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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2011.

¨	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 333-87202

CIRCUS AND ELDORADO JOINT VENTURE

SILVER LEGACY CAPITAL CORP.

(Exact names of registrants as specified in their charters)


Nevada		88-0310787
Nevada		71-0868362
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

407 North Virginia Street, Reno, Nevada 89501

(Address of principal executive offices, including zip code)

(800) 687-7733

(Registrants’ telephone number, including area code)

Not Applicable

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

Indicate by check mark whether the registrants (1) have 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 registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrants have submitted electronically and posted on their corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers, or smaller reporting companies. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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


Circus and Eldorado Joint Venture		Yes ¨ No x
Silver Legacy Capital Corp.		Yes x No ¨

The number of shares of Silver Legacy Capital Corp.’s common stock outstanding at November 14, 2011 was 2,500. All of these shares are owned by Circus and Eldorado Joint Venture.

CIRCUS AND ELDORADO JOINT VENTURE

SILVER LEGACY CAPITAL CORP.

FORM 10-Q

INDEX


			Page No.
PART I. FINANCIAL INFORMATION

	Item 1.	Financial Statements:

		Consolidated Balance Sheets as of September 30, 2011 (Unaudited) and December 31, 2010		1

		Consolidated Statements of Operations (Unaudited) for the Three and Nine Months Ended September 30, 2011 and 2010		2

		Condensed Consolidated Statement of Partners’ Equity (Unaudited) for the Nine Months Ended September 30, 2011		3

		Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2011 and 2010		4

		Condensed Notes to Consolidated Financial Statements (Unaudited)		5

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		9

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		16

	Item 4.	Controls and Procedures		16

PART II. OTHER INFORMATION

	Item 6.	Exhibits		17

SIGNATURES				18

CIRCUS AND ELDORADO JOINT VENTURE

(doing business as Silver Legacy Resort Casino)

CONSOLIDATED BALANCE SHEETS

(In thousands)


	September 30,		December 31,
	2011		2010
	(Unaudited)

ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	33,032	$	31,654
Accounts receivable, net		3,190		2,458
Inventories		2,115		2,013
Prepaid expenses and other		3,500		2,692

Total current assets		41,837		38,817
PROPERTY AND EQUIPMENT, NET		219,437		229,119
OTHER ASSETS, NET		6,573		7,315

Total Assets	$	267,847	$	275,251


LIABILITIES AND PARTNERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	3,877	$	4,493
Accrued interest		1,205		4,819
Accrued and other liabilities		9,058		9,198
Current portion of long-term debt		142,777		—

Total current liabilities		156,917		18,510
LONG-TERM DEBT		—		142,735
OTHER LONG-TERM LIABILITIES		8,480		8,176

Total liabilities		165,397		169,421
COMMITMENTS AND CONTINGENCIES (Note 8)
PARTNERS’ EQUITY		102,450		105,830

Total Liabilities and Partners’ Equity	$	267,847	$	275,251

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

CIRCUS AND ELDORADO JOINT VENTURE

(doing business as Silver Legacy Resort Casino)

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands)

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
OPERATING REVENUES:
Casino	$	19,182		$	18,580		$	53,396		$	52,816
Rooms		9,357			8,782			25,168			25,240
Food and beverage		8,633			8,121			25,088			23,991
Other		2,089			2,046			5,475			5,433

		39,261			37,529			109,127			107,480
Less: promotional allowances		(5,125	)		(4,750	)		(13,571	)		(12,352	)

Net operating revenues		34,136			32,779			95,556			95,128


OPERATING EXPENSES:
Casino		10,084			9,930			27,990			27,376
Rooms		2,584			2,489			7,455			7,416
Food and beverage		5,763			5,430			16,746			16,149
Other		1,340			1,503			3,709			4,014
Selling, general and administrative		7,274			7,179			20,966			20,947
Depreciation		3,584			3,584			11,014			11,748
Change in fair value of life insurance contracts		591			(476	)		323			(295	)
(Gain) loss on disposition of assets		(2	)		130			95			210

Total operating expenses		31,218			29,769			88,298			87,565

OPERATING INCOME		2,918			3,010			7,258			7,563


OTHER (INCOME) EXPENSE:
Interest expense		3,764			3,730			11,292			11,261
Interest income		(2	)		(4	)		(8	)		(8	)

Total other expense		3,762			3,726			11,284			11,253

NET LOSS	$	(844	)	$	(716	)	$	(4,026	)	$	(3,690	)

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

CIRCUS AND ELDORADO JOINT VENTURE

(doing business as Silver Legacy Resort Casino)

CONDENSED CONSOLIDATED STATEMENT OF PARTNERS’ EQUITY

(In thousands)

(Unaudited)


	Galleon, Inc.			Eldorado Resorts, LLC			Total

BALANCE, January 1, 2011 (1)	$	47,915		$	57,915		$	105,830
Cumulative effect of adoption of ASU No. 2010-16, Accrual for Casino Jackpot Liability Reserve		323			323			646
Net loss		(2,013	)		(2,013	)		(4,026	)


BALANCE, September 30, 2011 (1)	$	46,225		$	56,225		$	102,450

(1)	Balances include Accumulated Other Comprehensive Income totaling ($762,000) comprised of ($381,000) each for Galleon, Inc. and Eldorado Resorts, LLC.

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

CIRCUS AND ELDORADO JOINT VENTURE

(doing business as Silver Legacy Resort Casino)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended September 30,
	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(4,026	)	$	(3,690	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		11,014			11,748
Amortization of debt discounts and issuance costs		447			450
Loss on disposition of assets		95			210
Increase in accrued pension cost		304			505
Decrease in provision for doubtful accounts		(57	)		(252	)
(Increase) decrease in cash value of insurance policies in excess of premiums paid		323			(295	)
Changes in current assets and current liabilities:
Accounts receivable		(675	)		155
Inventories		(102	)		(3	)
Prepaid expenses and other		(835	)		(966	)
Accounts payable		(132	)		179
Accrued interest		(3,614	)		(3,616	)
Accrued and other liabilities (1)		506			858

Net cash provided by operating activities		3,248			5,283


CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets		53			56
Increase (decrease) in other assets		14			(188	)
Purchase of property and equipment		(1,937	)		(8,358	)

Net cash used in investing activities		(1,870	)		(8,490	)


CASH FLOWS FROM FINANCING ACTIVITIES:

Net cash used in financing activities		—			—


CASH AND CASH EQUIVALENTS:
Net increase (decrease) for the period		1,378			(3,207	)
Balance, beginning of period		31,654			35,042

Balance, end of period	$	33,032		$	31,835


SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during period for interest	$	14,459		$	14,461

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES:
Payables for purchase of property and equipment	$	138		$	189

(1)	Balance for the nine months ended September 30, 2011 excludes the cumulative-effect adjustment of $646,000 related to the adoption of ASU No. 2010-16, Accrual for Casino Jackpot Liability Reserve.

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

CIRCUS AND ELDORADO JOINT VENTURE

(doing business as Silver Legacy Resort Casino)

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1. Organization and Basis of Presentation

Principles of Consolidation and Operations

Effective March 1, 1994, Eldorado Limited Liability Company (a Nevada limited liability company owned and controlled by Eldorado Resorts, LLC) (“ELLC”) and Galleon, Inc. (a Nevada corporation owned and controlled by MGM Resorts International and previously owned and controlled by Mandalay Resort Group (“Mandalay”) (“Galleon” and, collectively with ELLC, the “Partners”), entered into a joint venture agreement to establish Circus and Eldorado Joint Venture (the “Partnership”), a Nevada general partnership. The Partnership owns and operates a casino and hotel located in Reno, Nevada (“Silver Legacy”), which began operations on July 28, 1995. ELLC contributed land to the Partnership with a fair value of $25.0 million and cash of $26.9 million for a total equity investment of $51.9 million. Galleon contributed cash to the Partnership of $51.9 million to comprise their total equity investment. Each partner has a 50% interest in the Partnership.

On April 25, 2005, a wholly owned subsidiary of MGM Resorts International (“MGM”) was merged with and into Mandalay as a result of which Mandalay became a wholly owned subsidiary of MGM Resorts International. With the consummation of the merger, Galleon, Inc. became an indirect wholly-owned subsidiary of MGM Resorts International.

The consolidated financial statements include the accounts of the Partnership and its wholly owned subsidiary, Silver Legacy Capital Corp. (“Capital”). Capital was established solely for the purpose of serving as a co-issuer of $160.0 million principal amount of 10 ¹/8% mortgage notes due March 1, 2012 co-issued by the Partnership and Capital and, as such, Capital does not have any operations, assets, or revenues. All intercompany accounts and transactions have been eliminated in consolidation. The Partnership operates as one segment.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, all of which are normal and recurring, necessary to present fairly the financial position of the Partnership as of September 30, 2011, and the results of operations for the three and nine months ended September 30, 2011 and 2010 and cash flows for the nine months ended September 30, 2011 and 2010. The results of operations for such periods are not necessarily indicative of the results to be expected for a full year.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Partnership’s annual report on Form 10-K for the year ended December 31, 2010.

Reclassifications

Certain reclassifications, which have no effect on previously reported net income (loss), have been made to the 2010 consolidated financial statements to conform to the 2011 presentation. Pursuant to the guidance in the recently issued AICPA Audit and Accounting Guide Gaming, the Partnership reclassified the amounts paid under slot participation agreements from “Casino” revenue to “Casino” expense. The total amount reclassified for the three and nine months ended September 30, 2010 was $0.3 million and $0.7 million, respectively.

Use of Estimates

The condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. Those principles require the Partnership’s 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates incorporated into our condensed consolidated financial statements include estimated useful lives for depreciable and amortizable assets, the estimated allowance for doubtful accounts receivable, estimated cash flows in assessing the recoverability of long-lived assets, our self-insured liability reserves, players’ club liabilities, contingencies and litigation, claims and assessments. Actual results could differ from these estimates.

Recently Issued Accounting Pronouncements

In April 2010, the FASB issued ASU No. 2010-16, Accruals for Casino Jackpot Liabilities. Specifically, the guidance clarifies that an entity should not accrue jackpot liabilities, or portions thereof, before a jackpot is won if the entity can avoid paying the jackpot. Jackpots should be accrued and charged to revenue when an entity has the obligation to pay the jackpot. The guidance applies to both base and progressive jackpots. The new guidance was effective for fiscal years beginning on or after December 15, 2010 and requires a cumulative-effect adjustment to opening retained earnings in the period of adoption. The Partnership adopted the guidance effective January 1, 2011 and recorded an adjustment to retained earnings of $0.6 million.

Certain amendments to Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements,” become effective for the Partnership for fiscal years beginning after December 15, 2011. Such amendments include a consistent definition of fair value, enhanced disclosure requirements for “Level 3” fair value adjustments and other changes to required disclosures. The Partnership does not expect this amendment to have a material affect on its financial statements and will comply with the disclosure enhancements of this amendment when the amendment is effective.

ASC 220, “Comprehensive Income,” was amended in June 2011 and will become effective for the Partnership for fiscal years beginning after December 15, 2011, including retrospective adjustment. Such amendments allow the Partnership two options for the presentation of comprehensive income. Under either option, the Partnership is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. As a result of the amendment, the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity is eliminated. The Partnership does not expect this amendment to have a material affect on its financial statements and will comply with the disclosure enhancements of this amendment when the amendment is effective.

Note 2. Liquidity

As of September 30, 2011, the Partnership had $142.8 million in 10 ¹/8% mortgage notes (the “Notes”) outstanding. The entire principal amount of the Notes will become due and payable at maturity on March 1, 2012 and the Partnership will be required to borrow funds to satisfy its repayment obligations under the Notes or otherwise restructure its payment obligations under the Notes. The Partnership has retained the services of outside advisors to assist the Partnership and is exploring various alternatives for refinancing or restructuring its obligations under the Notes. There can be no assurance, however, that the Partnership will be able to refinance or restructure the Notes on terms that are acceptable to the Partnership or, in the case of a restructuring of such obligations, the holders of the Notes, or at all. If the Partnership is unable to refinance or otherwise restructure its obligations with respect to the Notes, the holders thereof will be entitled to exercise the remedies provided in the indenture governing the Notes, including foreclosing on the assets securing the Notes. If the Partnership is unable to refinance or otherwise restructure the Notes by March 1, 2012, it would have a material adverse effect on the Partnership’s business and its financial position.

Amounts outstanding under the Notes have been classified as “current obligations” for financial reporting purposes beginning March 31, 2011. In the event that the Partnership is unable to refinance or otherwise restructure

such amounts by the time of the filing of its Annual Report on Form 10-K for the year ending December 31, 2011, it would have a material adverse effect on its consolidated financial position and would raise substantial doubt as to its ability to continue as a going concern.

Note 3. Fair Value Measurements

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Accordingly, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, there is a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair values as follows:

Level 1: Inputs are based upon quoted prices (unadjusted) in active markets for identical assets or liabilities which are accessible as of the measurement date.

Level 2: Inputs are based upon quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and model-derived valuations for the asset or liability that are derived principally from or corroborated by market data for which the primary inputs are observable, including forward interest rates, yield curves, credit risk and exchange rates.

Level 3: Inputs for the valuations are unobservable and are based on management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques such as option pricing models and discounted cash flow models.

The Partnership’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and debt. Management believes that the carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities are representative of their respective fair values due to the short maturities of these instruments. The estimated fair value of the Partnership’s 10 ¹/8% mortgage notes was approximately $108.5 million as of September 30, 2011 and was determined using estimated market prices.

Note 4. Debt

Current and long-term debt consisted of the following (in thousands):


	September 30, 2011		December 31, 2010
Current Portion of Long-Term Debt:
10 ¹/8% Mortgage Notes due 2012 (net of unamortized discount of $23)	$	142,777	$	—

Long-Term Debt:
10 ¹/8% Mortgage Notes due 2012 (net of unamortized discount of $65)	$	—	$	142,735

On March 5, 2002, the Partnership and Capital (collectively, the “Issuers”) co-issued $160.0 million principal amount of senior secured mortgage notes due 2012 (the “Notes”). Concurrent with issuing the Notes, the Partnership entered into a senior secured credit facility (the “Credit Facility”) for $40.0 million. The Credit Facility originally provided for a $20.0 million senior secured revolving credit facility and a $20.0 million five-year term loan facility, each of which provided for the payment of interest at floating rates based on LIBOR plus a spread. The proceeds from the Notes, together with $26.0 million in borrowings under the Credit Facility, were used to repay $150.2 million representing all of the indebtedness outstanding under a prior bank credit facility and to fund $30.0 million of distributions to the Partners. In addition, the remaining proceeds along with operating cash flows were used to pay $6.3 million in related fees and expenses of the transactions. These fees were capitalized and are included in other assets. On November 4, 2003, the Partnership, U.S. Bank, N.A. and Bank of America, N.A., executed an

amendment to the Credit Facility which reduced the revolving facility to $10.0 million. On March 28, 2008, the Partnership and Bank of America, N.A. executed an amendment reducing the revolving facility to $1.0 million. On January 28, 2009, the Partnership executed an amendment to extend the Credit Facility’s maturity date for an additional year to March 30, 2010. The Partnership had not utilized its borrowing capacity under the Credit Facility since 2003. As a result, the Credit Facility was not extended beyond its March 30, 2010 maturity date.

The Notes are senior secured obligations which rank equally with all of the Partnership’s outstanding senior debt and are senior to any subordinated debt. The Notes are secured by a security interest in the Issuers’ existing and future assets, other than certain licenses which may not be pledge pursuant to applicable law, and a pledge by each of the Partners of all of its partnership interest in the Partnership. The Notes mature on March 1, 2012 and bear interest at the rate of 10 ¹/8% per annum, payable semi-annually in arrears on March 1 and September 1 of each year, commencing on September 1, 2002.

The indenture relating to the Notes contains various restrictive covenants. The covenants require, and/or any covenants in any new credit facility we may secure may require, the maintenance of certain financial ratios and impose limitations on the ability of the Partnership, among other things, to incur additional debt or liens, engage in transactions with affiliates, dispose of property, make distributions to its partners or merge, consolidate or sell assets. As of September 30, 2011, the Partnership was in compliance with the covenants in the indenture relating to the Notes.

The entire principal amount of the Notes will become due and payable at maturity on March 1, 2012 and the Partnership will be required to borrow funds to satisfy its repayment obligations under the Notes or otherwise restructure its payment obligations under the Notes. The Partnership has retained the services of outside advisors to assist the Partnership and is exploring various alternatives for refinancing or restructuring its obligations under the Notes. There can be no assurance, however, that the Partnership will be able to refinance or restructure the Notes on terms that are acceptable to the Partnership or, in the case of a restructuring of such obligations, the holders of the Notes, or at all. If the Partnership is unable to refinance or otherwise restructure its obligations with respect to the Notes, the holders thereof will be entitled to exercise the remedies provided in the indenture governing the Notes, including foreclosing on the assets securing the Notes. If the Partnership is unable to refinance or otherwise restructure the Notes by March 1, 2012, it would have a material adverse effect on the Partnership’s business and its financial position.

In February 2009, the Partnership repurchased and retired $17.2 million principal amount of the Notes. The total purchase price of the Notes was approximately $11.4 million, resulting in a gain of approximately $5.5 million, net of unamortized debt issuance costs. The repurchase of the Notes reduced the amount of Notes outstanding to $142.8 million. The transaction was funded by available invested cash reserves. The Partnership’s executive committee has authorized the Partnership to spend up to an additional $8.6 million for the repurchase of Notes. It is anticipated that any additional Notes acquired prior to maturity will be acquired through open market purchases. See “Note 2” for more information regarding the maturity of the Notes.

Note 5. Related Parties

An affiliate of each of the Partners owns and operates a casino attached and adjacent to Silver Legacy. Our Partners may be deemed to be in a conflict of interest position with respect to decisions they make relating to the Partnership as a result of the interests their affiliates have in the Eldorado Hotel & Casino and Circus Circus Hotel & Casino-Reno, respectively.

As of September 30, 2011, the Partnership’s related parties receivable and payable were $0.2 million and $0.1 million, respectively. As of December 31, 2010, the Partnership’s related parties receivable and payable were $0.2 million and $0.1 million, respectively. Related parties receivable and payable are included in “Accounts receivable, net” and “Accounts payable,” respectively, on the Partnership’s consolidated balance sheets.

Note 6. Supplemental Executive Retirement Plan

Effective January 1, 2002, the Partnership adopted a Supplemental Executive Retirement Plan (“SERP”) for a select group of highly compensated management employees. The SERP provides for a lifetime benefit at age 65, based on a formula which takes into account a participant’s highest annual compensation, years of service, and executive level. The SERP also provides an early retirement benefit at age 55 with at least four years of service, a disability provision, and a lump sum death benefit. The obligation is being funded informally through life insurance contracts on the participants and related cash surrender value. The Partnership anticipates that its periodic pension cost for the year ending December 31, 2011 will be approximately $0.4 million, of which $0.3 million had been accrued as of September 30, 2011.

Note 7. Partnership Agreement

Concurrent with the issuance of the Notes on March 5, 2002, the Partnership’s original partnership agreement was amended and restated in its entirety and was further amended in April 2002 (the “New Partnership Agreement”). The New Partnership Agreement provides for, among other items, profits and losses to be allocated to the Partners in proportion to their percentage interests, separate capital accounts to be maintained for each Partner, provisions for management of the Partnership and payment of distributions and bankruptcy and/or dissolution of the

Partnership. The April 2002 amendments were principally (i) to provide equal voting rights for ELLC and Galleon with respect to approval of the partnership’s annual business plan and the appointment and compensation of the general manager, and (ii) to give each Partner the right to terminate the general manager.

Note 8. Commitments and Contingencies

In March 2008, the Nevada Supreme Court ruled, in a case involving another casino company, that food and non-alcoholic beverages purchased for the use in providing complimentary meals to customers and to employees were exempt from sales and use tax. The Partnership had previously paid use tax on these items and has generally filed for refunds for the periods from February 2000 to February 2008 related to this matter. The aggregate amount for which a refund claim is pending is approximately $1.5 million.

The Nevada Department of Taxation (the “Department”) filed a petition for rehearing, which the Nevada Supreme Court announced in July 2008 it would not grant. Hearings before the Nevada Administrative Law Judge are currently being scheduled and have taken place; however, the date of the Partnership’s hearing is uncertain at this time. Due to uncertainty surrounding the potential arguments that may be raised in the administrative process, the Partnership will not record any gain until the tax refund is realized.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

Effective March 1, 1994, Eldorado Limited Liability Company (“ELLC”), a Nevada limited liability company owned and controlled by Eldorado Resorts LLC, and Galleon, Inc. (“Galleon”), a Nevada corporation now owned and controlled by MGM Resorts International, entered into a joint venture agreement to establish the Partnership for the purpose of constructing, owning and operating Silver Legacy. Capital, a wholly owned subsidiary of the Partnership, was incorporated for the sole purpose of serving as a co-issuer of the $160 million principal amount of 10 ¹/8% mortgage notes due 2012 co-issued by the Partnership and Capital, and does not have any operations, assets or revenues.

On July 28, 1995, Silver Legacy commenced operations as a hotel-casino in downtown Reno, Nevada. Silver Legacy is a leader within the Reno market, offering the largest number of table games, the second largest number of hotel rooms and the third largest number of slot machines of any property in the Reno market. Silver Legacy’s net operating revenues and income are derived largely from our gaming activities. In an effort to enhance our gaming revenues, we attempt to maximize the use of our gaming facilities at Silver Legacy by providing a well-balanced casino environment that contains a mix of games attractive to multiple market segments. Rooms, food and beverage also contribute a large portion of our net revenues.

Our operating results are highly dependent on the volume of customers visiting and staying at our resort, which in turn impacts the price we can charge for our hotel rooms and other amenities. Key volume indicators include table games drop and slot handle, which refer to amounts wagered by our customers. The amount of volume we retain, which is not fully controllable by us, is recognized as casino revenues and is referred to as our win or hold. In addition, hotel occupancy and price per room, including our resort fee, designated by average daily rate (“ADR”) are key indicators for our hotel business.

Significant Factors Affecting Results of Operations

Severe Weather

Silver Legacy’s operations are subject to seasonal variation, with the weakest results generally occurring during the winter months. During the first quarter of 2011, our region experienced severe weather conditions, including the second highest snowfall on record. On the majority of the weekends during the first quarter of 2011, travel to Reno from northern California, our main feeder market, was difficult due to poor weather or impossible due to road closures. As a result, there was an adverse effect on business levels, especially hotel occupancy, and our operating performance during the first quarter of 2011 and nine months ended September 30, 2011 compared to the same prior year periods.

Global, National and Regional Economic Conditions

The economic recession and the slow pace of recovery continue to adversely influence consumers’ confidence, discretionary spending levels and travel patterns. We believe the weak demand, high unemployment, record number of home foreclosures, increased competition and volatility of the economy have had a significant negative impact on the gaming and tourism industries, and, as a result, our operating performance over the past several years. In response to the difficult economic environment, our management implemented cost savings measures and continues to review our operations to look for opportunities to further reduce expenses and maximize cash flows. While there have been some signs of improvement, we believe the current economic conditions could continue to negatively affect our operating results for some period of time. We remain uncertain as to the duration and magnitude of the impact on our operations and the length of any future recovery period.

Expansion of Native American Gaming

A significant portion of Silver Legacy’s revenues and results of operations are generated from patrons who are residents of northern California, and, as such, our results of operations have been adversely impacted by the growth in Native American gaming in northern California. Many existing Native American gaming facilities in northern California are modest compared to Silver Legacy. However, a number of Native American tribes have established large-scale gaming facilities in California and some Native American tribes have announced that they are in the process of expanding, developing, or are considering establishing, large-scale hotel and gaming facilities in northern California. As northern California Native American gaming operations have expanded, we believe the increasing competition generated by these gaming operations has negatively impacted principally drive-in, day-trip visitor traffic from our main feeder markets in northern California.

Under their current compacts, most Native American tribes in California may operate up to 2,000 slot machines, and up to two gaming facilities may be operated on any one reservation. However, under action taken by the National Indian Gaming Commission, gaming devices similar in appearance to slot machines, but which are deemed to be technological enhancements to bingo style gaming, are not subject to such limits and may be used by tribes without state permission. The number of slot machines the tribes are allowed to operate may increase as a result of any new or amended compacts the tribes may enter into with the State of California that receive the requisite approvals, such as has been the case with respect to a number of new or amended compacts which have been executed and approved.

We believe any future growth of Native American gaming establishments, including the addition of hotel rooms and other amenities, could place additional competitive pressure on our operations. While we cannot predict the extent of any future impact, it could be significant.

Bowling Tournaments Within the Reno Market

The National Bowling Stadium, located one block from Silver Legacy, is one of the largest bowling complexes in North America and has been selected to host multi-month tournaments in Reno two out of every three years through 2018, including 2010. Through one-time agreements, the National Bowling Stadium hosted the United States Bowling Congress (“USBC”) Open Tournament in Reno in 2011 and will host the tournament in 2014, both usually off-years for Reno. Historically, these multi-month bowling tournaments have attracted a significant number of visitors to the Reno market and have benefited business in the downtown area, including Silver Legacy. The USBC Open Tournament, which attracted approximately 80,000 bowlers in 2007, returned to the Reno market and attracted approximately 68,500 men and women bowlers to the Reno area during the period from late-February through the end of June 2010. The USBC Open Tournament returned again beginning in late February through the end of June 2011 and brought approximately 62,300 bowlers to the Reno market during the tournament period. The USBC Women’s Tournament will take place in Reno beginning in mid-April through early July 2012 and is expected to attract approximately 32,500 women bowlers.

Summary Financial Results

The following table highlights the results of our operations (dollars in thousands):


	Three months ended September 30, 2011			Three months ended September 30, 2010			Percent Change			Nine months ended September 30, 2011			Nine months ended September 30, 2010			Percent Change
Net revenues	$	34,136		$	32,779			4.1	%	$	95,556		$	95,128			0.4	%
Operating expenses		31,218			29,769			4.9			88,298			87,565			0.8
Operating income		2,918			3,010			(3.1	)		7,258			7,563			(4.0	)
Net loss		(844	)		(716	)		17.9			(4,026	)		(3,690	)		9.1

Net Revenues. During the three months ended September 30, 2011 compared to the same prior year period, net revenues rose due to positive gains among all revenue components. These increases in revenues were partially offset by higher promotional allowances associated with complimentary offers provided to our casino customers which drove visitation during the third quarter of 2011 compared to the same prior year period. While the previously discussed factors which have negatively impacted Reno’s gaming and tourism market as a whole continue to be a challenge, the current quarter benefited from strong holiday and special event weekends, increased convention business and targeted casino promotional offers.

Net revenues increased slightly during the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010. Higher net revenues posted during the third quarter of 2011 compared to the same prior year period were partially offset by decreased net revenues during the first half of 2011 compared to the same prior year period. We believe these decreases resulted from severe weather conditions which had a negative impact on drive-in visitation during the first quarter of 2011, fewer bowler room nights associated with lower attendance during the second quarter of 2011 and decreased convention business throughout the first half of 2011 compared to the same prior year periods.

Operating Income and Net Loss. Reductions in departmental operating expenses, as a percentage of revenues, resulting from continued efforts to minimize costs were offset by decreases in the fair value of our supplemental executive retirement plan’s life insurance contracts during the three and nine months ended September 30, 2011 compared to the same prior year periods. As a result, operating income decreased and net loss increased during both periods in 2011 compared to the same prior year periods.

Revenues

The following table highlights the components of operating revenues (dollars in thousands):


	Three months ended September 30, 2011			Three months ended September 30, 2010			Percent Change			Nine months ended September 30, 2011			Nine months ended September 30, 2010			Percent Change
Casino	$	19,182		$	18,580			3.2	%	$	53,396		$	52,816			1.1	%
Rooms		9,357			8,782			6.5			25,168			25,240			(0.3	)
Food and beverage		8,633			8,121			6.3			25,088			23,991			4.6
Other		2,089			2,046			2.1			5,475			5,433			0.8
Promotional allowances		(5,125	)		(4,750	)		7.9			(13,571	)		(12,352	)		9.9

Casino Revenues. During the three and nine months ended September 30, 2011 compared to the same prior year periods, table games drop increased 4.0% and 2.7%, respectively, and slot handle increased 1.5% and 1.0%, respectively. Severe weather disrupted traffic flow from our feeder markets during the first quarter of 2011 compared to the same prior year period and bowler attendance declined during the second quarter of 2011 compared to the same prior year period; however, the negative impact on mass market casino play associated with decreased visitation was offset by growth in tracked table games play and slot handle. The increases in casino volume during the three and nine months ended September 30, 2011 compared to the same prior year periods were driven by promotional incentives, including non-negotiable chips, slot free play, room offers and complimentaries, provided to customers in our casino database and growth within our locals customer demographic. Additionally, a higher table games hold percentage also contributed to the increase in casino revenues during the third quarter of 2011 compared to the same prior year period. Hold percentages in both years were within normal ranges.

Rooms Revenues. Rooms revenues rose during the three months ended September 30, 2011 compared to the same prior year period primarily due to an increase in our ADR of $5.10, and to a lesser extent, an increase in occupied room nights of 1.0%. Our ADR and occupancy percentages were $78.75 and 73.7%, respectively, for the three months ended September 30, 2011 compared to $73.65 and 73.3%, respectively, for the three months ended September 30, 2010. The increase in ADR during the current quarter compared to the same prior year period resulted from efforts to elevate room rates via effective rate yield management, the increase in our resort fee from $3 to $6 effective September 1, 2010, and increased room nights from our convention segment which typically produces a higher room rate.

During the nine months ended September 30, 2011 compared to the same prior year period, our ADR and occupancy percentages were $75.41 and 69.5%, respectively, compared to $72.55 and 71.5%, respectively, during the nine months ended September 30, 2010. Despite the increase in our ADR associated with the higher resort fee, hotel revenues decreased slightly during the nine months ended September 30, 2011 due to declines in hotel occupancy. This decline in hotel occupancy was primarily due to fewer convention room nights, the majority of which were attributable to the absence of a large convention which took place in March 2010 along with a major city-wide convention which took place in June 2010. Declines in bowler room nights associated with the reduction in bowlers visiting the Reno market during the second quarter of 2011 compared to the second quarter of 2010 along with the severe weather experienced during the first quarter of 2011 compared to the first quarter of 2010 also contributed to the declines in hotel occupancy.

Food and Beverage Revenues. Food and beverage revenues rose during the three and nine months ended September 30, 2011 compared to the same prior year periods as a result of increased restaurant customer counts among a majority of our restaurants, higher complimentaries associated with promotional offers, and growth in convention and ballroom catering revenues. Restaurant customer counts increased 3.4% and 3.0%, respectively, for the three and nine months ended September 30, 2011 compared to the same prior year periods. Additionally, our average restaurant check increased during the three and nine months ended September 30, 2011 compared to the same prior year periods due to selective menu price revisions in several of our restaurants and had a positive impact on food and beverage revenues.

Other Revenues. Other revenues are comprised of revenues generated by our retail outlets, entertainment, other miscellaneous items, and our share of ballroom revenues. During the three months ended September 30, 2011 compared to the same prior year period, other revenues increased primarily due to increased retail revenues, ATM commissions and convention incentive fees. These increases were partially offset by declines in ballroom revenues associated with fewer banquet functions and decreased entertainment revenues resulting from a decrease in concert dates during the third quarter of 2011 compared to the same prior year period.

Other revenues remained flat during the nine months ended September 30, 2011 compared to the same prior year period. Increases in retail and other revenues were offset by decreases in ballroom and entertainment revenues during the nine months ended September 30, 2011 compared to the same prior year period.

Promotional Allowances. Promotional allowances, expressed as a percentage of gross revenues, increased to 13.1% and 12.4%, respectively, during the three and nine months ended September 30, 2011 compared to 12.7% and 11.5%, respectively, during the three and nine months ended September 30, 2010. This year over year growth was attributable to increases in rooms, food, beverage, concert tickets and retail promotional offers to our casino customers. These increases resulted from efforts to drive visitation to Silver Legacy, utilize available room inventory during slower periods, reward customer loyalty, attract new players and market our improved players’ club which was revised in August 2010.

Operating Expenses

The following table highlights our operating expenses (dollars in thousands):


	Three months ended September 30, 2011		Three months ended September 30, 2010		Percent Change			Nine months ended September 30, 2011		Nine months ended September 30, 2010		Percent Change
Casino	$	10,084	$	9,930		1.6	%	$	27,990	$	27,376		2.2	%
Rooms		2,584		2,489		3.8			7,455		7,416		0.5
Food and beverage		5,763		5,430		6.1			16,746		16,149		3.7


Other	1,340		1,503		(10.8	)	3,709	4,014		(7.6	)
Selling, general and Administrative	7,274		7,179		1.3		20,966	20,947		0.1
Depreciation	3,584		3,584		0.0		11,014	11,748		(6.2	)
Change in fair value of life insurance contracts	591		(476	)	(224.2	)	323	(295	)	(209.5	)
(Gain) loss on disposition of assets	(2	)	130		(101.5	)	95	210		(54.8	)

Casino Expenses. Casino expenses increased during the three and nine months ended September 30, 2011 compared to the same prior year periods primarily due to increased promotional allowances related to the cost of rooms, food, beverage, ticket and retail complimentaries allocated to the casino department and an increase in the liability associated with unredeemed players’ club complimentaries. These increases were partially offset by savings in casino departmental payroll resulting from operational efficiencies, declines in bad debt expense and decreased special events expenses as a result of continued efforts to reduce costs and maximize profitability.

Rooms Expenses. During the three and nine months ended September 30, 2011 compared to the same prior year periods, rooms expenses increased mainly due to higher costs resulting from increased free-to-guest internet usage and increased laundry expenditures associated with our improved room product and linens presentation implemented during our room remodel project which was completed in December of 2010. These expenses were partially offset by savings, on a per occupied room basis, in hotel department payroll and supplies. During the third quarter of 2011 compared to the same prior year period, increased room nights also drove the increase in room expenses; however, the growth in our ADR resulted in an improved profit margin during the current quarter.

Food and Beverage Expenses. During the three and nine months ended September 30, 2011 compared to the same prior year periods, food and beverage expenses rose primarily due to higher departmental payroll and food cost of sales as a result of growth in restaurant customer counts. These increases were partially offset by a higher amount of complimentaries allocated to the casino departments during both periods in 2011 compared to 2010.

Other Operating Expenses. Other operating expenses are comprised of expenses associated with the operation of our retail outlets and the ballroom along with the entertainment department’s production costs and professional fees. Other operating expenses decreased during the three and nine months ended September 30, 2011 compared to the same prior year periods principally due to lower ballroom expenses associated with decreased ballroom usage along with declines in entertainment expenses. These declines were partially offset by increases in retail expenses in conjunction with higher retail revenues during the three and nine months ended September 30, 2011 compared to the same prior year periods.

Selling, General and Administrative Expenses. During the three months ended September 30, 2011 compared to the same prior year period, selling, general and administrative expenses increased mainly as a result of higher advertising media expenditures associated with a new television commercial and expanded advertising campaign, legal and financial advisor professional services, and higher electricity costs due to increased rates. These increases were partially offset by reductions in payroll, benefits, property taxes, insurance expense and building repairs and maintenance.

During the nine months ended September 30, 2011 compared to the same prior year period, selling, general and administrative expenses remained flat. The same factors affecting the third quarter of 2011 also impacted the nine months ended September 30, 2011 compared to the same prior year period with the exception of utilities costs which decreased due to lower usage resulting from operational efficiencies throughout the first half of 2011 compared to 2010.

Depreciation Expense. Depreciation expense for the three and nine months ended September 30, 2011 compared to the same prior year periods remained flat. Increased depreciation of assets associated with our hotel room remodel project which were placed into service and depreciated throughout the latter half of 2010 was offset by declines in depreciation due to many 15 year assets becoming fully depreciated in 2011.

Change in Fair Value of Life Insurance Contracts. These amounts relate to the change in fair value of life insurance contracts that informally fund a portion of our supplemental executive retirement plan. During the three and nine months ended September 30, 2011 compared to the same prior year periods, the fair value of these life insurance contracts decreased due to declines in the underlying insurance investment return.

Other (Income) Expense

Other (income) expense is comprised of interest expense and interest income and remained flat during the three and nine months ended September 30, 2011 compared to the same prior year periods.

Liquidity and Capital Resources

During the nine months ended September 30, 2011, cash flows provided by operating activities was $3.2 million compared to $5.3 million during the same prior year period. This change in cash flows provided by operating activities was primarily due to the increase in our net loss combined with various changes in balance sheet accounts which occurred in the normal course of business. As of September 30, 2011, cash and cash equivalents were $33.0 million which is sufficient for normal operating requirements.

Cash used in investing activities for the nine months ended September 30, 2011 was $1.9 million compared to $8.5 million during the same prior year period, and related primarily to capital expenditures for various renovation projects and equipment purchases. The decrease during the nine months ended September 30, 2011 compared to the same prior year period was mainly due to the purchase of furniture and fixtures for our hotel room remodel project which was completed in December of 2010. Our executive committee has approved $2.5 million in capital expenditures for 2011.

There was no cash used in financing activities during the nine months ended September 30, 2011 and 2010.

In July 2011, we renewed our property and liability insurance policies each covering a 12-month period. Under these policies, the Partnership and the owner of the adjacent Eldorado property, Eldorado Resorts LLC (which is an affiliate of ELLC), have combined per occurrence earthquake coverage of $186 million and combined aggregate flood coverage of $250 million. In the event that an earthquake causes damage to the Partnership’s property, the Partnership is eligible to receive up to the entire $186 million in coverage, depending on the replacement cost, regardless of the damage, if any, to the Eldorado property. In the event that a flood causes damage only to the Partnership’s property, the Partnership is eligible to receive up to $250 million in coverage, depending on the replacement cost. However, in the event that both properties are damaged, the Partnership is entitled to receive, to the extent of any replacement cost incurred, up to $141 million of the coverage amount (based on our percentage of the total reported property values) and the portion of the other $109 million, if any, remaining after satisfaction of the claim of Eldorado Resorts LLC with respect to its adjoining property.

Our insurance policy also includes combined terrorism coverage for Silver Legacy and the adjoining Eldorado property up to $800 million. In the event that an act of terrorism causes damage only to the Partnership’s property, the Partnership is eligible to receive up to $800 million in coverage, depending on the replacement cost. However, in the event that both properties are damaged, the Partnership is entitled to receive, to the extent of any replacement cost incurred, up to $450 million of the coverage amount (based on our percentage of the total reported property values) and the portion of the other $350 million, if any, remaining after satisfaction of the claim of Eldorado Resorts LLC with respect to its adjoining property. This policy also covers an additional property located in Shreveport, LA which is owned by an affiliate of Eldorado Resorts LLC. In the event that an act of terrorism causes damage to all three properties, the Partnership is entitled to receive, to the extent of any replacement cost incurred, up to $351 million of the coverage amount (based on our percentage of the total reported property values) and the portion of the other $449 million, if any, remaining after satisfaction of the claims with respect to the other two properties.

The Partnership’s partnership agreement, as currently in effect, provides that, subject to any contractual restrictions to which the Partnership is subject, including the indenture relating to the 10 ¹/8% mortgage notes, and prior to the occurrence of a “Liquidating Event,” the Partnership will be required to make distributions to its partners as follows:

(i) The estimated taxable income of the Partnership allocable to each partner multiplied by the greater of the maximum marginal federal income tax rate applicable to individuals for such period or the maximum marginal federal income tax rate applicable to corporations for such period (as of the date hereof both rates are 35%); provided, however, that if the State of Nevada enacts an income tax (including any franchise tax based on income), the applicable tax rate for any tax distributions subsequent to the effective date of such income tax

shall be increased by the higher of the maximum marginal individual tax rate or corporate income tax rate imposed by such tax (after reduction for the federal tax benefit for the deduction of state taxes, using the maximum marginal federal individual or corporate rate, respectively).

(ii) Annual distributions of remaining “Net Cash From Operations” in proportion to the percentage interests of the partners.

(iii) Distributions of “Net Cash From Operations” in amounts or at times that differ from those described in (i) and (ii) above, provided in each case that both partners agree in writing to the distribution in advance thereof.

As defined in the partnership agreement, the term “Net Cash From Operations” means the gross cash proceeds received by the Partnership, less the following amounts: (i) cash operating expenses and payments of other expenses and obligations of the Partnership, including interest and scheduled principal payments on Partnership indebtedness, including indebtedness owed to the partners, if any, (ii) all capital expenditures made by the Partnership, and (iii) such reasonable reserves as the partners deem necessary in good faith and in the best interests of the Partnership to meet its anticipated future obligations and liabilities (less any release of reserves previously established, as similarly determined).

The Partnership’s partnership agreement provides that the partners shall not be permitted or required to contribute additional capital to the Partnership without the consent of the partners, which consent may be given or withheld in each partner’s sole and absolute discretion.

10 ¹/8% Mortgage Notes

On March 5, 2002, the Partnership and Capital co-issued $160.0 million principal amount of 10 ¹/8% senior secured mortgage notes due 2012. The notes are senior secured obligations which rank equally with all of the Partnership’s other outstanding senior debt and senior to any subordinated debt. The notes are secured by a security interest in substantially all of the Issuers’ existing and future assets, other than certain licenses which may not be pledged under applicable law. Each of the Partnership’s partners executed a pledge of all of its partnership interests in the Partnership to secure the notes. The notes mature on March 1, 2012 and bear interest at the rate of 10 ¹/8% per annum, payable semi-annually in arrears on March 1 and September 1 of each year, commencing on September 1, 2002. As of September 30, 2011, we were in compliance with all of the covenants in the indenture related to the notes.

In February 2009, the Partnership purchased and retired $17.2 million principal amount of its 10 ¹/8% mortgage notes. The total purchase price of the notes was approximately $11.4 million, resulting in a gain of approximately $5.5 million, net of unamortized debt issuance costs and discounts. The repurchase of the notes reduced the amount of notes outstanding to $142.8 million. The transaction was funded by available invested cash reserves. The Partnership’s executive committee has authorized the Partnership to spend up to an additional $8.6 million for the repurchase of notes. It is anticipated that any additional notes acquired prior to their maturity will be through open market purchases.

We believe we have sufficient capital resources to fund capital commitments and make interest payments on our 10 ¹/8% mortgage notes up to the March 1, 2012 maturity date. Our future sources of liquidity are anticipated to be from our operating cash flow and cash reserves. However, the entire principal amount of our notes will become due and payable at maturity on March 1, 2012 and the Partnership will be required to borrow funds to satisfy our repayment obligations under the mortgage notes or otherwise restructure our payment obligations under the mortgage notes.

We have retained the services of outside advisors to assist us with exploring various alternatives for refinancing or restructuring our obligations under the 10 ¹/8% mortgage notes. There can be no assurance, however, that we will be able to refinance or restructuring the mortgage notes on terms that are acceptable to us or, in the case of a restructure of the mortgage notes, the holders of such notes, or at all. If we are unable to refinance or restructure our obligations with respect to the mortgage notes, the holders thereof will be entitled to exercise the remedies provided in the indenture governing the notes, including foreclosing on the assets securing the mortgage notes. If we are unable to refinance or restructure the notes by March 1, 2012, it would have a material adverse effect on our business and our financial position.

Amounts outstanding under our notes have been classified as “current obligations” for financial reporting purposes beginning March 31, 2011. In the event that we are unable to refinance or restructure such amounts by the time of the filing of our Annual Report on Form 10-K for the year ending December 31, 2011, it would have a material adverse effect on our consolidated financial position and would raise substantial doubt as to our ability to continue as a going concern.

Critical Accounting Policies

A description of our critical accounting policies can be found in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2010. There have been no material changes to these policies during the nine months ended September 30, 2011.

Forward-Looking Statements

Certain information included in this report and other materials filed or to be filed by the Partnership and Capital with the Securities and Exchange Commission (as well as information included in oral statements or written statements made or to be made by them) contain or may contain statements that are forward-looking within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements can be identified by the fact that they do not relate strictly to historical or current facts. We have based these forward-looking statements on our current expectations about future events. These forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, intentions, financial condition, results of operations, future performance and business, including, current and future operations and statements that include the words “may”, “could”, “should”, “would”, “believe”, “expect”, “anticipate”, “estimate”, “intend”, “plan” or similar expressions. Such statements include information relating to capital spending, financing sources and the effects of regulation (including gaming and tax regulation) and competition. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by us or on our behalf. These risks and uncertainties include, but are not limited to our ability to refinance or otherwise restructure our obligations under our mortgage notes, dependence on existing management, leverage and debt service (including sensitivity to fluctuations in interest rates), domestic or global economic conditions, changes in Federal or state tax laws or the administration of such laws, changes in gaming laws or regulations (including the legalization of gaming in certain jurisdictions), expansion of gaming on Native American lands (including such lands in California), risks and uncertainties relating to any applications for licenses and approvals under applicable laws and regulations (including gaming laws and regulations) and any further terrorist attacks similar to those that occurred September 11, 2001. Additional information concerning potential factors that we think could cause our actual results to differ materially from expected and historical results is included in Item 1A of our annual report on Form 10-K for the fiscal year ended December 31, 2010. If one or more of the assumptions underlying our forward-looking statements proves incorrect, then our actual results, performance or achievements could differ materially from those expressed in, or implied by, the forward-looking statements contained in this report. Therefore, we caution you not to place undue reliance on our forward-looking statements. This statement is provided as permitted by the Private Securities Litigation Reform Act of 1995.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

We are potentially exposed to market risk in the form of fluctuations in interest rates and their potential impact upon our variable rate debt outstanding. We evaluate our exposure to this market risk by monitoring interest rates in the marketplace and we have, on occasion, utilized derivative financial instruments to help manage this risk although we did not utilize any derivative financial instruments during the nine months ended September 30, 2011. As of September 30, 2011, we had no variable rate debt outstanding.

Item 4.

Controls and Procedures

As required by Rule 15d-15(b) under the Securities Exchange Act, as amended (the “Exchange Act”), our management, including our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, our principal executive officer and our principal financial officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures

were effective to ensure that information required to be disclosed in reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and regulations and to provide that such information is accumulated and communicated to management to allow timely decisions regarding required disclosures.

There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. OTHER INFORMATION

Item 6.

Exhibits

(a)

Exhibits.


31.1		Certification of Gary L. Carano

31.2		Certification of Stephanie D. Lepori

32.1		Certification of Gary L. Carano pursuant to 18 U.S.C. Section 1350

32.2		Certification of Stephanie D. Lepori pursuant to 18 U.S.C. Section 1350

101.INS		XBRL Instance Document.

101.SCH		XBRL Taxonomy Extension Schema Document.

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		XBRL Taxonomy Extension Presentation, Linkbase Document.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.


		CIRCUS AND ELDORADO JOINT VENTURE

Date: November 14, 2011	By:	/s/ Gary L. Carano
		Gary L. Carano
		Chief Executive Officer (Principal Executive Officer)

Date: November 14, 2011	By:	/s/ Stephanie D. Lepori
		Stephanie D. Lepori
		Chief Accounting and Financial Officer (Principal Financial and Accounting Officer)

		SILVER LEGACY CAPITAL CORP.

Date: November 14, 2011	By:	/s/ Gary L. Carano
		Gary L. Carano
		Chief Executive Officer (Principal Executive Officer)

Date: November 14, 2011	By:	/s/ Stephanie D. Lepori
		Stephanie D. Lepori
		Treasurer (Principal Financial and Accounting Officer)

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SILVER LEGACY CAPITAL CORP 10-Q