a complimentary
          basis to
          patrons of a riverboat casino did not constitute retail sales subject to
          Indiana
          sales tax when purchased, was likewise exempt from use tax when such food
          was
          later prepared and provided to patrons on a complimentary basis. The Department
          has until May 31 to request a Tax Court rehearing in that case or file
          an appeal
          of the decision with the Indiana Supreme Court.








**Item
      1A.** **Risk
      Factors.**





Information
      regarding risk factors appears in Part I - Item 1A of our Annual Report on
      Form
      10-K for the fiscal year ended December 31, 2006. The following risk
      factors reflect certain material changes from the risks previously disclosed
      in
      our Annual Report on Form 10-K:





**Increased
      competition in Chicagoland market**





On
      April 4, 2007, Ameristar Casinos, Inc. announced that it has entered into a
      definitive agreement with Resorts International Holdings, LLC to acquire its
      subsidiary that owns and operates Resorts East Chicago. Ameristar intends to
      make a number of major capital improvements to Resorts East Chicago. It intends
      to significantly expand the gaming facilities, improve access to the casino,
      build additional structured parking and upgrade the non-gaming amenities. While
      we cannot determine what effect this will have on our future operations in
      the
      Chicagoland market, it may have a significant impact on how we operate our
      business to remain competitive.





**Higher
      energy costs**





Due
      to
      the recent increase in energy prices, there is a greater risk that our patrons
      will have less discretionary income due to higher fuel costs. Customers may also
      be less likely to travel or may be more likely to reduce the number of trips
      to
      our casinos.





**Black
      Hawk construction projects**





If
      there
      is a shortfall in the insurance proceeds we expect to receive for the rebuilding
      of the Rohling Inn at Black Hawk, we will need to reallocate our capital
      expenditure budget to cover these costs in order to stay within our capital
      expenditures limitation in our loan covenants. This will limit our ability
      to
      implement other planned expenditures at our properties.





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**Item
      6.**   **Exhibits.**





(a)
            The
                following exhibits are filed as part of this
                report:





**Exhibit
                    No.**
                **Description
                    of Document**10.1*
                Management
                    Incentive Plan10.2**
                Amendment
                    Number Seven to Loan and Security Agreement31.1***
                Certification
                    of Chief Executive Officer pursuant to Rule 15d-14 of the Securities
                    Exchange Act of 1934, as adopted pursuant to Section 302 of the
                    Sarbanes-Oxley Act of 2002.31.2***
                Certification
                    of Chief Financial Officer pursuant to Rule 15d-14 of the Securities
                    Exchange Act of 1934, as adopted pursuant to Section 302 of the
                    Sarbanes-Oxley Act of 2002.32***
                Certification
                    pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                    906 of
                    the Sarbanes-Oxley Act of 2002.
  *
                Incorporated
                    by reference to the Company’s current report on Form 8-K dated
                    February 7, 2007.**
                Incorporated
                    by reference to the Company’s current report on Form 8-K dated March15,
                    2007.***
                Filed
                    herewith.














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**SIGNATURES**





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





Dated:
                May 15, 2007THE
                MAJESTIC STAR CASINO, LLC*/s/
                Don H. Barden*Don
                H. BardenChairman,
                President and Chief Executive Officer(Duly
                Authorized Officer and Principal Executive Officer)*/s/
                Jon S. Bennett*Jon
                S. BennettVice
                President and Chief Financial Officer(Principal
                Financial and Accounting Officer)THE
                MAJESTIC STAR CASINO CAPITAL CORP.*/s/
                Don H. Barden*Don
                H. BardenPresident
                and Chief Executive Officer(Duly
                Authorized Officer and Principal Executive Officer)*/s/
                Jon S. Bennett*Jon
                S. BennettVice
                President and Chief Financial Officer(Principal
                Financial and Accounting Officer)THE
                MAJESTIC STAR CASINO CAPITAL CORP II/*s/
                Don H Barden*Don
                H BardenPresident
                and Chief Executive Officer(Duly
                Authorized Officer and Principal Executive Officer)*/s/Jon
                S Bennett*Jon
                S BennettVice
                President and Chief Financial Officer(Principal
                Financial and Accounting Officer)




















S-1