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

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (“Act”)

For the fiscal year ended December 31, ~~2010~~2011

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

Commission File No. 333-88242

JACOBS ENTERTAINMENT, INC.

(Exact name of Registrant as specified in its charter)

Delaware

34-1959351

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

17301 West Colfax, Suite 250, ~~Golden, Colorado 80401~~

Golden, Colorado 80401

(Address of principal executive offices) (Zip code)

(303) 215-5200

(Registrant’s telephone number, including area code)

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

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

~~Indicate~~Securities byregistered ~~check~~pursuant ~~mark~~to ~~if the registrant is a well-known seasoned issuer as defined in Rule~~Section ~~405~~ 12(g) of the ~~Securities~~ Act~~. Yes ¨ No x~~:

None.

Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act.

Yes ¨ No x

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

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

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

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

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

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

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: No market exists for the common stock of the registrant; as of March 2930, ~~2011~~2012 all of its outstanding shares of common stock are held by its parent corporation.

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

Class		Outstanding at March 2930, ~~2011~~2012
Class A Common Stock, $0.01 par value		1,320 shares
Class B Common Stock, $0.01 par value		180 shares

DOCUMENTS INCORPORATED BY REFERENCE:

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

JACOBS ENTERTAINMENT, INC.

~~2010~~2011 ANNUAL REPORT ON FORM 10-K

Table of Contents

Item	Description	Page
Item 1.	Business.		1
Item 1A.	Risk Factors.		24
Item 1B.	Unresolved Staff Comments.		34
Item 2.	Properties.		34
Item 3.	Legal Proceedings.		34
Item 4.	~~[Reserved.]~~Mine Safety Disclosures		34
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.		34
Item 6.	Selected Financial Data.		35
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.		36
Item 7A.	Quantitative and Qualitative Disclosure about Market Risk.		5354
Item 8.	Financial Statements and Supplementary Data.		5455
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.		5455
Item 9A.	Controls and Procedures.		5455
Item 9B.	Other Information.		5556
Item 10.	Directors, Executive Officers and Corporate Governance.		5556
Item 11.	Executive Compensation.		5758
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.		6062
Item 13.	Certain Relationships and Related Transactions, and Director Independence.		6062
Item 14.	Principal Accounting Fees and Services.		6365
Item 15.	Exhibits, Financial Statement Schedules.		6365

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

•

projections of future results of operations or financial condition;

• expectations for our casino, video poker truck ~~plaza~~stop and horse racing properties; and

•

expectations of the availability of capital resources.

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

•

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

•

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

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

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

•

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

•

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

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

•

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

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

•

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

•

Our business relies heavily on certain markets and a further economic downturn in these markets could have a material adverse effect on our future results of operations.

• Our ~~business~~intention ~~relies~~to ~~heavily~~expand onour ~~certain~~gaming ~~markets~~activities ~~and~~into anforeign ~~economic downturn in these~~ markets asmay ~~has~~cause ~~been~~us ~~experienced~~to inface ~~the~~new ~~last~~and ~~three~~significant ~~years~~regulatory, ~~could~~financial ~~have~~and apolitical ~~material adverse effect on our future results of operations~~risks.

•

The expansion of our activities to include acquisition and operation of a broad, diversified portfolio of residential and commercial properties may increase our financial and operational risks over those associated with our traditional gaming operations.

•

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

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

NON-GAAP FINANCIAL MEASURES

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

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

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

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

•

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

•

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

•

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

•

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

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

iii

•

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

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

INDUSTRY AND MARKET DATA

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

PART I

Item 1. Business.

Introduction

Jacobs Entertainment, Inc. (“Jacobs Entertainment,” “JEI,” the “Company,” “us,” “our” or “we”) was formed as a Delaware corporation on April 17, 2001. We are a developer, owner and operator of gaming, ~~and~~ pari-mutuel wagering, leisure and entertainment facilities throughout the United States, with properties located in Colorado, Nevada, Louisiana and Virginia. We develop and acquire real estate assets, including commercial and multi-family residential properties, and add value by integrating amenities concentrating on entertainment and gaming. As of March 2930, ~~2011~~2012, we own and operate five land-based casinos, 2021 video ~~gaming~~poker truck ~~plazas~~ stops (six of which are leased) and a horse racing track with ten satellite wagering facilities (~~five~~four of which are leased and one of which is temporarily closed). In addition, we are party to an agreement that entitles us to a portion of the gaming revenue from an additional ~~truck plaza~~ video ~~gaming~~poker ~~facility~~truck stop.

All of our gaming facilities target local customers and emphasize revenues from slot machine play or video gaming, or both. For the year ended December 31, ~~2010~~2011, our net revenues, net loss and EBITDA were approximately $~~329~~379.9 million, $5.6 million and $5042.0 million, respectively. See Note 1413 to our consolidated financial statements for information concerning the operational performance of the segments of our business.

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

			As of December 31, 2010								Year EndedDecember 31,2010
			As of December 31, 2011								Year EndedDecember 31,2011
Property	Location	Facility Type	ApproximateGamingSquareFootage		GamingMachines		TableGames		HotelRooms		Property LevelEBITDA (1)
											(in thousands)
The Lodge Casino	Black Hawk, Colorado	Land-based casino		28,000		~~970~~985		3536		50	$	2627,~~858~~776
Gilpin Casino	Black Hawk, Colorado	Land-based casino		11,000		~~398~~379		6		0		4,~~363~~477
Gold Dust West- Reno	Reno, Nevada	Land-based casino		17,500		475		0		27		5,514
Gold Dust West-Reno	Reno, Nevada	Land-based casino		17,500		483		0		27		5,721
Gold Dust West - Carson City	Carson City, Nevada	Land-based casino		12,000		397		6		146		(278	)
Gold Dust West-Carson City	Carson City, Nevada	Land-based casino		12,000		390		6		142		(10,737	)
Gold Dust West- Elko	Elko, Nevada	Land-based casino		13,000		342		6		0		1,883
Gold Dust West-Elko	Elko, Nevada	Land-based casino		13,000		349		6		0		2,480
Louisiana Truck Plazas (2)	Louisiana (19 various locations)	Video gaming		12,000		944		0		0		19,255
Video Poker Truck Stops	Louisiana (22 various locations)	Video poker gaming		35,700		1,098		0		0		21,286
Colonial Downs Racetrack and satellite wagering facilities	Virginia (1110 various locations)	Horse racing and pari-mutuel wagering		N/A		N/A		N/A		N/A		~~1,483~~875
Total				93117,~~500~~200		3,~~526~~684		5354		~~223~~219	$	5951,~~078~~878

(1) Property Level EBITDA excludes corporate overhead ~~expense~~and other of $9.18 million.

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

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

	Year EndedDecember 31, 2010
	Year EndedDecember 31, 2011
Total Property Level EBITDA	$	5951,~~078~~878
Corporate overhead		(9,058	)
Corporate overhead and other		(9,833	)
Total EBITDA		5042,~~020~~045
Depreciation and amortization		(21,~~331~~498	)
Interest expense, net		(2526,~~556~~142	)
Net Income	$	3,133
Net loss	$	(5,595	)

Our Business Strategy ~~and Competitive Strengths~~

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

~~Black~~Generate ~~Hawk,~~Repeat ~~Colorado~~Business ~~was~~by ~~one~~Catering ofto ~~the~~Local Gaming ~~fastest~~Patrons. ~~growing~~We ~~gaming~~focus ~~markets~~on inattracting ~~the~~and ~~country,~~fostering ~~having~~repeat ~~experienced~~business afrom ~~26.3%~~local ~~compound annual growth in~~ gaming ~~revenue~~patrons ~~from~~at ~~1998~~all ~~through~~of ~~2000~~our properties. ~~Revenues~~Our instrategy ~~2001~~for ~~through~~establishing ~~2003~~a ~~stabilized~~strong atpresence ~~approximately~~with ~~$500~~local ~~million~~residents ~~annually~~or ~~and~~patrons ~~rose~~is to ~~$524~~provide ~~million~~a inuser-friendly ~~2004,~~gaming environment ~~$535~~featuring ~~million~~convenient ~~in 2005~~locations, ~~$554~~high ~~million~~quality infood ~~2006,~~at affordable prices and ~~$581~~promotional ~~million~~incentives inthat ~~2007.~~reward ~~However,~~frequent inplay. ~~2008,~~In ~~revenues fell~~order to ~~$509~~maximize ~~million~~exposure ~~due~~ to athe ~~statewide~~local ~~smoking ban~~ and asurrounding ~~nationwide~~communities ~~economic recession, combined with a pronounced slowdown~~ in the ~~gaming~~most ~~industry.~~cost-effective ~~In 2009 and 2010~~manner, ~~revenues~~we utilize ~~rose~~computerized toslot ~~$530~~data ~~million~~tracking ~~and~~systems ~~$559~~that ~~million,~~allow ~~respectively,~~us ~~primarily~~to ~~due~~track toindividual ~~the new~~play ~~gaming~~and ~~regulations~~payouts ~~allowed~~and ~~under~~develop ~~Colorado~~mailing ~~Amendment~~lists 50for ~~which~~special ~~became~~events, ~~effective~~contest onplay ~~July 2,~~and ~~2009~~promotions.

Pursue Opportunistic Development and Acquisitions Opportunities. We ~~may acquire~~believe our experience and management team uniquely positions us to capitalize on expansion into underdeveloped domestic and perhaps international markets or ~~develop~~to ~~additional~~pursue ~~gaming~~opportunistic ~~properties~~acquisitions inof ~~different~~strategic ~~jurisdictions~~or ~~catering~~distressed assets. We believe our operating expertise and network synergies enable us to ~~local~~create ~~gaming~~value ~~patrons~~above inand beyond what other operators can provide. Our geographically broad-based experience gives us a superior understanding of a property’s revenue potential and enables us to be the ~~future~~optimal partner or purchaser for select assets. Further, ~~further~~we ~~expanding~~believe ~~our~~that ~~geographic~~we ~~diversity~~can develop and improve acquired properties by including a mix of entertainment and leisure amenities that complement and highlight the gaming facility.

InExpand ~~November 2003~~Louisiana ~~and~~Video ~~2004,~~Poker ~~referendums~~Truck ~~were~~Stop ~~passed in four localities in Virginia that allowed us to expand our off-track wagering facilities and we currently operate ten~~Business. Our strategy ~~for~~of expanding our ~~horse racing~~presence ~~operations is to be a competitive participant~~ in the ~~industry~~Louisiana byvideo ~~capitalizing~~poker ontruck stop ~~our~~market ~~unique~~is ~~dirt~~driven ~~and~~by: ~~turf~~(i) the ~~track~~consistent ~~facilities~~revenue ~~for~~each ~~live racing, hosting marquee racing events, and expanding our off-track wagering~~ facility ~~network under appropriate circumstances. Advanced deposit account wagering~~generates, ~~primarily over~~ (ii) the ~~internet,~~high isreturn ~~the~~on ~~fastest~~investment ~~growing~~associated ~~segment~~with ofoperating the ~~pari-mutuel~~video ~~wagering~~poker ~~industry.~~truck ~~Colonial~~stops, ~~operates~~and ~~its~~(iii) the ~~own~~relatively ~~account~~low ~~wagering~~capital ~~platform~~expenditures ~~called~~necessary ~~EZ Horseplay. Colonial is seeking~~ to ~~expand~~maintain EZthe ~~Horseplay wagering handle with both traditional customers and customers in non-traditional venues using technology specifically developed for EZ Horseplay~~facilities.

~~Our~~Strong ~~competitive~~Emphasis ~~strategies~~on Slot and ~~strengths~~Video ~~include:~~Gaming Revenues. All of our gaming facilities emphasize slot machine or video gaming play, or both. We believe slot machine play to be the fastest growing, most consistently profitable and lowest risk segment of the gaming entertainment business. We offer a wide variety of games to attract customers and encourage them to play for longer periods of time, thereby promoting the stability of our gaming revenue. We intend to maximize slot and video gaming revenue by continuing to invest in state-of-the art equipment and systems and replacing older models with the most current product offerings in appropriate markets.

~~Generate~~Maximize ~~Repeat~~Our Core Business byProfitability ~~Catering~~Upon toa ~~Local~~Rebound ~~Gaming~~in ~~Patrons.~~Net Revenues. We ~~focus~~operate onbusinesses ~~attracting~~that ~~and~~have ~~fostering~~inherently ~~repeat~~low ~~business~~variable ~~from~~costs ~~local~~such ~~gaming~~that ~~patrons~~positive atchange ~~all~~in ofrevenues ~~our~~should ~~properties.~~drive ~~Our~~relatively ~~strategy~~large ~~for~~improvements ~~establishing~~in a strong presence with local residents or patrons is to provide a user-friendly gaming environment featuring convenient locations, high quality food at affordable prices and promotional incentives that reward frequent playEBITDA. In ~~order~~addition to ~~maximize exposure to~~ the ~~local~~inherently ~~and~~high variable ~~surrounding~~margin ~~communities~~nature inof ~~the~~our ~~most cost-effective manner~~businesses, we ~~utilize~~have ~~computerized~~and ~~slot~~will ~~data~~continue ~~tracking systems that allow us~~ to ~~track~~dedicate ~~individual~~significant ~~play~~efforts ~~and~~towards ~~payouts~~positioning ~~and~~our ~~develop~~business ~~mailing lists for special events, contest play~~ and ~~promotions.~~cost Westructure ~~also participate in busing programs with unaffiliated transportation companies~~ to ~~bring~~ensure ~~patrons~~we ~~from~~generate the ~~greater Denver metropolitan area and surrounding communities to our two properties located in Black Hawk, Colorado.~~

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

~~Enter~~ maximum ~~Additional~~incremental ~~Locals-Oriented~~profitability ~~Markets.~~when ~~Our~~core ~~management~~industry ~~team~~revenue ~~has~~growth areturns. ~~proven track~~When ~~record~~revenue oftrends ~~successfully~~improve, ~~operating~~we ~~casinos~~anticipate that ~~cater~~our tomargins ~~local~~will ~~residents~~improve orcompared ~~day~~to ~~trip~~our ~~patrons~~previous ~~who~~periods ~~reside~~of insimilar revenue ~~close~~levels ~~proximity~~due to the ~~properties.~~combination Inof anour ~~effort~~reduced tocost ~~leverage~~structure ~~this operating experience~~ and ~~enter~~generally ~~two~~high ~~additional~~margins. ~~locals-oriented markets~~However, ~~we acquired~~this ~~Piñon~~trend ~~Plaza~~may ~~(subsequently~~not ~~renamed~~continue ~~“Gold Dust West-Carson City”), located in Carson City, Nevada, in June 2006. This facility has 397 slot machines~~ and ~~six~~our ~~table~~margins ~~games~~may onnot ~~its~~improve ~~12,000~~at ~~square foot gaming floor~~all. ~~We opened a new casino in Elko, Nevada (“Gold Dust West-Elko”) on March 5, 2007 that features a 13,000 square-foot casino floor with 342 slot machines and six table games.~~

Capitalize on the Growth of EZ Horseplay, Our Proprietary Internet Account Wagering Platform, at Colonial Downs. Advanced deposit account wagering, primarily over the internet, is the fastest growing segment of the pari-mutuel wagering industry. We have developed and operate our own account wagering platform called EZ Horseplay. In addition to capitalizing on our unique dirt and turf track facilities for live racing, hosting marquee racing events, and expanding our off-track wagering facility network under appropriate circumstances, we intend to expand EZ Horseplay wagering handle with both traditional customers and customers in non-traditional venues using technology specifically developed for EZ Horseplay. We may license our EZ Horseplay technology platform to operators in other jurisdictions as well.

Our Competitive Strengths

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

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

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

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

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

In Louisiana, effective June 1, 2010, no new licenses for video poker truck stops will be granted for locations within one mile of any residential property and certain other structures. This legislation has significantly reduced the number of new video poker truck stop licenses being issued. Furthermore, additional barriers to entry include restrictions that require ~~truck~~ ~~plaza~~ video ~~gaming~~poker ~~facilities~~truck stops to meet specified minimum levels of diesel and total fuel sales, have a specified minimum site acreage and conduct restaurant operations not fewer than 12 hours per day and to keep a convenience store open 24 hours per day. These restrictions also prohibit the operation of more than 50 video ~~gaming~~poker machines at any location and require ~~truck plaza~~ video ~~gaming~~poker truck ~~facilities~~stops to be located only in those parishes that voted to continue video gaming during a one-time statewide referendum in 1996. Additional barriers to entry are disclosed below in “Gaming Regulation and Licensing—Louisiana.”

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

Strong, Experienced Management Team. Our senior management team is an experienced group of industry veterans. Jeffrey P. Jacobs, our Chairman and Chief Executive Officer, has been Black Hawk Gaming’s Chief Executive Officer since November 1996 and the Chief Executive Officer of Colonial Holdings, Inc. (“Colonial”), our wholly owned subsidiary, since March 1997. Stephen R. Roark, our President, has been Black Hawk Gaming’s President since September 1995 and was its Chief Financial Officer from 1993 to 2006. Ian M. Stewart, our President of Pari-Mutuel Wagering Operations, has been President of Colonial since November 1998 and its Chief Financial Officer since June 1997. Michael T. Shubic, our Chief Operating Officer, has over 35 years of experience in the gaming industry ~~and has been with us since 2002~~. Brett A. Kramer, our Chief Financial Officer, has over 15 years experience with us in various financial capacities. Stanley Politano, our Executive Vice President, also has over 15 years of experience in the gaming industry. The five general managers of our casinos have numerous years of casino management experience and report to Mr. Shubic. The Vice President of Louisiana Operations oversees our ~~truck~~video ~~plaza~~poker ~~video~~truck ~~gaming~~stop operations, has over 15 years of experience in video ~~the~~poker truck ~~plaza~~stops ~~video gaming business~~ and also reports directly to Mr. Shubic. We believe the expertise and experience of our management team enables us to enhance the operation of our existing properties and any properties we may acquire in the future.

Our Properties and Operations

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

The Lodge isCasino—Black ~~located~~Hawk, ~~on a 2~~Colorado.5 ~~acre~~The ~~site~~Lodge ~~that~~Casino ~~abuts~~in ~~State~~Black ~~Highway~~Hawk, ~~119~~Colorado, ~~with~~which ~~approximately~~commenced 28operations in June 1998,~~000~~ ~~square~~is ~~feet~~one of ~~gaming~~18 ~~space~~casinos onlocated ~~three~~in ~~floors~~the ~~containing~~gaming ~~970~~district ~~slot~~of ~~machines~~Black ~~and~~Hawk. 35The ~~table~~Lodge ~~games~~serves ~~(including~~the 19greater ~~poker~~Denver ~~tables~~metropolitan area, 12which ~~black~~is ~~jack~~located ~~tables,~~40 2miles ~~roulette~~east ~~tables~~of Black Hawk and has a population of approximately 2.4 million, ~~craps tables)~~as well as customers from nearby communities such as Boulder and Fort Collins, 50Colorado ~~hotel~~and ~~rooms~~Cheyenne, ~~four~~Wyoming. ~~restaurants~~As of December 31, ~~three~~2011, the ~~bars~~Black ~~and~~Hawk ~~on-site~~market ~~parking~~had ~~for~~approximately 8,400 slot machines and approximately ~~600~~200 ~~vehicles.~~table ~~Our~~games ~~property~~generating ~~includes~~$551 million in revenues for the year then ended. The ~~White~~Lodge ~~Buffalo~~is ~~Grille,~~one ~~Seasons~~of ~~Buffet,~~the ~~Jake’s~~largest ~~Deli~~gaming ~~and~~facilities ~~Java~~in ~~and~~the ~~Crème’s~~market.

The Lodge is located on a 2.5 acre site that abuts State Highway 119, with approximately 28,000 square feet of gaming space on three floors containing 985 slot machines and 36 table games (including 21 poker tables, 11 black jack tables, 2 roulette tables and 2 craps tables), 50 hotel rooms, four restaurants, three bars and on-site parking for approximately 600 vehicles. Our property includes The White Buffalo Grille, Seasons Buffet, Jake’s Deli and Java and Crème’s.

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

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

The Gilpin Casino—Black Hawk, Colorado. The Gilpin Casino, which commenced operations in October 1992, is located on a one-acre site in the central Black Hawk gaming district. We ~~expanded our facility through the acquisition of an adjacent casino in early 1994 and we further expanded the casino in 2005. We~~ were one of the first casinos opened in Colorado following the legalization of casino gaming in 1991. We offer ~~398~~379 slot machines and 6 table games, including 4 black jack tables, 1 roulette table and 1 craps table. On March 15, 2010, we closed the Gilpin poker room. The Gilpin has one restaurant, Lucille’s, ~~two bars~~ and atwo ~~slot club~~bars. The Gilpin utilizes busing and other promotional programs, similar to those of The Lodge. We have available to our customers approximately 200 surface parking spaces in the heart of historic Black Hawk.

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

Gold Dust West-~~Carson City~~Reno—~~Carson City~~Reno, Nevada. OnGold ~~June 25,~~Dust ~~2006~~West-Reno, which we ~~closed~~acquired anin ~~agreement~~2001, ~~with~~is ~~Capital~~located ~~City Entertainment,~~on ~~Inc~~4.6 ~~(“CCI”),~~owned anand ~~unaffiliated~~leased ~~party,~~acres ~~under~~in ~~which~~Reno’s wecentral ~~acquired~~downtown ~~all~~gaming ofdistrict ~~the~~and ~~assets~~has ofbeen operating ~~Piñon~~since ~~Plaza,~~1978. ~~a division of CCI which we have now re-branded as~~ Gold Dust West-~~Carson~~Reno ~~City.~~caters ~~The~~to ~~assets~~residents ~~included all~~ of ~~the~~Reno ~~personal property, buildings~~ and ~~improvements~~surrounding ~~used~~areas byand ~~Piñon~~has ~~Plaza~~approximately in17,500 ~~the~~square ~~operation~~feet of ~~its~~gaming ~~casino~~space, ~~hotel,~~which ~~bowling~~offers ~~alley~~483 ~~and~~slot ~~RV park in Carson City, Nevada~~machines. ~~Contemporaneously,~~Gold weDust ~~entered~~West-Reno ~~into~~also afeatures ~~triple~~The ~~net~~Grille ~~ground~~Restaurant ~~lease~~and ~~covering~~has parking ~~land~~for ~~underlying~~365 ~~the~~vehicles. ~~assets which~~The ~~began~~property ~~upon~~currently ~~closing~~offers of27 ~~the~~hotel ~~asset purchase agreement~~rooms.

Gold Dust West-Carson City—Carson City, Nevada. Gold Dust West-Carson City, which commenced operations in 1995 prior to our acquisition in 2006, is a 146,000 square foot facility located on approximately 18 acres ~~covered~~of ~~by the~~ land we lease ~~mentioned~~from ~~above~~an unaffiliated party pursuant to a triple net ground lease. Gold Dust West-Carson City offers ~~397~~390 slot machines and six table games, two restaurants, a snack bar and three bars. It has a slot club ~~and~~ that offers various promotional packages~~, many associated with its 32 bowling lanes~~. Gold Dust West-Carson City ~~has~~offers ~~146~~142 hotel rooms and a 32 lane bowling center. It also owns and operates a 4847 space RV park as part of the resort. There are approximately 875 parking spaces for Gold Dust West-Carson City’s casino patrons and hotel guests. On April 1, 2010, we opened a new Mexican restaurant, Olé Olé.

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

We renovated and upgraded the building and installed slot machines, table games and appropriate food and beverage offerings. We commenced renovation during the third quarter of 2006 and opened the casino on March 5, 2007. Gold Dust West-Elko has approximately 13,000 square feet of gaming space, and offers ~~342~~349 slot machines and six table games. Gold Dust West-Elko also has two restaurants, one bar and has parking for 400 vehicles.

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

~~The~~Louisiana Video Poker Truck Stop Properties. Our Louisiana operations consist of 21 video poker truck ~~plazas’~~stops ~~revenues~~located in Louisiana (of which six are ~~comprised~~leased). We are also party to an agreement that entitles us to a portion of: ~~(i) revenue~~the gaming revenues from an additional video poker ~~gaming~~truck ~~machines;~~ stop (~~ii) sales~~Cash’s ofTruck ~~gasoline~~Plaza and ~~diesel~~Casino ~~fuel;~~in ~~(iii~~Lobdell). Each video poker truck stop features a 24 ~~sales~~hour per ofday ~~groceries~~convenience store, ~~trucker~~fueling ~~supplies~~operations, ~~and~~a ~~various~~restaurant ~~items~~operating ~~through~~not ~~their~~fewer ~~convenience~~than ~~stores; (iv)~~12 ~~sales~~hours per ofday, ~~food~~ and ~~beverages~~up to 50 video poker devices in ~~their~~the ~~restaurants~~casino ~~and~~depending ~~bars;~~on the level of fuel sales and ~~(v) miscellaneous commissions~~available onspace. ~~ATMs~~At December 31, ~~pay~~2011, ~~phones~~our ~~and~~video ~~lottery~~poker ~~sales~~truck stops had a combined total of 1,098 video gaming devices.

The Louisiana video poker ~~gaming~~truck ~~industry~~stops’ ~~consists~~revenues ofare ~~video~~comprised ~~gaming in 31~~ of ~~Louisiana’s~~: 64(i) revenue ~~parishes.~~from ~~The industry is highly regulated and~~ video poker gaming machines; ~~can~~(ii) sales ~~only~~of begasoline ~~placed~~and indiesel ~~qualifying~~fuel; ~~bars,~~(iii) sales ~~restaurants,~~of ~~hotels~~groceries, ~~satellite~~trucker ~~wagering~~supplies ~~facilities~~ and ~~truck~~various ~~plazas.~~items Inthrough ~~order~~their toconvenience ~~qualify for video gaming, a truck plaza~~stores; ~~must~~(iv) sales ~~offer~~of ~~diesel~~food ~~fuel,~~and ~~gasoline,~~beverages ain ~~convenience~~their ~~store,~~restaurants ~~a restaurant~~ and abars; ~~place for truck drivers to shower~~ and ~~sleep. Our video gaming machines are located in a separate gaming room~~(v) ~~that~~miscellaneous iscommissions ~~designed~~on ~~to provide a pleasant casino-like atmosphere. As of December 31~~ATMs, ~~2010,~~pay ~~Louisiana~~phones ~~had~~and ~~197~~lottery ~~licensed video gaming truck plazas~~sales.

The Louisiana ~~truck~~video ~~plaza~~poker industry consists of video poker in 31 of Louisiana’s 64 parishes. The industry is highly regulated and video poker machines can only be placed in qualifying bars, restaurants, hotels, satellite wagering facilities and video ~~gaming~~poker ~~market~~truck ~~caters~~stops. ~~primarily~~In order to ~~local~~qualify ~~residents~~for video poker, ~~whom~~a wevideo ~~believe~~poker ~~contribute~~truck tostop ~~the~~must ~~vast~~offer ~~majority~~diesel offuel, gasoline, a convenience store, a restaurant and a place for truck ~~plaza~~drivers ~~gaming~~to ~~revenue~~shower and sleep. WeOur ~~believe~~video ~~that~~poker ~~most~~machines ofare ~~our~~located ~~video~~in a separate gaming ~~customers~~room that ~~live~~is ~~within~~designed to provide a ~~five~~pleasant casino-~~mile~~like ~~radius~~atmosphere. As of ~~our~~December 31, ~~properties~~2011, Louisiana had 200 licensed video poker truck stops.

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

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

Colonial Downs—New Kent, Virginia. Colonial Downs, which opened in 1997, is our racetrack in New Kent, Virginia, which primarily conducts pari-mutuel wagering on thoroughbred and harness racing. The outside grandstand area, located on the first floor of the track facility, has an occupancy capacity of approximately 4,000 patrons. Also located on the first floor of the track facility are simulcast television seating areas, two covered patio areas, two bars, a large concession food court, gift shop, game room and wagering locations with 68 tellers. The Jockey Club, which is in the main grandstand area located on the third floor of the track facility, includes a full-service dining area with a seating capacity of 548 patrons, two separate lounge areas, and additional wagering locations with 20 tellers. On the fourth floor is the Turf Club with seating for full service dining for 125 along with 10 luxury suites with skybox seating and a wagering location with eight tellers. In addition, there is a ballroom with seating for 250 patrons for special events. The dirt track at Colonial Downs is one and one-quarter miles in length and is one of the largest tracks in the United States. Based on our knowledge of the industry, we believe the 180-foot wide turf track is the widest turf track in the country, thereby establishing the track as one of the major turf racing facilities in the Mid-Atlantic region. In addition to our racetrack, we presently operate ten satellite wagering facilities inthroughout Virginia ~~as described~~(four ~~below.~~are Weleased ~~previously~~and ~~operated~~one ~~nine~~more ~~such~~is ~~facilities~~temporarily ~~until we~~ closed). ~~our~~Our ~~Chesapeake~~satellite ~~Military~~wagering ~~Highway~~facilities ~~facility~~are inlocated ~~November 2008~~ in ~~order~~Alberta, ~~to consolidate operations with our~~ Chesapeake, Hampton, ~~Indian~~Henrico, ~~River~~Martinsville, ~~Road~~Weber ~~facility.~~City, ~~During 2010~~Vinton, weand ~~opened~~three ~~two new satellite wagering facilities~~ in Richmond~~, Virginia~~.

~~Satellite~~Account Wagering ~~Facilities,~~and ~~Virginia~~EZ Horseplay. InEach year, ~~addition~~the ~~to our~~Virginia ~~racetrack~~Racing ~~facility,~~Commission welicenses ~~operate~~advance ~~ten~~deposit ~~satellite~~account wagering ~~facilities~~providers, inincluding ~~Virginia~~us, ~~(five~~to ~~are~~accept ~~leased).~~wagers ~~These~~over ~~facilities~~the ~~provide~~telephone ~~simulcast~~or ~~pari-mutuel~~through ~~wagering~~the oninternet ~~thoroughbred~~via ~~and~~the ~~harness~~provider’s ~~racing~~advanced ~~from~~deposit ~~our~~wagering ~~racetrack~~system. ~~and~~For ~~selected~~2011 ~~other~~and ~~racetracks~~2012, only ~~throughout~~four ~~the~~providers ~~United~~(including ~~States.~~us) ~~Our~~have ~~satellite~~been ~~wagering~~licensed. ~~facilities~~Because ~~are~~of ~~located~~our inposition ~~Alberta,~~as ~~Chesapeake,~~the ~~Hampton,~~only ~~Martinsville,~~racetrack ~~Weber~~in ~~City~~Virginia, ~~Vinton,~~we ~~and~~receive ~~four~~a instatutory ~~Richmond.~~source ~~These~~market ~~facilities~~fee ~~employ~~equal ~~state-of-the-art~~to ~~audio/video~~10% ~~technology~~of ~~for~~all ~~receiving quality~~wagers ~~import~~placed ~~simulcast~~by ~~thoroughbred~~Virginians ~~and~~through ~~harness~~these ~~racing~~account ~~from~~wagering ~~nationally~~service ~~known racetracks~~providers. We ~~The~~share ~~Virginia~~the ~~Racing~~source ~~Commission~~market ~~cannot~~fee ~~grant~~equally ~~licenses~~with ~~for~~the ~~more~~recognized ~~satellite~~majority ~~wagering~~horsemen’s ~~facilities under existing legislation~~groups.

~~The~~Since ~~facilities~~2004, ~~are~~we ~~structured~~have tooperated ~~accommodate~~an internet ~~the~~account ~~needs~~wagering ofplatform ~~various~~in ~~patrons~~Virginia called EZ Horseplay. In early 2009, ~~from~~we ~~the~~developed ~~seasoned~~a ~~handicapper~~custom tobuilt ~~the~~account ~~novice~~wagering ~~wagerer,~~support ~~and provide~~kiosk ~~patrons~~that ~~with~~allows a ~~comfortable~~customer to remotely open a wagering account, ~~upscale~~fund ~~environment~~the ~~including~~account with cash, take a ~~full~~cash withdrawal ~~bar~~from their account and print a ~~range~~race oftrack ~~restaurant services~~program. The Infirst ~~addition~~kiosks, ~~self-serve~~along ~~automated~~with ~~wagering~~a ~~equipment~~touch isscreen ~~available~~version toof ~~patrons~~the inEZ ~~order~~Horseplay tointernet ~~make~~account wagering ~~more~~platform, ~~user-friendly~~were todeployed ~~the~~in ~~novice~~September 2009. As of December 31, 2011, we ~~and~~have ~~more~~deployed ~~efficient~~approximately ~~for~~70 ~~the~~kiosks ~~expert.~~in ~~This~~private ~~equipment~~clubs, ~~with~~bars ~~touch-screen~~and ~~interactive~~restaurants ~~terminals~~in ~~and~~Virginia. ~~personalized~~We ~~portable~~intend ~~wagering~~to ~~terminals,~~expand ~~provides~~EZ ~~patrons~~Horseplay wagering handle with ~~current~~both ~~odds~~traditional ~~information~~customers and ~~enables~~customers ~~them~~in tonon-traditional ~~place~~venues ~~wagers~~using ~~and~~technology ~~credit~~specifically developed ~~winning~~for ~~tickets~~EZ ~~to their~~Horseplay. ~~accounts~~Additionally, ~~without~~we ~~waiting~~may license our EZ Horseplay technology platform to operators in ~~line~~jurisdictions outside Virginia as well.

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

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

~~The~~We ~~Nautica~~plan ~~Properties.~~to ~~During~~grow ~~July~~our ~~2006,~~company wethrough ~~acquired~~the ~~from~~strategic ~~affiliated~~real ~~parties~~estate ~~options~~development toprojects. ~~lease~~Our ~~and~~strategy ~~options~~is to ~~purchase~~acquire ~~six~~real ~~businesses~~estate or existing gaming properties in strategic locations and ~~their~~use ~~related~~our ~~assets,~~development ~~including~~expertise ~~various~~to ~~parcels~~create ~~of land,~~mixed ~~buildings~~use ~~and~~entertainment ~~related~~complexes ~~improvements,~~with onamenities that supplement and emphasize the ~~west~~gaming ~~bank~~component of the ~~Cuyahoga~~project. ~~River~~Furthermore, inwe ~~Cleveland,~~plan ~~Ohio.~~to Weuse ~~refer~~added value development techniques to ~~these~~maximize ~~businesses~~the benefits of our existing properties and ~~their~~improve ~~related~~any ~~assets~~properties we choose to acquire. For our casinos, ~~covering~~particularly anthose ~~aggregate~~that ofcater ~~approximately~~to ~~624~~local players,~~000~~ ~~square~~we ~~feet~~believe ofbuilding ~~land~~entertainment ~~(14.4~~districts ~~acres)~~that includes gaming, retail and perhaps a ~~building~~ ~~comprised~~multi-family ofresidential ~~47,380~~component ~~square~~shifts ~~feet~~traffic offlow ~~net~~and ~~rentable~~increases ~~space,~~population asdensity ~~the~~near ~~Nautica~~our ~~Properties~~property enhancing our gaming product.

We are continuously looking for opportunities, both domestically and globally to further diversify our geographic footprint and increase shareholder value. Some of the areas in which we are considering expansion include, but are not limited to:

The Gulf Coast – We have assembled a development parcel just south of I-10 in Diamondhead, Mississippi. Subject to gaming and zoning approvals, we hope to develop a casino, hotel, retail and entertainment complex with a town center concept.

OnColorado ~~April 1,~~– ~~2008,~~We weown ~~acquired~~or control a ~~business~~significant ~~and~~area ~~its~~of ~~related~~developable ~~assets,~~property ~~referred~~within ~~to as~~the ~~“Lot~~gaming ~~D,”~~district ~~for~~in ~~$800~~Black Hawk,~~000~~ Colorado. ~~The~~We ~~company~~may ~~that~~develop ~~owned~~ this ~~business~~property ~~was~~to ~~wholly~~possibly ~~owned~~build bya ~~our~~new ~~Chairman and Chief Executive Officer (“CEO”). On January 21~~casino, ~~2009,~~expand weone ~~acquired~~of aour ~~second~~existing ~~Nautica~~casinos ~~Properties~~or ~~based~~add ~~business~~amenities ~~and~~like ~~its~~hotel ~~related assets~~rooms, ~~referred~~entertainment tovenues asor ~~“Sugar~~parking ~~Warehouse,” for $2,450,000 from the limited partnership~~ that ~~owned~~will ~~this~~complement ~~building. An affiliate of~~ our ~~CEO~~existing ~~owned 82% of the general partner interests and 16~~casinos.~~4% of the limited partner interests of the seller.~~

OnIn ~~August 16~~addition, ~~2010,~~we have assets that we ~~acquired~~may adevelop ~~third~~into ~~Nautica~~gaming ~~Properties~~or ~~based~~other ~~business~~leisure and ~~its~~entertainment ~~related~~venues ~~assets,~~and ~~referred~~complementary ~~to as~~uses. ~~“Flats,”~~In ~~for~~New $2Kent County,~~800,000~~ Virginia we own over 600 acres surrounding our race track. ~~Flats~~This ~~was~~land ~~controlled~~can bybe ~~the~~used ~~mother~~to ~~and~~expand ~~sister~~our facility at Colonial Downs (especially if the Commonwealth of Virginia permits casino gambling at our ~~CEO~~facility, ~~and~~the isonly ~~therefore~~licensed racetrack ~~deemed~~in toVirginia). beWe anhave ~~entity~~also ~~under~~assembled ~~common~~a ~~control~~24-acre development site in the heart of downtown Cleveland, Ohio on the west bank of the Cuyahoga River. ~~See~~While ~~Item 13~~the ~~“Certain~~long-term ~~Relationships~~plan ~~and~~for ~~Related~~these ~~Transactions~~sites is to expand or create additional gaming facilities, we anticipate exploiting market opportunities to maximize the existing permitted highest and ~~Director Independence~~best use for the property we own in order to minimize carrying costs or maximize value.”

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

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

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

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

Seasonality and Weather Conditions

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

Competition

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

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

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

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

Our Colorado casinos are on opposite sides of Main Street in Black Hawk. Because of their proximity, our Black Hawk casinos compete for some of the same customers. Further, there were 1516 other casinos operating in Black Hawk on December 31, ~~2010~~2011. There were approximately 8,~~400~~600 total gaming devices (slot machines, poker, black jack, craps and roulette tables) in Black Hawk as of December 31, ~~2010~~2011.

~~Central~~Competition ~~City~~in isthe ~~located adjacent to~~ Black Hawk ~~and~~ ~~provides~~gaming ~~the~~market, ~~most~~which ~~direct~~is ~~competition to~~ the primary gaming ~~establishments~~market in ~~Black~~Colorado, ~~Hawk~~is intense. ~~There~~Large, ~~were~~well-financed ~~seven~~companies have ~~casinos~~entered ~~operating~~the inBlack ~~Central~~Hawk ~~City~~and ~~with~~other ~~approximately~~Colorado ~~2,200~~markets ~~total~~through ~~gaming~~the ~~devices~~purchase asor expansion of ~~December 31,~~existing ~~2010.~~facilities ~~Black~~and ~~Hawk~~others ~~has~~may ~~historically~~continue ~~enjoyed~~to ~~a competitive~~do ~~advantage~~so, ~~over~~all ~~Central~~of ~~City~~which incould ~~large~~materially ~~part because~~harm ~~access~~our bybusiness, ~~State~~financial ~~Highway~~condition ~~119~~and results of operations. Ameristar Black Hawk (~~formerly~~owned ~~the~~by ~~only~~Ameristar ~~major~~Casinos, ~~access~~Inc.) tois ~~Black~~directly ~~Hawk~~across ~~from~~Highway ~~the~~119 ~~Denver~~from ~~metropolitan~~The ~~area~~Lodge and ~~Interstate~~operates ~~70)~~approximately ~~requires~~1,550 ~~customers~~total togaming ~~drive~~devices bywith ~~and,~~new inslot ~~part~~product, ~~through Black~~a ~~Hawk~~new toparking ~~reach~~garage ~~Central~~and ~~City.~~refurbished Inand ~~late~~rebranded ~~2004,~~dining ~~Central~~venues. Ameristar ~~City~~completed ~~constructed~~construction of a ~~road~~33 ~~from~~story, I536-70room ~~directly~~hotel, ~~into~~a ~~Central~~convention ~~City,~~center ~~commonly~~and ~~referred~~other toamenities asand ~~the~~facilities ~~Central~~in ~~City Parkway~~2009. ItMardi isGras ~~now~~Casino, ~~possible~~Golden ~~for~~Gates ~~certain~~Casino ~~traffic~~and ~~that~~Golden ~~passed~~Gulch ~~through~~Casino ~~Black~~— ~~Hawk~~all, tonext ~~proceed directly~~ to ~~Central~~The ~~City~~Lodge, ~~from~~were ~~Interstate~~acquired ~~70.~~by ~~Nonetheless~~Affinity Gaming, ~~motorists~~LLC ~~driving~~in ~~from~~September ~~the~~2011 ~~Denver~~and ~~metropolitan~~Riviera ~~area~~Black ~~still~~Hawk ~~have~~was ~~the~~acquired ~~option~~by Monarch Casino and Resort, Inc. Each of ~~choosing~~these tooperators gocan ~~either~~be expected to ~~Black~~reinvest ~~Hawk~~in ortheir ~~Central~~properties ~~City~~and ~~without~~make ~~having~~continuous toimprovements ~~drive~~in ~~through~~their ~~the~~marketing ~~other town~~efforts.

~~Large,~~Central ~~well-financed~~City ~~companies~~is ~~have~~located ~~entered~~adjacent ~~the~~to Black Hawk and ~~other~~provides ~~Colorado markets and others may enter through~~ the ~~purchase~~most ~~or expansion~~direct ofcompetition ~~existing~~to facilities, which could have a material adverse effect on our results of operations and financial position. For example, on January 1, 2005, Ameristar Casinos, Inc. purchased a facility, formerly known as the ~~Mountain High~~gaming ~~Casino,~~establishments ~~which is directly across the street from The Lodge, and completed construction of a 536 hotel room tower~~ in the fourth quarter of 2009, a convention center, and other amenities. Under Ameristar’s ownership, this facility has been expanded to approximately 1,500 slot machines and 40 table games, and a parking garage accommodating 1,500 vehicles. No other casinos are currently under construction in Black Hawk. ~~In 2003, the Isle of Capri Casinos, Inc. purchased~~There ~~Colorado~~were ~~Central~~eight ~~Station, located diagonally across the street from its existing facility and subsequently completed a major renovation and expansion project physically linking the two properties. The combined~~ casinos ~~are~~operating ~~the largest~~ in ~~Black~~Central ~~Hawk~~ City with approximately ~~1,650 slot machines, 41 table games, 402 hotel rooms and~~ 2,300 ~~parking~~total ~~spaces.~~gaming ~~The~~devices ~~Isle~~as of ~~Capri~~December 31, is2011. ~~noted~~Motorists ~~for~~driving ~~its~~from ~~aggressive~~the ~~marketing~~Denver ~~programs.~~metropolitan ~~The~~area ~~Mardi~~have ~~Gras~~the ~~casino,~~option ~~which~~of ischoosing ~~next~~ to ~~The~~go ~~Lodge,~~either ~~was~~to ~~purchased~~Black inHawk ~~2005~~or ~~and~~Central ~~the~~City ~~owners~~without ~~have~~having ~~developed~~to ~~and~~drive ~~implemented~~through ~~new~~the ~~marketing~~other ~~programs~~town.

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

Video Poker Truck Stop Operations. Our Louisiana video poker truck stop operations face competition from land-based and riverboat casinos throughout Louisiana and on the Mississippi Gulf Coast, casinos on Native American lands and other non-casino gaming opportunities within Louisiana. The Louisiana Riverboat Economic Development and Gaming Control Act limits the number of gaming casinos in Louisiana to 15 riverboat casinos statewide and one land-based casino in New Orleans. All 15 available riverboat licenses are issued, however, only 13 are currently operational. The remaining two riverboat casino licenses are held by Pinnacle Entertainment, Inc. (“Pinnacle”) and Creative Casinos, LLC (“Creative Casinos”). Pinnacle is developing a $357 million casino project in Baton Rouge tentatively scheduled to open the third quarter of 2012. In March 2012, Ameristar Casinos, Inc. entered into an agreement to acquire Creative Casinos and its license and is proposing a $500 million project in Lake Charles tentatively scheduled to open in mid-2014.

Our video poker operations also face competition from other video poker truck stops located in surrounding areas, as well as competition from Louisiana horse racing facilities, some of which have been authorized to operate video gaming machines, and restaurants and bars with video gaming machines. As of December 31, 2011, there were 200 video poker truck stops in Louisiana licensed to operate video poker devices.

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

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

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

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

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

Employees and Labor Relations

As of December 31, ~~2010~~2011, we had approximately 1,~~000~~100 full-time and part-time employees at our facilities in Black Hawk, Colorado, and Reno, Carson City, and Elko, Nevada, 300 year-round and ~~500~~400 seasonal employees at our facilities in Virginia and 400 employees at our facilities in Louisiana. Employees include cashiers, dealers, food and beverage service personnel, facilities maintenance, security, valet, accounting, marketing, and personnel services. We consider relations with our employees to be good.

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

Regulation

Gaming Regulation and Licensing—Colorado

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

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

~~The~~9 Colorado casinos were granted retail/operator licenses concurrently with their openings. The licenses are subject to continued satisfaction of suitability requirements and must be renewed biyearly. The current licenses for both Colorado casinos were renewed on April 16, 2009. There can be no assurance that the Colorado casinos can successfully renew their licenses in a timely manner every other year.

The Colorado casinos were granted retail/operator licenses concurrently with their openings. The licenses are subject to continued satisfaction of suitability requirements and must be renewed biyearly. The current licenses for both Colorado casinos were renewed on April 21, 2011. There can be no assurance that the Colorado casinos can successfully renew their licenses in a timely manner every other year.

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

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

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

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

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

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

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

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

Under Rule 4.5, gaming licensees, affiliated companies and controlling persons commencing a public offering of voting securities must notify the Gaming Commission no later than ten business days after the initial filing of a registration statement with the Securities and Exchange Commission. Licensed publicly traded corporations are also required to send proxy statements to the Division of Gaming within five days after their distribution. Licensees to whom Rule 4.5 applies must include in their charter documents provisions that: restrict the rights of the licensees to issue voting interests or securities except in accordance with the Colorado Gaming Act and the Colorado Regulations; void the transfer of voting securities or other voting interests issued in violation of the Colorado Gaming Act and the Colorado Regulations until the issuer ceases to be subject to the jurisdiction of the Gaming Commission or until the Gaming Commission, by affirmative act, validates the transfer; and provide that holders of voting interests or securities of licensees found unsuitable by the Gaming Commission may, within 60 days of such finding of unsuitability, be required to sell their interests or securities back to the issuer at the lesser of the cash equivalent of the holders’ investment or the market price as of the date of the finding of unsuitability. Alternatively, the holders may, within 60 days after the finding of unsuitability, transfer the voting interests or securities to a person suitable to the Gaming Commission. Until the voting interests or securities are held by suitable persons, the issuer may not pay dividends or interest, the securities may not be voted, they may not be included in the voting or securities of the issuer, and the issuer may not pay any remuneration in any form to the holders of the securities.

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

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

•

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

•

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

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

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

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

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

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

Prior to July 2, 2009, Colorado casinos could operate only between 8:00 a.m. and 2:00 a.m. Slot machines, black jack, poker and other approved variations of those games and video poker were the only permitted games, with a maximum single wager of $5. On November 4, 2008, Colorado Amendment 50 was approved by Colorado voters and was subsequently voted upon and approved by each of the three gaming towns in Colorado (Black Hawk, Central City and Cripple Creek). The new gaming rules, which became effective on July 2, 2009 at Colorado casinos, allowed for the introduction of craps and roulette, increased the maximum single wager limit to $100, allows 24-hour gaming operations, and prohibit changes in existing tax levels (currently, a series of graduated tax rates, with a maximum gaming tax rate of 2019% on adjusted gross proceeds over $13 million) unless such changes are approved by a statewide vote. For further discussion, see Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

The 2009 amendment did not affect constitutional restrictions on the percentage of space a casino may use for gaming – 50% of any floor and 35% of the overall square footage of the building in which the casino is located. Also, it did not change the age-related restrictions for casinos, namely, that only individuals who are 21 years or older may gamble or consume alcohol on the casino premises. Finally, Colorado casinos may not extend credit to any gaming patrons.

Gaming Regulation and Licensing—Nevada

~~The recent voter-approved amendment did not affect constitutional restrictions on the~~ ~~percentage~~“Nevada ofCommission”), ~~space a casino may use for gaming – 50% of any floor and 35% of~~ the ~~overall~~Nevada ~~square~~State ~~footage~~Gaming ofControl ~~the~~Board ~~building in which~~ (the ~~casino~~“Nevada ~~is located. Also~~Board”), itand ~~did~~various ~~not~~local ~~change~~ordinances ~~the~~and ~~age-related restrictions for casinos~~regulations, ~~namely~~including, ~~that~~without ~~only individuals~~limitation, ~~who~~those ~~are~~of ~~21 years or older may gamble or consume alcohol on~~ the cities ~~casino~~of ~~premises. Finally~~Reno, ~~Colorado~~Carson ~~casinos~~City ~~may not~~and ~~extend~~Elko, ~~credit~~Nevada to(collectively, ~~any~~the ~~gaming~~“Nevada ~~patrons~~Gaming Authorities”).

Gaming Regulation and Licensing—Nevada

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

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

The Nevada Gaming Subsidiaries have been licensed by the Nevada Gaming Authorities as corporate licensees. Gaming licenses require the periodic payment of fees and taxes and are not transferable. Jacobs Entertainment’s parent company, Jacobs Investments, Inc. (“Jacobs Investments” or “JII”), has been registered by the Nevada Commission as a holding company and has been found suitable to own Jacobs Entertainment’s stock. Black Hawk Gaming has been registered by the Nevada Commission as an intermediary company and has been found suitable to own the stock of Gold Dust West. Jacobs Entertainment has been registered by the Nevada Commission as a publicly traded corporation (a “Registered Corporation”) and has been found suitable as the sole shareholder of Black Hawk Gaming, Piñon Plaza and Elko. Registered Corporations, registered intermediary companies, and corporate licensees are required periodically to submit detailed financial and operating reports to the Nevada Commission and furnish any other information that the Nevada Commission may require. Substantially all material loans, leases, sales of securities and similar financing transactions by Jacobs Investments, Jacobs Entertainment, Black Hawk Gaming, and the Nevada Gaming Subsidiaries must be reported to or approved by the Nevada Commission. No person may become a more than 5% stockholder of, or holder of ana more than 5% interest in, or receive any percentage of profits from a corporate licensee without first obtaining licenses and approvals from the Nevada Gaming Authorities. No person may become a 5% or less stockholder or interest holder in a corporate licensee without registering with the Nevada Gaming Authorities. The controlling shareholders, directors and certain officers of Jacobs Investments, Jacobs Entertainment, Black Hawk Gaming, and the Nevada Gaming Subsidiaries have obtained from the Nevada Gaming Authorities the various registrations, findings of suitability, approvals, permits and licenses that are required in order to engage in gaming activities in Reno, Carson City and Elko, Nevada.

The Nevada Gaming Authorities may investigate any person who has a material relationship to, or material involvement with, Jacobs Investments, Jacobs Entertainment, Black Hawk Gaming, or the Nevada Gaming Subsidiaries in order to determine whether that individual is suitable or should be licensed as a business associate of a gaming licensee. The officers, directors and shareholders of Jacobs Investments and Jacobs Entertainment must file applications with and be licensed or found suitable by the Nevada Gaming Authorities. The officers, directors and certain key employees of the Nevada Gaming Subsidiaries must file applications with and may be required to be licensed or found suitable by the Nevada Gaming Authorities. The officers, directors and key employees of Jacobs Investments, Jacobs Entertainment and Black Hawk Gaming who are actively and directly involved in the gaming activities of the Nevada Gaming Subsidiaries may be required to be licensed or found suitable by the Nevada Gaming Authorities. The Nevada Gaming Authorities may deny an application for licensing for any cause that they deem reasonable. A finding of suitability is comparable to licensing, and both require submission of detailed personal and financial information followed by a thorough investigation. The applicant for licensing or a finding of suitability must pay all the costs of the investigation. Changes in licensed positions must be reported to the Nevada Gaming Authorities and, in addition to their authority to deny an application for a finding of suitability or licensure, the Nevada Gaming Authorities have jurisdiction to disapprove a change in a corporate position.

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

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

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

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

The Nevada Act requires any person who acquires beneficial ownership of more than 5% of a Registered Corporation’s voting securities to report the acquisition to the Nevada Commission. The Nevada Act requires that beneficial owners of more than 10% of a Registered Corporation’s voting securities apply to the Nevada Commission for a finding of suitability within 30 days after the Chairman of the Nevada Board mails the written notice requiring such filing. However, an “institutional investor,” as defined in the Nevada Act, that beneficially owns more than 10% but not more than 11% of a Registered Corporation’s voting securities as a result of a stock repurchase by the Registered Corporation may not be required to file such an application. Further, an institutional investor that acquires more than 10% but not more than 25% of a Registered Corporation’s voting securities may apply to the Nevada Commission for a waiver of a finding of suitability if that institutional investor holds the voting securities for investment purposes only. An institutional investor that has obtained a waiver may hold more than 25% but not more than 29% of a Registered Corporation’s voting securities and maintain the waiver where the additional ownership results from a stock repurchase by the Registered Corporation. An institutional investor will not be deemed to hold voting securities for investment purposes unless the voting securities were acquired and are held in the ordinary course of business as an institutional investor and not for the purpose of causing, directly or indirectly, the election of a majority of the members of the Registered Corporation’s board of directors, any change in the Registered Corporation’s corporate charter, bylaws, management, policies or operations, or of any of its gaming affiliates, or any other action that the Nevada Commission finds to be inconsistent with holding the Registered Corporation’s voting securities for investment purposes only. Activities which are not deemed to be inconsistent with holding voting securities for investment purposes only include: (i) voting on all matters voted on by stockholders; (ii) making financial and other inquiries of management of the type normally made by securities analysts for informational purposes and not to cause a change in management, policies or operations; and (iii) such other activities as the Nevada Commission may determine to be consistent with such investment intent. If the beneficial holder of voting securities who must be found suitable is a corporation, partnership or trust, it must submit detailed business and financial information, including a list of beneficial owners. The applicant is required to pay all costs of investigation.

byor ~~stockholders;~~to have any other relationship with the Registered Corporation, the Registered Corporation (iii) ~~making~~pays ~~financial~~that ~~and~~person ~~other~~any ~~inquiries~~dividend ofor ~~management~~interest, of(ii) allows ~~the~~that ~~type~~person ~~normally~~to ~~made~~exercise, directly byor indirectly, any voting right conferred through securities ~~analysts~~held ~~for~~by ~~informational~~that ~~purposes~~person, ~~and~~(iii) pays ~~not~~remuneration in any form to ~~cause~~that aperson ~~change~~for inservices ~~management, policies~~rendered or ~~operations;~~otherwise, ~~and~~or (~~iii~~iv) ~~such~~fails ~~other~~to ~~activities~~pursue asall ~~the~~lawful ~~Nevada~~efforts ~~Commission~~to ~~may determine~~require that unsuitable person to berelinquish ~~consistent~~its ~~with~~voting ~~such~~securities ~~investment~~including, ~~intent.~~if Ifnecessary, the ~~beneficial~~immediate ~~holder~~purchase of the voting securities ~~who~~for ~~must~~cash beat ~~found~~fair ~~suitable~~market isvalue. ~~a corporation~~Additionally, ~~partnership~~ orthe ~~trust~~Cities of Reno, itCarson ~~must~~City ~~submit~~and ~~detailed~~Elko, ~~business~~Nevada ~~and~~have ~~financial~~the ~~information,~~authority ~~including~~to approve aall ~~list~~persons ofowning ~~beneficial~~or ~~owners.~~controlling ~~The~~the ~~applicant~~stock isof ~~required~~any tocorporation ~~pay~~controlling ~~all~~a ~~costs~~gaming oflicensee ~~investigation~~operating in those cities.

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

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

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

Jacobs Investments, Jacobs Entertainment and Black Hawk Gaming may not make a public offering without the prior approval of the Nevada Commission if the proceeds from the offering are intended to be used to construct, acquire or finance gaming facilities in Nevada, or to retire or extend ~~obligations~~ obligations incurred for those purposes or for similar transactions. On September 1722, ~~2009~~2011, the Nevada Commission granted Jacobs Entertainment prior approval to make public offerings for a period of two years, subject to certain conditions (the “Shelf Approval”). The Shelf Approval also applies to any affiliated company wholly owned by Jacobs Entertainment which is a publicly traded corporation or would become a publicly traded corporation pursuant to a public offering. The Shelf ~~Approval~~ Approval may be rescinded for good cause without prior notice upon the issuance of an interlocutory stop order by the Chairman of the Nevada Board. The Shelf Approval does not constitute a finding, recommendation or approval by any of the Nevada Gaming Authorities as to the accuracy or adequacy of the offering memorandum or the investment merits of the securities. Any representation to the contrary is unlawful.

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

~~Changes~~ adverse ineffects ~~control~~ of athese ~~Registered~~business ~~Corporation~~practices ~~through~~on ~~merger,~~Nevada’s ~~consolidation,~~gaming ~~stock~~industry orand ~~asset acquisitions,~~to ~~management~~further orNevada’s ~~consulting~~policy ~~agreements,~~to: or(i) assure ~~any~~the ~~act~~financial orstability ~~conduct~~of bycorporate agaming ~~person~~licensees byand their ~~which~~affiliates; it(ii) preserve ~~obtains~~the ~~control~~beneficial aspects of aconducting ~~Registered~~business ~~Corporation,~~in ~~may~~the corporate form; and (iii) ~~not~~promote ~~occur~~a ~~without~~neutral environment for the ~~prior~~orderly ~~approval~~governance of ~~the~~corporate ~~Nevada Commission~~affairs. ~~Entities~~Approvals ~~seeking~~are, toin ~~acquire~~certain ~~control~~circumstances, required offrom the Nevada Commission before a Registered Corporation ~~must~~can ~~satisfy~~make exceptional repurchases of voting securities above the ~~Nevada~~current ~~Board~~market ~~and~~price ~~Nevada~~thereof ~~Commission~~and onbefore a ~~variety~~corporate ofacquisition ~~stringent~~opposed ~~standards~~by ~~prior~~management tocan ~~assuming~~be ~~such control~~consummated. The Nevada ~~Commission~~Act ~~may~~ also requires ~~require~~prior ~~controlling~~approval ~~stockholders,~~of ~~officers,~~a ~~directors~~plan ~~and~~of ~~other persons~~recapitalization ~~having~~proposed by a ~~material~~Registered ~~relationship~~Corporation orin ~~involvement~~response ~~with~~to ~~the~~a ~~entity~~tender ~~proposing~~offer tomade ~~acquire~~directly ~~control,~~ to beits ~~investigated~~stockholders ~~and~~for ~~licensed~~the aspurposes ~~part~~ of ~~the~~acquiring ~~approval~~control ~~process~~of ~~relating to~~ the ~~transaction~~Registered Corporation.

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

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

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

Gaming Regulation and Licensing—Louisiana

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

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

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

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

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

The suitability criteria law makes an exception for institutional investors. An institutional investor of any applicant otherwise required to be found suitable or qualified pursuant to the act is presumed suitable or qualified upon submitting documentation to the Board and the Division sufficient to establish qualifications as an institutional investor as described below, and upon certifying that: (i) it owns, holds, or controls publicly traded securities issued by a licensee or permittee or a holding, intermediate, or parent company of a licensee or permittee in the ordinary course of business for investment purposes only; (ii) it does not exercise influence over the affairs of the issuer of the securities or over any licensed or permitted subsidiary of the issuer of the securities; and (iii) it does not intend to exercise influence over the affairs of the issuer of the securities, or over any licensed or permitted subsidiary of the issuer of the securities, in the future, and that it agrees to notify the Board in writing within 30 days if that intent should change.

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

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

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

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

~~Operating~~17 video draw poker devices at truck plazas in Louisiana requires both an establishment license and a device owner license. The establishment license permits the placement by a licensed device owner of video draw poker devices on the licensed premises. A device owner license permits the licensed entity to place and operate video draw poker devices at licensed establishments. In many cases, an establishment licensed for the placement of video draw poker devices will contract with a licensed device owner for video draw poker device placement services for a percentage of the video draw poker revenues. A licensed establishment may also, however, be a licensed device owner. A licensed device owner entity must be majority-owned by a person or persons who have resided within the State of Louisiana for a period of two years.

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~~Restaurants~~ the Board or the Division, and ~~bars~~declaring that such person may ~~contain~~not: up(i) receive todividends ~~three~~or ~~video~~interest ~~draw~~on ~~poker~~securities ~~devices~~of ~~and~~a corporation holding a ~~hotel~~license, if the person has or ~~motel~~controls directly ~~may have~~or ~~three~~indirectly ~~video~~more ~~draw~~than ~~poker~~a ~~devices~~5% ownership, income, or profit interest in ~~each~~such ofcorporation; ~~its~~(ii) exercise ~~lounges~~directly, ~~and~~or ~~restaurants~~through ~~licensed~~a totrustee ~~sell alcoholic~~or ~~beverages~~nominee, upa toright aconferred ~~total~~by securities of ~~twelve~~a ~~for~~corporation ~~each~~holding ~~hotel~~a orlicense, ~~motel.~~if Athe ~~pari-mutuel~~person ~~wagering~~has ~~facility~~or controls ~~and~~directly or indirectly more than a ~~licensed~~five ~~satellite~~percent ~~wagering~~ownership, ~~facility~~income, ~~may have~~or anprofit ~~unlimited~~interest ~~number~~in ofsuch ~~video~~corporation; ~~draw~~(iii) receive ~~poker~~remuneration ~~devices.~~or Aother ~~truck~~economic ~~stop~~benefit ~~facility~~from ~~may have~~any upperson holding a license issued pursuant to ~~fifty~~ ~~video~~the ~~draw~~provisions ~~poker~~of ~~devices,~~the act; ~~with~~(iv) exercise significant influence over the ~~number~~activities ~~being~~of ~~determined~~a byperson holding a license issued pursuant to the ~~amount~~provisions of ~~fuel~~the ~~sales~~act; or (v) continue owning or holding a security of a corporation holding a license if the ~~truck~~person ~~stop~~has ~~facility~~or controls directly or indirectly more than a 5% ownership, income, or profit interest in such corporation.

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

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

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

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

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

The number of video draw poker devices permissible in a qualified video poker truck stop is based on average monthly fuel sales, as follows: (i) 100,000 gallons of fuel, of which at least 40,000 gallons are diesel—not more than 50 devices; (ii) 75,000 gallons of fuel, of which at least 30,000 gallons are diesel—not more than 40 devices; and (iii) 50,000 gallons of fuel, of which at least 10,000 are diesel—not more than 35 devices. Compliance with the foregoing thresholds is measured quarterly for the first year of operation and, thereafter, is measured annually. Once licensed, if a video poker truck stop sells less than an average of 50,000 gallons per month but more than 25,000 gallons per month in any calendar year, the video poker truck stop will not be permitted to operate any video draw poker devices in the following calendar year. A qualified video poker truck stop that sells less than an average of 25,000 gallons per month in any calendar year will be subject to revocation of its video draw poker license. Bulk sales or transfers may not be used to calculate monthly averages. Fuel facilities may, however, offer

A fuel ~~restaurant,~~for ~~bar,~~sale ~~motel~~at ora ~~hotel~~lower price (a) when motor fuel is sold upon the final liquidation of a business; (b) when motor fuel is advertised, ~~pari-mutuel~~offered ~~wagering~~for ~~facility~~sale, ~~and~~or ~~satellite~~sold ~~wagering~~by any fiduciary or ~~facility~~other ~~pays~~officer under the order or direction of any court; (c) when motor fuel is sold for promotional purposes limited to a grand opening, an ~~initial~~annual ~~non-refundable~~anniversary, ~~licensing~~or ~~and~~an ~~processing~~annual ~~fee~~customer ofappreciation $1day sale,~~100.~~ Aeach ~~truck~~of ~~stop~~which ~~facility~~does ~~pays~~not anexceed ~~initial~~three consecutive ~~licensing~~days; and ~~processing~~(d) when ~~fee~~motor fuel is sold in a good faith effort to meet the legal price of ~~$10,100~~a competitor. ALouisiana ~~license~~law ~~must~~creates bea ~~renewed~~presumption ~~every~~that ~~five~~a ~~years~~fuel ~~but~~facility awill ~~renewal~~not ~~fee~~violate isthe ~~required~~price ~~each~~requirement ~~year.~~when ~~The~~it sells fuel below the ~~non-refundable~~required ~~annual~~price ~~renewal~~to ~~and~~meet ~~processing~~the ~~fee~~price ~~for~~of a ~~restaurant,~~competitor ~~bar,~~if ~~motel~~it ormakes ~~hotel,~~a ~~pari-mutuel~~bona ~~wagering~~fide ~~facility,~~effort ~~and~~to ~~satellite~~determine ~~wagering~~the ~~facility~~legality isof ~~$200.~~the ~~The~~price ~~non-refundable~~of ~~annual~~such ~~renewal~~competitor and ~~processing~~determines ~~fee~~in ~~for~~good afaith ~~truck~~that ~~stop~~the ~~facility~~competitor’s price is ~~$1,100~~a legal price.

In addition, under the act, a qualified video poker truck stop is required to have at least five developed contiguous acres and sell fuel, lubricating oil, and other vehicular merchandise, such as batteries, tires, or vehicle parts for eighteen-wheel tractor-trailers, and also meet all of the ~~licensing~~following ~~fee~~criteria: (i) it must be located adjacent to a major state or interstate highway, as defined by the ~~device~~Board ~~owner~~(within ~~collects~~2,000 feet of a major state highway or U.S. interstate highway); (ii) it must have an on-site restaurant with all ~~funds~~of ~~deposited~~the infollowing ~~each~~features: ~~video~~(a) provides ~~draw~~seating ~~poker~~for ~~device~~at least 50 patrons; (b) provides full table service for sit-down meals; (c) is open 12 hours a day; (d) offers a varied menu; and (e) operates a fully equipped kitchen which includes, but is not limited to, a range oven and refrigerated storage ~~required~~appliances used for the preparation of foods for on-premises or immediate consumption; (iii) it must have parking areas with each of the following: (a) a stable parking area for at least 50 18-wheel tractor-trailer motor vehicles, either paved or concrete (or otherwise certified and approved), to ~~remit~~support 18-wheel tractor- trailer motor vehicles and their loads, constructed according to industry specifications, subject to approval by the ~~State~~Board and the Division; (b) parking of sufficient ~~Louisiana~~size is allowed for safe ingress and egress; and (c) parking areas for other vehicles around business entrance ways and exits shall not constitute parking areas for 18-wheel tractor-trailer motor vehicles; (iv) it must sell diesel and gasoline fuel; (v) it must have on-site arepair biservice facilities for 18-~~weekly~~wheel ~~basis~~tractor-trailer motor vehicles which facility may be in the form of a ~~franchise~~contract ~~payment~~services business which regularly performs this type of service; (vi) it must have at least four of the following amenities: (a) a separate truckers’ television lounge; (b) a full service laundry facility located in a convenient area for truckers’ use; (c) private showers for men and women, not located in an ~~amount~~area ~~equal~~open to general public restroom facilities; (d) a ~~percentage~~travel store with items commonly referred to as truckers’ supplies (items commonly used only by commercial motor vehicles); (e) truck scales; (f) separate truckers’ telephones; and (g) permanent storage facilities for fuel; (vii) it must have an area separated for adult patronage only; and (viii) it must have, if available, a Class A—General retail permit or a Class A—Restaurant permit, as defined in Part II of ~~the~~Chapter ~~net~~1 ~~device~~or ~~revenue~~Part II ~~derived~~of ~~from~~Chapter 2 of Title 26 of the ~~operation~~Louisiana Revised Statutes of ~~each~~1950, ~~video~~to ~~draw~~serve ~~poker~~or ~~device~~sell alcoholic beverages for on-premises consumption and be owned and leased by ~~him~~a person who meets all personal qualifications for such permit. ~~The~~In ~~amount~~light of ~~the~~Hurricane ~~percentage is~~Katrina ~~based~~and onother recent events, the ~~type~~Louisiana oflegislature ~~licensed~~put ~~establishment~~in ~~authorized~~place byexceptions to the ~~Board~~amenities ~~for~~requirements ~~the~~and ~~placement~~fuel ofrequirements ~~video~~that allow ~~draw~~qualified video poker truck stop licensees to operate casinos with a previously approved number of gaming devices, notwithstanding certain non-compliance with the amenities or fuel requirements. The exceptions may apply, depending on the circumstances and as ~~follows:~~determined ~~(i) a~~by ~~restaurant~~the Division, ~~bar~~if the non-compliance is caused by force majeure, ~~tavern~~expropriation by political subdivision, ~~cocktail~~road ~~lounge~~construction or other non-commercial circumstances that directly affect compliance. An owner or lessor of a qualified video poker truck stop may lease or sublease any restaurant, ~~club~~convenience store, ~~motel~~fuel facility, or ~~hotel—26%;~~any ~~(ii) a~~other business operation located on the premises of the qualified video poker truck stop to another person, provided that such person ~~facility—32.5%;~~executes ~~and~~a ~~(iii)~~ written lease which contains a ~~pari-mutuel~~requirement ~~wagering~~that ~~facility~~the lessee or ~~satellite~~sublessee ~~wagering~~comply ~~facility—22~~with the laws and regulations which govern the operation of video draw poker devices.5% If such lease or sublease is granted, the owner or lessor of such qualified video poker truck stop shall maintain ultimate supervision and control of that entire video poker truck stop premises.

~~The~~Additionally, ~~number~~no ~~of video~~license ~~draw~~can ~~poker~~be ~~devices~~granted ~~permissible~~to inany avideo ~~qualified~~poker truck stop ~~facility~~located, isat ~~based~~the ontime ~~average~~application ~~monthly~~is ~~fuel~~made ~~sales,~~for asa ~~follows:~~license ~~(i) 100,000~~to ~~gallons~~operate ofvideo ~~fuel,~~draw ofpoker ~~which at least 40~~devices,~~000~~ ~~gallons~~within ~~are~~five ~~diesel—not~~hundred ~~more~~feet ~~than~~of 50any ~~devices; (ii) 75,000~~property ~~gallons~~that ofis ~~fuel,~~on ofthe ~~which~~National atHistoric ~~least 30~~Registry,~~000~~ ~~gallons~~any ~~are~~public ~~diesel—not~~playground, ~~more~~or ~~than~~a 40building ~~devices;~~used ~~and~~exclusively ~~(iii) 50,000~~as ~~gallons~~a ~~of fuel~~church, ~~of which at least 10~~synagogue,~~000~~ ~~are~~public ~~diesel—not~~library ~~more~~or ~~than 35 devices~~school. ~~Compliance~~In ~~with~~addition, ~~the~~no ~~foregoing~~license ~~thresholds~~shall ~~is measured~~be ~~quarterly~~issued for ~~the~~any ~~first~~video ~~year~~poker ~~of operation and, thereafter, is measured annually. Once licensed, if a~~ truck stop ~~facility~~unless ~~sells~~previously ~~less~~applied ~~than~~for or anlicensed ~~average~~as of 50January 1,~~000~~ ~~gallons per month but more than 25~~2008,~~000~~ ~~gallons per month in any calendar year~~located, at the ~~truck~~ ~~stop~~time ~~facility~~application ~~will~~is ~~not~~made befor ~~permitted~~a license to operate ~~any~~ video draw poker devices, inwithin ~~the~~two ~~following~~thousand ~~calendar~~five ~~year.~~hundred Afeet ~~qualified~~of ~~truck~~any ~~stop~~property ~~facility~~ that ~~sells~~is ~~less~~on ~~than~~the anNational ~~average~~Historic ~~of 25~~Registry,~~000~~ ~~gallons per month in~~ any ~~calendar year will be subject to~~public ~~revocation~~playground, ~~of its video draw poker license. Bulk sales~~ or ~~transfers~~a ~~may not~~building be used toexclusively ~~calculate~~as ~~monthly~~a ~~averages. Fuel facilities may~~church, ~~however~~synagogue, ~~offer~~public ~~fuel~~library, ~~for~~or ~~sale~~school atunless athe ~~lower~~applicant ~~price~~for ~~(a) when motor fuel is sold upon~~ the ~~final~~license ~~liquidation~~has ~~of a~~applied ~~business;~~prior ~~(b) when~~to ~~motor fuel is advertised~~January 1, ~~offered for sale~~2008, orwith ~~sold~~the bylocal ~~any~~governing ~~fiduciary~~authority orof ~~other~~the ~~officer~~parish ~~under~~where the ~~order~~video orpoker ~~direction~~truck stop ~~of any court; (c) when motor fuel~~ is ~~sold~~located for ~~promotional purposes limited to~~ a ~~grand~~certificate ~~opening, an annual anniversary, or an annual customer appreciation day sale, each~~ of ~~which~~compliance ~~does~~with ~~not~~applicable ~~exceed~~zoning ~~three~~ordinances ~~consecutive days;~~ and ~~(d) when~~building ~~motor~~codes ~~fuel~~and ~~is sold in~~ a ~~good~~statement ~~faith~~of ~~effort~~approval tofor ~~meet~~ the ~~legal~~operation ~~price~~ of avideo ~~competitor.~~draw ~~Louisiana~~poker ~~law~~devices ~~creates~~at a ~~presumption~~ ~~that~~video apoker ~~fuel~~truck ~~facility~~stop ~~will~~or ~~not~~has ~~violate~~applied ~~the~~with ~~price requirement when it sells fuel below~~ the ~~required~~appropriate ~~price~~authority for ~~to meet the price of~~ a ~~competitor~~building ifpermit itprior ~~makes a bona fide effort~~ to ~~determine~~January 1, ~~the~~2008. ~~legality~~Moreover, ofno ~~the~~license ~~price~~shall ofbe ~~such~~issued ~~competitor~~for ~~and determines~~any ~~in good faith that the competitor’s price is a legal price.~~

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

~~Revised~~video ~~Statutes~~poker oftruck ~~1950,~~stop tounless ~~serve~~previously orapplied ~~sell~~for ~~alcoholic~~or ~~beverages~~licensed ~~for~~as ~~on-premises~~of ~~consumption~~June 1, ~~and~~2010, befor ~~owned~~facilities ~~and~~located, ~~leased~~at bythe atime ~~person~~of ~~who~~application, ~~meets~~within ~~all~~one ~~personal~~mile ~~qualifications~~of ~~for~~any ~~such~~residential ~~permit.~~property Inor ~~light of~~any ~~Hurricane~~property ~~Katrina~~that ~~and~~is ~~other~~on ~~recent events,~~ the ~~Louisiana~~National ~~legislature~~Historic ~~put~~Registry, inany ~~place~~public ~~exceptions~~playground, toor ~~the~~a ~~amenities~~building ~~requirements~~used ~~and~~exclusively ~~fuel~~as ~~requirements~~a ~~that~~church, ~~allow~~synagogue, ~~qualified~~public ~~truck~~library ~~stop~~or ~~facility~~school ~~licensees~~unless tothe ~~operate~~applicant ~~casinos~~for ~~with~~the alicense ~~previously~~has ~~approved~~applied ~~number of~~prior ~~gaming~~to ~~devices~~June 1, ~~notwithstanding~~2010 ~~certain non-compliance~~ with the ~~amenities~~local governing orauthority ~~fuel~~of ~~requirements. The exceptions may apply, depending on~~ the ~~circumstances~~parish ~~and~~where ~~as determined by~~ the ~~Division,~~video ifpoker ~~the~~truck ~~non-compliance~~stop is ~~caused~~located byfor ~~force~~a ~~majeure, expropriation~~certificate byof ~~political~~compliance ~~subdivision,~~with ~~road~~applicable ~~construction~~zoning orordinances ~~other~~and ~~non-commercial~~building ~~circumstances~~codes ~~that~~and ~~directly~~statement ~~affect~~of ~~compliance.~~approval Anfor ~~owner~~the oroperation ~~lessor~~ of avideo ~~qualified~~draw ~~truck~~poker ~~stop~~devices ~~facility~~at ~~may lease or sublease any restaurant, convenience store, fuel~~the ~~facility,~~location or ~~any~~has ~~other~~applied ~~business~~with ~~operation located on~~ the ~~premises~~appropriate ofauthority ~~the~~for ~~qualified~~a ~~truck~~building ~~stop~~permit ~~facility~~prior to ~~another person~~June 1, ~~provided~~2010. ~~that~~In such ~~person~~instance, ~~executes~~residential aproperty ~~written~~is ~~lease~~any ~~which~~property ~~contains~~wholly aor ~~requirement~~partly ~~that~~used ~~the~~for ~~lessee~~ or ~~sublessee~~intended ~~comply~~to ~~with~~be ~~the laws~~used ~~and~~for ~~regulations~~living ~~which~~or ~~govern~~sleeping ~~the~~with ~~operation~~one ofor ~~video~~more rooms, ~~draw~~including ~~poker~~a ~~devices.~~bathroom Ifand ~~such~~complete ~~lease~~kitchen orfacilities, ~~sublease~~and isincludes ~~granted,~~mobile ~~the~~home ~~owner~~ or ~~lessor~~manufactured ofhousing, provided that such ~~qualified~~mobile ~~truck~~home ~~stop~~or ~~facility~~manufactured ~~shall~~housing ~~maintain~~has ~~ultimate~~been ~~supervision~~in ~~and~~its ~~control~~present oflocation ~~that~~for ~~entire~~at ~~truck~~least ~~stop premises~~60 days.

~~Additionally,~~All nosuitability ~~license~~information ~~can~~and beapplications ~~granted~~required to ~~any~~be ~~truck~~submitted ~~stop~~with ~~facility~~respect ~~located,~~to at the ~~time~~21 ~~application~~Louisiana ~~is made for a license to operate~~ video ~~draw~~ poker ~~devices,~~truck ~~within~~stops ~~five~~currently owned ~~hundred~~by ~~feet of any property that is on the National Historic Registry~~us, ~~any~~as ~~public~~well ~~playground, or a building used exclusively~~ as athe ~~church,~~video ~~synagogue,~~poker ~~public library or school. In addition, no license shall be issued for any~~ truck stop ~~facility~~in ~~unless~~which ~~previously~~we ~~applied~~share ~~for~~in orthe ~~licensed as of January 1~~revenue, ~~2008,~~have ~~located,~~been atsubmitted ~~the time application is made for a license~~ to ~~operate~~the ~~video~~Board ~~draw~~and ~~poker devices, within two thousand five hundred feet of any property that is on~~ the ~~National~~Division. ~~Historic~~All ~~Registry,~~applications ~~any~~submitted ~~public~~have ~~playground,~~been orapproved aand ~~building~~none ~~used~~are ~~exclusively~~currently aspending. ~~a church~~However, ~~synagogue,~~because ~~public library, or school unless~~ the ~~applicant~~Board ~~for~~and the ~~license has applied prior to January 1, 2008,~~ ~~with~~Division ~~the~~conduct ~~local~~a ~~governing~~new ~~authority~~suitability ofinvestigation ~~the~~in ~~parish~~connection ~~where~~with ~~the~~each ~~truck~~acquisition ~~stop is located for a certificate~~ of ~~compliance with applicable zoning ordinances and building codes and~~ a ~~statement~~facility ofat ~~approval~~which ~~for the operation of~~ video ~~draw~~gaming ~~poker~~ devices atare ~~a truck stop facility or has applied with the appropriate authority for a building permit prior~~ to ~~January 1,~~be ~~2008. Moreover~~operated, noregardless ~~license shall be issued for any truck stop facility unless previously applied for or licensed as~~ of ~~June 1, 2010,~~prior ~~for facilities located~~approvals, atthere ~~the~~can ~~time~~be ofno ~~application,~~guarantee ~~within one mile of any residential property or any property~~ that ~~is on the National Historic Registry, any public playground, or~~ a ~~building~~suitability ~~used~~approval ~~exclusively~~will ~~as a church, synagogue, public~~ultimately ~~library~~result orwith ~~school~~respect ~~unless the applicant for the license has applied prior~~ to ~~June 1, 2010 with~~ the local governing authority of the parish where the truck stop is located for a certificate of compliance with applicable zoning ordinances and building codes and statement of approval for the operation of video ~~draw~~ poker ~~devices~~truck atstops ~~the~~that ~~location~~we orpropose ~~has applied with the appropriate authority for a building permit prior~~ to ~~June 1, 2010~~acquire. In such instance, residential property is any property wholly or partly used for or intended to be used for living or sleeping with one or more rooms, including a bathroom and complete kitchen facilities, and includes mobile home or manufactured housing, provided that such mobile home or manufactured housing has been in its present location for at least 60 days.

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

Gaming Regulation and Licensing—Virginia

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

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

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

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

~~(i) conducting~~The ~~a review annually of Colonial’s track and satellite wagering facility~~ licenses, ~~(ii) annually~~issued ~~approving Colonial’s proposed schedule of racing days, (iii) approving new or modified types of pari-mutuel wagering pools requested~~ by ~~Colonial,~~the ~~(iv) issuing~~Virginia ~~permits~~Racing Commission to ~~all officers, directors, racing officials, and other employees of~~ Colonial, ~~and~~for ~~(v) approving simulcast schedules at~~ the ~~track~~racetrack and ~~at the~~ its satellite wagering facilities. ~~The~~are ~~Virginia~~for ~~Racing~~a ~~Commission~~period ~~also~~of ~~has~~not ~~the~~less ~~authority~~than to20 ~~promulgate regulations pertaining to Colonial’s track facilities~~years, ~~equipment,~~but ~~safety~~are ~~and~~subject ~~security~~to ~~measures,~~annual ~~and~~review ~~controls~~by the ~~issuing~~Virginia ~~of licenses~~Racing ~~and~~Commission. ~~permits~~It ~~for~~is ~~participants~~possible inthat ~~pari-mutuel~~such ~~racing,~~licenses ~~including~~will ~~Colonial~~not ~~employees~~be atrenewed ~~the~~or ~~track~~that ~~and~~such atlicenses ~~the~~could ~~satellite~~be ~~wagering~~suspended ~~facilities.~~or Inrevoked by ~~addition,~~ the Virginia Racing Commission ~~must~~for ~~approve~~violations ~~any~~of ~~acquisition~~the orVirginia ~~continuing~~Racing ~~ownership~~Act ~~of a 5%~~ or ~~greater~~Virginia ~~interest~~Racing inCommission ~~Colonial~~rules. ~~Action~~We byalso ~~the~~hold ~~Virginia~~an ~~Racing~~advance ~~Commission~~deposit ~~that~~account iswagering ~~inconsistent~~license ~~with~~that ~~the~~is ~~Colonial’s~~renewable ~~business~~annually. ~~plan~~Our ~~could~~current ~~have~~advance adeposit ~~material~~account ~~adverse~~wagering license ~~effect~~expires onDecember 31, ~~Colonial~~2012.

~~During~~We ~~the~~have ~~2000 session of the Virginia General Assembly,~~ an ~~amendment~~agreement ~~to the Racing Act was passed that requires Colonial to enter into contracts~~ with ~~each representative horsemen’s group and provides for it to contribute to~~ the ~~purse~~VHHA account of the respective breed a minimum of 5% of the first $75 million of simulcast amounts wagered (“handle”), 6% of the next $75 million and 7% of all handle over $150 million. The amendment also provides for the breakage generated by pari-mutuel wagering to be allocated 70% to capital expenditures and 30% to backstretch benevolent activities. Prior to this amendment, Colonial received all breakage. The Virginia Racing Act requires that, ~~after~~expires ~~July~~December 131, ~~2000,~~2014 we enter into contracts with each representative horsemen’s group that provide for us to contribute, by breed of horse, a minimum of 5% of the first $75 million of handle, 6% of the next $75 million of handle and ~~7% of all handle over $150 million to the purse account of the respective breed. Finally, the amendment empowers the Commission to summarily suspend Colonial’s licenses if it~~an ~~believes~~agreement ~~the~~with ~~Racing Act or~~ the ~~regulations~~VaHBPA ~~have~~that ~~been~~expires ~~violated. In addition~~December 31, the Interstate Horse Racing Act also requires that we secure the consent of the Virginia Horsemen’s Benevolence and Protective Association (the “VaHBPA”) and the Virginia Harness Horse Association (“VHHA”) to the export simulcasting of races2012. ~~These consents are usually contained in the agreement between each group and Colonial.~~

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

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

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

Gaming Regulation—Federal

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

Liquor Regulation

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

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

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

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

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

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

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

A licensee is required to maintain financial responsibility for its business, including timely payment of all taxes, creditor obligations and other bills, and must keep accurate records of all such transactions. Mixed beverage licensees must record sales and purchases of all mixed beverages, food and non-alcoholic beverages. Mixed beverage licensees must submit annual review reports to the Virginia ABC Board showing all purchases and sales of alcoholic beverages during the year as well as an accurate inventory. Finally, the Virginia ABC Board imposes certain restrictions and limitations on advertising, the use of advertising materials and promotions.

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

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

Taxation

Gaming operators in Colorado are subject to state and local taxes and fees in addition to ordinary federal and state income taxes. The City of Black Hawk has imposed an annual license fee, currently $750, for each gaming device installed in a casino. In addition, Colorado has a tax on gross gaming revenue (also called “adjusted gross proceeds”) being generally defined as the total amount wagered less the total amount paid out in prizes. asThe following ~~follows~~tax structure has been in effect since July 1, 2011:

Tax as Percentage of Adjusted Gross Proceeds	Annual Amount of AdjustedGross Proceeds
Tax as Percentage of	Annual Amount of Adjusted
0.25%	$	0	—	2,000,000
Adjusted Gross Proceeds	Gross Proceeds
2.00%		2,000,001	—	5,000,000
0.2375%	$	0	—	2,000,000
9.00%		5,000,001	—	8,000,000
1.90%		2,000,001	—	5,000,000
11.00%		8,000,001	—	10,000,000
8.55%		5,000,001	—	8,000,000
16.00%		10,000,001	—	13,000,000
10.45%		8,000,001	—	10,000,000
20.00%		13,000,001		and above
15.20%		10,000,001	—	13,000,000
19.00%		13,000,001		and above

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

In Nevada, license fees and taxes, computed in various ways depending on the type of gaming or activity involved, are payable to the State of Nevada, Washoe, Carson City, and Elko Counties and the Cities of Reno, Carson City, and Elko. Depending upon the particular fee or tax involved, these fees and taxes are payable either monthly, quarterly or annually and are based upon either: (i) a percentage of the gross revenues received; (ii) the number of gaming devices operated; or (iii) the number of table games operated. A live entertainment tax is also paid by casino operations where entertainment is furnished in connection with an admissions charge or the selling or serving of food or refreshments or the selling of merchandise. Presently the state tax in Nevada on adjusted gross revenue from gaming is 6.75% on gross revenues in excess of $134,000.

~~Video~~In ~~gaming~~March ~~operators~~2008, inthe ~~truck~~Nevada ~~plazas~~Supreme inCourt ~~Louisiana~~ruled ~~are~~that ~~subject~~food ~~to state~~ and ~~local~~non-alcoholic ~~taxes~~beverages ~~and~~purchased ~~fees~~for use in ~~addition~~providing complimentary meals to ~~ordinary~~ ~~federal~~customers and ~~state~~to ~~income~~employees ~~taxes~~were exempt from use tax. ~~The~~Recently, ~~state~~the Nevada Department of ~~Louisiana~~Taxation has ~~imposed~~asserted athat “gaming ~~franchise~~companies ~~fee”~~should ofpay ~~32.5%~~sales oftax ~~the~~on ~~net~~customer ~~device~~complimentary ~~revenue~~meals ~~from~~and ~~each~~employee ~~video~~meals ~~gaming~~on ~~device~~a ~~located~~prospective atbasis. aThis ~~truck~~position ~~plaza.~~stems ~~The~~from ~~net~~a ~~device~~recent ~~revenue~~Nevada isTax ~~the~~Commission ~~amount~~decision ~~remaining~~which states that ~~after~~complimentary ~~all~~meals ~~winnings~~provided ~~have~~to ~~been~~customers ~~paid.~~are ~~This~~subject ~~franchise~~to ~~fee~~sales istax ~~collected~~at ~~twice~~the ~~per~~retail ~~month~~value byof the ~~Louisiana~~meal ~~state~~and ~~police~~employee ~~based~~meals onare ~~the~~subject ~~data~~to ~~that~~sales istax ~~provided~~at ~~directly~~the tocost ~~them~~of ~~from~~ the ~~devices~~meal. ~~There~~A ispetition ~~also~~for anjudicial ~~annual~~review ~~state~~of ~~establishment~~the ~~license~~Nevada ~~fee~~Tax ofCommission ~~$1,100.~~decision has been Infiled ~~addition,~~in ~~the~~Clark ~~state~~County ~~imposes~~District aCourt. ~~device~~We ~~operation~~are ~~fee~~currently ofevaluating ~~$1,000~~whether ~~per~~or ~~year~~not ~~per~~to ~~device,~~accrue ~~which~~tax isprospectively ~~paid~~as ~~quarterly,~~it ~~and~~disagrees ~~each~~with ~~parish~~the ~~imposes~~position anasserted ~~annual~~by ~~occupational~~the ~~license~~Nevada ~~tax~~Department of ~~approximately~~Taxation. ~~$50~~The ~~per~~resolution ~~device~~of this matter is not expected to have a material impact on our consolidated financial statements.

~~Colonial~~Video isgaming ~~subject~~operators toin avideo ~~number~~poker oftruck ~~federal,~~stops in Louisiana are subject to state and local taxes and fees in addition to ordinary federal and state income taxes. ~~These~~The ~~include~~state ~~fees~~of toLouisiana ~~support~~has imposed a “gaming franchise fee” of 32.5% of the ~~Virginia~~net ~~Breeders~~device ~~Fund,~~revenue from each video gaming device located at a ~~taxes~~video ~~payable~~poker truck stop. The net device revenue is the amount remaining after all winnings have been paid. This franchise fee is collected twice per month by the Louisiana state police based on the data that is provided directly to them from the devices. ~~Commonwealth~~There is also an annual state establishment license fee of ~~Virginia~~$1,100. ~~taxes~~In ~~and~~addition, ~~admission~~the ~~charges~~state ~~payable~~imposes toa ~~New~~device ~~Kent~~operation ~~County~~fee of $1,000 ~~where~~per ~~the~~year ~~track~~per device, which is ~~located~~paid quarterly, and ~~taxes~~each ~~payable~~parish toimposes ~~localities~~an inannual ~~which~~occupational ~~satellite~~license ~~wagering~~tax ~~facilities are~~of approximately $50 per device.

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

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

Item 1A. Risk Factors.

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

Risks Related to Our Indebtedness

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

We have a significant amount of indebtedness. As of December 31, ~~2010~~2011, we had total indebtedness of $~~282~~284.27 million, excluding accounts payable, accrued expenses and other noncurrent liabilities, and total ~~stockholder’s~~ equity of $2516.70 million. Our substantial indebtedness could have considerable consequences. For example, it could:

•

increase our vulnerability to general adverse economic and industry conditions;

•

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

•

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

•

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

•

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

•

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

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

Our debt agreements impose many restrictive covenants on us.

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

•

expand our business through material acquisitions;

•

incur more debt;

•

issue stock of subsidiaries;

•

make investments;

•

repurchase stock;

•

create liens;

•

enter into transactions with affiliates;

•

enter into sale-leaseback transactions;

•

merge or consolidate; and

•

transfer and sell assets.

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

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

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

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

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

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

•

reduce or delay planned expansion and capital expenditures;

•

sell assets;

•

restructure debt; or

•

raise additional capital.

Our debt becomes due at various times between ~~2011~~2013 and 2014. We intend to refinance all of our debt on or before maturity. We cannot assure you that we will be able to refinance any of our debt on commercially reasonable terms or at all. See Note 5 to our Consolidated Financial Statements.

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

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

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

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

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

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

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

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

•

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

•

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

•

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

•

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

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

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

•

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

•

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

•

it could not pay its debts as they become due.

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

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

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

•

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

•

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

•

your cost;

•

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

•

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

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

•

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

•

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

Risks Related to Our Business

We face significant competition.

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

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

• ~~Ameristar~~the ~~Casinos,~~market ~~Inc.~~deterioration ~~(“Ameristar”)~~at ~~purchased~~Colorado’s ~~Mountain~~horse ~~High~~track ~~Casino~~and ~~(formerly~~three ~~the~~dog ~~Black~~tracks ~~Hawk~~has ~~Casino~~reinvigorated byefforts ~~Hyatt)~~to inauthorize avideo ~~bankruptcy~~lottery ~~sale.~~terminals, ~~That~~slot ~~casino~~machines, isso-called ~~directly~~“instant ~~across~~racing ~~highway~~machines” ~~119~~or ~~from~~other ~~The~~types ~~Lodge~~of gaming at these venues and ~~Ameristar~~at ~~has~~the ~~expanded~~state’s off-track betting facilities. A bill introduced in the ~~casino~~Colorado ~~area~~legislature toin ~~accommodate~~February ~~approximately~~2012 1proposes the placement of up to 2,~~550~~500 ~~total~~video ~~gaming~~lottery ~~devices~~terminals ~~with~~at ~~new~~each ~~slot~~of ~~product,~~three ~~expanded~~tracks – one on the ~~parking~~Front ~~garage~~Range, ~~and~~one ~~refurbished~~near Pueblo and ~~rebranded~~one ~~its~~on ~~dining~~the ~~venues~~Western Slope. ~~Ameristar~~The ~~completed~~pressure ~~construction~~on ofColorado astate 33government ~~story,~~to ~~536~~generate non-~~room~~tax ~~hotel,~~revenue ato ~~convention~~help ~~center~~offset ~~and~~continuing ~~other~~state ~~amenities~~revenue declines is substantial, and ~~facilities~~policy inmakers ~~the~~view ~~fourth~~gaming ~~quarter~~expansion as a source of ~~2009~~such added tax revenue. InIf ~~all~~authorization ~~respects,~~of ~~Ameristar~~any form of expanded gambling is ~~known~~granted toby bethe Colorado Lottery Division, the Colorado state legislature, or the voters, it would have a ~~fierce~~material ~~competitor~~adverse ineffect on gaming ~~markets~~revenues in ~~which~~Black itHawk ~~operates~~and at The Lodge and Gilpin casinos;

• ~~Isle~~Ameristar ofBlack ~~Capri~~Hawk, owned by Ameristar Casinos, Inc. ~~owns~~(“Ameristar”), ~~Lady~~is ~~Luck~~directly ~~Casino~~across ~~Black~~Highway ~~Hawk~~119 ~~(previously~~from ~~operated~~The asLodge ~~Colorado~~and ~~Central~~operates ~~Station)~~approximately 1,550 ~~across~~total ~~the~~gaming ~~street~~devices ~~from~~with ~~its~~new ~~existing~~slot ~~facility~~product, a new parking garage and inrefurbished ~~2005~~and ~~completed~~rebranded adining ~~major~~venues. ~~renovation~~Ameristar ~~and~~completed ~~expansion~~construction ~~project~~of ~~physically~~a ~~linking~~33 ~~the~~story, ~~two~~536-room ~~properties.~~hotel, ~~The~~a ~~combined~~convention ~~casinos~~center ~~are~~and ~~the~~other ~~largest~~amenities inand ~~Black~~facilities ~~Hawk~~in ~~with~~2009. ~~approximately~~In 1all respects,~~700~~ ~~total~~Ameristar ~~gaming~~is ~~devices,~~a ~~402~~fierce ~~hotel~~competitor ~~rooms~~in ~~and~~gaming ~~2,300~~markets ~~parking~~in ~~spaces~~which it operates;

• ~~the~~ Mardi Gras ~~casino~~Casino, ~~next~~Golden toGates ~~our~~Casino ~~casino~~and Golden Gulch Casino, all next to The Lodge, ~~was~~were ~~purchased~~acquired by Affinity Gaming, LLC in ~~2005~~September 2011 and ~~the~~Riviera ~~owners~~Black ~~have~~Hawk ~~continued~~was toacquired ~~develop~~by Monarch Casino and ~~implement~~Resort, Inc. We expect the new ~~marketing~~owners ~~programs~~to improve their respective properties and implement new ~~slot~~marketing ~~product~~programs;

• ~~late~~Isle inof ~~2004,~~Capri ~~Central City~~Casinos, aInc. ~~gaming~~owns ~~area~~Lady ~~about~~Luck ~~one~~Casino ~~mile from~~ Black Hawk, ~~completed~~across the ~~“Southern~~street ~~Access,”~~from aits ~~road~~existing ~~which~~facility, ~~directly~~and ~~connects~~in ~~Central~~2005 ~~City~~completed toa ~~Interstate~~major ~~70.~~renovation ~~The~~and ~~new~~expansion ~~access~~project ~~road~~physically tolinking ~~Central~~the ~~City~~two ~~enables~~properties. ~~existing~~The combined casinos ~~and~~are ~~possible~~the ~~new~~largest ~~casinos~~in toBlack ~~pose~~Hawk awith ~~significant~~approximately ~~competitive~~1,650 ~~threat~~total to gaming ~~activities~~devices, in402 ~~Black~~hotel ~~Hawk~~rooms and 2,300 parking spaces; and

• in the ~~market deterioration at Colorado’s horse track and three dog tracks may reinvigorate efforts to authorize video lottery terminals~~past, ~~slot machines, so-called “instant racing machines” or other types of gaming at these venues and at~~ the ~~state’s~~Cheyenne ~~off-track betting facilities. A possible statewide initiative or legislation to expand slot machine gaming to the two Denver area racing facilities~~ and ~~potentially~~Arapahoe toIndian ~~one~~tribes ~~or both of its other tracks in the southern part of the state~~ have ~~been~~claimed ~~publicly~~significant ~~discussed.~~treaty Inrights ~~2009, legislation~~ to ~~authorize~~land ~~instant racing machines (a form of slot machine) was defeated~~ in ~~the~~ Colorado ~~General~~have ~~Assembly.~~pursued ~~In 2010, the Colorado General Assembly considered and rejected~~ a ~~proposal~~plan to ~~seek~~exchange ~~voter~~those ~~approval~~rights offor aland ~~race~~east ~~track~~of ~~on property owned by~~ the ~~Colorado~~Denver ~~State~~metropolitan ~~Fair~~area inon ~~Pueblo,~~ which ~~site~~to ~~would~~build ~~include~~and nooperate ~~fewer~~a ~~than~~large ~~500~~casino ~~video~~gaming ~~lottery~~facility. ~~terminals~~This orproject ~~other~~appears ~~comparable~~to ~~devices that could~~ be ~~played~~dormant ~~throughout~~at ~~the year~~present. InIf ~~2010~~it ~~and~~is ~~2011~~renewed, ~~the~~or ~~state~~if ~~legislature~~another ~~considered~~tribe ~~and~~seeks ~~rejected~~approval ~~proposals~~from tothe ~~authorize~~United ~~keno,~~States ~~including~~Department ~~devices~~of ~~that~~Interior ~~feature keno but appear~~ to besecure ~~and~~other ~~operate~~land ~~as slot machines,~~ in the state’s ~~liquor licensed establishments, such as bars and restaurants. The pressure~~ on ~~Colorado~~which ~~state~~it ~~government~~does tonot ~~generate~~now ~~non-tax~~reside ~~revenue~~and to ~~help~~which ~~offset~~it ~~continuing~~does ~~state~~not ~~revenue~~now ~~declines~~have islegal ~~substantial~~title, and ~~policy~~if ~~makers~~any ~~view gaming expansion as a source of~~ such ~~added~~effort ~~tax~~obtains ~~revenue.~~all Ifnecessary ~~authorization of any form of expanded gambling is granted by the Colorado Lottery Division~~federal, ~~the Colorado~~ state ~~legislature~~, orand ~~the~~local ~~voters~~governmental approvals, it ~~would~~could have a material adverse effect on gaming revenues in Black Hawk and at The Lodge and Gilpin casinos~~; and~~.

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

•The inGold ~~the~~Dust ~~recent~~West ~~past~~casino in Reno, ~~the~~Nevada, ~~Cheyenne~~encounters ~~and~~strong ~~Arapahoe~~competition ~~Indian~~from ~~tribes~~large ~~have~~hotel and ~~claimed~~casino ~~significant~~facilities ~~treaty~~and ~~rights~~smaller tocasinos ~~land~~similar in ~~Colorado~~size ~~have pursued a plan~~ to ~~exchange~~the ~~those~~Gold ~~rights~~Dust ~~for~~West ~~land~~casino ~~east~~in of the ~~Denver~~Reno ~~metropolitan~~ area, on which toincludes ~~build~~Sparks, ~~and operate a large casino gaming facility~~Nevada. ~~This~~There ~~project appears to be dormant at present. If it~~ is ~~renewed,~~also orcompetition ~~if another tribe seeks approval~~ from ~~the~~gaming ~~United~~establishments ~~States~~in ~~Department~~other oftowns ~~Interior~~and tocities ~~secure other land~~ in ~~the~~Nevada ~~state on which it does not now reside~~ and tofrom ~~which~~Native itAmerican gaming ~~does~~facilities ~~not~~located ~~now~~near ~~have legal title~~Sacramento, ~~and~~California. ifOur ~~any~~Carson ~~such~~City ~~effort obtains all necessary federal, state,~~ and ~~local governmental approvals~~Elko, itNevada ~~could~~Gold ~~have~~Dust aWest ~~material~~casinos ~~adverse~~face ~~effect~~competition onfrom ~~gaming~~several ~~revenues~~casinos in ~~Black~~those ~~Hawk~~cities and atother ~~The~~venues ~~Lodge~~in ~~and Gilpin casinos~~Nevada.

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

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

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

~~Finally,~~Louisiana ~~several~~Video ~~states~~Poker ~~are~~Truck ~~giving~~Stop ~~consideration~~Operations. toOur ~~approving~~video ~~intrastate,~~poker ~~internet gaming~~truck ~~which~~stops ~~could~~compete ~~include~~with other video poker truck stops located in Louisiana and other forms of gaming, ~~blackjack~~such as land-based, riverboat and Native American casinos, as well as slot ~~machine-type~~machines ~~games.~~located ~~Any~~at ~~widespread~~horseracing ~~adoption~~tracks ofand ~~this~~video ~~form~~poker ofmachines ~~gaming~~located in bars, ~~especially~~restaurants, inhotels, ~~states~~off-track ~~where~~wagering wefacilities ~~operate,~~and bingo ~~could~~parlors. ~~have~~There awere ~~materially~~200 ~~adverse~~licensed ~~effect~~video onpoker ~~our~~truck ~~results~~stops ofin ~~operations~~Louisiana at December 31, 2011, which is a 1.5% increase over December 31, 2010.

~~Louisiana~~Pari-Mutuel ~~Truck~~Wagering ~~Plaza~~ Operations. ~~Our~~We ~~Louisiana~~operate ~~truck~~a ~~plaza~~racetrack ~~operations~~in ~~compete~~New ~~with~~Kent, ~~other~~Virginia, ~~truck~~and ~~plazas~~ten ~~located~~off-track inwagering ~~Louisiana~~facilities ~~and other~~located ~~forms~~in ofAlberta, ~~gaming~~Chesapeake, ~~such~~Hampton, asHenrico, ~~land-based~~Martinsville, ~~riverboat~~Weber City, Vinton, and ~~Native~~three ~~American~~in ~~casinos~~Richmond, asVirginia. ~~well~~Similarly, asthe ~~slot~~expansion ~~machines~~of ~~located~~other atforms ~~horseracing~~of ~~tracks~~gaming ~~and video poker machines located~~ in ~~bars,~~neighboring ~~restaurants~~states, ~~hotels,~~such ~~off-track~~as ~~wagering~~table ~~facilities~~games ~~and~~in ~~bingo~~West ~~parlors. There~~Virginia ~~were~~and ~~197~~slot ~~licensed~~machines ~~video poker truck plazas~~ in ~~Louisiana at December 31~~Maryland, ~~2010,~~could ~~which~~have isan aadverse 2%effect ~~increase~~on ~~over~~our ~~December 31, 2009~~performance.

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

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

We compete for wagering dollars and simulcast fees with live racing and races simulcast from racetracks in other states, particularly racetracks in neighboring states such as Charles Town in West Virginia, Pimlico Race Course and Laurel Park in Maryland, and Delaware Park in Delaware. We also compete for wagering dollars with account wagering companies operating both legally and illegally in Virginia. These companies take wagers from Virginians both over the phone and the internet. We believe legislation which went into effect January 1, 2010 provides us with fair compensation for the activities of licensed providers. Unlicensed account wagering companies have lower costs than Colonial Downs and thus are able to attract customers in Virginia with large wagering rebates.

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

We face extensive regulation from gaming authorities.

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

~~Potential~~29 Changes in Regulatory Environment. From time to time, legislators and special interest groups have proposed legislation that would expand, restrict or prevent gaming or wagering operations in the jurisdictions in which we operate. Any expansion of gaming or wagering or restriction on or prohibition of our gaming or wagering operations could materially harm our business, financial condition and results of operations. In particular in Colorado, there have been repeated attempts to expand gambling beyond Black Hawk, Central City and Cripple Creek to other towns, racetracks, bingo halls, and tribal gaming through legislation, ballot initiatives, and administrative action by state or local agencies and this is a continued competitive threat to us. Periodic changes to the membership of the Colorado Limited Gaming Control Commission and turnover in the office of the governor of Colorado (the appointing authority for both the members of the Gaming Commission and the executive director of the Department of Revenue which oversees the Gaming Commission) in January 2011 could also affect our operations.

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

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

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

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

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

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

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

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

We need to invest in capital expenditures to compete effectively.

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

~~Economic~~Acts of terrorism and war, natural and man-made disasters, economic conditions, seasonality and weather conditions could affect our operations.

~~Our~~Terrorist ~~business,~~attacks ~~financial condition~~ and ~~results~~other acts of ~~operations~~war ~~may~~or hostility behave ~~harmed~~created bymany ~~general~~economic and ~~local economic~~political ~~conditions~~uncertainties. IfWe cannot predict the ~~U.S.~~extent ~~economy~~to which terrorism, security alerts or ~~the~~war, ~~local~~or ~~economy~~hostilities in aIraq ~~market~~and inAfghanistan ~~which~~and weother ~~operate~~countries ~~suffers~~throughout athe ~~downturn,~~world will continue to directly or indirectly impact our ~~properties~~business ~~could~~and beoperating ~~harmed~~results. asAs ~~the~~a ~~disposable~~consequence ~~income~~of the threat of ~~consumers~~terrorist orattacks ~~their~~and ~~willingness~~other toacts ~~patronize~~of ~~our~~war ~~operations~~or ~~declines, resulting~~hostility in the future, premiums for a ~~decrease~~variety inof ~~the~~insurance ~~number~~products have increased, and some types of ~~patrons~~insurance atare no ~~our~~longer ~~properties~~available. orGiven acurrent ~~decrease~~conditions in the ~~amount~~global ~~that~~insurance ~~patrons~~markets, we are ~~willing~~substantially uninsured for losses and interruptions caused by terrorist acts and acts of war. If any such event were to ~~wager~~affect our properties, we would likely be adversely impacted.

InOur ~~addition~~business, ~~seasonality~~financial condition and ~~weather conditions can affect our~~ results of operations. ~~Winter~~may ~~travel~~be ~~conditions~~harmed ~~can~~by ~~adversely~~general ~~affect patronage~~ and ~~revenues~~local ateconomic conditions. ~~our~~If ~~Colorado~~the ~~and Nevada casinos~~U.S. ~~Although casino~~economy ~~business~~or isthe ~~not~~local ~~seasonal,~~economy ~~levels~~in ofa ~~gaming~~market ~~activity~~in ~~increase~~which ~~significantly~~we ~~during~~operate ~~weekends~~suffers ~~and~~a ~~holidays~~downturn, ~~especially~~or ~~holiday~~if ~~weekends.~~there ~~Hurricanes~~is ~~Katrina~~a ~~and~~global ~~Rita~~economic ~~temporarily~~or ~~affected~~financial crisis, our ~~truck~~properties ~~plaza~~could ~~video~~be ~~gaming~~harmed ~~operations~~as inthe ~~late~~disposable ~~2005,~~income ~~while Hurricanes~~of ~~Gustav~~consumers ~~and~~or ~~Ike~~their ~~temporarily~~willingness to ~~affected~~patronize our ~~truck~~operations ~~plaza~~declines, ~~video~~resulting ~~gaming operations~~ in ~~late 2008. Similar hurricanes could have~~ a ~~material~~decrease ~~adverse effect on our Louisiana operations~~ in ~~future years. Our pari-mutuel wagering revenues are higher during scheduled live racing than at other times of~~ the ~~year.~~number ~~Adverse weather conditions can cause cancellation~~ of orpatrons ~~curtail attendance~~ at ~~outdoor races, thereby reducing wagering and~~ our ~~revenues.~~properties ~~Attendance~~or ~~and~~a ~~wagering~~decrease atin ~~both~~the ~~outdoor~~amount ~~races~~that ~~and satellite~~patrons ~~wagering~~are ~~facilities~~willing ~~can~~to ~~be harmed by holidays and other competing seasonal activities~~wager.

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

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

The Federal Interstate Horseracing Act and the Virginia Racing Act require Colonial to have written agreements with representative Virginia horsemen’s groups in order to simulcast races. We have an agreement with the VHHA that expires December 31, ~~2011~~2014 and an agreement with the VaHBPA that expires December 31, 2012.

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

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

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

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

We are subject to potential exposure to environmental liabilities.

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

Black Hawk, Colorado is located within a 400-square mile area that in 1983 was designated as the Clear Creek Central/City National Priorities List Site Study Area under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. Although our Colorado casinos are not within any of the specific areas currently identified for investigation or remediation under that statute, environmental problems may subsequently be discovered, including in connection with any future construction on our property. Furthermore, governmental authorities could broaden their investigations and identify areas of concern within the site, we could be identified as a “potentially responsible party” and any related liability could have a material adverse effect on us. We do not have insurance to cover environmental liabilities, if we incur any.

We operate video poker truck stops in Louisiana and handle large volumes of gasoline and diesel fuel, including the dispensing of fuel and storage in underground storage tanks. Failure to operate properly, accidents or casualties could lead to material environmental liability and may adversely affect our financial condition.

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

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

•

shortages of material and skilled laborers;

•

labor disputes and work stoppages;

•

weather interference or delays;

•

engineering problems;

•

environmental problems;

•

regulatory problems;

•

changes to plans or specifications;

•

fire, earthquake, flood and other natural disasters; and

•

geological, construction, excavation and equipment problems.

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

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

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

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

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

We believe that a substantial majority of the slot machines sold in the U.S. in ~~2010~~2011 were manufactured by a few select companies. In addition, we believe that one company in particular provided a majority of all slot machines sold in the U.S. in ~~2010~~2011.

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

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

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

In November 2006, a ballot initiative listed as Question 5 and entitled the “Nevada Clean Indoor Air Act” (the “Question 5”) was approved by a majority of Nevada voters. Question 5 restricts smoking in all indoor public places of employment with certain exceptions. Among the exceptions ~~are~~enumerated in Question 5 were the gaming areas of casinos and “stand alone” bars, taverns and saloons that do not serve meals. In 2011, the Nevada Legislature relaxed the requirements of Question 5 with Assembly Bill 271 in which the types of bars in which smoking is allowed was expanded to include those with food service. If future ballot initiatives or anti-smoking legislation are passed in Nevada removing or restricting these exceptions to Question 5, there could be a resulting material adverse effect on our business.

~~The~~In ~~“Colorado~~2009, ~~Clean~~a ~~Indoor~~bill ~~Act”~~was (introduced in the ~~“Indoor~~Louisiana ~~Act”)~~state ~~was~~legislature ~~adopted~~that would ban smoking in ~~the~~bars ~~Colorado~~and ~~legislature~~casinos in ~~March 2006~~Louisiana. The Itbill ~~bans~~failed ~~smoking~~by ina ~~virtually~~large ~~all~~margin. ~~public~~A ~~places~~similar ~~although~~bill banning smoking in certain ~~portions~~free-standing ofcasinos, ~~gaming~~riverboat casinos and racetrack slot parlors, ~~including~~but ~~gaming~~excluded ~~areas~~video poker truck stops, ~~were~~was ~~exempt~~introduced ~~from~~in the ~~Indoor~~Louisiana ~~Act~~state ~~until~~legislature ~~January 1~~in 2010, ~~2008~~but died in committee. ~~Since~~In ~~that~~2011, ~~exception~~the ~~for~~Louisiana ~~gaming~~legislature ~~areas~~rejected ~~was~~a ~~repealed~~bill byto ~~the~~ban ~~state~~smoking ~~legislature, compliance~~in ~~with~~bars. If ~~the~~anti-smoking ~~Indoor~~legislation ~~Act~~is ~~has,~~passed wein ~~believe~~Louisiana, ~~had~~there ancould be a resulting material adverse effect on our business.

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

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

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

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

Item 3. Legal Proceedings.

We are involved in routine litigation arising in the ordinary course of our business pertaining to workers’ compensation claims, equal opportunity employment issues, or guest injury claims. All such claims are routinely turned over to our insurance providers. ~~We believe these matters are covered by appropriate insurance policies, less applicable deductibles which are accrued in our financial statements.~~ None of the claims ~~or payment of deductibles~~ is expected to have a material impact on our financial position, results of operations or cash flows. We believe these matters are covered by appropriate insurance policies. See Note 8 to our Consolidated Financial Statements.

Item 4. ~~[Reserved~~Mine Safety Disclosures.]

Not applicable.

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

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

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

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

Item 6. Selected Financial Data.

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

	As of and for the Year Ended December 31,
	2010			2009(Asadjusted,see Note 4of FinancialStatements)			2008(Asadjusted,see Note 4of FinancialStatements)			2007(Asadjusted)			2006(Asadjusted)
	2011			2010(Asadjusted,see Note 4of FinancialStatements)			2009(Asadjusted,see Note 4of FinancialStatements)			2008(Asadjusted)			2007(Asadjusted)
	(Dollars In Thousands, except Distributions per Common Share)
Statements of Operations Data:(1)
Net revenues	$	~~329~~379,~~924~~945		$	~~313~~351,~~466~~956		$	~~363~~336,~~286~~572		$	~~350~~393,~~419~~328		$	~~323~~375,~~090~~187
Total costs and expenses		~~301~~359,~~235~~398			~~286~~323,~~583~~172			~~340~~311,~~022~~744			~~317~~369,~~420~~950			~~291~~347,~~565~~534
Operating income		2820,~~689~~547			2628,~~883~~784			2324,~~264~~828			3223,~~999~~378			3127,~~525~~653
Interest expense, net		(2526,~~556~~142	)		(2526,~~191~~832	)		(2726,~~283~~355	)		(28,~~132~~945	)		(3230,~~336~~095	)
Pre-payment penalties, tender and consent costs		—			—			—			—			(9,321	)
Net (loss) income	$	(5,595	)	$	1,952		$	(1,527	)	$	(5,567	)	$	(2,442	)
Income tax benefit		—			—			—			—			103
Net income (loss)	$	3,133		$	1,692		$	(4,019	)	$	4,867		$	(10,029	)
Balance Sheet Data (end of period):(1)
Current assets	$	3637,~~032~~531		$	3538,~~231~~762		$	3238,~~910~~327		$	3536,~~802~~064		$	3738,~~292~~449
Total assets		~~334~~329,~~296~~822			~~343~~349,~~540~~338			~~347~~360,~~432~~553			~~360~~368,~~967~~189			~~355~~383,~~973~~566
Current liabilities		2940,~~039~~177			2549,~~937~~003			2846,~~845~~704			3049,~~450~~207			3240,~~486~~781
Long-term debt, capital lease obligations and other liabilities		~~279~~273,~~535~~674			~~292~~282,~~081~~806			~~292~~295,~~249~~360			~~300~~296,~~779~~406			~~286~~315,~~666~~218
Stockholder’s equity		25,722			25,522			26,338			29,738			36,821
Equity		15,971			17,529			18,489			22,576			27,567
Financial Data
Ratio of earnings to fixed charges(2)		10.~~12x~~80	x		1.~~06x~~07	x		0.~~87x~~95	x		10.~~16x~~82	x		0.~~70x~~92	x
Distributions per Common Share	$	2,533		$	2,159		$	1,200		$	10,962		$	22,803
Distributions Declared per Common Share	$	11,303		$	2,533		$	2,163		$	1,203		$	10,962

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

(2) The ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. Earnings consist of income (loss) before income taxes and noncontrolling interest, plus fixed charges and amortization of capitalized interest, less interest capitalized during the period. Fixed charges consist of interest on indebtedness (whether expensed or capitalized), amortization of deferred financing costs, discounts and premiums and that portion of rental expense that we believe is representative of interest. For the years ended December 31, 2011, 2009, 2008 and ~~2006~~2007, we had a deficiency of $35,~~944~~520, $1,462, $5,492 and $102,~~215~~526, respectively, in earnings to fixed charges.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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

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

TABLE OF CONTENTS:

Description of item
A.	Company background	36
B.	Significant transactions occurring during the year ended December 31, ~~2010~~2011	36
C.	Subsequent events	37
D.	Overview and discussion of our operations	3738
E.	Comparison of our operations for the year ended December 31, ~~2010~~2011 to the year ended December 31, ~~2009~~2010	4142
F.	Comparison of our operations for the year ended December 31, ~~2009~~2010 to the year ended December 31, ~~2008~~2009	4344
G.	Segment information for the three years ended December 31, ~~2010~~2011	4546
H.	Liquidity and capital resources—December 31, ~~2010~~2011	4950
I.	Critical accounting policies and estimates	5253

A. Company background

We are a developer, owner and operator of gaming, ~~and~~ pari-mutuel wagering, leisure and entertainment facilities throughout the United States, with properties located in Colorado, Nevada, Louisiana and Virginia. AsWe ofown ~~December 31, 2010, we owned~~ and ~~operated~~operate two casinos in Colorado and three casinos in Nevada, 1821 video ~~gaming~~poker truck ~~plazas~~stops in Louisiana and a horse racing track with ten satellite wagering facilities in Virginia (one of which is temporarily closed). In addition, we are party to an agreement that entitles us to a portion of the gaming revenues from an additional ~~truck plaza~~ video ~~gaming~~poker ~~facility~~truck stop.

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

B. Significant transactions occurring during the year ended December 31, ~~2010~~2011

~~Amendment~~Acquisitions to– ~~Credit~~Nautica ~~Agreement~~Properties

On ~~March~~January 3118, ~~2010~~2011, we ~~entered into~~acquired ana ~~Amendment~~Nautica Properties based parking lot business and ~~Restatement~~its ~~Agreement~~related ~~(the~~assets ~~“Amendment”)~~referred to ~~our~~as ~~credit~~“Nautica Phase ~~agreement~~2” for $1.25 ~~Generally,~~million. ~~the~~Our ~~Amendment,~~Chief ~~among~~Executive ~~other~~Officer ~~things,~~(“CEO”) ~~adjusted~~controlled ~~our~~the ~~bank~~business. ~~financial~~The ~~covenants,~~acquisition ~~allowed~~of this business has been accounted for ~~the~~as ~~exclusion~~a combination of ~~certain~~entities ~~items~~under ~~from~~common ~~EBITDA~~control. ~~for~~The ~~purposes~~ portion of ~~calculating~~Nautica Phase 2 acquired from our ~~revised~~CEO ~~financial~~has ~~covenants,~~been ~~and~~recorded ~~provided~~at ~~for~~the ~~other~~historical ~~minor~~cost ~~amendments.~~bases ~~Additionally,~~in the ~~maturity~~assets ofand ~~all~~liabilities ~~but~~transferred ~~$3.0~~and ~~million~~the portion of ~~our~~Nautica ~~revolving~~Phase ~~senior~~2 ~~credit~~acquired ~~facility~~from ~~aggregating~~third ~~$40.0~~parties ~~million~~has ~~due~~been ~~June~~recorded ~~2011~~at ~~(“Class~~fair Bvalue ~~Revolving~~at the acquisition date using the ~~Loans”)~~acquisition ~~was~~method ~~extended~~of toaccounting. ~~June~~See ~~2012~~Note ~~(“Class~~4 Ato ~~Revolving~~our ~~Loans”)~~Consolidated Financial Statements.

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

~~2.75%~~On ~~above LIBOR to~~ October 3~~.00%~~, ~~above~~2011, ~~LIBOR.~~we ~~The~~acquired ~~total~~a ~~cost~~Nautica ofProperties ~~the~~based ~~Amendment,~~parking ~~including~~lot ~~the~~business ~~bank~~and ~~consent~~its related ~~fees,~~assets ~~the~~referred ~~fees~~ to ~~the~~as ~~joint~~“Sycamore & ~~lead~~Main” ~~arrangers,~~for ~~legal,~~$1.1 ~~accounting~~million. ~~and~~Our ~~other~~CEO ~~costs~~controlled ~~was~~the ~~approximately $2~~business.0 ~~million.~~The Ofacquisition ~~these~~of ~~costs,~~Sycamore & ~~$1.5~~Main ~~million~~and ~~will~~its beparking ~~amortized~~lot tobusiness ~~interest~~was ~~expense~~accounted ~~over~~for ~~the~~as ~~remaining~~a ~~life~~combination of ~~the~~entities ~~credit~~under common ~~facility~~control. ~~which~~Therefore, isthe ~~approximately~~acquisition ~~one~~has ~~and~~been ~~one-half~~recorded ~~years~~at ~~and~~ the ~~remainder~~historical ~~was~~cost ~~expensed~~bases asin ~~incurred.~~the Atassets ~~December 31,~~and ~~2010,~~liabilities ~~we were~~transferred. inSee ~~compliance~~Note ~~with~~4 to our ~~financial~~Consolidated ~~covenants~~Financial Statements.

On October 28, 2011, we acquired a Nautica Properties based parking lot business and its related assets referred to as “Nautica Peninsula Land” for $1.0 million. Our CEO controlled the business. The acquisition of this business has been accounted for as a combination of entities under common control. The portion of Nautica Peninsula Land acquired from our CEO has been recorded at the historical cost bases in the assets and liabilities transferred and the portion of Nautica Peninsula Land acquired from third parties has been recorded at fair value at the acquisition date using the acquisition method of accounting. See Note 4 to our Consolidated Financial Statements.

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

On January 31, 2011, we acquired two video poker truck stops in Louisiana, Cash Magic Springhill, LLC (“Springhill”) and Cash Magic Vivian, LLC (“Vivian”), for $5.5 million and $4.9 million, respectively, which were previously wholly owned by another JII subsidiary, Gameco Holdings, Inc. (“Gameco”), an entity under common control and with common management. On March 31, 2011, we acquired one additional video poker truck stop in Louisiana, Jalou Forest Gold, LLC (“Forest Gold”), for $3.0 million, which was also previously wholly owned by Gameco. The acquisitions of these video poker truck stops have been accounted for as combinations of entities under common control. Accordingly, the accompanying consolidated financial statements and the accompanying management’s discussion and analysis of financial condition and results of operations presented in this Form 10-K have been retroactively adjusted to include the operations of these businesses, along with the Nautica Property acquisitions, from January 1, 2009. See Note 4 to our Consolidated Financial Statements.

C. Subsequent events

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

~~Additionally,~~On ~~on January~~February 3123, ~~2011~~2012, we ~~acquired~~entered into ~~two~~a ~~truck~~second ~~plaza~~amendment ~~video~~and ~~gaming~~restatement ~~facilities~~agreement into ~~Louisiana,~~our ~~Cash~~credit ~~Magic~~facility ~~Springhill,~~(the ~~LLC~~“Restated ~~and~~Credit ~~Cash~~Agreement”). ~~Magic~~The ~~Vivian,~~Restated ~~LLC,~~Credit ~~for~~Agreement extended the maturity of $~~5.5~~45 million of our term loans and $~~4.9~~37 million, of our revolving loan ~~respectively~~commitments to December 16, ~~which~~2013, ~~were~~among ~~previously~~other ~~wholly~~minor ~~owned~~amendments. In byaddition, ~~another~~we ~~JII~~increased ~~subsidiary,~~our ~~Gameco~~revolver ~~Holdings~~capacity to $40 million. We are required to pay down $11.75 million of term loans on or before the June 16, ~~Inc~~2012 maturity date. ~~The~~We ~~acquisitions~~also have the right to borrow an additional $12 million of ~~these~~term ~~businesses~~loans ~~will~~under bethe ~~accounted~~Restated ~~for~~Credit Agreement if we choose, so long as ~~combinations~~the oftotal ~~entities~~indebtedness under ~~common~~the ~~control~~Restated ~~during~~Credit ~~2011~~Agreement does not exceed $96.75 million.

DAs a result of the Restated Credit Agreement, our interest rate will increase by 0.25% ~~Overview~~on the loans that mature on December 16, 2013. As such, the interest rate on the drawn revolving loan balance will increase by 0.25%, the interest rate on the $11.75 million of term loans that mature June 16, 2012 will remain 3% above LIBOR, and ~~discussion~~the $45 million of term loans that mature December 16, 2013 will have an interest rate of 3.25% above LIBOR. See Note 5 to our ~~operations~~Consolidated Financial Statements.

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

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

Black Hawk, Colorado

On February 24, 2012, we entered into a real estate sales contract with Dakota Blackhawk, LLC and Miner’s Mesa Development, LLC wherein we agreed to purchase approximately 45 acres of land located in the City of Black Hawk, Colorado (with approximately 1 acre within the casino gaming district) for an aggregate purchase price of $7.5 million. The transaction is expected to close on or before January 31, 2013.

D. Overview and discussion of our operations

Our CEO is our chief operating decision maker. As of December 31, 2011, we had four segments representing the geographic regions of our operations: Colorado, Nevada, Louisiana and Virginia. Each segment is managed separately because of the unique characteristics of its revenue stream and customer base. We have aggregated our operations into these four segments based on similarities in the nature of the properties’ businesses, customers and regulatory environment in which each property operates. The Colorado segment consists of The Lodge and Gilpin casinos. Our Nevada segment includes the Gold Dust West-Reno, Gold Dust West-Carson City and Gold Dust West-Elko casinos. The Louisiana operations consist of video poker truck stops, and the Virginia segment consists of Colonial’s pari-mutuel operations and satellite wagering facilities.

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

In addition to the above performance measurements, we pay particular attention to our monthly and annual cash flow. Our business is sensitive to shifts in volumes and levels of activity and we find it necessary to monitor our cash levels closely. Every six months (June 15 and December 15) we have a cash interest payment due on our $210 million senior unsecured notes amounting to $10.2 million. Additionally, we currently have $5756.48 million outstanding on our senior secured credit facility with interest due at varying intervals. As of December 31, ~~2010~~2011, $1114.59 million was outstanding on the $40 million senior secured revolving credit facility we have with a bank group on which we can draw as needed in order to augment the cash flow we generate from operations. This is generally a function of the timing of generating cash from operations coupled with the amount of cash we need to run the business—i.e., our cash inventory. Presently, we estimate that we require approximately $15 million of cash inventory to operate our properties. See also Section H, “Liquidity and Capital Resources.”

Colorado

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

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

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

Colorado

Our Colorado operations consist of The Lodge Casino at Black Hawk (“The Lodge”) and the Gilpin Casino (“Gilpin”), both of which are located in Black Hawk, Colorado. The competitive aspects of the market in Black Hawk continue to be a significant factor in our operations. At December 31, 2011, there were approximately 8,400 slot machines in the city of Black Hawk. We had 1,364 slot machines in this market (985 at The Lodge and 379 at the Gilpin), which represented approximately 16% of the total slot machines in Black Hawk. Additionally, there were 195 table games in the city of Black Hawk. We had 42 table games in this market (36 at The Lodge and 6 at the Gilpin), which represented approximately 22% of the total table games in Black Hawk. On March 15, 2010, we closed the Gilpin poker room.

For the year ended December 31, 2011, our gross gaming revenues at The Lodge and the Gilpin totaled $108.0 million, which represented 20% of the total gaming revenues in Black Hawk. The overall Black Hawk market gross gaming revenues decreased by 1.5% in 2011 over 2010. However, total slot devices in Black Hawk increased by 3% while table games increased by 5%. We achieved 120% efficiencies (our percentage of the gross gaming revenues divided by our percentage of the gaming devices) within the market for 2011. We follow our efficiency level very closely as we believe this is a useful measure of how well we are performing within the market.

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

Nevada

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

At December 31, ~~2010~~2011, Reno had approximately 11,~~500~~600 gaming devices, of which Gold Dust West-Reno had ~~475~~483 devices, or 4.1% of the market. For the year ended December 31, ~~2010~~2011, our gross gaming revenues were ~~3.8~~4% of the Reno market, with an efficiency rate of 9399.7%.

Since its acquisition in June 2006, Gold Dust West-Carson City ~~(formerly Piñon Plaza Resort)~~, has undergone major renovations and changes to the operations ~~emerging January 24, 2007 as the “new” Gold Dust West-Carson City by way of an extensive rebranding program~~. The Carson City area (state capital) is 30 miles south of Reno and services the areas of Dayton, Gardnerville and Minden surrounding it with a total population base of 60,000 plus. The area had approximately 4,~~100~~300 gaming devices of which Gold Dust West-Carson City had ~~403~~396 (109% of total devices). For the year ended December 31, ~~2010~~2011, our efficiency rate was 9192%. ~~This property is expected to substantially improve its efficiency through enhanced utilization of its many unique amenities.~~

At December 31, ~~2010~~2011, Gold Dust West-Elko had ~~348~~355 gaming devices, representing approximately ~~11.5~~12% of the total devices in the market. For the year ended December 31, ~~2010~~2011, our gross gaming revenues were 12% of the Elko market, with an efficiency rate of ~~129~~125%.

Louisiana

As of ~~March~~December 2931, 2011, ~~the~~our Louisiana ~~truck~~operations ~~plaza video gaming facilities~~ consist of 2021 video poker truck ~~plazas~~stops located in Louisiana and a share in the gaming revenues offrom an additional video poker truck ~~plaza~~stop. Each video poker truck ~~plaza~~stop features a convenience store, fueling operations, a restaurant and up to 50 video ~~gaming~~ poker devices in the casino depending on the level of fuel sales and available space. At December 31, ~~2010~~2011, our ~~truck plaza~~ video ~~gaming~~poker ~~facilities~~truck stops had a combined total of ~~944~~1,098 video gaming devices.

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

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

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

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

Virginia

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

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

OnAs ~~November~~of December 1031, ~~2008~~2011, we ~~closed~~operated ~~one~~nine ~~of our two~~ satellite wagering facilities in ~~Chesapeake,~~ Virginia. On(one ~~April 28,~~of ~~2010,~~which weis ~~opened~~temporarily aclosed). Additionally, ~~satellite wagering facility~~ in ~~Henrico~~February ~~County~~2012, ~~Virginia,~~Colonial ~~and~~Downs onreceived ~~August 27,~~a ~~2010,~~license wefor ~~opened~~ a tenth satellite wagering facility. inThe ~~Richmond,~~facility ~~Virginia.~~is Aslocated ofin ~~December 31, 2010,~~downtown weRichmond ~~operate~~and ~~ten~~operates ~~satellite~~within ~~wagering~~an ~~facilities~~existing ~~in Virginia~~restaurant.

Since 2004, Colonial Downs has operated an internet account wagering platform in Virginia called EZ Horseplay. In early 2009, Colonial Downs ~~commenced~~developed ~~development of~~ a custom built account wagering support kiosk that allows a customer to remotely open a wagering account, fund the account with cash, take a cash withdrawal from their account and print a race track program. The first kiosks, along with a ~~touchscreen~~touch screen version of the EZ Horseplay internet account wagering platform, were deployed in September 2009. As of December 31, ~~2010~~2011, we have deployed approximately 3070 kiosks in private clubs, bars and restaurants in Virginia.

Summary of Consolidated Operating Results

Our results of operations reflect the consolidated operations of all our subsidiaries. A summary of our consolidated operating results for the years ended December 31, ~~2010~~2011, ~~2009~~2010 and ~~2008~~2009 is as follows:

Year Ended December 31,

2010

2009(As adjusted,see Note 4 ofFinancialStatements)

2008(As adjusted,see Note 4 ofFinancialStatements)

2011

2010(As adjusted,see Note 4 ofFinancialStatements)

2009(As adjusted,see Note 4 ofFinancialStatements)

(Dollars in Thousands)

REVENUES

Gaming:

Casino

~~140~~143,~~265~~895

~~139~~140,~~766~~265

139,~~492~~766

Truck stop

6172,~~463~~388

6270,~~983~~142

6772,~~590~~309

Pari-mutuel

27,~~669~~920

3227,~~276~~669

3832,~~657~~276

Food and beverage

28,~~720~~895

29,~~781~~896

3031,~~736~~447

Convenience store—fuel

85119,~~443~~253

6095,~~659~~480

9770,~~021~~510

Other

2124,~~271~~416

2224,~~302~~107

2325,~~508~~349

Less: promotional allowances

(3436,~~907~~822

)

(3435,~~301~~603

)

(3335,~~718~~085

)

Total net revenues

~~329~~379,~~924~~945

~~313~~351,~~466~~956

~~363~~336,~~286~~572

COSTS AND EXPENSES

Gaming:

Casino

4849,~~871~~672

4748,~~348~~871

4647,~~809~~348

Truck stop

3742,~~326~~964

3842,~~784~~732

4044,~~990~~590

Pari-mutuel

2122,~~757~~374

2621,~~077~~757

3126,~~172~~077

Food and beverage

1314,~~726~~338

1314,~~521~~846

15,~~417~~085

Convenience store—fuel

80113,~~510~~163

5789,~~139~~871

9066,~~714~~552

Other

1519,~~254~~938

1618,~~044~~191

1819,~~260~~079

Marketing, general and administrative

6365,~~054~~255

6564,~~864~~234

6867,~~931~~102

Unrealized (gain) loss on change in fair value of investment in equity securities

(594

)

309

6,577

Unrealized loss (gain) on change in fair value of investment in equity securities

131

(594

)

309

Goodwill impairment

—

199

Impairment of long-lived assets

10,065

—

Abandonment costs

—

829

Goodwill impairment

—

836

3,064

Depreciation and amortization

21,~~331~~498

2122,~~497~~428

2022,~~124~~538

Total costs and expenses

~~301~~359,~~235~~398

~~286~~323,~~583~~172

~~340~~311,~~022~~744

OPERATING INCOME

2820,~~689~~547

2628,~~883~~784

2324,~~264~~828

Interest expense, net

(2526,~~556~~142

)

(2526,~~191~~832

)

(2726,~~283~~355

)

Noncontrolling interest

—

(71

)

NET (LOSS) INCOME

(5,595

)

1,952

(1,527

)

NET INCOME (LOSS) ATTRIBUTABLE TO JEI

3,133

1,692

(4,090

)

Net income of subsidiaries attributable to the noncontrolling interest

(26

)

(42

)

(63

)

NET (LOSS) INCOME ATTRIBUTABLE TO JEI

(5,621

)

1,910

(1,590

)

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

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

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

~~effective July 2, 2009~~E. ~~Amendment~~Comparison 50of isour ~~benefiting~~operations for the ~~larger~~year ~~casino~~ended ~~properties in Black Hawk. Overall~~December 31, ~~the~~2011 ~~City of Black Hawk casino win increased 6% during 2010 compared~~ to ~~2009. Gold Dust~~ ~~West-Reno~~the ~~continues~~year toended beDecember 31, ~~negatively~~2010 ~~impacted by continued declines in our market area.~~

~~Truck~~All ~~stop~~comparisons ~~video~~below ~~poker~~begin ~~gaming revenues decreased $1.5 million or 2% to $61.5 million from $63.0 million. The decrease in revenues was experienced at nearly all of our truck stop locations and is consistent~~ with the ~~statewide~~2011 ~~truck~~results ~~stop~~followed ~~video~~by ~~gaming revenue decline of 2% resulting from~~ the ~~continued general economic conditions, including higher unemployment and decreased disposable income for~~ 2010 ~~compared to 2009~~ results.

~~Pari-mutuel~~Casino revenues ~~decreased~~increased $43.6 million or 143% to $27143.79 million from $32140.3 million. The ~~decrease~~increase in casino revenues is ~~attributable~~due to aincreases at The Lodge of $30.78 million ~~decrease~~or in1%, ~~wagering~~at ~~revenues~~the Gilpin of $1.9 million or 9%, at ~~the~~Gold ~~racetrack~~Dust West-Reno of $0.4 million or 3% and ~~off~~at Gold Dust West-Elko of $1.1 million or 11%, somewhat offset by a decrease at Gold Dust ~~track~~West-Carson ~~wagering~~City ~~facilities~~of $0.6 million or 7%. Revenues at The Lodge increased primarily due to an ~~overall~~increase ~~decrease~~in slot revenues, somewhat offset by decreases in ~~attendance~~player banked poker and table games. The increase in ~~2010~~revenues ~~compared~~at the Gilpin was primarily due to an ~~2009~~increase in slot coin-in attributable to a new marketing program, ~~combined~~somewhat ~~with~~offset by a $0.91 million ~~decrease~~reduction in ~~account~~player ~~wagering~~banked poker revenues ~~primarily~~attributable ~~due~~ to athe ~~decrease~~March in2010 ~~commission~~closure ~~revenue~~of ~~resulting~~the ~~from~~poker ~~revised~~room. ~~profit sharing~~The ~~agreements~~increase ~~with~~in ~~horsemen’s~~revenues ~~groups~~at asGold ~~compared~~Dust West-Elko tois consistent with the ~~prior~~strong ~~year~~market results.

~~Food~~Video ~~and~~poker ~~beverage~~truck stop revenues ~~decreased~~increased $12.1 3 million or 43% to $2872.7 4 million from $2970.81 million. ~~This~~The ~~decrease~~increase isin ~~primarily~~revenues ~~attributable~~exceeded tothe ~~decreases~~statewide ofvideo ~~$1.6~~poker ~~million at the~~ truck stop ~~facilities,~~revenue ~~$0.2~~increase ~~million at the Gilpin and $0.5 million at Colonial which correspond to the decreases in gaming revenues. These decreases were somewhat offset by increases~~ of ~~$0.7 million at The Lodge, $0.~~1% ~~million~~resulting atfrom the ~~Gold~~installation ~~Dust~~of ~~West-Reno,~~new ~~$0.2~~video ~~million~~poker atgaming ~~Gold~~devices ~~Dust West-Carson City~~ and ~~$0.2~~the ~~million~~remodeling atof ~~Gold~~certain ~~Dust West-Elko~~locations.

~~Convenience store~~Pari-~~fuel~~mutuel revenues increased $240.72 million or 411% to $8527.49 million from $6027.7 million. The increase ~~was primarily due to an increase~~ in ~~the~~revenues ~~average~~is ~~selling~~attributable ~~price of fuel~~ to ~~$2.71~~a ~~per gallon in 2010 from~~ $21.268 million ~~per gallon in 2009, combined with an 17%~~ increase in ~~volume.~~account Inwagering ~~December 2009~~revenues, ~~JEI~~partially ~~entered~~offset ~~into~~by a ~~fuel supply agreement with CITGO Petroleum Corporation (“CITGO”)~~$1.6 Tomillion ~~help~~decrease ~~JEI~~in ~~reach~~wagering ~~the~~revenues ~~fuel~~at ~~sale volume necessary to qualify for~~ the ~~reduced~~off ~~pricing~~track ~~structure~~wagering ~~under~~facilities ~~the~~and ~~CITGO~~racetrack ~~contract, JEI entered into agreements with affiliates to provide fuel at cost for their fuel operations. The increase in fuel sales volume for this period was~~ primarily due to ~~the~~an ~~new~~overall ~~affiliate~~decrease ~~agreements, resulting~~ in anattendance ~~increase~~ in ~~fuel~~2011 ~~sales~~compared ~~revenues~~to ~~totaling $8.0 million in~~ 2010.

~~Other~~Food and beverage revenues decreased $1.0 million or 53% to $2128.39 million from $2229.39 million. ~~and~~This ~~were~~decrease ~~primarily~~is primarily attributable to adecreases of $10.29 million ~~decrease in convenience store revenues~~ at the video poker truck stops, ~~and~~of ~~receipt~~which of $0.36 million inis ~~2009~~the ofresult ~~insurance proceeds in excess~~ of ~~hurricane~~outsourcing ~~losses~~the ~~incurred~~food ~~during~~and ~~late~~beverage ~~2008~~operations at ~~our~~Springhill ~~truck stops, somewhat offset by a one-time oil~~ and ~~gas~~Vivian ~~royalty received~~ in ~~April~~2011, ~~2010~~and ~~totaling~~decreases of $0.52 million ~~and~~at anColonial ~~increase~~and ~~in hotel revenues totaling~~ $0.2 million at ~~The~~Gold ~~Lodge.~~Dust ~~Additionally,~~West-Carson ~~other revenues at Colonial~~City, ~~Lot~~somewhat Doffset ~~and Sugar Warehouse decreased~~ by aan ~~combined~~increase of $0.3 million at Gold Dust West-Elko.

~~Promotional~~Convenience store-fuel ~~allowances~~revenues increased $023.68 million or 225% to $34119.93 million from $3495.35 million. ~~Increases~~The inincrease ~~promotional~~was ~~allowances~~primarily ofdue ~~$2.4~~to ~~million~~an atincrease ~~The~~in ~~Lodge and $0.2 million at~~ the ~~truck~~average ~~stops~~selling ~~were~~price ~~somewhat offset~~of byfuel ~~decreases~~to of $13.854 ~~million~~per atgallon ~~Gold~~in ~~Dust~~2011 ~~West-Reno,~~from $02.173 ~~million~~per atgallon ~~the~~in ~~Gilpin~~2010, ~~and~~somewhat ~~$0.1~~offset ~~million~~by a at4% ~~Gold~~decrease ~~Dust~~in ~~West-Elko~~volume.

~~Casino~~Other ~~expenses~~revenues increased $10.63 million or 31% to $4824.94 million from $4724.~~3 million. Increases of $2.~~1 million atand ~~The~~were ~~Lodge~~primarily attributable ~~and~~to a $0.18 million at ~~Gold~~increase ~~Dust~~in ~~West-~~convenience ~~Carson~~store ~~City~~revenues ~~were~~at ~~somewhat~~the ~~offset~~video bypoker ~~decreases~~truck ofstops ~~$0.4~~combined ~~million~~with ata ~~the Gilpin and~~ $0.21 million atincrease ~~Gold~~in ~~Dust~~hotel ~~West-Elko.~~and ~~The~~other ~~increase~~revenues at ~~The~~the ~~Lodge~~casinos, ~~was~~somewhat ~~primarily~~offset ~~due~~by toa ~~additional~~one-time ~~staffing~~oil ~~for~~and ~~the~~gas ~~table~~royalty ~~games~~received ~~and~~in April ~~extended~~2010 ~~hours combined~~totaling ~~with~~$0.5 ~~increased~~million ~~gaming~~and ~~taxes~~a ~~resulting~~decrease ~~from~~of ~~increased~~$0.1 ~~casino~~million ~~revenues~~at Colonial.

~~Truck~~Promotional ~~stop~~allowances ~~gaming~~increased ~~expenses decreased~~ $1.5 2 million or 4 3% to $3736.38 million from $3835.6 million. Promotional allowances increased by $1.8 million ~~and~~at isthe ~~primarily~~Gilpin ~~due~~associated to ~~direct~~a ~~costs~~new ~~associated~~marketing ~~with~~program ~~decreased~~and ~~truck~~$0.4 ~~stop~~million at the video poker ~~gaming~~truck ~~revenues~~stops, somewhat offset by decreases of $0.6 million at The Lodge and $0.4 million at Gold Dust West-Carson City.

~~Pari-mutuel~~Casino ~~costs and~~ expenses ~~decreased~~increased $40.38 million or 172% to $2149.87 million from $2648.1 9 million. ~~The~~primarily ~~decrease~~due ~~is attributable~~ to aincreases of $20.71 million ~~decrease~~at inThe ~~direct~~Lodge, ~~costs~~$0.1 ~~resulting~~million ~~from~~at ~~decreased pari-mutuel~~the ~~revenues~~Gilpin, ~~primarily~~$0.2 asmillion aat ~~result~~Gold ofDust anWest-Reno, ~~overall~~$0.1 ~~decrease~~million inat ~~attendance~~Gold asDust ~~compared~~West-Carson toCity ~~the~~and ~~prior year, combined with a~~ $10.63 million ~~decrease~~at inGold ~~costs~~Dust ~~associated~~West-Elko. ~~with~~The ~~account~~increases ~~wagering~~directly ~~resulting~~correspond to ~~from~~the ~~revised~~increases ~~profit~~in ~~sharing~~casino ~~agreements~~revenues ~~with horsemen’s~~and ~~groups~~increased labor costs.

Video poker truck stop expenses increased $0.3 million or less than 1% to $43.0 million from $42.7 million and is primarily due to direct costs associated with increased video poker truck stop revenues.

Pari-mutuel costs and expenses increased $0.6 million or 3% to $22.4 million from $21.8 million. The increase is attributable to an increase of $0.8 million in account wagering, facility and simulcast costs and expenses, partially offset by a $0.2 million decrease in purse expense.

Food and beverage costs and expenses ~~increased~~decreased $0.25 million or 23% to $1314.73 million from $1314.58 million., ~~Increases~~and is due to a decrease of $01.51 million at ~~The~~the ~~Lodge~~video poker truck stops, of which $0.17 million atis the ~~Gilpin~~result of outsourcing the food and beverage operations at Springhill and Vivian in 2011, combined with a $0.1 million decrease at the ~~Gold~~Gilpin, ~~Dust~~somewhat ~~West-Reno,~~offset by increases of $0.43 million at ~~Gold~~The ~~Dust~~Lodge, ~~West-Carson City and~~ $0.21 million at Gold Dust West-~~Elko~~Reno, ~~were offset by decreases of~~ $0.91 million at ~~the~~ ~~truck~~Gold ~~stops~~Dust West-Carson City and $0.2 million at ~~Colonial~~Gold Dust West-Elko.

Convenience store-fuel expenses increased $23.43 million or 4126% to $80113.52 million from $5789.19 million. The increase was primarily due to an increase in the average cost of fuel to $23.5735 per gallon in ~~2010~~2011 from $2.1357 per gallon in ~~2009~~2010, ~~combined~~somewhat ~~with~~offset anby ~~increase~~a decrease in volume as discussed in convenience store-fuel revenues above. In Additionally, in January 2010, we ~~also~~ collected $0.34 million in accounts receivable that had been fully reserved in ~~December~~ 2008. ~~The increase in fuel costs associated with the new affiliate agreements was $8.0 million in 2010.~~

Other costs and expenses ~~decreased~~increased $01.87 million or 510% to $1519.2 9 million from $1618.02 million, and were attributable to aan ~~$0.7~~increase ~~million decrease~~ in convenience store expenses at the video poker truck stops which correlates to the ~~decrease~~increase in convenience store revenues combined with aan ~~$0.1~~increase ~~million decrease~~ in ~~hotel~~labor ~~expenses at The Lodge~~costs.

Marketing, general and administrative expenses ~~decreased~~increased $21.80 million or 42% to $6365.13 million from $6564.93 million. This ~~decrease~~increase is primarily the result of aincreases ~~net decrease~~ of $10.98 million at ~~corporate which is comprised of~~ the ~~following:~~video ~~(a) during~~poker ~~2009,~~truck ~~we made political contributions in Ohio totaling $2.3 million which did not recur in 2010~~stops, ~~combined with decreases of: (b)~~ $0.52 million inat ~~professional~~The ~~accounting fees~~Lodge, ~~(c)~~ $0.13 million inat ~~legal~~Gold ~~expenses~~Dust West-Elko and ~~(d)~~ $0.42 million inat ~~other~~corporate. ~~miscellaneous~~These ~~expenses;~~increases were somewhat offset by ~~increases~~decreases of: ~~(e)~~ $0.~~5 million of costs incurred during 2010 related to the amendment to our credit agreement, (f) $0.5 million for corporate payroll, (g) $0.~~1 million ~~for travel expenses~~ at ~~corporate and (h) $0.3 million for various political contributions made in 2010. Additionally, we had decreases of~~the ~~$0.2 million at Gold Dust West-Reno~~Gilpin, $0.2 million at Gold Dust West-Carson City, and $0.62 million at Colonial ~~and $0~~.4 ~~million~~The increase at ~~the~~corporate ~~truck~~was ~~stops.~~primarily ~~These~~due ~~decreases~~to ~~were somewhat offset by~~ increases ofin ~~$0.2~~payroll ~~million~~and atconsulting ~~The Lodge~~costs, ~~$0.2~~somewhat ~~million~~offset atby ~~the~~a ~~Gilpin and~~reduction ~~$0.1~~in ~~million~~legal ~~combined~~and atlicense ~~the~~costs ~~Nautica~~and ~~Properties~~campaign contributions.

We account for our investment in MTR Gaming Group, Inc. (“MTR”) asunder ~~an equity security, in accordance with~~ the fair value option permitted by FASB ASC Topic 825, Financial Instruments (“ASC Topic 825”). AnA ~~increase~~decrease in ~~the~~MTR’s stock price during 2011 resulted in an unrealized ~~gain~~loss on the change in fair value of investment in equity securities totaling $0.6 1 million ~~during the year ended December 31, 2010~~. AAn ~~decrease~~increase in ~~the~~MTR’s stock price during 2010 resulted in an unrealized ~~loss~~gain ~~on the change in fair value of investment in equity securities~~ totaling $0.36 million ~~during the year ended December 31, 2009~~.

~~Depreciation~~At ~~and~~Gold ~~amortization~~Dust West-Carson ~~expense~~City, ~~decreased~~we recorded an impairment of long-lived assets totaling $010.21 million orduring 1%2011. In 2011, we assessed our ability to recover the recorded cost of the Gold Dust West-Carson City and Virginia long-lived assets. We prepared a cash flow analysis based on management’s best estimates in an effort to ~~$21~~assess the likelihood of recovering the cost of these assets.3 ~~million~~Based ~~from~~on these projections and the related underlying assumptions for Gold Dust West-Carson City, as well as our knowledge of the Carson City market, we believe that we will not be able to fully recover the carrying cost of these assets, and therefore, Gold Dust West-Carson City recorded an impairment of long-lived assets totaling $2110.51 million in 2011. No comparable transaction occurred during 2010.

~~Net~~At ~~interest~~one ~~expense~~of ~~increased~~our byvideo ~~$0.4~~poker ~~million~~truck orstops, 1%we torecorded ~~$25.6~~a ~~million~~goodwill ~~from~~impairment totaling $250.28 million ~~and~~ isduring ~~attributable~~2010. toNo ~~higher~~comparable ~~effective~~transaction ~~interest~~occurred ~~rates on our variable rate bank debt, somewhat offset by a decrease in debt outstanding~~ during ~~the~~2011. ~~year~~See ~~ended~~Note ~~December 31,~~3 ~~2010 compared~~ to ~~the~~our ~~year~~Consolidated ~~ended~~Financial ~~December 31, 2009~~Statements.

FDepreciation and amortization expense decreased $0.9 ~~Comparison~~million or 4% to $21.5 million from $22.4 million and is primarily due to decreases of ~~our~~$0.6 ~~operations~~million ~~for~~at Gold Dust West-Carson City due to the ~~year~~asset impairment ~~ended~~discussed ~~December~~above, 31$0.1 million at The Lodge, ~~2009~~$0.3 tomillion at the ~~year~~video ~~ended~~poker ~~December~~truck 31stops and $0.2 million at corporate, ~~2008~~somewhat offset by increases of $0.1 million at Gold Dust West-Elko and $0.2 million at Colonial.

~~All~~Net ~~comparisons~~interest ~~below~~expense ~~begin~~decreased ~~with~~by ~~the~~$0.7 ~~2009~~million ~~results~~or ~~followed~~3% to $26.1 million from $26.8 million and is attributable to a decrease in debt outstanding, somewhat offset by ~~the~~higher ~~2008~~effective ~~results~~interest rates on our variable rate bank debt.

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

~~Truck stop gaming revenues decreased $4~~F.6 ~~million~~Comparison orof 7%our tooperations ~~$63.0~~for ~~million~~the ~~from~~year ~~$67.6~~ended ~~million primarily~~December 31, ~~due~~2010 to the ~~new~~year ~~competition~~ended ~~at certain locations combined with general economic conditions~~December 31, ~~including~~2009 ~~higher unemployment and decreased disposable income.~~

~~Pari-mutuel~~All ~~revenues~~comparisons ~~decreased~~below ~~$6.4~~begin ~~million~~with ~~or 17% to $32.3 million from $38.7 million. The decrease in revenues is attributable to a $1.9 million decrease in~~ the ~~Chesapeake~~2010 ~~market~~results ~~partially~~followed ~~resulting from~~by the ~~closure of our Chesapeake, Military Highway off track wagering facility in November 2008, combined with a $2.1 million decrease in the Richmond market resulting from fewer operating days in~~ 2009 ~~at our Broad Street and Hull Street off track~~ ~~wagering facilities~~results. ~~Revenues at the racetrack and other off track wagering facilities decreased $2.1 million and account wagering revenues decreased $0.3 million.~~

~~Food~~Casino ~~and beverage~~ revenues ~~decreased~~increased $0.95 million or 3less than 1% to $29140.83 million from $30139.78 million. ~~This~~Increases ~~decrease~~in casino isrevenues ~~primarily~~at ~~attributable~~The toLodge ~~decreases~~ of $13.27 million or 5% were offset by decreases at the ~~truck~~Gilpin ~~stops~~of ~~and~~ $0.57 million ~~at Colonial~~or ~~due~~4%, toGold ~~the~~Dust ~~lower~~West-Reno ~~level~~ of ~~gaming~~$2.2 ~~activity~~million or 12%, ~~somewhat~~Gold ~~offset~~Dust byWest-Carson ~~increases~~City of $0.51 million ator ~~The~~1% ~~Lodge,~~and Gold Dust West-Elko of $0.12 million or 2%. Revenues at ~~the~~The ~~Gilpin~~Lodge increased primarily due to Amendment 50 becoming effective July 2, $02009.1 ~~million~~Amendment at50 ~~Gold~~is ~~Dust~~benefiting ~~West-Carson~~the ~~City~~larger ~~and~~casino $0properties in Black Hawk.1 ~~million~~Overall, atthe City of Black Hawk casino win increased 6% during 2010 compared to 2009. Gold Dust West-~~Elko~~Reno continues to be negatively impacted by continued declines in our market area.

~~Convenience~~Video poker ~~store-fuel~~truck stop revenues decreased $362.32 million or 373% to $6070.71 million from $9772.03 million. The ~~average~~decrease ~~selling~~in ~~price~~revenues was experienced at nearly all of ~~fuel decreased~~our tovideo ~~$2.26~~poker ~~per~~truck ~~gallon~~stop inlocations ~~2009~~and is consistent with the statewide video poker truck stop revenue decline of 2% resulting from ~~$3.58~~the ~~per~~continued ~~gallon~~general ineconomic ~~2008~~conditions, ~~while~~including ~~fuel~~higher ~~volume~~unemployment ~~was~~and ~~down~~decreased 1%disposable income for 2010 compared to 262009.~~9 million~~ ~~gallons.~~

~~Other~~Pari-mutuel revenues decreased $14.26 million or 514% to $2227.37 million from $2332.53 million. ~~and~~The ~~were~~decrease ~~primarily~~in revenues is attributable to a $0.3.7 million decrease in ~~hotel~~wagering ~~and other~~ revenues at ~~Gold~~the ~~Dust~~racetrack ~~West-Carson~~and ~~City, a $0.1~~off ~~million~~track ~~decrease~~wagering infacilities ~~hotel~~primarily ~~revenues~~due atto ~~The~~an ~~Lodge,~~overall ~~a $0.1 million~~ decrease atin ~~the~~attendance ~~Gilpin,~~in a2010 ~~$0.2~~compared ~~million~~to ~~decrease~~2009, atcombined ~~Colonial,~~with a $0.29 million decrease in ~~Sugar~~account ~~Warehouse~~wagering revenues ~~and~~primarily adue ~~$0.6~~to ~~million~~a decrease in ~~convenience~~commission ~~store~~revenue ~~and~~resulting ~~other~~from ~~revenues~~revised atprofit ~~the~~sharing ~~truck~~agreements ~~stops,~~with ~~somewhat~~horsemen’s ~~offset~~groups byas ~~receipt~~compared ofto ~~$0.3~~the ~~million~~prior ~~of insurance proceeds in excess of hurricane losses incurred during late 2008 at our truck stops~~year.

~~Promotional~~Food ~~allowances~~and ~~increased~~beverage revenues decreased $01.6 5 million or 25% to $3429.39 million from $3331.74 million. ~~Increases~~This indecrease ~~promotional~~is ~~allowances~~primarily attributable to decreases of $02.30 million at ~~The~~the ~~Lodge~~video poker truck stops, $0.32 million at the Gilpin, and $0.35 million at ~~Gold Dust~~Colonial ~~West-Carson~~which ~~City~~correspond ~~and~~to ~~$0.5~~the ~~million~~decreases atin gaming ~~Gold~~revenues. ~~Dust~~These ~~West-Elko~~decreases were somewhat offset by ~~decreases~~increases of $0.57 million at The Lodge, $0.1 million at the Gold Dust West-Reno, $0.2 million at Gold Dust West-Carson City and $0.32 million at ~~the~~Gold ~~truck~~Dust ~~stops~~West-Elko.

~~Casino~~Convenience ~~expenses~~store-fuel revenues increased $025.50 million or 135% to $4795.35 million from $4670.85 million,. The increase was primarily due to ~~increases~~an increase in the average selling price of fuel to $12.173 ~~million~~per atgallon ~~The~~in ~~Lodge~~2010 ~~and~~from $02.~~1 million~~26 atper ~~Gold~~gallon ~~Dust~~in ~~West-Elko~~2009, ~~offset~~combined bywith ~~decreases~~an of17% $0increase in volume.2 ~~million~~In atDecember 2009, JEI entered into a fuel supply agreement with CITGO Petroleum Corporation (“CITGO”). To help JEI reach the ~~Gilpin~~fuel sale volume necessary to qualify for the reduced pricing structure under the CITGO contract, ~~$0.4~~JEI ~~million~~entered atinto ~~Gold~~an ~~Dust West-Reno~~agreement with Gameco to provide gasoline and ~~$0.1~~diesel ~~million~~fuel at ~~Gold~~cost ~~Dust~~for ~~West-Carson~~its ~~City,~~fuel operations. ~~which~~The ~~correspond~~increase in fuel sales volume for this period was primarily due to the ~~changes~~new agreement with Gameco, resulting in ~~casino~~an increase in fuel sales revenues attotaling ~~each~~$4.5 ~~location~~million in 2010.

~~Truck~~Other ~~stop~~revenues ~~gaming expenses~~ decreased $21.2 million or 5% to $3824.81 million from $4125.03 million and iswere primarily attributable to ~~direct~~a $1.4 million ~~costs~~decrease ~~associated~~in toconvenience store revenues at the ~~decrease~~video poker truck stops and receipt of $0.3 million in 2009 of insurance proceeds in excess of hurricane losses incurred during late 2008 at our video poker truck ~~stop~~stops, ~~gaming~~somewhat offset by a one-time oil and gas royalty received in April 2010 totaling $0.5 million and an increase in hotel revenues totaling $0.2 million at The Lodge. Additionally, other revenues at Colonial and our Nautica Properties decreased by a combined $0.3 million.

~~Pari-mutuel~~Promotional ~~costs~~allowances ~~and~~increased ~~expenses decreased~~ $50.15 million or 161% to $2635.16 million from $3135.21 million. ~~The~~Increases ~~decrease~~in ispromotional ~~attributable~~allowances toof ~~decreased~~$2.4 million ~~direct~~at ~~costs~~The ~~resulting~~Lodge ~~from~~and ~~decreased~~$0.1 ~~pari-mutuel~~million ~~revenues~~at ~~combined~~the ~~with~~video ~~decreased~~poker ~~operating~~truck ~~costs~~stops ~~resulting~~were ~~from~~somewhat ~~the~~offset ~~closure~~by decreases of ~~one~~$1.8 ofmillion ~~our~~at ~~off~~Gold ~~track~~Dust ~~wagering~~West-Reno, ~~facilities in~~$0.1 ~~November~~million ~~2008~~at the Gilpin and $0.1 million at Gold Dust West-Elko.

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

West-Carson City.

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

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

~~Marketing,~~Casino ~~general and administrative~~ expenses ~~decreased~~increased $3.1.6 million or 43% to $6548.9 million from $6847.93 million. This decrease is primarily the result of a $1.5 million decrease at Colonial due to decreases in marketing costs, Instant Racing lobbying costs, insurance costs, travel expenses and administrative salaries, combined withIncreases ~~decreases~~ of $0.2.1 million at The Lodge, ~~$0.8~~and ~~million at the Gilpin,~~ $0.~~5 million at Gold Dust West-Reno, $~~1.2 million at Gold Dust West-Carson City ~~and~~were ~~$0.3 million at the truck stops,~~ somewhat offset by ~~increases~~decreases of $10.14 million at ~~corporate,~~the ~~$0.2 million~~Gilpin ~~at Sugar Warehouse~~ and $0.12 million at ~~Lot~~Gold DDust ~~and Flats combined~~West-Elko. The ~~decreases~~increase at ~~our operating units are the result of cost management efforts at all locations.~~ The ~~increase~~Lodge inwas ~~corporate overhead is~~ primarily ~~attributable~~due to ~~$2.3~~additional ~~million of~~staffing ~~Ohio~~for ~~campaign~~the ~~costs~~table ~~incurred~~games ~~during 2009~~ and anextended ~~increase~~hours incombined ~~professional~~with ~~accounting~~increased ~~fees~~gaming ~~totaling~~taxes ~~$0.4~~resulting ~~million,~~from ~~somewhat~~increased ~~offset~~casino ~~by a decrease in labor totaling $0~~revenues.2 ~~million and $1.4 million of Colorado Amendment 50 campaign costs incurred during 2008. These 2009 and 2008 campaign costs are further discussed in Note 11 to the consolidated financial statements.~~

~~Beginning~~Video ~~November 1,~~poker ~~2008,~~truck westop ~~began~~expenses ~~accounting~~decreased ~~for our investment in MTR as an equity security, in accordance with the fair value option permitted by ASC Topic 825~~$1.9 ~~Decreases~~million inor ~~the~~4% ~~stock~~to ~~price resulted in an unrealized loss on the change in fair value of investment in equity securities totaling~~ $042.37 million ~~during~~from ~~the year ended December 31, 2009~~$44.6 ~~During~~million ~~2008,~~and weis ~~recorded~~primarily ~~impairments~~due ~~totaling~~to ~~$6.6~~direct ~~million~~costs onassociated ~~the~~with ~~fair~~decreased ~~value~~video ofpoker ~~our~~truck ~~investment~~stop ~~in MTR~~revenues.

APari-mutuel ~~goodwill~~costs ~~impairment~~and ~~totaling~~expenses decreased $04.23 million ~~was~~or ~~recorded~~17% atto ~~Gold~~$21.8 ~~Dust~~million ~~West~~from $26.1 million. The decrease is attributable to a $2.7 million decrease in direct costs resulting from decreased pari-~~Carson~~mutuel ~~City~~revenues ~~during~~primarily as a result of an overall decrease in attendance as compared to the prior year, ~~ended~~combined ~~December 31,~~with ~~2008~~a $1.6 ~~No goodwill~~million ~~remained~~decrease onin ~~this~~costs ~~property~~associated ~~after~~with ~~the~~account ~~impairment~~wagering resulting ~~was~~from ~~recorded~~revised profit sharing agreements with horsemen’s groups.

~~Abandonment~~Food and beverage costs ~~totaling~~and expenses decreased $0.3 million or 2% to $14.8 million ~~were~~from ~~recorded at~~$15.1 ~~Colonial~~million. ~~during~~Decreases ~~2008~~of ~~due~~$1.4 tomillion at the ~~closure~~video ofpoker ~~one~~truck stops and $0.2 million at Colonial, were offset by increases of ~~our~~$0.5 ~~two~~million ~~satellite~~at ~~wagering~~The ~~facilities~~Lodge, in$0.1 ~~Chesapeake~~million at the Gilpin, ~~Virginia~~$0.1 Nomillion ~~comparable~~at ~~transaction~~Gold Dust ~~occurred~~West-Reno, ~~during~~$0.4 ~~2009~~million at Gold Dust West-Carson City and $0.2 million at Gold Dust West-Elko.

~~Depreciation~~Convenience ~~and~~store-fuel expenses ~~amortization expense~~ increased $123.43 million or 735% to $2189.59 million from $2066.16 million. ~~and~~The increase was primarily ~~attributable~~due to ~~increases~~an increase in the average cost of fuel to $12.157 ~~million~~per atgallon ~~the~~in ~~truck~~2010 ~~stop~~from ~~locations,~~ $02.313 ~~million~~per gallon in 2009, combined with an increase in volume as atdiscussed ~~The~~in ~~Lodge~~convenience ~~and~~store-fuel revenues above. In January 2010, we also collected $0.14 million atin ~~Gold~~accounts ~~Dust~~receivable ~~West-Elko,~~that ~~somewhat~~had ~~offset~~been byfully areserved $0in December 2008.1 ~~million~~The ~~decrease~~increase atin ~~Gold~~fuel ~~Dust~~costs ~~West-Carson~~associated ~~City~~with the new affiliate agreements was $4.5 million in 2010.

~~Net~~Other ~~interest~~costs ~~expense~~and expenses decreased $20.19 million or 85% to $2518.2 million from $2719.31 million, and were attributable to a $0.8 ~~The~~million decrease isin ~~attributable~~convenience tostore ~~lower~~expenses ~~effective interest~~at ~~rates~~the onvideo ~~our~~poker ~~variable~~truck ~~rate~~stops ~~bank~~which ~~debt,~~correlates ~~combined~~to ~~with~~the a decrease in ~~debt~~convenience ~~outstanding~~store ~~during~~revenues ~~the~~combined ~~year~~with ~~ended~~a ~~December 31,~~$0.1 ~~2009~~million ~~compared~~decrease toin ~~the~~hotel ~~year~~expenses ~~ended~~at ~~December 31,~~The ~~2008~~Lodge.

GMarketing, general and administrative expenses decreased $2.9 ~~Segment~~million ~~information~~or ~~for~~4% to $64.2 million from $67.1 million. This decrease is primarily the ~~three~~result ~~years~~of ~~ended~~a ~~December~~net 31decrease of $1.9 million at corporate which is comprised of the following: (a) during 2009, we made political contributions in Ohio totaling $2.3 million which did not recur in 2010, combined with decreases of: (b) $0.5 million in professional accounting fees, (c) $0.1 million in legal expenses and (d) $0.4 million in other miscellaneous expenses; somewhat offset by increases of: (e) $0.5 million of costs incurred during 2010 related to the amendment to our credit agreement, (f) $0.5 million for corporate payroll, (g) $0.1 million for travel expenses at corporate and (h) $0.3 million for various political contributions made in 2010. Additionally, we had decreases of $0.2 million at Gold Dust West-Reno, $0.2 million at Gold Dust West-Carson City, $0.6 million at Colonial and $0.5 million at the video poker truck stops. These decreases were somewhat offset by increases of $0.2 million at The Lodge, $0.2 million at the Gilpin and $0.1 million combined at the Nautica Properties.

AsAn ~~discussed~~increase ~~above,~~in weMTR’s ~~have~~stock ~~four~~price ~~segments~~resulted ~~representing~~in an unrealized gain on the ~~geographic~~change ~~regions~~in fair value of ~~our~~investment ~~operations:~~in ~~Colorado,~~equity ~~Nevada,~~securities ~~Louisiana~~totaling ~~and~~$0.6 ~~Virginia~~million during the year ended December 31, 2010. ~~Each~~A ~~segment~~decrease isin ~~managed~~the ~~separately~~stock ~~because~~price ofresulted in an unrealized loss on the ~~unique characteristics~~change in fair value of ~~its~~investment in ~~revenue~~equity ~~stream,~~securities ~~regulatory~~totaling ~~environment~~$0.3 ~~and~~million ~~customer~~during ~~base~~the year ended December 31, 2009.

~~The~~Our ~~information~~annual ~~presented~~goodwill isimpairment ~~by each segment~~test inincluded ~~which~~an weanalysis ~~have~~of ~~operations~~the ~~and~~gaming ~~also~~industry ~~presents~~overall ~~our~~as ~~EBITDA~~well ~~(earnings~~as ~~before~~an ~~interest,~~analysis ~~income~~of ~~taxes,~~the ~~depreciation~~specific ~~and~~locations ~~amortization)~~in ~~for~~which ~~each~~we ~~segment~~operate. We ~~believe~~determined ~~that~~ the ~~presentation~~fair ofvalues afor ~~non-GAAP~~each ~~financial measure such as EBITDA is useful because it allows holders~~ of ~~our~~these ~~debt~~reporting ~~and~~units ~~management~~using toboth ~~evaluate~~the ~~and~~market ~~compare~~approach ~~our~~(recent ~~operating~~comparable ~~results~~ transactions from ~~continuing~~which ~~operations~~we ~~from~~derived ~~period~~an toapplicable ~~period~~valuation inmultiple) ~~a meaningful~~ and ~~consistent manner in addition to standard GAAP financial measures. Management internally evaluates~~ the ~~performance~~income ofapproach ~~our~~(net ~~segments~~present ~~using~~value ~~EBITDA measures as do most analysts following the gaming industry. EBITDA is an element~~ of ~~certain key financial covenants in~~ our ~~debt~~anticipated ~~agreements and, as such, is a critical component that we closely watch in order to determine our ability to achieve~~ future ~~growth~~cash ~~and to ensure we are in compliance with our debt agreements~~flows). WeThese ~~present~~fair ~~EBITDA~~values inwere ~~the~~then ~~tables~~compared ~~below~~ to ~~provide~~the ~~further~~carrying ~~discussion~~values ~~and~~for ~~analysis~~the ofrespective ~~our~~reporting ~~operating results~~unit. ~~EBITDA~~In ~~can~~2010 beand ~~reconciled~~2009, ~~directly~~prior to our ~~consolidated~~acquisition ~~net~~from ~~income~~a ~~(loss)~~related ~~by adding the amounts shown for depreciation and amortization~~party, ~~interest~~we ~~and~~determined ~~income~~the ~~taxes~~carrying tovalue ~~net~~of ~~income~~the ~~(loss).~~goodwill ~~This~~at ~~information~~one ~~should not be considered as an alternative to any measure~~ of ~~performance~~ asour ~~promulgated~~video ~~under~~poker ~~accounting~~truck ~~principles~~stops ~~generally~~was ~~accepted in the United States of America~~impaired, ~~such~~and ~~as net income (loss)~~therefore, ~~nor~~we ~~should~~recorded itgoodwill beimpairment ~~considered~~charges astotaling ~~an indicator of our overall financial performance~~$0.8 ~~Our~~million ~~calculation~~during ~~of EBITDA may be~~2010 ~~different~~compared ~~from~~to ~~the~~$3.1 ~~calculation~~million ~~used~~in ~~by other companies and comparability may be limited~~2009.

~~The~~Depreciation ~~following~~and isamortization aexpense ~~summary~~decreased of$0.1 ~~the~~million ~~net~~or ~~revenues,~~less ~~costs~~than ~~and~~1% ~~expenses~~to ~~and EBITDA, for the three~~$22.4 ~~years~~million ~~ended~~from ~~December 31,~~$22.5 ~~2010,~~million. ~~2009 and 2008 (dollars in thousands):~~

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

Net interest expense increased by $0.5 million or 2% to $26.8 million from $26.3 million and is attributable to higher effective interest rates on our variable rate bank debt, somewhat offset by a decrease in debt outstanding during the year ended December 31, 2010 compared to the year ended December 31, 2009.

~~See~~G. ~~Notes~~Segment oninformation ~~page~~for ~~49.~~the three years ended December 31, 2011

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

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

The following is a summary of the components of EBITDA, for the three years ended December 31, 2011, 2010 and 2009 (dollars in thousands):


	For the Years Ended December 31,
	2011			2010 (As adjusted, see Note 4 of Financial Statements)			2009 (As adjusted, see Note 4 of Financial Statements)
NET REVENUES
Colorado:
The Lodge	$	79,916		$	78,449		$	76,129
Gilpin		18,089			18,076			18,917

Total Colorado		98,005			96,525			95,046

Nevada:
Gold Dust West-Reno		18,111			17,604			17,968
Gold Dust West-Carson City		12,216			12,621			12,627
Gold Dust West-Elko		12,372			10,911			10,824

Total Nevada		42,699			41,136			41,419

Louisiana		207,332			182,252			162,670
Virginia		31,180			31,285			36,512
Corporate and other		729			758			925

Total Net Revenues		379,945			351,956			336,572

COSTS AND EXPENSES
Colorado:
The Lodge		52,140			51,591			48,917
Gilpin		13,612			13,713			13,804

Total Colorado		65,752			65,304			62,721

Nevada:
Gold Dust West-Reno		12,390			12,090			12,257
Gold Dust West-Carson City (1)		22,953			12,899			12,591
Gold Dust West-Elko		9,892			9,028			8,995

Total Nevada		45,235			34,017			33,843

Louisiana (3)		186,046			161,918			145,289
Virginia		30,305			29,802			34,965
Corporate overhead and other (2) (4) (5)		10,562			9,703			12,388

Total Costs and Expenses		337,900			300,744			289,206

EBITDA
Colorado:
The Lodge		27,776			26,858			27,212
Gilpin		4,477			4,363			5,113

Total Colorado		32,253			31,221			32,325

Nevada:
Gold Dust West-Reno		5,721			5,514			5,711
Gold Dust West-Carson City (1)		(10,737	)		(278	)		36
Gold Dust West-Elko		2,480			1,883			1,829

Total Nevada		(2,536	)		7,119			7,576

Louisiana (3)		21,286			20,334			17,381
Virginia		875			1,483			1,547
Corporate overhead and other (2) (4) (5)		(9,833	)		(8,945	)		(11,463	)

Total EBITDA	$	42,045		$	51,212		$	47,366

See Notes on page 50.

General

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

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

The Lodge

Net revenues at The Lodge increased by 3%$1.5 ~~while~~million ~~EBITDA decreased~~or 12% for the year ended December 31, ~~2010~~2011 compared to the same period of ~~2009~~2010, primarily ~~due~~in toslots ~~the~~revenues ~~new~~and ~~gaming~~decreased ~~legislation~~promotional ~~that began on July 2~~allowances, ~~2009.~~somewhat ~~Labor~~offset ~~costs,~~by ~~gaming~~a ~~taxes~~decrease ~~and~~in ~~other~~player ~~expenses~~banked ~~were~~poker ~~consistent~~and ~~with~~table ~~the~~games ~~change in~~ revenues. ~~The~~Labor ~~smoking~~costs ~~ban~~and ~~which~~food ~~became~~and beverage ~~effective~~costs inwere ~~Colorado~~also onhigher ~~January 1,~~than ~~2008~~the ~~had~~prior ayear. ~~significant~~EBITDA ~~negative~~increased ~~impact~~3% in ~~2008~~2011 compared to 2010. For the year ended December 31, ~~2009~~2010 compared to the year ended December 31, ~~2008~~2009, EBITDA ~~increased~~decreased 61%.

Gilpin

EBITDA at the Gilpin ~~decreased~~increased 15$0.1 million or 3% for the year ended December 31, ~~2010~~2011 compared to the same period of ~~2009~~ 2010. ~~Year-over-year,~~ ~~table~~Slots ~~games~~ revenues increased during 2011 primarily due to ~~the~~a new ~~gaming~~marketing ~~legislation,~~program ~~offset~~which byalso increased promotional allowances. The Gilpin experienced a decrease in player banked poker due to the March 2010 closure of ~~the~~its poker room. Gaming taxes were also higher in 2011 as a result of increased gaming revenues. For the year ended December 31, 2010 compared to the same period of 2009, net revenues at the Gilpin ~~combined~~decreased ~~with~~4% and EBITDA decreased 15%. Year-over-year, the Gilpin experienced a decrease in slots and other revenues due to ~~the~~ general economic conditions ~~discussed~~and in the ~~“General”~~2010 ~~section~~closure ~~above.~~of ~~Marketing~~its ~~costs~~poker ~~were~~room, ~~higher~~somewhat offset ~~during 2010~~by ~~than~~an ~~2009.~~increase ~~For~~in ~~the~~table ~~year ended~~games ~~2009~~revenues ~~compared~~resulting tofrom ~~2008,~~ the ~~Gilpin~~ ~~experienced~~2009 agaming 6%legislation. ~~decrease~~Marketing incosts ~~revenues~~were ~~and~~higher aduring 5%2010 ~~decrease~~than ~~in EBITDA~~ 2009.

Gold Dust West-Reno

~~The~~Slots ~~Reno~~revenues ~~market~~at ~~has~~Gold ~~experienced~~Dust ~~significant~~West-Reno ~~slot~~increased ~~revenue~~by ~~declines~~3% during ~~2010~~2011 ~~and 2009~~ compared to ~~2008~~2010. ~~revenue~~Labor ~~levels~~costs were also higher year-over-year. EBITDA at Gold Dust West-Reno ~~decreased~~increased 34% for the year ended December 31, ~~2010~~2011 compared to the same period of ~~2009~~2010. ~~and~~EBITDA 8decreased 3% for the year ended December 31, ~~2009~~2010 compared to ~~2008~~2009 primarily due to a decrease in slot revenues resulting from the local and general economic conditions ~~discussed in the “General” section above~~, substantially offset by a decrease in promotional allowances.

Gold Dust West-Carson City

Excluding the impact of the 2011 impairment of long-lived assets totaling $10.1 million, EBITDA at Gold Dust West-Carson City decreased $0.34 million for the year ended December 31, ~~2010~~2011 compared to the same period of ~~2009. On April 1,~~ 2010, weprimarily ~~opened~~due to a ~~new~~decrease ~~restaurant resulting~~ in ~~additional~~ ~~labor,~~slots ~~food~~ and ~~beverage and~~ other ~~start-up~~revenues ~~costs.~~resulting ~~EBITDA~~from ~~increased~~local ~~$1.3~~economic ~~million~~conditions, ~~for~~somewhat ~~the~~offset ~~year~~by ~~ended~~a ~~2009~~decrease ~~compared to 2008 primarily due to reductions~~ in ~~labor,~~promotional ~~advertising and other operating costs and expenses~~allowances. ~~Furthermore, a goodwill~~ ~~impairment~~EBITDA ~~totaling~~decreased $0.23 million ~~was~~in ~~recorded~~2010 atfrom ~~Gold~~2009. ~~Dust~~On ~~West-Carson~~April 1, ~~City~~2010, ~~during~~we ~~the~~opened ~~year~~a ~~ended~~new ~~December 31,~~restaurant ~~2008.~~resulting Noin ~~goodwill~~additional ~~impairment~~labor, ~~was~~food ~~recorded~~and ~~during~~beverage ~~2010~~and orother ~~2009~~start-up costs.

Gold Dust West-Elko

EBITDA at Gold Dust West-Elko increased ~~less than~~ $0.1 6 million or 32% for the year ended December 31, ~~2010~~2011 compared to the same period of ~~2009~~2010. Net revenues increased $1.5 million, while costs and expenses increased $0.9 million. The increase in EBITDA was primarily due to a ~~decrease~~10% increase in ~~promotional~~slot revenues, ~~allowances~~combined with increases in table games and food and beverage revenues, somewhat offset by ~~lower~~increases ~~slot~~in direct costs attributable to the increases in revenues. For the year ended December 31, ~~2009~~2010 compared to the same period of ~~2008~~2009, EBITDA increased less than $0.51 million primarily due to ~~increases~~a decrease in ~~slot~~promotional ~~revenues~~allowances, ~~resulting~~somewhat ~~from~~offset ~~increases~~by inlower ~~promotional~~slot ~~allowances~~revenues.

4748

Louisiana

~~EBITDA~~Excluding at the ~~Louisiana~~impacts ~~truck~~of ~~stops~~the ~~increased~~goodwill 4%impairment ~~for~~charges ~~the~~of ~~year~~$0.8 ~~ended~~million ~~December 31,~~and ~~2010~~$3.1 ~~compared~~million torecorded ~~the~~in ~~same~~2010 ~~period~~and of 2009, ~~primarily~~respectively, ~~due~~EBITDA toat anthe ~~increase~~Louisiana invideo ~~fuel~~poker ~~gross~~truck ~~profit~~stops ~~per~~increased ~~gallon,~~$0.1 ~~somewhat~~million ~~offset~~or by1% ~~decreases~~for inthe ~~gaming~~year ~~and~~ended ~~non-gaming~~December 31, ~~revenues~~2011 ~~resulting~~compared ~~from~~to the ~~general~~same ~~economic~~period ~~conditions~~of ~~discussed~~2010 inand ~~the “General” section above. EBITDA decreased 14~~4% infor ~~2009~~2010 compared to ~~2008~~2009, primarily due to ~~decreases~~increases ~~during~~in ~~the~~fuel ~~third~~prices and ~~fourth quarters~~gross ofprofit ~~2009~~per ingallon. ~~gaming~~Gaming ~~and non-gaming~~ revenues ~~resulting~~in ~~from~~2011 ~~the~~returned ~~general~~to ~~economic~~levels ~~conditions~~similar ~~discussed~~to in2009, rebounding ~~the~~from ~~“General”~~a ~~section~~3% ~~above,~~decline ~~combined~~in ~~with~~2010 afrom ~~decrease~~2009 inresulting ~~fuel~~from ~~gross~~general ~~profit~~economic ~~per gallon~~conditions. Additionally, during ~~the~~2010, ~~third~~we ~~quarter~~received ~~of 2008,~~a ~~hurricanes~~one-time ~~Gustav~~oil and ~~Ike~~gas ~~struck~~royalty ~~certain~~totaling of$0.5 ~~our~~million ~~Louisiana~~and ~~operations~~collected ~~causing~~$0.4 ~~minimal~~million ~~damage to our properties but significant damage~~ in ~~the~~accounts ~~region.~~receivable ~~All~~that ofhad ~~our~~been fully ~~properties~~reserved ~~were operating within approximately two days, resulting~~ in ~~an increase in gaming and non-gaming revenues during the third and fourth quarters of~~ 2008.

Virginia

EBITDA at our pari-mutuel operations in Virginia decreased ~~less than~~ $0.16 million for the year ended December 31, ~~2010~~2011 compared to the same period of ~~2009~~2010. ~~but~~The ~~increased~~year-over-year decrease is primarily attributable to an overall decrease in revenues totaling $0.91 million ~~for~~and ~~the~~increased ~~year~~pari-mutuel ~~ended~~account ~~December 31,~~wagering ~~2009~~costs ~~compared~~totaling to$0.6 ~~the~~million, ~~same~~somewhat ~~period~~offset ofby ~~2008~~a $0.2 ~~During~~million ~~2008~~decrease in management, ~~Virginia~~general ~~recorded~~and ~~abandonment~~administrative costs. ~~totaling~~EBITDA decreased less than $0.81 million for the ~~closure~~year ofended aDecember 31, ~~satellite~~2010 ~~wagering facility.~~compared Noto ~~similar~~the ~~charges~~same ~~were~~period ~~recorded~~of ~~during 2010 or~~ 2009.

Corporate Overhead and Other

The EBITDA loss at corporate ~~decreased~~increased $20.69 million for the year ended December 31, ~~2010~~2011 compared to the same period of ~~2009~~2010 and decreased $42.75 million for the year ended December 31, ~~2009~~2010 compared to the same period of ~~2008~~2009. These fluctuations are ~~primarily~~somewhat due to the variability in the stock price of our investment in MTR as follows: a $0.61 million loss ~~gain~~ in ~~2010~~2011, a $0.3 6 million ~~loss~~gain in ~~2009~~2010 and a $60.63 million loss in ~~2008~~2009. Additionally, we expended $0.5 million during 2010 for general and administrative costs for the amendment to our credit agreement, and $2.3 million during 2009 for campaign costs in Ohio ~~and $1~~.4 ~~million during 2008 for campaign costs in Colorado.~~ After adjusting for these ~~unusual~~non-core items, the EBITDA loss increased 27% in ~~2010~~2011 compared to ~~2009~~2010, primarily due to ~~the~~increases ~~Nautica~~in ~~Properties~~payroll, consulting and ~~increased~~legal 8%costs, insomewhat ~~2009~~offset ~~compared~~by toa ~~2008~~reduction in campaign contributions, ~~primarily~~and increased ~~due~~2% toin ~~higher~~2010 ~~professional~~compared ~~accounting~~to ~~fees~~2009.

Reconciliation of EBITDA to Net Income (Loss)

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

Year Ended December 31, 2010	EBITDA			Depreciation andAmortization		InterestExpense, net		NetIncome (Loss)
Year Ended December 31, 2011 (As adjusted, see Note 4 of Financial Statements)	EBITDA			Depreciation andAmortization		InterestExpense, net		NoncontrollingInterest			NetIncome (Loss)
Colorado:
The Lodge	$	2627,~~858~~776		$	54,~~028~~910	$	6,~~664~~725	$	~~15,166~~		$	16,141
Gilpin		4,~~363~~477			1,~~764~~686		1,~~899~~904		~~700~~			887
Total Colorado		3132,~~221~~253			6,~~792~~596		8,~~563~~629		~~15,866~~			17,028
Nevada:
Gold Dust West-Reno		5,~~514~~721			1,~~558~~635		2,~~619~~612		~~1,337~~			1,474
Gold Dust West-Carson City		(278	)		2,270		1,534		(4,082	)
Gold Dust West-Carson City (1)		(10,737	)		1,607		1,534					(13,878	)
Gold Dust West-Elko		12,~~883~~480			2,~~518~~652		~~1,070~~951		~~(1,705~~	)		(1,123	)
Total Nevada		7(2,~~119~~536	)		65,~~346~~894		5,~~223~~097		~~(4,450~~	)		(13,527	)
Louisiana		1921,~~255~~286			45,~~990~~793		4,~~175~~603		~~10,090~~			10,890
Virginia		~~1,483~~875			2,~~261~~459		~~532~~501		~~(1,310~~	)		(2,085	)
Corporate overhead and other (1)		(9,058	)		942		7,063		(17,063	)
Corporate overhead and other (2)		(9,833	)		756		7,312	$	(26	)		(17,927	)
TOTAL	$	5042,~~020~~045		$	21,~~331~~498	$	2526,~~556~~142	$	~~3,133~~(26	)	$	(5,621	)

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

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

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

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

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

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

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

H. Liquidity and capital resources—December 31, 2010

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

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


Year Ended December 31, 2010 (As adjusted, see Note 4 of Financial Statements)	EBITDA			Depreciation and Amortization		Interest Expense, net		Noncontrolling Interest			Net Income (Loss)
Colorado:
The Lodge	$	26,858		$	5,028	$	6,664				$	15,166
Gilpin		4,363			1,764		1,899					700

Total Colorado		31,221			6,792		8,563					15,866

Nevada:
Gold Dust West-Reno		5,514			1,558		2,619					1,337
Gold Dust West-Carson City		(278	)		2,270		1,534					(4,082	)
Gold Dust West-Elko		1,883			2,518		1,070					(1,705	)

Total Nevada		7,119			6,346		5,223					(4,450	)

Louisiana (3)		20,334			6,076		5,377					8,881
Virginia		1,483			2,261		532					(1,310	)
Corporate overhead and other (4)		(8,945	)		953		7,137	$	(42	)		(17,077	)

TOTAL	$	51,212		$	22,428	$	26,832	$	(42	)	$	1,910

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


Year Ended December 31, 2009 (As adjusted, see Note 4 of Financial Statements)	EBITDA			Depreciation and Amortization		Interest Expense, net		Noncontrolling Interest			Net Income (Loss)
Colorado:
The Lodge	$	27,212		$	5,148	$	6,782				$	15,282
Gilpin		5,113			1,939		1,904					1,270

Total Colorado		32,325			7,087		8,686					16,552

Nevada:
Gold Dust West-Reno		5,711			1,598		2,618					1,495
Gold Dust West-Carson City		36			1,948		1,534					(3,446	)
Gold Dust West-Elko		1,829			2,438		932					(1,541	)

Total Nevada		7,576			5,984		5,084					(3,492	)

Louisiana (3)		17,381			6,337		5,122					5,922
Virginia		1,547			2,124		577					(1,154	)
Corporate overhead and other (5)		(11,463	)		1,006		6,886	$	(63	)		(19,418	)

TOTAL	$	47,366		$	22,538	$	26,355	$	(63	)	$	(1,590	)

~~The~~(1) ~~cash~~Included ~~provided by or used~~ in ~~our~~Gold ~~financing activities~~Dust ~~varies~~West-Carson ~~significantly~~City ~~from~~for ~~year~~2011 tois ~~year~~an ~~depending~~impairment ~~upon~~charge ~~the cash provided by operations and investing activities, both~~ of which are discussed above, as well as our cash position. The cash used in financing activities during 2010 was the result of net payments on the revolving senior credit facility totaling $7.5 million, payments on long-~~term~~lived ~~debt~~assets totaling $210.~~4 million, payments to obtain financing totaling $~~1.5 million ~~and distributions to stockholder totaling $3~~.~~8 million, including $2.8 million for the purchase of Flats.~~

As(2) ofIncluded ~~December 31,~~in ~~2010,~~corporate weoverhead ~~had~~and ~~$28.5~~other ~~million available on our $40 million revolving senior credit facility~~ for ~~acquisitions,~~2011 ~~capital~~is ~~expenditure~~a ~~programs and working capital. As of December 31, 2010, our total debt approximates~~ $~~282~~0.21 million. ~~Our~~loss ~~future liquidity, which includes our ability to make semi-annual interest payments~~ on ~~June 15~~the ~~and~~change ~~December 15 of each year, depends upon our future operational success. Our failure to pay interest, repay our indebtedness when due, or maintain compliance with our debt covenants would result~~ in anfair ~~event~~value of ~~default~~investment ~~under both our senior credit facility and our note indenture. At December 31, 2010, we were~~ in ~~compliance~~equity ~~with our financial covenants~~securities.

~~While~~(3) ~~our~~Included ~~owner has made capital contributions~~ in ~~the~~Louisiana ~~past~~is ~~to facilitate our various acquisitions from time to time, we can give no assurance that it will continue to do so in the future. Additionally, as we are~~ a ~~Qualified~~goodwill ~~Subchapter~~impairment ~~S-Corporation~~charge ~~Subsidiary,~~totaling ~~we may from time to time make distributions to our owner for any taxes due as a result of taxable income generated by us~~$0.8 ~~Furthermore,~~million ~~annual distributions may be made to our owner~~ in ~~an aggregate~~2010 ~~amount~~and ~~not to exceed the greater of~~ $3.1 million ~~or 50% of consolidated net income as defined~~ in ~~our credit agreement and indenture~~2009.

We(4) ~~believe~~Included ~~that~~in ~~our~~corporate ~~cash~~overhead ~~flow from operations, cash~~ and ~~cash~~other equivalents and our $40 million senior revolving credit facility discussed above will be adequate to meet our debt service obligations and operational expenditures, as well as our capital expenditure requirements for ~~the~~2010 ~~next~~is ~~twelve~~a ~~months~~$0.6 ~~During 2011, we currently anticipate spending approximately $15~~ million ~~for~~gain ~~discretionary~~on ~~capital expenditures. While we believe these sources will provide us sufficient liquidity over~~ the ~~next~~change ~~twelve~~in ~~months,~~fair wevalue ~~can give no assurance that these sources~~ of ~~cash~~investment ~~will be sufficient to enable us to do so. Further,~~ in ~~addition~~equity tosecurities ~~our~~and ~~normal~~general ~~capital expenditure requirements, we anticipate that we will pursue the acquisition of other properties~~ and ~~continue~~administrative tocosts ~~engage~~incurred inrelated ~~the pursuit of new development opportunities. It is possible that we may need~~ to ~~enter into new financing arrangements and raise additional capital in~~ the ~~future~~amendment ~~if we are unable~~ to ~~generate sufficient cash to sustain expansion. Our ability to incur additional debt is further restricted by the terms and covenants of~~ our ~~senior secured bank~~ credit ~~facility~~agreement ~~and~~totaling ~~senior unsecured notes~~$0.5 ~~We can give no assurance that we will be able to raise any capital or obtain the necessary sources of liquidity and financing on favorable terms, if at all~~million. Additionally, any debt financing that we may incur in the future will increase the amount of our total outstanding indebtedness and our debt service requirements, and therefore heighten the related risks we currently face.

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

H. Liquidity and capital resources—December 31, 2011

As of December 31, 2011, we had cash and cash equivalents of $25.2 million compared to $24.7 million as of December 31, 2010. The increase of $0.5 million is the result of $29.4 million cash provided by operating activities, $13.9 million cash used in investing activities, and $15.0 million used in financing activities, which is

further discussed below. Our primary sources of liquidity are cash provided by operating activities and external borrowings. Our primary uses of cash are for debt service, capital improvements, development and acquisitions. Cash flows provided by operating activities increased $1.3 million for the year ended December 31, 2011 compared to the same period of 2010 and increased $5.0 million for the year ended December 31, 2010 compared to 2009. The year-over-year increase in operating cash flows from 2010 to 2011 is primarily due to an increase in operating income after adjusting for non-cash transactions combined with a greater increase in accrued expenses and other noncurrent liabilities, somewhat offset by routine fluctuations in accounts payable resulting from cash management activities . The year-over-year increase in operating cash flows from 2009 to 2010 is primarily due to routine fluctuations in accounts payable and other current liabilities resulting from cash management activities.

Cash used in investing activities during 2011 was the result of property and equipment and device rights additions totaling $14.0 million, for ongoing capital investments at our existing properties, somewhat offset by $0.1 million of proceeds from the sale of equipment. The cash used in investing activities during 2010 was the result of property and equipment and device rights additions totaling $12.6 million for ongoing capital investments at our existing properties, somewhat offset by $0.3 million of proceeds from the sale of equipment. The cash used in investing activities during 2009 was the result of property and equipment and device rights additions totaling $14.6 million for ongoing capital investments at our existing properties, $2.7 for the atrium expansion project at The Lodge, $0.3 million for Mississippi land purchase transactions, and $0.2 million to acquire the noncontrolling interest of Sugar Warehouse, offset by $0.4 million of proceeds from the sale of equipment.

The cash provided by or used in our financing activities varies significantly from year to year depending upon the cash provided by operations and investing activities, both of which are discussed above, as well as our cash position. The cash used in financing activities during 2011 was the result of payments on long-term debt totaling $1.5 million, $2.1 million to acquire the noncontrolling interests of Nautica Phase 2 and Nautica Peninsula Land and cash distributions to stockholder totaling $15.6 million, including $10.4 million for the purchase of Springhill and Vivian, $3.0 million for the purchase of Forest Gold and $1.2 million for the combined purchases of the three Nautica Properties, somewhat offset by net borrowings on the revolving senior credit facility totaling $3.4 million and $0.8 million for the issuance of debt at Sycamore & Main prior to our acquisition.

As of December 31, 2011, we had $22.1 million available on our $40 million revolving senior credit facility for acquisitions, capital expenditure programs and working capital. As of December 31, 2011, our total debt approximates $284.7 million. Our future liquidity, which includes our ability to make semi-annual interest payments on June 15 and December 15 of each year, depends upon our future operational success. Our failure to pay interest, repay our indebtedness when due, or maintain compliance with our debt covenants would result in an event of default under both our senior credit facility and our note indenture. At December 31, 2011, we were in compliance with our financial covenants. See Item 7C. above for information regarding our recent credit facility amendment.

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

We believe that our cash flow from operations, cash and cash equivalents and our senior revolving credit facility discussed above will be adequate to meet our debt service obligations and operational expenditures, as well as our capital expenditure requirements for the next twelve months. During 2012, we currently anticipate spending approximately $15 million for discretionary capital expenditures. While we believe these sources will provide us sufficient liquidity over the next twelve months, we can give no assurance that these sources of cash will be sufficient to enable us to do so. Further, in addition to our normal capital expenditure requirements, we anticipate that we will pursue the acquisition of other properties and continue to engage in the pursuit of new development opportunities. It is possible that we may need to enter into new financing arrangements and raise additional capital in the future if we are unable to generate sufficient cash to sustain expansion. Our ability to incur additional debt is further restricted by the terms and covenants of our senior secured bank credit facility and senior unsecured notes. We can give no assurance that we will be able to raise any capital or obtain the necessary sources of liquidity and financing on favorable terms, if at all. Additionally, any debt financing that we may incur in the future will increase the amount of our total outstanding indebtedness and our debt service requirements, and therefore heighten the related risks we currently face.

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

The following table provides disclosure concerning our obligations and commitments to make future payments under contracts, such as debt and lease agreements, and purchase and other long-term obligations as of December 31, ~~2010~~2011.

(In Thousands)

Total

~~Next12~~Next ~~Months~~12Months

1-3Years

4-5Years

After 5Years

Long-term debt (1)

~~353~~337,~~892~~432

2635,~~353~~124

~~107~~302,~~271~~308

~~220,268~~—

—

Capital lease obligations

76,~~216~~696

~~520~~474

~~948~~1,715

~~1,586~~698

43,~~162~~809

Operating leases (2)

3835,~~141~~418

3,~~079~~234

5,~~746~~666

54,~~163~~113

2422,~~153~~405

Purchase obligations (3)

~~287~~166,~~429~~711

7357,~~377~~176

~~146~~109,~~753~~535

~~67,299~~—

—

Other long-term obligations (4)

21,~~404~~937

2,~~081~~383

34,~~371~~115

23,~~827~~164

1312,~~125~~275

Total contractual cash obligations

~~708~~568,~~082~~194

~~105~~98,~~410~~391

~~264~~423,~~089~~339

~~297~~7,~~143~~975

4138,~~440~~489

(1) Long-term debt includes principal and interest owing under the terms of our senior unsecured notes, our senior secured credit facility and capital leases. Interest on variable rate debt is computed based on rates outstanding at December 31, ~~2010~~2011.

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

(3) Purchase obligations include five-year fuel supply agreements for gasoline and diesel fuel. Fuel volumes are specified in the contracts. The purchase price is a variable market-based price. The long-term obligations in this table were derived using the applicable contract prices for gasoline and diesel fuel at December 31, ~~2010~~2011 multiplied by the actual fuel volumes per the contracts.

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

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

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

5152

I. Critical accounting policies and estimates

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

Property and equipment

We have a significant investment in long-lived property and equipment, representing approximately 7169% of our total assets. We ~~estimate~~analyzed ~~that~~ the undiscounted future cash flows expected to result from the use of ~~these~~the assets ~~exceed~~at ~~the~~Gold ~~current~~Dust ~~carrying~~West-Carson ~~value~~City ofand ~~these~~Virginia ~~assets~~(see below). Any adverse change to the estimate of these undiscounted cash flows could necessitate an impairment charge that would adversely affect operating results. We review the carrying value of our property and equipment for potential impairment when events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use. Further, we assign lives to our assets based on our standard policy, which is established by management as representative of the useful life of each class of assets. Should the actual useful life of a class of assets differ from the estimated useful life, we would record an impairment charge. We review useful lives and obsolescence and assess the commercial viability of our assets periodically.

During 2011 and 2010, based on operating results, we were required, pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360, Property, Plant and Equipment, to assess our ability to recover the recorded cost of the Gold Dust West-Carson City and Virginia long-lived assets. We prepared a cash flow analysis based on management’s best ~~estimate~~estimates in an effort to assess the likelihood of recovering the cost of these assets. Based on these projections and the related underlying assumptions for Gold Dust West-Carson City, as well as our knowledge of the Carson City market, we believe that we will not be able to fully recover the carrying cost of these assets, and therefore, Gold Dust West-Carson City recorded an impairment of long-lived assets totaling $10.1 million in 2011. Based on the cash flow projections and the related underlying assumptions for Virginia, ~~markets~~as well as our knowledge of the Virginia market, we believe that we will be able to recover the carrying cost of these assets and no impairment currently exists. However, future events such as actual performance versus projected performance, continued market decline, increased and/or changing competitive forces, or other unforeseen events could change our estimates and cause us to recognize an additional impairment in the carrying value of the Gold Dust West-Carson City or Virginia long-lived assets in future periods. Such an impairment could be material to our financial position and results of operations.

Goodwill and other intangible assets

We have $4648.57 million in goodwill recorded on our consolidated balance sheet resulting from the acquisition of businesses. We do not have any other nonamortizing intangible assets on our consolidated balance sheet. We annually review our goodwill for impairment. The annual evaluation of goodwill requires the use of estimates about future operating results of each reporting unit to determine its estimated fair value. Changes in forecasted operations can materially affect these estimates.

~~Our~~53 reporting units with goodwill balances at December 31, 2010 are The Lodge ($4.2 million), Gilpin ($2.5 million), Gold Dust West-Reno ($8.8 million) and Louisiana ($31.0 million). There is no goodwill recorded in our Gold Dust West-Carson City, Gold Dust West-Elko or Virginia reporting units. We performed our most recent annual impairment test for these reporting units as of September 30, 2010. Our annual impairment test included an analysis of the gaming industry overall as well as an analysis of the specific locations in which we operate. We determined the fair values for each of these reporting units using both the market approach (recent comparable transactions from which we derived an applicable valuation multiple) and the income approach (net present value of

Our reporting units with goodwill balances at December 31, 2011 are The Lodge ($4.2 million), Gilpin ($2.5 million), Gold Dust West-Reno ($8.8 million) and Louisiana ($33.2 million). There is no goodwill recorded in our Gold Dust West-Carson City, Gold Dust West-Elko or Virginia reporting units. We performed our most recent annual impairment test for these reporting units as of September 30, 2011. Our annual impairment test included an analysis of the gaming industry overall as well as an analysis of the specific locations in which we operate. We determined the fair values for each of these reporting units using both the market approach (recent comparable transactions from which we derived an applicable valuation multiple) and the income approach (net present value of our anticipated future cash flows). These fair values were then compared to the carrying values for the respective reporting unit. WeAs ~~determined~~of ~~that~~September 30, ~~goodwill~~2011, ~~was~~we ~~not~~believe ~~impaired~~the atcarrying ~~any~~value of the goodwill held in our reporting units aswas ofnot ~~September 30, 2010~~impaired. Furthermore, if the fair value of any of our reporting units declined by 10%, no goodwill impairment would be required. ~~During~~However, ~~2008~~as of September 30, 2010 and 2009, prior to our acquisition from a related party, we determined the carrying value of the goodwill at one of our video poker truck stops was impaired. Consequently, during 2010 and 2009, we recorded a goodwill impairment ~~totaling~~charge of $0.28 million atand ~~our~~$3.1 ~~Gold Dust~~million, ~~West-Carson~~respectively. ~~City~~There ~~reporting~~has ~~unit,~~been ~~which~~no ischange ~~further discussed~~ in ~~Note~~the 3carrying toamount ~~the~~of ~~financial~~goodwill ~~statements.~~during 2011.

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

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

Market Risk

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

We have issued $210 million of 9 3/4% fixed rate senior unsecured notes due in 2014 and a $100 million variable rate senior secured credit facility consisting of: (i) a $40 million revolving credit facility, of which $3 million isexpired ~~due in~~June 2011 and the remainder is due inJune 2012, (ii) a $40 million six-year term loan facility due in June 2012, and (iii) a $20 million six-year delayed draw term loan due inJune 2012. As of December 31, ~~2010~~2011, $1114.59 million iswas outstanding on the senior secured revolving credit facility and $5756.48 million iswas outstanding on our senior secured term loan debt, bearing interest at a blended variable rate approximating 3.3350% ~~at December 31, 2010~~. As of December 31, ~~2010~~2011, $2822.51 million was available on the revolving credit facility. On February 23, 2012, we amended and extended our credit facility. See discussion of the 2012 amendment to the credit agreement discussed above in Item 7C. – Subsequent Event.

If market interest rates increase, our cash requirements for interest on the senior secured credit facility balance would also increase. Conversely, if market interest rates decrease, our cash requirements for interest on the senior secured credit facility balance would also decrease. There would be an approximate change in our cash requirements of $0.23 million annually for interest should market rates increase or decrease by 10% compared to interest rate levels at December 31, ~~2010~~2011.

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

JEI owns an investment in the publicly traded equity of MTR Gaming Group, Inc. ~~(“MTR”).~~ Market prices for equity securities are subject to fluctuation. Fluctuation in the market price of such a security may result from perceived changes in the underlying economic characteristics of the investee, the relative price of alternative investments, and general market conditions. Consequently, the amount realized on any ultimate sale of this investment may significantly differ from the reported market value as of December 31, ~~2010~~2011.

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

We54 use significant amounts of electricity, natural gas and other forms of energy. While we have generally not experienced any major shortages of energy, any substantial increases in the cost of electricity and natural gas in the United States could negatively impact our operating results. The extent of any impact is subject to the magnitude and duration of the energy price increases and could be material.

~~Also,~~ affect ifconsumer ~~gas~~spending ~~prices~~in ~~rise,~~our ~~this~~gaming ~~may~~operations ~~result~~and inrelated afacilities, ~~reduction~~as ofconsumers ~~automobile~~spend ~~travel~~less ~~and a decrease~~ in ~~the~~anticipation ~~number~~ of ~~patrons~~a atpotential ~~our~~economic ~~properties~~downturn. ~~Our business~~Furthermore, ~~assets~~other uncertainties, ~~financial~~including national ~~condition~~ and ~~results~~global ofeconomic ~~operations~~conditions, ~~could~~terrorist beattacks ~~adversely~~or ~~affected~~other byglobal aevents, ~~weakening~~could ofadversely ~~national~~affect ~~economic~~consumer ~~conditions~~spending, ~~high~~increase gasoline prices and~~/or~~ ~~adverse~~adversely ~~winter~~affect ~~weather conditions~~our operations.

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

Also, if gas prices rise, this may result in a reduction of automobile travel and a decrease in the number of patrons at our properties. Our business, assets, financial condition and results of operations could be adversely affected by a weakening of national economic conditions, high gasoline prices and/or adverse winter weather conditions. We currently do not use any financial instruments to hedge against fuel price exposure.

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

Item 8. Financial Statements and Supplementary Data.

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

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

None.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of December 31, ~~2010~~2011. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, evaluated and reported, as applicable, within the time periods specified in the rules and forms of the U.S. Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely discussions regarding required disclosure.

Management’s Annual Report on Internal Control Over Financial Reporting

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

•

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

•

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

•

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

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

Management assessed the effectiveness of our internal control over financial reporting as of December 31, ~~2010~~2011. In making this assessment, our management used the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment, we believe that, as of December 31, ~~2010~~2011, our internal control over financial reporting is effective based on those criteria.

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

Changes in Internal Control Over Financial Reporting

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

Item 9B. Other Information.

There is no information we were required to report on Form 8-K during our fourth fiscal quarter of the year ended December 31, ~~2010~~ 2011 that was not so reported.

Item 10. Directors, Executive Officers and Corporate Governance.

The following table provides information regarding our directors and executive officers and key employees as of March 1, ~~2011~~ 2012

Name	Age	Position
Jeffrey P. Jacobs	5758	Chief Executive Officer, Secretary, Treasurer and Chairman of the Board
Stephen R. Roark	6364	President
Ian M. Stewart	5657	President of Pari-Mutuel Wagering Operations
Michael T. Shubic	5758	Chief Operating Officer
Brett A. Kramer	4243	Chief Financial Officer
Stanley Politano	6162	Executive Vice President
Emanuel J. Cotronakis	4041	Executive Vice President, General Counsel and Assistant Secretary

~~Jeffrey~~56 P. Jacobs is our Chairman, Chief Executive Officer, Secretary and Treasurer and sole director. He is also Chairman and Chief Executive Officer of Colonial, and Chairman and Chief Executive Officer of Black Hawk Gaming, two of our subsidiaries. From 1996 to 2007, he served as Chairman and Chief Executive Officer of Diversified Opportunities Group Ltd. (“Diversified”), a company co-founded by Mr. Jacobs and his father, Richard E. Jacobs, and based in Cleveland, Ohio, that had investments in gaming companies and other ventures. Jacobs Entertainment, Inc. acquired Diversified on February 22, 2002 and it was dissolved in 2007. Mr. Jacobs serves as the Chairman and Chief Executive Officer of Jacobs Investments, Inc., a company which owns all of our equity securities and which engages in a variety of private equity transactions and other investments. From 1975 to present, Mr. Jacobs has also served as the Chairman and Chief Executive Officer of Jacobs Investments Management Co., Inc., a company engaged in the development, construction and operations of various residential and commercial real estate projects in Ohio. Mr. Jacobs became a director of MTR Gaming Group, Inc. (“MTR”) on May 6, 2008 and became its chairman on October 31, 2008. In March 2010, Mr. Jacobs resigned from MTR’s Board of Directors. MTR has a class of equity securities registered under the Securities Exchange Act of 1934.

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

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

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

Michael T. Shubic has been our Chief Operating Officer since July 1, 2006. From December 12, 2002 when he joined us until his appointment as our Chief Operating Officer, he served as our Vice President of Operations. From 2000 to 2002, Mr. Shubic was Vice President and General Manager of the Isle of Capri Black Hawk Casino in Black Hawk, Colorado. From 1997 to 2000, as a private individual, he explored and participated in various aspects of the golf industry, including education, sales and management. From 1984 to 1997, Mr. Shubic was employed by several gaming companies in Las Vegas and Reno, Nevada, Joliet, Illinois, and Nassau, Bahamas. His positions included general manager, casino administrator, customer analysis manager, casino credit manager and food and beverage manager. Mr. Shubic holds a B.S. degree in Hotel Administration from the University of Nevada.

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

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

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

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

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

Item 11. Executive Compensation.

Compensation Discussion and Analysis

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

•

an overview of our board of directors’ philosophy as to executive compensation;

•

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

•

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

Overview and Objectives

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

During ~~2010~~2011, the total cash compensation to Jeffrey P. Jacobs is limited to an aggregate of $1 million per year under our credit agreements. As a result, most elements of our compensation plans discussed below do not include our CEO, Jeffrey P. Jacobs. However, as also discussed below, our sole shareholder nonetheless is entitled under our credit agreements to certain tax distributions since, as a Qualified Subchapter S-Corporation Subsidiary, our taxable income flows through and is taxed to it. Finally and also as discussed in detail in Item 13 below, Mr. Jeffrey P. Jacobs has received certain direct dividends from us and constructive dividends resulting from the accounting treatment required of certain related party transactions.

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

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

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

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

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

Name and Principal Position(1)

Year

Salary

Bonus

StockAwards

OptionAwards

~~OptionAwards~~Non-EquityIncentive PlanCompensation

Change inPension Valueand Non-QualifiedDeferredCompensationEarnings

~~Non-EquityIncentive~~All ~~PlanCompensation~~OtherCompensation(2)(3)

~~Change inPension Valueand Non-QualifiedDeferredCompensationEarnings~~Total

~~All OtherCompensation(2)(3)~~

~~Total~~

($)

~~($)~~

Jeffrey P. Jacobs

~~2010~~2011 ~~20092008~~20102009

750,000 727,500 758,942 ~~562,500~~

250,000 72,716 — ~~250,000~~

1,250,000 1,250,000 1,325,000

2,250,000 2,050,216 2,083,942

~~1,250,000 1,325,000 1,340,000~~

~~2,050,216 2,083,942 2,152,500~~

Stephen R. Roark

~~2010~~2011 ~~20092008~~20102009

~~465~~466,~~407485~~634465,~~571457~~407 485,~~816~~571

50135,000 ~~— 133~~50,000 —

601,634 515,407 485,571

~~515,407 485,571 590,816~~

Ian M. Stewart

~~2010~~2011 ~~20092008~~20102009

313,300 307,494 298,852 ~~300,661~~

1535,000 ~~— 65~~15,000—

348,300 322,494 298,852

~~322,494 298,852 365,661~~

Michael T. Shubic

~~2010~~2011 ~~20092008~~20102009

368,449 357,381 361,~~175339,094~~175

40100,000 ~~— 98~~40,000—

468,449 397,381361,175

~~397,381 361,175437,094~~

Brett A. Kramer

~~2010~~2011 ~~20092008~~20102009

~~245~~246,~~663~~781 ~~256~~245,~~302231~~663256,~~821~~302

3070,000 ~~— 70~~30,000—

316,781 275,663256,302

~~275,663 256,302301,821~~

Stanley Politano

~~2010~~2011 ~~20092008~~20102009

174,034 173,764 181,226 ~~171,440~~

49,000 22,577 — ~~49,000~~

223,034 196,341 181,226

~~196,341 181,226 220,440~~

Emanuel J. Cotronakis(4)

~~2010~~2011 ~~20092008~~20102009

437,115 410,096 188,077 —

75,000 40,000 — —

512,115 450,096 188,077

~~450,096 188,077 —~~

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

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

(3) Also see Director Compensation and Item 13 below that describe distributions to our owner during ~~2010~~2011, which directly and indirectly benefited our Chief Executive Officer.

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

5860

Employment Agreements

As of December 31, ~~2010~~2011, three of our executive officers are a party to an Executive Employment Agreement as follows:


			Base Salary
Name	Title	Effective Date	Year One		Year Two		Year Three
Michael T. Shubic	Chief Operating Officer	July 1, 2009	$	350,000	$	360,500	$	371,315

Ian M. Stewart	President of Pari-Mutuel Wagering Operations	August 1, 2009		300,000		309,000		318,270

Emanuel J. Cotronakis	Executive Vice President, General Counsel and Assistant Secretary	July 31, 2009		400,000		425,000		450,000

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

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

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

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

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

Director Compensation

We ~~had~~have ~~two~~one ~~directors~~director, Jeffrey P. Jacobs, who is also our CEO~~, and Richard E~~. ~~Jacobs,~~Our ~~his~~director ~~father.~~received Inno ~~2008,~~other ~~Richard~~compensation ~~E. Jacobs was paid $187,500~~ for his service as a director. ~~Effective October 15,~~ ~~2008, Richard E. Jacobs resigned his position as a member of the Board of Directors of JEI. Our directors received no other compensation for their services as directors.~~ During 2011, 2010 and 2009, no director’s fees were paid.

As explained in Item 13 below, our stockholder received compensation from us in ~~2010~~2011 as a result of amounts accounted for as ~~a distribution~~distributions resulting from the sale of a certain Nautica ~~Property~~Properties. Additionally, annual distributions may be made to our owner in an aggregate amount not to exceed the greater of $1 million and 50% of consolidated net income as defined in our credit agreement and indenture. Distributions to our stockholder totaled $316,~~800~~955,000 in ~~2010~~2011, including $25,~~800~~462,000 for the purchase of ~~Flats~~Cash ~~Development~~Magic Springhill, ~~Inc~~LLC, $4,913,000 for the purchase of Cash Magic Vivian, LLC, $3,025,000 for the purchase of Jalou Forest Gold, LLC, and $1,214,000 for the purchases of the three Nautica Properties.

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

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

5961

During ~~2010~~2011, there were no interlocking relationships between any member of our board of directors and any of our executive officers that would be required to be disclosed under Item 407(e)(4) of Regulation S-K.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

As of March 1, ~~2011~~2012, there were 1,500 shares of our common stock outstanding divided into 1,320 Class A shares and 180 Class B shares. The shares are equal in all respects except that each Class B share entitles the holder to 50,000 votes on each matter required to be voted upon by our shareholders. We have no equity compensation, stock option or similar plans relating to our equity securities. All 1,500 shares (100%) of our issued and outstanding common stock are owned by Jacobs Investments, Inc., a Delaware corporation (“JII”).

The following table sets forth certain information regarding the beneficial ownership of JII’s common stock as of March 1, ~~2011~~2012, for each stockholder who is known by us to own beneficially more than 5% of JII’s common stock.


	Number of Shares				Percentage
Stockholders of JII	Class A		Class B		Class A			Class B
Jeffrey P. Jacobs(1) Golden Bear Plaza East Tower 1170 U.S. Highway One, Suite 600 North Palm Beach, Florida 33408		528		—		40	%		—

Jacobs Family Economic and Control Trusts(2) Hahn Loeser & Parks LLP 200 Public Square, Suite 2800 Cleveland, Ohio 44114		792		180		60	%		100	%

All executive officers and directors as a group		528		—		40	%		—

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

(2)

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

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

JIMCO Management Agreement

In order to assist us in our efforts to research, develop, perform due diligence on and possibly acquire new gaming opportunities, we have a consulting agreement with Jacobs Investments Management Co. Inc. (“JIMCO”), 82% of which is owned by Jeffrey P. Jacobs and the remaining 18% of which is owned in equal portions by two of his business associates. This agreement calls for payments of $1.25 million per year payable in two equal installments of $625,000 on January 1st and July 1st plus 2.5% of budgeted development costs for projects undertaken by us, if certain debt covenant ratios are met. Totals expenses incurred under this agreement with JIMCO were $1,250,000, $1,~~325~~250,000 and $1,~~340~~325,000 for the years ended December 31, ~~2010~~2011, ~~2009~~2010 and ~~2008~~2009, respectively.

60Transactions with Affiliate Video Poker Truck Stops

We manage and provide administrative services and support to the video poker truck stop owned by Gameco Holdings, Inc. (“Gameco”), another wholly owned subsidiary of JII, in exchange for certain fees. We allocate management, accounting and overhead costs incurred by JEI to the video poker truck stop owned by

~~Transactions~~ Gameco. These costs totaled $318,000, $291,000, and $240,000 for the years ended December 31, 2011, 2010 and 2009, respectively. We expect to continue to render management and accounting services to Gameco in the future. We believe the fees paid to us are no less favorable to us than those that would be paid to unaffiliated vendors. Additionally, beginning in December 2009, to help JEI reach the fuel sale volume necessary to qualify for the reduced pricing structure under the fuel supply agreements with ~~Affiliate~~CITGO ~~Truck~~Petroleum ~~Stops~~Corporation (see Note 8 to the financial statements), we entered into an agreement with Gameco to provide gasoline and diesel fuel at cost for its fuel operations, which totaled $5,564,000, $4,476,000 and $0 for the years ended December 31, 2011, 2010 and 2009.

WeGameco owns ~~allocate management, accounting~~ and ~~overhead~~has ~~costs~~the ~~incurred~~right byto ~~JEI~~acquire toadditional ~~various~~video poker truck stops ~~owned~~in ~~by Gameco Holdings, Inc~~Louisiana. ~~(“Gameco”),~~ ~~another~~We ~~wholly~~have ~~owned~~the ~~subsidiary~~right ofto ~~JII.~~purchase ~~These~~any ~~costs~~existing ~~totaled~~or ~~$1,200,000,~~future ~~$1,101,000,~~video ~~and~~poker ~~$1,157,000~~truck ~~for~~stops ~~the~~acquired ~~years~~by ~~ended~~Gameco ~~December 31,~~at ~~2010,~~a ~~2009~~price ~~and~~equal ~~2008, respectively. We expect~~ to ~~continue~~(i) the tolesser ~~render~~of ~~management~~(a) seven ~~and~~times ~~accounting~~trailing ~~services~~12 months toEBITDA, ~~Gameco~~and in (b) the ~~future.~~sum Weof ~~believe~~ the ~~fees~~consideration paid toby usthe ~~are~~affiliated nocompany ~~less~~plus ~~favorable~~or tominus usan ~~than~~adjustment ~~those~~for ~~that~~working ~~would~~capital beand ~~paid~~plus toan ~~unaffiliated~~amount ~~vendors.~~equal ~~Additionally,~~to ~~beginning~~the intrailing ~~December~~12 months ~~2009~~EBITDA, toor ~~help~~(ii) an ~~JEI~~amount ~~reach the fuel sale volume necessary~~supported toby ~~qualify~~a ~~for~~fairness ~~the~~opinion ~~reduced~~by ~~pricing~~a ~~structure~~nationally ~~under~~recognized ~~the~~accounting, ~~fuel~~investment ~~supply~~banking ~~agreements~~or ~~with~~appraisal ~~CITGO~~firm; ~~Petroleum~~provided ~~Corporation~~that ~~(see~~after ~~Note~~giving 8effect to ~~the~~each ~~financial~~such ~~statements),~~acquisition weand ~~entered~~pro ~~into~~forma ~~agreements~~for ~~with~~contemplated ~~various~~expenditures, we ~~Gameco~~must ~~subsidiaries~~be toin ~~provide~~pro ~~gasoline~~forma ~~and~~compliance ~~diesel fuel~~with atall ~~cost~~financial ~~for~~covenants ~~their~~under ~~fuel~~our ~~operations~~credit agreements. WeAny ~~provided~~such ~~gasoline~~acquisitions ~~and~~by ~~diesel~~us ~~fuel~~could ~~totaling~~result ~~$7,968,000~~in tosignificant ~~Gameco~~profits ~~subsidiaries~~to ~~for the year ended December 31, 2010~~Gameco.

~~Gameco~~On ~~owns~~January 31, ~~and~~2011, ~~has~~we ~~the~~acquired ~~right~~two ~~to acquire additional~~ video ~~gaming~~poker truck ~~plazas~~stops in Louisiana., WeCash ~~have~~Magic ~~the~~Springhill, ~~right~~LLC to(“Springhill”) ~~purchase any existing or future video gaming facilities acquired by Gameco at a price equal~~and toCash ~~(i) the~~Magic ~~lesser~~Vivian, ofLLC (a“Vivian”) ~~seven~~, ~~times~~for ~~trailing 12 months EBITDA~~$5,461,797 and ~~(b) the~~$4,912,718, ~~sum~~respectively, ofwhich ~~the~~were ~~consideration~~previously ~~paid~~wholly owned by ~~the~~Gameco. ~~affiliated~~On ~~company~~March 31, ~~plus~~2011, orwe ~~minus~~acquired anone ~~adjustment~~additional ~~for~~video ~~working~~poker ~~capital~~truck ~~and~~stop ~~plus~~in anLouisiana, ~~amount~~Jalou ~~equal~~Forest toGold, ~~the trailing~~LLC ~~12 months~~(“Forest ~~EBITDA~~Gold”), orfor ~~(ii) an~~$3,025,182, ~~amount~~which ~~supported~~was byalso apreviously ~~fairness~~wholly ~~opinion~~owned by aGameco. ~~nationally~~The ~~recognized~~acquisitions ~~accounting,~~of ~~investment~~these ~~banking~~video orpoker ~~appraisal~~truck ~~firm;~~stops ~~provided~~were ~~that~~accounted ~~after giving effect to each such acquisition and pro forma~~ for ~~contemplated expenditures, we~~as ~~must~~combinations beof inentities ~~pro forma compliance with all financial covenants~~ under ~~our~~common ~~credit agreements~~control. ~~Any~~See ~~such~~Note ~~acquisitions~~4 byof usour ~~could~~Consolidated Financial ~~result in significant profits to Gameco~~Statements.

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

Jalou Device Owner, L.P.

Under Louisiana law, video poker machines must be owned by Louisiana residents. Through October 2009, the ~~Jalou truck plaza~~ video ~~gaming~~poker ~~facilities~~truck stops paid a fee to the third party owner of the machines in order to maintain the machines used in our ~~truck~~video ~~plaza~~poker ~~operations~~truck stops, plus reimbursement for the owner’s licensing costs and various other expenses. Beginning in November 2009, the ownership of the video poker machines and the related repair parts inventory used byin ~~the~~our ~~Jalou~~video poker truck ~~plazas~~stops was transferred from the third party owner to a related party, Jalou Device Owner, L.P. (“Device Owner”), of which Gameco owns 49% and is the general partner. Two Louisiana residents own the remaining 51% of Device Owner and are the limited partners. ~~The~~Our ~~Jalou~~video poker truck ~~plazas~~stops pay 90 cents per operating video poker machine per day to Device Owner, plus reimbursement for Device Owner’s licensing costs. Total expense under these arrangements was $1,~~301~~510,000, $1,~~126~~508,000 and $1,~~273~~310,000 for the years ended December 31, ~~2010~~2011, ~~2009~~2010 and ~~2008~~2009, respectively.

Other Related Party Transactions

During 2009, we incurred expenses with the R.E. Jacobs Group for JEI-related airplane usage totaling $113,000. Additionally, ~~Flats~~prior ~~periodically~~to ~~received~~our ~~working capital advances from JIMCO~~acquisition, ~~our~~Nautica ~~CEO~~Phase ~~and~~2 ~~the~~periodically ~~mother~~provided ofworking ~~our~~capital advances ~~CEO.~~to JIMCO. These advances totaled $~~731~~583,000 as of December 31, ~~2009~~2010 and are included in the balances due tofrom affiliates discussed below. These working capital advances were settled ~~upon~~at closing of the acquisition of ~~Flats~~Nautica Phase 2 by JEI during ~~2010~~2011.

Balances Due To/From Affiliates

Each of the above related party transactions results in either receivables from or payables to our affiliates. As of December 31, 2011 ~~2010~~ and ~~2009~~2010, these transactions resulted in net receivables from affiliates totaling $1,~~276~~098,000 and $12,~~023~~722,000, respectively. As of December 31, ~~2010~~2011 and ~~2009~~2010, these transactions resulted in net payables to affiliates totaling $~~639~~1,203,000 and $1,~~469~~251,000, respectively.

6163

Nautica Properties

During July 2006, we acquired from affiliated parties options to lease and options to purchase ~~six~~certain businesses and their related assets, including various parcels of land, buildings and related improvements, on the west bank of the Cuyahoga River in Cleveland, Ohio. We refer to these businesses and their related assets, covering an aggregate of approximately 624,000 square feet of land (14.4 acres) and a building comprised of 47,380 square feet of net rentable space, as the Nautica Properties. In 2011, we acquired substantially all of the remaining Nautica Properties under option as part of our process of assembling a developable site.

On ~~April~~ January 118, ~~2008~~2011, we acquired a Nautica Properties based parking lot business and its related assets referred to as “~~Lot~~Nautica DPhase 2” for $~~800~~1,~~000~~250,000. ~~which~~Our ~~was~~CEO ~~accounted~~controlled ~~for~~the ~~as a distribution to our stockholder~~business. The ~~company~~acquisition ~~that~~of ~~owned~~ this business was ~~wholly~~accounted ~~owned~~for byas ~~our~~a ~~Chairman and~~combination ~~Chief~~of ~~Executive~~entities ~~Officer~~under ~~(“CEO”)~~common control. The ~~net~~portion ~~assets~~of ~~acquired~~Nautica ~~were~~Phase ~~$131,000.~~2 ~~On January 21, 2009, we~~ acquired ~~a second Nautica Properties based business and its related assets referred to as “Sugar Warehouse” for $2,450,000~~ from ~~a limited partnership controlled by~~ our CEO. Anhas ~~affiliate~~been ~~(“Affiliate”)~~recorded ofat ~~our~~the ~~CEO~~historical ~~owned~~cost ~~82%~~bases ofin the ~~general~~assets ~~partner~~and ~~interests~~liabilities transferred and ~~16.4%~~the portion of ~~the~~Nautica ~~limited~~Phase ~~partner~~2 ~~interests~~acquired offrom ~~the~~third ~~seller.~~parties Ahas ~~distribution~~been ofrecorded ~~$2,238,000~~at ~~was~~fair ~~recorded~~value onat the acquisition date ~~for~~using the ~~portion~~acquisition method of accounting. ~~the~~See ~~purchase~~Note ~~price~~4 ~~attributable~~ to our ~~CEO.~~Consolidated ~~The~~Financial ~~net assets acquired were $1,721,000~~Statements.

On ~~July~~ October 73, ~~2010~~2011, we ~~exercised~~acquired ~~our~~the “Sycamore & ~~option~~Main” ~~and~~parking ~~entered~~lot ~~into~~business aand ~~purchase~~its ~~agreement~~related toassets ~~acquire~~for a$1,100,000. ~~third~~Our ~~Nautica~~CEO ~~Properties~~controlled ~~based~~the business. ~~and~~The ~~its~~acquisition ~~related~~of ~~assets~~Sycamore & ~~referred~~Main toand asits ~~“Flats”~~parking ~~for~~lot ~~$2,800,000,~~business ~~which~~ was accounted for as a ~~distribution to~~combination ~~our stockholder. Closing~~ of ~~the~~entities under ~~transaction~~common ~~occurred~~control. ~~on August 16~~Therefore, ~~2010.~~the ~~Flats~~acquisition ~~was~~has ~~controlled~~been byrecorded at the ~~mother~~historical ~~and~~cost ~~sister~~bases ofin ~~our~~the ~~CEO,~~assets and ~~was~~liabilities ~~accounted~~transferred. ~~for~~See asNote a4 ~~combination~~to ofour ~~entities~~Consolidated ~~under~~Financial ~~common control~~Statements. ~~The net assets acquired were $1,637,000.~~

InOn ~~July~~October 28, ~~2010~~2011, we ~~amended~~acquired the ~~three~~“Nautica ~~remaining~~Peninsula ~~unexercised~~Land” ~~option~~parking ~~agreements~~lot business and ~~extended~~its ~~the~~related ~~option~~assets ~~periods~~for ~~to July 11~~$971,381. Our ~~2012~~CEO ~~giving~~controlled usthe business. The acquisition of this business was accounted for as a combination of entities under common control. The portion of Nautica Peninsula Land acquired from our CEO has been recorded at the ~~right~~historical tocost ~~purchase~~bases orin ~~enter~~the assets ~~into~~and ~~long-term~~liabilities ~~leases~~transferred onand the ~~three~~portion ~~remaining~~of Nautica ~~Properties~~Peninsula ~~businesses~~Land ~~and~~acquired ~~their~~from ~~related~~third ~~assets~~parties has been recorded at fair value at the acquisition date using the acquisition method of accounting. See Note 4 to our Consolidated Financial Statements.

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

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

Other Investments

We may invest up to $3 million per year in private or publicly traded securities of unaffiliated companies. These investments may be selected and managed by JII, provided that under our senior credit agreement our pro forma consolidated leverage ratio (ratio of our total pro forma debt to our pro forma EBITDA) must be 5.0 to 1.0 or less after giving effect to any such investment and provided that under our note indenture our fixed charge coverage ratio (ratio of our Consolidated EBITDA to our fixed charges, primarily interest) was at least 2.0 to 1.0 for the preceding four quarter period; and provided further that to the extent that less than $3.0 million in the aggregate of such investments are made in any fiscal year, the unused amount may be used in the succeeding fiscal year, subject to the pro forma leverage condition just discussed. Furthermore, we may invest an aggregate amount not to exceed $5.0 million at any time outstanding. At December 31, ~~2010~~2011, we had invested $7,943,000 (cost) in the securities of an unaffiliated public company; the market value of such securities at December 31, ~~2010~~2011 was $1,~~652~~521,000.

Director Independence

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

Item 14. Principal Accountant Fees and Services.

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

	Year EndedDecember 31,
	Year Ended
	2010		2009
	December 31,
Audit fees	$	1,107,000	$	1,428,000
	2011		2010
Audit related fees*		25,000		30,000
Audit fees	$	1,110,000	$	1,107,000
Tax fees**		314,000		388,000
Audit related fees*		31,000		25,000
All other fees		160,000		21,000
Tax fees**		329,000		314,000
All other fees		21,000		160,000

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

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

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

Item 15. Exhibits and Financial Statement Schedules.

(a) Financial Statements and Financial Statement Schedules

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

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

(b) Exhibits

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

6365

SIGNATURES

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


JACOBS ENTERTAINMENT, INC.

By:		/s/ JEFFREY P. JACOBS

		Jeffrey P. Jacobs
		Chief Executive Officer

By:		/s/ BRETT A. KRAMER

		Brett A. Kramer
		Chief Financial Officer

Date: March 2930, ~~2011~~2012

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

Signature	Title	Date
/s/ JEFFREY P. JACOBS	Chairman of the Board of Directors and Chief	March 2930, ~~2011~~2012
Jeffrey P. Jacobs	Executive Officer (Principal Executive Officer)
/s/ BRETT A. KRAMER	Chief Financial Officer	March 2930, ~~2011~~2012
Brett A. Kramer	(Principal Financial and Accounting Officer)

6466

Jacobs Entertainment, Inc.

Consolidated Financial Statements as of December 31, ~~2010~~2011 and ~~2009~~2010, and for the Years Ended December 31, ~~2010~~2011, ~~2009~~2010 and ~~2008~~2009, and Report of Independent Registered Public Accounting Firm

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholder of

of Jacobs Entertainment, Inc.

Golden, Colorado

We have audited the accompanying consolidated balance sheets of Jacobs Entertainment, Inc. and subsidiaries (the “Company”) as of December 31, ~~2010~~2011 and ~~2009~~2010, and the related consolidated statements of operations, ~~stockholder’s~~ equity, and cash flows for each of the three years in the period ended December 31, ~~2010~~2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Jacobs Entertainment, Inc. and subsidiaries as of December 31, ~~2010~~2011 and ~~2009~~2010, and the results of their operations and their cash flows for each of the three years in the period ended December 31, ~~2010~~2011, in conformity with accounting principles generally accepted in the United States of America.

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

Denver, Colorado

March 30, 2012

F-1

JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, ~~2010~~2011 and ~~2009~~2010

(Dollars in thousands)

	2010			2009(As adjusted,see Note 4)
	2011			2010(As adjusted,see Note 4)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	2425,~~234~~227		$	24,~~205~~705
Restricted cash		1,~~211~~212			1,~~121~~226
Accounts receivable, net of allowance for doubtful accounts of $607 and $910, respectively		2,906			2,993
Accounts receivable, net of allowance for doubtful accounts of $964 and $618, respectively		3,222			3,199
Due from affiliates		1,~~276~~098			12,~~023~~722
Inventory		3,~~429~~860			3,~~039~~901
Prepaid expenses and other current assets		2,976			2,850
Other current assets		2,912			3,009
Total current assets		3637,~~032~~531			3538,~~231~~762
PROPERTY, PLANT AND EQUIPMENT:
Land and improvements		6266,~~465~~777			6266,~~397~~063
Buildings and improvements		~~192~~202,~~319~~440			~~190~~198,~~236~~962
Equipment, furniture and fixtures		~~102~~110,~~301~~486			95104,~~164~~928
Leasehold improvements		3,~~213~~232			3,~~201~~213
Construction in progress		~~1,033~~715			~~594~~1,033
		361,331			351,592
		383,650			374,199
Less accumulated depreciation		(~~125~~154,~~323~~967	)		(~~107~~129,~~285~~027	)
Property, plant and equipment, net		~~236~~228,~~008~~683			~~244~~245,~~307~~172
OTHER NONCURRENT ASSETS:
Goodwill		4648,~~471~~728			4648,~~471~~728
Identifiable intangible assets, net		78,~~425~~509			8,~~173~~274
Debt issue costs, net		52,~~016~~826			5,~~695~~016
Investment in equity securities		1,~~652~~521			1,~~058~~652
Other assets		12,~~692~~024			21,~~605~~734
Total other noncurrent assets		6263,~~256~~608			6465,~~002~~404
TOTAL	$	~~334~~329,~~296~~822		$	~~343~~349,~~540~~338
LIABILITIES AND STOCKHOLDER’S EQUITY
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable	$	8,~~220~~277		$	68,~~367~~533
Accrued expenses		1618,~~442~~418			1516,~~984~~883
Due to affiliates		~~639~~1,203			1,~~469~~251
Current portion of long-term debt and capital lease obligations		312,~~738~~279			222,~~117~~336
Total current liabilities		2940,~~039~~177			2549,~~937~~003
Long-term debt and capital lease obligations		~~278~~272,~~421~~463			~~291~~281,~~070~~692
Other noncurrent liabilities		1,~~114~~211			1,~~011~~114
Total liabilities		~~308~~313,~~574~~851			~~318~~331,~~018~~809
COMMITMENTS AND CONTINGENCIES (Note 8)
STOCKHOLDER’S EQUITY:
EQUITY:
Class A Common stock, $.01 par value; 1,800 shares authorized, 1,320 shares issued and outstanding as of December 31, 2010 and 2009		—			—
Class A Common stock, $.01 par value; 1,800 shares authorized, 1,320 shares issued and outstanding as of December 31, 2011 and 2010		—			—
Class B Common stock, $.01 par value; 200 shares authorized, 180 shares issued and outstanding as of December 31, 2010 and 2009		—			—
Class B Common stock, $.01 par value; 200 shares authorized, 180 shares issued and outstanding as of December 31, 2011 and 2010		—			—
Additional paid-in capital		2737,~~724~~914			3032,~~657~~522
Accumulated deficit		(221,~~002~~943	)		(516,~~135~~322	)
Total stockholder’s equity		25,722			25,522
Total stockholder’s equity of Jacobs Entertainment, Inc.		15,971			16,200
TOTAL	$	334,296		$	343,540
Noncontrolling interest		—			1,329
Total equity		15,971			17,529
TOTAL	$	329,822		$	349,338

See notes to consolidated financial statements.

F-2

JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, ~~2010~~2011, ~~2009~~2010 and ~~2008~~2009

(Dollars in thousands)

2010

2009(As adjusted,see Note 4)

2008(As adjusted,see Note 4)

2011

2010(As adjusted,see Note 4)

2009(As adjusted,see Note 4)

REVENUES

Gaming:

Casino

~~140~~143,~~265~~895

~~139~~140,~~766~~265

139,~~492~~766

Truck stop

6172,~~463~~388

6270,~~983~~142

6772,~~590~~309

Pari-mutuel

27,~~669~~920

3227,~~276~~669

3832,~~657~~276

Food and beverage

28,~~720~~895

29,~~781~~896

3031,~~736~~447

Convenience store—fuel

85119,~~443~~253

6095,~~659~~480

9770,~~021~~510

Convenience store—other

1114,~~239~~583

1213,~~460~~739

1215,~~908~~146

Hotel

3,~~806~~856

3,~~607~~806

43,~~101~~607

Other

65,~~226~~977

6,~~235~~562

6,~~499~~596

Total revenues

~~364~~416,~~831~~767

~~347~~387,~~767~~559

~~397~~371,~~004~~657

Less: Promotional allowances

(3436,~~907~~822

)

(3435,~~301~~603

)

(3335,~~718~~085

)

Net revenues

~~329~~379,~~924~~945

~~313~~351,~~466~~956

~~363~~336,~~286~~572

COSTS AND EXPENSES

Gaming:

Casino

4849,~~871~~672

4748,~~348~~871

4647,~~809~~348

Truck stop

3742,~~326~~964

3842,~~784~~732

4044,~~990~~590

Pari-mutuel

2122,~~757~~374

2621,~~077~~757

3126,~~172~~077

Food and beverage

1314,~~726~~338

1314,~~521~~846

15,~~417~~085

Convenience store—fuel

80113,~~510~~163

5789,~~139~~871

9066,~~714~~552

Convenience store—other

1419,~~455~~148

1517,~~179~~392

1718,~~222~~214

Hotel

~~799~~790

~~865~~799

~~1,038~~865

Marketing, general and administrative

6365,~~054~~255

6564,~~864~~234

6867,~~931~~102

Unrealized (gain) loss on change in fair value of investment in equity securities

(594

)

309

6,577

Unrealized loss (gain) on change in fair value of investment in equity securities

131

(594

)

309

Goodwill impairment

—

199

Impairment of long-lived assets

10,065

—

Abandonment costs

—

829

Goodwill impairment

—

836

3,064

Depreciation and amortization

21,~~331~~498

2122,~~497~~428

2022,~~124~~538

Total costs and expenses

~~301~~359,~~235~~398

~~286~~323,~~583~~172

~~340~~311,~~022~~744

OPERATING INCOME

2820,~~689~~547

2628,~~883~~784

2324,~~264~~828

Interest income

2421

2625

~~194~~28

Interest expense

(2526,~~580~~163

)

(2526,~~217~~857

)

(2726,~~477~~383

)

NET INCOME (LOSS)

3,133

1,692

(4,019

)

NET (LOSS) INCOME

(5,595

)

1,952

(1,527

)

Net income attributable to the noncontrolling interest

—

(71

)

Net income of subsidiaries attributable to the noncontrolling interest

(26

)

(42

)

(63

)

NET INCOME (LOSS) ATTRIBUTABLE TO JACOBS ENTERTAINMENT, INC.

3,133

1,692

(4,090

)

NET (LOSS) INCOME ATTRIBUTABLE TO JACOBS ENTERTAINMENT, INC.

(5,621

)

1,910

(1,590

)

See notes to consolidated financial statements.

F-3

JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~STOCKHOLDER’S~~ EQUITY

FOR THE YEARS ENDED DECEMBER 31, ~~2010~~2011, ~~2009~~2010 and ~~2008~~2009

(Dollars in thousands)

	Jacobs Entertainment, Inc. Stockholder
	CommonStock*		AdditionalPaid-inCapital			(AccumulatedDeficit)RetainedEarnings			~~AccumulatedOtherComprehensiveIncome (Loss)~~NoncontrollingInterest			~~NoncontrollingInterest~~Total			ComprehensiveIncome (Loss)**			~~Total~~
BALANCES, JANUARY 1, 2008 (As adjusted, see Note 4)	$	—	$	34,753		$	(2,737	)	$	(2,419		$	141		$	—		$	29,738
BALANCES, JANUARY 1, 2009 (As adjusted, see Note 4)	$	—	$	37,732		$	(16,642	)	$	1,486		$	22,576
Distributions				(1,800	)														(1,800	)
Capital contribution				942									942
Comprehensive income (loss):
Distributions				(3,244	)					(46	)		(3,290	)
Change in fair value of equity securities										2,419						2,419			2,419
Acquisition of noncontrolling interest										(212	)		(212	)
Net (loss) income (As adjusted, see Note 4)							(4,090	)					71			(4,019	)		(4,019	)
Net (loss) income ** (As adjusted, see Note 4)							(1,590	)		63			(1,527	)
Total comprehensive loss (As adjusted, see Note 4)															$	(1,600	)
BALANCES, DECEMBER 31, 2009 (As adjusted, see Note 4)	$	—	$	35,430		$	(18,232	)	$	1,291		$	18,489
BALANCES, DECEMBER 31, 2008 (As adjusted, see Note 4)	$	—	$	32,953		$	(6,827	)	$	—		$	212					$	26,338
Capital contributions				892									892
Capital contribution				942															942
Distributions				(3,800	)					(4	)		(3,804	)
Distributions				(3,238	)														(3,238	)
Net income ** (As adjusted, see Note 4)							1,910			42			1,952
Acquisition of noncontrolling interest													(212	)					(212	)
BALANCES, DECEMBER 31, 2010 (As adjusted, see Note 4)	$	—	$	32,522		$	(16,322	)	$	1,329		$	17,529
Net income ** (As adjusted, see Note 4)							1,692												1,692
Capital contributions				22,347									22,347
BALANCES, DECEMBER 31, 2009 (As adjusted, see Note 4)	$	—	$	30,657		$	(5,135	)	$	—		$	—					$	25,522
Distributions				(16,955	)								(16,955	)
Capital contribution				867															867
Acquisitions of noncontrolling interest										(1,355	)		(1,355	)
Distributions				(3,800	)														(3,800	)
Net (loss) income **							(5,621	)		26			(5,595	)
Net income **							3,133												3,133
BALANCES, DECEMBER 31, 2011	$	—	$	37,914		$	(21,943	)	$	—		$	15,971
BALANCES, DECEMBER 31, 2010	$	—	$	27,724		$	(2,002	)	$	—		$	—					$	25,722

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

** For the years ended December 31, 2011, 2010 and 2009, comprehensive income (loss) is equal to net income ~~and is entirely attributable to the Jacobs Entertainment, Inc~~(loss). ~~stockholder.~~

See notes to consolidated financial statements.

F-4

JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, ~~2010~~2011, ~~2009~~2010 and ~~2008~~2009

(Dollars in thousands)

	2010			2009(Asadjusted,see Note 4)			2008(Asadjusted,see Note 4)
	2011			2010(Asadjusted,see Note 4)			2009(Asadjusted,see Note 4)
OPERATING ACTIVITIES:
Net income (loss)	$	3,133		$	1,692		$	(4,019	)
Net (loss) income	$	(5,595	)	$	1,952		$	(1,527	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		21,~~331~~498			2122,~~497~~428			2022,~~124~~538
Goodwill impairment		—			—			199
Impairment of long-lived assets		10,065			—			—
Unrealized (gain) loss on change in fair value of investment in equity securities		(594	)		309			6,577
Goodwill impairment		—			836			3,064
Loss on sale of equipment		22			203			240
Unrealized loss (gain) on change in fair value of investment in equity securities		131			(594	)		309
Deferred financing cost amortization		2,179			1,655			1,481
Loss on sale of equipment		46			25			213
Noncash abandonment costs		—			—			782
Deferred financing cost amortization		2,190			2,179			1,668
Other		6—			96			~~(75~~9	)
Changes in operating assets and liabilities, net of acquisitions:
Restricted cash		~~(90~~14	)		~~302~~(90	)		~~(25~~302	)
Accounts receivable, net		20(125	)		2814			~~580~~(102	)
Inventory		~~(390~~41	)		(~~125~~427	)		(93162	)
Prepaid expenses and other assets		(409	)		103			74
Other assets		(274	)		(413	)		121
Accounts payable		~~1,851~~(684	)		(1,~~860~~602	)		2(1,~~682~~712	)
Accrued expenses and other noncurrent liabilities		~~458~~2,389			~~(1,860~~422	)		(21,~~515~~960	)
Due from/to affiliates		(~~341~~345	)		(7142	)		~~(393~~302	)
Net cash provided by operating activities		2729,~~176~~351			2128,~~946~~082			2523,~~619~~063
INVESTING ACTIVITIES:
Additions to property, plant and equipment		(1112,~~568~~225	)		(1611,~~104~~752	)		(1716,~~208~~430	)
Proceeds from sale of equipment		~~338~~145			~~389~~338			~~370~~389
Purchase of device rights		(755	)		(967	)		(900	)
Purchases of device rights		(1,756	)		(901	)		(1,124	)
Acquisition of noncontrolling interest		—			~~(212~~—	)		—(212	)
Net cash used in investing activities		(1113,~~985~~836	)		(1612,~~894~~315	)		(17,~~738~~377	)
FINANCING ACTIVITIES:
Payments to obtain financing		~~(1,500~~—	)		(~~555~~1,500	)		—(555	)
Proceeds from revolving line of credit		24,000			29,463			20,038
Proceeds from issuance of debt		800			—			—
Payments on long-term debt		(2,362	)		(1,398	)		(1,735	)
Proceeds from revolving line of credit		40,800			24,000			29,463
Payments on revolving line of credit		(31,500	)		(27,000	)		(27,000	)
Payments on long-term debt		(1,472	)		(2,914	)		(1,957	)
Distributions to stockholder		(3,800	)		(3,238	)		(1,800	)
Payments on revolving line of credit		(37,400	)		(31,500	)		(27,000	)
Net cash used in financing activities		(15,162	)		(2,728	)		(10,497	)
Acquisition of noncontrolling interest		(2,107	)		—			—
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		29			2,324			(2,616	)
Contribution from stockholder		—			25			—
CASH AND CASH EQUIVALENTS—Beginning of year		24,205			21,881			24,497
Distributions to stockholder		(15,614	)		(3,804	)		(3,290	)
CASH AND CASH EQUIVALENTS—End of year	$	24,234		$	24,205		$	21,881
Net cash used in financing activities		(14,993	)		(15,693	)		(3,339	)
NET INCREASE IN CASH AND CASH EQUIVALENTS		522			74			2,347
CASH AND CASH EQUIVALENTS—Beginning of year		24,705			24,631			22,284
CASH AND CASH EQUIVALENTS—End of year	$	25,227		$	24,705		$	24,631
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	23,~~455~~530		$	2324,~~643~~491		$	2624,~~198~~743
Non-cash investing and financing activities:
Capital contribution exchanged for retirement of liabilities paid by affiliate	$	867		$	942		$	—
Capital contributions for liabilities paid by affiliate in connection with acquisitions (see Note 4)	$	22,347		$	867		$	942
Non-cash additions to property	$	1,518		$	1,193		$	988
Capital distributions for assets retained by affiliate in connection with acquisitions (see Note 4)	$	1,341		$	—		$	—
Non-cash additions to property	$	1,936		$	1,518		$	1,193
Acquisition of property under note payable agreement	$	—		$	120		$	—

See notes to consolidated financial statements.

F-5

JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, ~~2010~~2011 and ~~2009~~2010, AND FOR THE

YEARS ENDED DECEMBER 31, ~~2010~~2011, ~~2009~~2010 and ~~2008~~2009

(Dollars in thousands)

1.	BUSINESS AND ORGANIZATION

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

As of March 2930, ~~2010~~2012, we own and operate five casinos through wholly-owned subsidiaries. Our casinos include The Lodge Casino at Black Hawk (“The Lodge”) and the Gilpin Hotel Casino (“Gilpin”), both in Black Hawk, Colorado, the Gold Dust West ~~Casino~~in Reno, Nevada (“Gold Dust West-Reno”) ~~in Reno~~, ~~Nevada,~~ the Gold Dust West- in Carson City, Nevada (“Gold Dust West-Carson City”) ~~in Carson City, Nevada~~ and the Gold Dust West-Elko in Elko, Nevada (“Gold Dust West-Elko”) ~~in Elko, Nevada~~. JEI also owns and operates 2021 ~~truck plaza~~ video ~~gaming~~poker ~~facilities~~truck stops in Louisiana, which are collectively referred to as “~~Jalou,” “~~truck stops~~” or “truck plazas~~.” We also receive a percentage of gaming revenue from an additional ~~truck~~video ~~plaza~~poker ~~video~~truck ~~gaming facility~~stop. Finally, JEI owns and operates a horse racing track with ten satellite wagering facilities (one of which is temporarily closed) in Virginia through a wholly-owned subsidiary, Colonial Holdings, Inc. (“Colonial”).

OnDuring ~~April 1~~2011, ~~2008,~~ we ~~acquired~~completed aseveral ~~business and its~~ related ~~assets~~party ~~referred~~acquisitions towhich as “Lot D” based in what we call the Nautica Properties area in Cleveland, Ohio. The company that owned this business was wholly owned by our CEO. On January 21, 2009, we acquired a second Nautica Properties based business and its related assets referred to as “Sugar Warehouse” from a limited partnership controlled by our CEO. On August 16, 2010, we acquired a third Nautica Properties based business and its related assets referred to as “Flats.” Flats was controlled by the mother and sister of our CEO. The acquisition of these three businesses were ~~each~~ accounted for as combinations of entities under common control. ~~Our 2009 and 2008 financial statements were previously retroactively adjusted to include the operations of the Lot D and Sugar Warehouse~~ ~~acquisitions from January 1~~Accordingly, ~~2008~~the ~~to their respective acquisition dates. The~~ accompanying consolidated financial statements have ~~also~~ been retroactively adjusted to include the operations of ~~Flats~~these businesses from January 1, ~~2008~~2009. See Note 4.

2.	SIGNIFICANT ACCOUNTING POLICIES

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

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

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

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

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

F-6

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

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


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

Costs of major improvements are capitalized, while costs of normal repairs and maintenance are charged to expense as incurred. Gains or losses on disposal of assets are recognized as incurred. Depreciation expense recorded for the years ended December 31, 2011, 2010 and 2009 was $19,977, $20,661 and $20,276, respectively.

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

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

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

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

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

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

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

F-7

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

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

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

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

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

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

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

	Years Ended December 31
	2010		2009		2008
	2011		2010		2009
Casino operations	$	1314,~~978~~587	$	1413,~~100~~978	$	1314,~~686~~100
Truck stop operations		2,176		2,265		2,243
Video poker truck stop operations		2,542		2,410		2,421
Convenience store operations		~~413~~404		~~267~~453		~~463~~274

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

Long-Lived Assets—We periodically evaluate our long-lived assets, including property, plant and equipment and identifiable intangibles, for potential impairment. If an impairment is indicated, such impaired assets are written down to their estimated fair value. For the years ended December 31, ~~2010~~2011, ~~2009~~2010 and ~~2008~~ 2009, we determined that there was no impairment of our long-lived assets other than those discussed in Notes 3 and 1211.

During 2011 and 2010, based on operating results, we were required, pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360, Property, Plant and Equipment, to assess our ability to recover the recorded cost of the Gold Dust West-Carson City and Virginia long-lived assets. We prepared a cash flow analysis based on management’s best ~~estimate~~estimates in an effort to assess the likelihood of recovering the cost of these assets. Based on these projections and the related underlying assumptions for Gold Dust West-Carson City, as well as our knowledge of the Carson City ~~and Virginia markets~~market, we believe that we will not be able to fully recover the carrying cost of these assets, and notherefore, ~~impairment~~Gold ~~currently~~Dust ~~exists.~~West-Carson ~~However,~~City ~~future~~recorded ~~events~~an ~~such~~impairment asof ~~actual~~long-lived ~~performance~~assets ~~versus~~totaling ~~projected performance~~$10,065 ~~continued~~in ~~market~~2011. ~~decline,~~Based ~~increased~~on ~~and/or changing~~the ~~competitive~~cash ~~forces,~~flow orprojections ~~other unforeseen events could change our estimates~~ and ~~cause us to recognize an impairment in~~ the ~~carrying~~related ~~value~~underlying ofassumptions ~~the~~for ~~Gold-Dust West-Carson City or~~ Virginia, ~~long-lived~~as ~~assets~~well inas ~~future periods. Such an impairment could be material to~~ our ~~financial~~knowledge ~~position and results~~ of ~~operations.~~the Virginia

F-8

market, we believe that we will be able to recover the carrying cost of these assets and no impairment currently exists. However, future events such as actual performance versus projected performance, continued market decline, increased and/or changing competitive forces, or other unforeseen events could change our estimates and cause us to recognize an additional impairment in the carrying value of the Gold-Dust West-Carson City or Virginia long-lived assets in future periods. Such an impairment could be material to our financial position and results of operations.

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

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

~~Furthermore,~~New weAccounting ~~have~~Guidance—In ~~determined~~December ~~that~~2010, the ~~policies~~FASB ~~associated~~issued Accounting ~~with~~Standards ~~our~~Update ~~long~~No. 2010-~~lived assets~~29, ~~goodwill~~Business ~~and~~Combinations: ~~identifiable~~Disclosure ~~intangible assets, and related estimates are critical to the preparation~~ of ~~our consolidated~~Supplementary ~~financial~~Pro ~~statements.~~Forma WeInformation ~~have~~for aBusiness ~~significant~~Combinations ~~investment~~(“ASU ~~in long~~2010-~~lived~~29”), ~~property~~which ~~and~~provides ~~equipment.~~amendments ~~We estimate that the undiscounted future cash flows expected~~ to ~~result~~FASB ~~from~~ASC ~~the~~Topic ~~use~~805, ofBusiness Combinations. The ~~these~~objective ~~assets exceeds the current carrying value~~ of ~~these assets.~~ASU ~~Any~~2010-29 ~~adverse~~is ~~change~~ to ~~the~~clarify ~~estimate~~and ofexpand ~~these~~the ~~undiscounted~~pro ~~cash~~forma ~~flows~~revenue ~~could~~and ~~necessitate~~earnings andisclosure ~~impairment~~requirements ~~charge~~for ~~that~~business ~~would adversely affect operating results~~combinations. ASU We2010-29 ~~estimate~~was ~~the~~effective ~~useful lives~~ for ~~our~~fiscal ~~assets~~years ~~based~~beginning onafter ~~historical experience~~December 15, ~~estimates~~ of2010. We ~~assets’~~adopted ~~commercial~~ASU ~~lives,~~2010-29 ~~and~~effective ~~the~~January 1, ~~likelihood~~2011, ofwhich ~~obsolescence.~~did ~~Should~~not ~~the~~have ~~actual useful life of~~ a ~~class~~material ofimpact ~~assets~~on ~~differ~~our ~~from~~consolidated ~~the~~financial ~~estimated useful life, we would record an impairment charge~~statements.

New ~~Accounting Guidance—New~~ authoritative accounting guidance under FASB ASC Topic ~~810~~924, ~~Consolidation~~Entertainment-Casinos (“ASC Topic ~~810~~924”), ~~amended~~clarified existing ~~accounting~~ literature tothat ~~require~~ an ~~enterprise~~entity toshould ~~perform~~accrue anjackpot ~~analysis~~liabilities and charge to ~~determine~~revenues ~~whether~~when ~~any~~an ~~variable~~entity ~~interest~~has ~~held~~the ~~gives~~obligation itto apay ~~controlling~~the ~~financial~~jackpot ~~interest~~(or in a ~~variable~~portion ~~interest~~thereof ~~entity~~as ~~and requires an ongoing reassessment of this nature~~applicable). ~~The~~This ~~standard~~guidance ~~also~~applies ~~requires~~to ~~enhanced~~both ~~disclosures~~base ~~that~~jackpots ~~will~~and ~~provide~~the ~~more~~incremental ~~transparent~~portion ~~information~~of ~~about~~progressive ~~an entity’s involvement in a variable interest entity~~jackpots. The standard was effective for us on January 1, ~~2010~~2011. The adoption of this standard did not have a material impact on our consolidated financial statements.

~~New~~In ~~authoritative accounting~~May ~~guidance~~2011, ~~under~~the FASB ~~ASC~~issued ~~Topic~~new ~~924,~~fair ~~Entertainment-Casinos~~value ~~(“ASC~~measurement ~~Topic~~authoritative ~~924”)~~guidance ~~clarified existing literature~~ that anclarifies ~~entity~~the ~~should~~application ~~accrue~~of ~~jackpot~~fair ~~liabilities~~value measurement and ~~charge~~disclosure torequirements ~~revenues~~and ~~when~~changes anparticular ~~entity~~principles ~~has the obligation to pay the jackpot (~~or arequirements ~~portion~~for ~~thereof~~measuring asfair ~~applicable)~~value. This guidance ~~applies~~is toeffective ~~both~~for ~~base~~interim ~~jackpots~~ and ~~the~~annual ~~incremental~~periods ~~portion~~beginning ofafter ~~progressive~~December 15, ~~jackpots~~2011. We ~~The~~are ~~standard~~currently ~~was~~evaluating ~~effective~~the provisions ~~for~~of usthis onguidance ~~January 1,~~and ~~2011.~~assessing ~~The~~the ~~adoption~~impact, ofif ~~this~~any, ~~standard~~it ~~did~~may ~~not~~ have ~~a material impact~~ on our ~~consolidated~~fair ~~financial~~value ~~statements~~disclosures.

3In June 2011, the FASB issued new authoritative guidance that states an entity that reports items of other comprehensive income has the option to present the components of net income and comprehensive income in either one continuous financial statement, or two consecutive financial statements. ~~GOODWILL~~This ~~AND~~guidance ~~IDENTIFIABLE~~is ~~INTANGIBLE~~effective ~~ASSETS~~for interim and annual periods beginning after December 15, 2011. The adoption of this guidance would only impact our consolidated financial statements if we have components of comprehensive income besides net income (loss) in the future.

WeIn ~~test goodwill for impairment as of~~ September 30 ~~each~~2011, ~~year or when circumstances indicate it is necessary. Testing compares~~ the ~~estimated~~FASB ~~fair~~issued ~~values~~Accounting ofStandards ~~our reporting units to the reporting~~Update ~~units’ carrying value~~No. ~~We consider a variety of factors when estimating the fair value of our reporting units~~ 2011-08, ~~including~~Intangibles ~~estimates~~– ~~about~~Goodwill ~~the~~and ~~future~~Other: ~~operating~~Testing ~~results~~Goodwill offor ~~each~~Impairment ~~reporting~~(“ASU ~~unit~~2011-08”), ~~multiples~~which ofprovides ~~EBITDA~~amendments ~~(earnings~~to ~~before~~FASB ~~interest,~~ASC ~~income taxes,~~Topic ~~depreciation and amortization)~~350, ~~investment~~Intangibles ~~banker~~– ~~market~~Goodwill ~~analyses,~~ and ~~recent~~Other. The ~~sales~~objective of ~~comparable~~ASU 2011-08 ~~business~~is ~~units~~to ifsimplify ~~such~~how ~~information~~entities istest ~~available~~goodwill tofor usimpairment. The Aamendment ~~variety~~provides ofan ~~estimates~~entity ~~and~~with ~~judgments about~~ the ~~relevance~~option ~~and~~to ~~comparability~~first ofassess ~~these~~ qualitative factors to ~~the~~evaluate ~~reporting~~whether ~~units~~it ~~are~~is ~~made.~~more Aslikely ofthan ~~September 30,~~not ~~2010 and 2009, we determined~~ that ~~goodwill was not impaired at any of our reporting units. However, as of September 30, 2008, we determined~~ the ~~carrying~~fair value of ~~the~~a ~~goodwill in our Gold Dust West-Carson City~~ reporting unit ~~was~~is less ~~impaired.~~than ~~Market~~its ~~conditions~~carrying inamount ~~2008~~as ~~resulted~~a inbasis ~~Gold~~for ~~Dust~~determining ~~West-Carson~~whether ~~City~~it ~~not~~is ~~meeting~~necessary ~~the~~to ~~financial~~perform ~~performance~~the ~~expectations~~two-step ~~originally~~goodwill ~~forecast~~impairment attest ~~the~~described ~~time~~in ofASC ~~acquisition~~Topic 350. ASU ~~Consequently,~~2011-08 ~~Gold~~is ~~Dust West-Carson~~effective ~~City~~for ~~recorded~~interim aand annual goodwill impairment ~~charge~~tests ofperformed for ~~$199~~fiscal ~~during~~years ~~the~~beginning ~~year~~after ~~ended~~ December 3115, ~~2008~~2011. We Asare acurrently ~~result~~evaluating of the ~~impairment~~provisions ~~charge,~~of ~~the~~this ~~carrying~~guidance ~~amount~~and ofassessing the ~~Gold~~impact, ~~Dust~~if ~~West-Carson~~any, ~~City~~it ~~goodwill~~may ~~was~~have ~~reduced~~on toour ~~zero. There has been no change in the carrying amount of~~ goodwill ~~during~~impairment ~~2010 and 2009~~test.

F-9

In3. ~~addition,~~GOODWILL weAND ~~have~~IDENTIFIABLE ~~reassessed~~INTANGIBLE ~~the useful lives of our identifiable intangible assets without any change to the previously established amortization periods of such assets.~~ ASSETS

~~Identifiable~~We ~~intangible~~test ~~assets~~goodwill for impairment as of September 30 each year or when circumstances indicate it is necessary. ~~December~~Testing compares the estimated fair values of our reporting units to the reporting units’ carrying values. We consider a variety of factors when estimating the fair value of our reporting units, including estimates about the future operating results of each reporting unit, multiples of EBITDA (earnings before interest, income taxes, depreciation and amortization), investment banker market analyses, and recent sales of comparable business units, if such information is available to us. A variety of estimates and judgments about the relevance and comparability of these factors to the reporting units are made. As of September 3130, 2011, we believe the carrying value of the goodwill held in our reporting units was not impaired. However, as of September 30, 2010 and 2009, ~~consist~~prior to our acquisition from a related party (see Note 4), we determined the carrying value of the ~~following:~~goodwill at one of our video poker truck stops was impaired. Consequently, we recorded goodwill impairment charges of $836 and $3,064 during the years ended December 31, 2010 and 2009, respectively. There have been no circumstances subsequently to indicate any additional impairment testing is required.

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

The changes in the carrying amount of goodwill for the years ended December 31, 2011 and 2010 are as follows:

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


	2011		2010
Balance as of beginning of year	$	48,728	$	49,564
Goodwill impairment during the year		—		(836	)

Balance as of end of year	$	48,728	$	48,728

~~Estimated~~In ~~amortization~~addition, ~~expense~~as ~~for~~of September 30, 2011, we have reassessed the ~~years~~useful ~~ending~~lives of our identifiable ~~December 31~~intangible ~~(in~~assets ~~thousands):~~without any change to the previously established amortization periods of such assets.

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

Identifiable intangible assets as of December 31, 2011 and 2010 consist of the following:

4. RECENT ACQUISITION ACTIVITY


	Weighted Average Remaining Life		2011						2010
	Weighted Average Remaining Life		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortizable intangible assets:
Revenue rights		40.00	$	6,000	$	1,200	$	4,800	$	6,000	$	1,080	$	4,920
Device use rights		2.26		12,161		8,787		3,374		10,987		8,047		2,940
Restriction agreements		4.77		743		408		335		743		329		414

Total			$	18,904	$	10,395	$	8,509	$	17,730	$	9,456

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