10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

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

For the fiscal year ended December 31, 2005

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

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

Yes   o   No   ý

Indicate by check mark if the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Act.

Yes   o   No   ý

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   ý   No   o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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. ý

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

Large accelerated filer o Accelerated filer o Non-accelerated filer ý

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

Yes   o   No   ý

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; all of its outstanding shares of common stock are held by two persons.

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 15, 2006
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:  None

See the exhibit index which appears on page E-1.

JACOBS ENTERTAINMENT, INC.

2005 ANNUAL REPORT ON FORM 10-K

Table of Contents

Item	Description
Item 1.	Business
Item 1A.	Risk Factors
Item 1B.	Unresolved Staff Comments
Item 2.	Properties
Item 3.	Legal Proceedings
Item 4.	Submission of Matters to a Vote of Security Holders
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6.	Selected Financial Data
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.	Quantitative and Qualitative Disclosure about Market Risk
Item 8.	Financial Statements and Supplementary Data
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A.	Controls and Procedures
Item 9B.	Other Information
Item 10.	Directors and Executive Officers of the Registrant
Item 11.	Executive Compensation
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13.	Certain Relationships and Related Transactions
Item 14.	Principal Accounting Fees and Services
Item 15.	Exhibits and Financial Statement Schedules

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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 position. These statements may be identified by the use of forward-looking terminology such as “believes,” “estimates, “expects, “intends,” “may,” “will,” “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 and truck plaza properties; and

•expectation of the continued 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. Some of 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 health 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.

•We may not be able to successfully integrate the operations of recent, proposed and future acquisitions into our business.

•We may experience a loss of market share due to intense competition.

•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 be adversely affected due to the adoption of anti-smoking regulations.

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

•Members of our board of directors own beneficially 100% of Jacobs Entertainment, Inc. and could have interests that conflict with yours.

•We rely on the maintenance of agreements with Colonial’s horsemen.

•Our business relies heavily on certain markets and an economic downturn in these markets could have a material adverse effect on our results.

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.

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NON-GAAP FINANCIAL MEASURES

Consolidated 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. Consolidated 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.

Consolidated EBITDA consists of net income (loss) plus depreciation and amortization, interest expense, net of capitalized interest, and taxes. Consolidated EBITDA is presented because it is used 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 which present EBITDA when reporting their results.

We use EBITDA, subject to certain adjustments, as a measure in debt covenants in our debt agreements. Our present indenture uses 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 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 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 significant interest expense, or 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.

Because of these limitations, Consolidated 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 generally accepted accounting principles’ results and using Consolidated 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, and we make no representations as to the accuracy of such estimates.

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PART I

Item 1.Business

Introduction

Jacobs Entertainment, Inc. (“Jacobs Entertainment”) was formed as a Delaware corporation on April 17, 2001. We are a geographically diversified gaming and pari-mutuel wagering company with properties in Colorado, Louisiana, Nevada and Virginia. We own and operate three casinos, 11 truck plaza video gaming facilities (one is leased) and a horseracing track with nine satellite wagering facilities (four are leased). In addition, we are a party to an agreement that entitles us to a portion of the gaming revenue from an additional truck plaza video gaming facility.

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, 2005, our net revenues and EBITDA were approximately $233.9 million and $28.9 million, respectively. See Note 14 to our consolidated financial statements for information concerning the operational performance of the segments of our business.

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

			As of December 31, 2005			Year Ended December 31, 2005
Property	Location	Facility Type	Approximate Gaming Square Footage	Gaming Machines	Table Games	Percentage of Gaming Revenue from Machines		Property Level EBITDA (1)
								(in thousands)
The Lodge Casino	Black Hawk, Colorado	Land-based casino	25,000	900	30	91	%	$	21,262
Gilpin Hotel Casino	Black Hawk, Colorado	Land-based casino	16,000	480	16	99		4,489
Gold Dust West Casino	Reno, Nevada	Land-based casino	17,500	500	0	100		6,103
Louisiana Truck Plazas	Louisiana (various locations)	Video gaming	9,000	570	0	100		15,733
Colonial Downs Racetrack and satellite wagering facilities	Virginia (various locations)	Horse racing and pari-mutuel wagering	N/A	N/A	N/A	N/A		(11,026		)
Total			67,500	2,450	46			$	36,561

(1)Property Level EBITDA excludes corporate overhead expense of $7,646 million in the aggregate for all of our properties and income tax expense of $423.

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

				Depreciation						Income
				and		Interest		Interest		Tax		Net Income
Year ended December 31, 2005	EBITDA(1)			Amortization		Income		Expense		Expense		(Loss)
The Lodge Casino	$	21,262		$	3,372	$	32	$	8,342	$	—	$	9,580
Gilpin Hotel Casino	4,489			1,645		12		2,592		—		264
Gold Dust West	6,103			1,691		15		3,141		—		1,286
Louisiana Truck Plazas	15,733			2,387		20		2,794		—		10,572
Colonial Downs	(11,026		)	1,685		86		322		—		(12,947		)
Total Property Level EBITDA	36,561			10,780		165		17,191				8,755
Corporate overhead	(7,646		)	225		7		5,213		423		(13,500		)
Total	$	28,915		$	11,005	$	172	$	22,404	$	423	$	(4,745	)

Business Strategy and Competitive Strengths

Our business strategy is to create a broad, geographically diversified base of gaming and pari-mutuel wagering properties that provide our customers with high quality experiences that build significant customer loyalty. We focus on attracting and fostering repeat business from local gaming patrons at our casino, truck plaza video gaming and pari-mutuel wagering facilities. Our local patrons are typically experienced gaming customers who seek convenient locations, high payouts, and a pleasant atmosphere.

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We believe that there are opportunities for growth and operational efficiencies in the markets in which we operate. Black Hawk, Colorado, was one of the fastest growing gaming markets in the country, having experienced a 26.3% compound annual growth in gaming revenue, from 1998 through 2000. Revenues in 2001 through 2003 stabilized at approximately $500 million annually and rose to $524 million in 2004 and to $535 million in 2005. We believe that our two Black Hawk properties will continue to be competitive, and in 2003 we renovated our Gilpin Hotel Casino property in Black Hawk to enhance our competitive position. In 2005, we entered into an agreement to acquire an operating casino in Carson City, Nevada, and we entered into a land and building lease to develop a casino in Elko, Nevada. We have identified, evaluated and continue to consider several other potential small casino opportunities in Nevada. In the last three years, we acquired five additional Louisiana truck plaza video gaming facilities and we believe that there are other truck plaza video gaming properties that may be available for acquisition. In November 2003 and 2004, referendums were passed in four localities in Virginia that allowed us to expand our off-track wagering facilities from four to nine such facilities in the last two years. In addition, we may acquire or develop additional gaming properties in different jurisdictions catering to local gaming patrons in the future, further expanding our geographic diversity.

Our strategy for our casino and video gaming operations is to continue to provide our customers with a user-friendly gaming environment featuring convenient locations, ample parking, good food at affordable prices and promotional incentives that reward frequent play. Our strategy for our horse racing operations is to be a competitive participant in the industry by 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.

Broad Geographic and Asset Diversification. We own and operate three land-based casinos, 11 truck plaza video gaming facilities and a horse racing track with nine off-track wagering facilities (of which four are leased), in four states. In addition, we are party to agreements that entitle us to a portion of the gaming revenue from an additional truck plaza video gaming facility. 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.

Significant Barriers to Entry. There are significant regulatory and other barriers to entry in each of the markets in which we operate. In Black Hawk, Colorado, these barriers include the limited availability of space in 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 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, the barriers to entry include restrictions that require truck plaza video gaming facilities 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. These restrictions also prohibit the operation of more than 50 video gaming machines at any location and require truck plaza video gaming facilities to be located only in those parishes that voted to continue video gaming during a one-time statewide referendum in 1996. 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. An unlimited racetrack owner’s and operator’s license is required in order to have off-track wagering facilities. Off-track wagering facilities can only be opened in the current jurisdictions in which we operate plus one other county without passage of additional referendums.

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, our wholly owned subsidiary, since March 1997. Stephen R. Roark, our Chief Financial Officer and President of Casino Operations, has been Black Hawk Gaming’s President since September 1995 and its Chief Financial Officer since 1993. Ian M. Stewart, our President of Pari-Mutuel Wagering and

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Video Poker Operations, has been President of Colonial since November 1998 and its Chief Financial Officer since June 1997. Michael Shubic, our Regional Vice-President of Casino Operations, has over 30 years of experience in the gaming industry. The three general managers of our casinos, who have a combined total of over 60 years of casino management experience, report directly to Mr. Shubic. Stan Guidroz is Vice President of Operations and oversees our truck plaza video gaming operations and has over 12 years of experience in the truck plaza video gaming business. Mr. Guidroz reports directly to Mr. Shubic. Further, Mr. Guidroz is supported by Reid Smith, John Jurewicz and J. Richard Gottardi, who oversee the day-to-day operations of our truck plaza video gaming operations and who have over 25 years of combined experience in the gaming industry. 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 21 casinos located in the gaming district of Black Hawk. The Lodge services 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. We believe that most of The Lodge’s customers are primarily day trip patrons who reside in the greater Denver metropolitan area. As of December 31, 2005, the Black Hawk market had approximately 9,700 gaming devices (slot machines, blackjack and poker tables) generating approximately $535 million in revenues for the year then ended. We are one of the largest gaming facilities in the market.

The Lodge is located on a 2.5 acre site that abuts State Highway 119, with approximately 25,000 square feet of gaming space on two floors containing 900slot machines and 30 table games, 50 hotel rooms, three restaurants, four bars and on-site parking for 600 vehicles. Our property includes The White Buffalo Grille, an upscale dining facility and a buffet that was completely remodeled in 2002 at a cost of $1 million. Black Hawk has no significant lodging facilities other than our facility and the Isle of Capri, which has a 397-room hotel at its Black Hawk casino. Another competitor has announced plans to construct a 537-room hotel directly across from our Lodge casino, which is expected to be completed in the spring of 2007.

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.

The Gilpin Hotel Casino—Black Hawk, Colorado. The Gilpin Hotel Casino, which commenced operations in October 1992, is a 37,000 square foot facility 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. We were one of the first casinos opened in Colorado following the legalization of casino gaming in 1991. We offer 480 slot machines,  a restaurant and two bars. We also offer slot club, busing and other promotional programs, and have available to our customers 200 surface parking spots in the heart of historic Black Hawk.

We commenced a remodeling and expansion of the Gilpin Hotel Casino in the third quarter of 2002 to place all gaming operations on a single floor and to upgrade and renovate the overall structure. These improvements cost approximately $7.8 million and were completed in June 2003. Although we experienced construction and other disruptions that adversely affected our business during the remodeling period, we believe these renovations have enhanced the Gilpin Hotel Casino’s competitiveness in the Black Hawk market. Further, in November 2004, we began a renovation of the third floor of the Gilpin Hotel Casino, which was completed in March 2005 at an approximate cost of $1.8 million. This addition, called the Gilpin Poker Room, initially added 16 live action poker tables with the space to add an additional 4 tables.

The Gold Dust West Casino—Reno, Nevada. The Gold Dust West Casino, located on 4.6 acres in Reno’s central downtown gaming district, has been operating since 1978. The casino caters to residents of Reno and surrounding areas and has about 17,500 square feet of gaming space, currently accommodating 500 slot machines. We offer the Wildwood Restaurant, a 6,600 square foot dining facility, 40 motel rooms, and surface parking for 300 vehicles. In December 2005, the Company recorded an abandonment charge of $1,424 representing the net book value of a stand-alone portion of the Gold Dust West's motel building (the “L-wing”) containing 66 of the previous 106 motel rooms. After considering alternative plans for this stand-alone portion of the motel, including a possible refurbish, it was decided that the property would be better served with improved access and expanded parking. The Company began demolition of the L-wing during the first quarter of 2006 and expects to complete the project late in the second quarter at an estimated total cost of $1.4 million. The Company expects to add approximately 75 parking spaces as a result of the demolition. The Company will continue to operate the remaining 40 hotel rooms. We implemented a slot player tracking system in September 2001, which has facilitated improvement of the casino’s operating results. During 2002, we made several improvements to the property including a significant remodeling of the Wildwood kitchen and serving line, the addition of outdoor signage, and general landscaping improvements. The Reno/Sparks, Nevada, market area

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generated approximately $1.0 billion of gaming revenues during each of the years ended December 31, 2003, 2004 and 2005. There were 25 casinos in the Reno/Sparks market area at December 31, 2005.

Louisiana Gaming Properties. Our truck plaza properties consist of 11 truck plaza video gaming facilities located in Louisiana and we share in the gaming revenues from an additional Louisiana truck plaza gaming facility. Our properties include the Houma Truck Plaza and Casino (a leased property) in Houma; Winner’s Choice Casino in Sulphur; Lucky Magnolia Truck Stop and Casino in St. Helena Parish; Bayou Vista Truck Plaza and Casino in Bayou Vista; Colonel’s Truck Plaza and Casino in Thibodaux; Raceland Truck Plaza and Casino in Raceland; Breaux Bridge in St. Martin Parish; Eunice in St. Landry Parish; Jefferson in Jefferson Parish (a leased property); Fuel Stop 36 in Lake Charles; and Larose Truck Plaza and Casino in Lockport. We acquired Fuel Stop 36 and the Larose Truck Plaza in December 2005. We are also party to an agreement that entitles us to a portion of the gaming revenues from Cash’s Truck Plaza and Casino in Lobdell. Each truck plaza features a convenience store, fueling operations, a restaurant operating not fewer than 12 hours per day, and 50 video poker devices (except for Lucky Magnolia Truck Stop and Casino and Larose Truck Plaza, which have 40 devices, and Fuel Stop 36, which has 39 devices).

The Louisiana video gaming industry consists of video gaming in 31 of Louisiana’s 64 parishes. The industry is highly regulated and video gaming machines can only be placed in qualifying bars, restaurants, hotels, satellite wagering facilities and truck plazas. In order to qualify for video gaming, a truck plaza must offer diesel fuel, gasoline, a convenience store, a restaurant and a place for truck drivers to shower and sleep. Our video gaming machines are located in a separate gaming room that is designed to provide a pleasant casino-like atmosphere. As of December 31, 2005, Louisiana had 153 licensed truck plazas.

The Louisiana truck plaza video gaming market caters primarily to local residents, whom we believe contribute to the vast majority of truck plaza gaming revenue. We believe that most of our video gaming 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 two simulcast television amphitheaters, two covered patio-seating areas, four bars, a large concession food court, gift shop, 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 2005, we added outdoor seating for additional patrons along the track’s homestretch in an area called “the Green.”

The one and one-quarter mile dirt track is one of the largest tracks in the United States and its 180-foot wide turf track is the widest turf track in North America. These unique configurations have attracted and are expected to continue to attract quality horses to the track. The track is known as a major turf racing center in the Mid-Atlantic region. Colonial Downs has conducted approximately 67% of its thoroughbred races over the turf course in 2005. Colonial Downs is developing the Virginia Derby, a turf race for three-year old thoroughbreds, into the marquee event of the thoroughbred meet. In 2005, the Virginia Derby was a Grade III stakes race.

In 2005, Colonial Downs created a new stakes race — the Colonial Turf Cup — which together with the Virginia Derby forms the first two legs of the Grand Slam of Grass^TM. The Grand Slam of Grass^TM consists of four races including the two races at Colonial Downs, the Secretariat to be held at Arlington Park, and the John Deere Breeders’ Cup Turf at Churchill Downs Park. Jacobs Investments, an affiliate of ours, had guaranteed $5 million to any horse that swept the series. Our horse swept the series. We had purchased an insurance policy to cover the potential estimated $2.4 million payable by us. The participating racetracks would have been responsible to pay $2.6 million.

Satellite Wagering Facilities, Virginia. In addition to our racetrack facility, we operate nine satellite wagering facilities in Virginia. These facilities provide simulcast pari-mutuel wagering on thoroughbred and harness racing from our racetrack and selected other racetracks throughout the United States. Our satellite wagering facilities are located in Brunswick County, two in Chesapeake, Hampton, Martinsville, Scott County, Vinton, and two in Richmond. These facilities employ state-of-the-art audio/video technology for receiving quality import simulcast thoroughbred and harness racing from nationally known racetracks.

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The facilities are structured to accommodate the needs of various patrons, from the seasoned handicapper to the novice wagerer, and provide patrons with a comfortable, upscale environment including a full bar and a range of restaurant services. In addition, self-serve automated wagering equipment is available to patrons in order to make wagering more user-friendly to the novice and more efficient for the expert. This equipment, with touch-screen interactive terminals and personalized portable wagering terminals, provides patrons with current odds information and enables them to place wagers and credit winning tickets to their accounts without waiting in line.

In 2003, 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. On April 28, 2004, the Virginia Racing Commission granted Colonial a license to accept wagers over the telephone or through the internet via its advanced deposit wagering system. The advanced deposit wagering system became fully operational late in the third quarter of 2004. In addition, Colonial has entered into agreements with other licensed account wagering providers in Virginia. Pursuant to these agreements, Colonial receives a share of source market fees for wagers placed by Virginians through these account wagering service providers. In 2004, the legislature of the Commonwealth of Virginia passed a statute, signed by the governor of Virginia, authorizing up to ten satellite wagering facilities in localities that approved such facilities by referenda. On November 2, 2004, referenda were passed authorizing the locating of a satellite wagering facility in the following counties in Virginia: Henry County, Scott County and Westmoreland County. Thereafter, the Virginia Racing Commission granted Colonial licenses to own and operate a satellite wagering facility in Henry County and Scott County, Virginia. The Virginia Racing Commission can grant licenses for one more satellite wagering facility under existing legislation.

Certain Transactions During 2005

Pinon Plaza Resort. On November 2, 2005, we entered into a definitive Asset Purchase Agreement with Capital City Entertainment, Inc. (“CCI”), an unaffiliated party, under which we agreed to acquire all of the assets of the Best Western Pinon Plaza Resort, a division of CCI. The assets to be purchased include all of the personal property, buildings and improvements used by Pinon Plaza in the operation of its casino, hotel, bowling alley and RV park in Carson City, Nevada. The purchase price for the assets is $14,500,000.

Contemporaneously, we entered into a triple net ground lease covering land underlying the assets. The lessor is a family trust affiliated with CCI. The lease has a ten-year term with two ten-year extensions at our option. Rentals under the lease are $250,000 per year for years one through five, $300,000 per year for years six through ten, and a rate based on an MAI appraisal of the property during the first and second extension terms. We have the right to purchase the leased land at an MAI-appraised value at the end of the first ten-year term. We also have a right of first refusal should the lessor seek to sell the leased land to a third party.

Consummation of the Asset Purchase Agreement and entry into the land lease are subject to several customary conditions, particularly including approval of the Nevada State Gaming Control Board and the Nevada Gaming Commission. Nevada gaming approvals are expected no later than June 30, 2006. The transaction is also subject to our obtaining financing on terms acceptable to us.

The Pinon Plaza Casino, which commenced operations in 1995 is a 140,000 square foot facility located on 17.7 acres covered by the land lease discussed above. Pinon Plaza offers 330 slot machines and nine table games, four restaurants and two bars. It has a slot club and offers various promotional packages, many associated with its 32 lane bowling alley. The Pinon Plaza has 148 hotel rooms and operates under the “Best Western” brand and reservation system. It also owns and operates a 48-space RV park as part of the resort. There are 750 parking spaces for Pinon Plaza’s casino patrons and hotel guests.

Colonial Downs Management Agreement. In 1996, Colonial Downs, L.P., our wholly owned subsidiary, entered into a Management and Consulting Agreement with Maryland-Virginia Racing Circuit, Inc. (the “Circuit”), an affiliate of the Maryland Jockey Club (“MJC”), which was subsequently amended several times, to provide management for Colonial’s New Kent, Virginia, racetrack and satellite wagering facilities and to create a Maryland-Virginia thoroughbred racing circuit. Under the agreement, MJC agreed to suspend live racing at its racetracks, Laurel Park and Pimlico Race Course, during Colonial’s live thoroughbred meets. Parties to the agreement also exchanged simulcast signals for their live meets at no cost to either party. The Circuit managed Colonial’s satellite facilities as well as the live standardbred and thoroughbred meets and provided certain personnel, at its expense, for the live thoroughbred meet. For its services, the Circuit received a

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management fee of 1.0% of the first $75 million of the aggregate gross amounts wagered in any calendar year in Virginia, excluding certain amounts specified in the agreement (“Handle”), and 2.0% of all Handle in excess of $75 million per calendar year. In addition, Colonial agreed to pay a management fee of 3.25% of Handle for any future satellite facilities located in the counties of Loudoun, Fairfax, Prince William, and Arlington and the Virginia cities of Manassas, Manassas Park, Fairfax City, Falls Church, and Alexandria.

In February 2003, Colonial entered into an amendment to the agreement pursuant to which the Circuit agreed to a management fee of 1.5% of Handle for Handle in excess of $125 million generated from the racetrack and satellite facilities located in Richmond, Chesapeake, Brunswick, and Hampton and certain localities in the Central and Southside portions of Virginia. The agreement, as amended, was to remain in effect until 2036, provided Colonial owned, controlled, or operated the racetrack under its existing licenses. At Colonial’s option, Colonial had the right to terminate the agreement any time after 2021 upon payment of a fee equal to 17 times the average management fee paid during the three years immediately preceding such termination.

On August 17, 2005, Colonial entered into an agreement with Magna Entertainment Corp. (“MEC”), an unaffiliated party, under which Colonial acquired all of the outstanding shares of the Circuit, a wholly owned subsidiary of MEC. Under the terms of the agreement, Colonial paid MEC $7 million on closing and $3 million by way of a one-year interest-bearing note. Colonial also paid the Circuit’s prorated 2005 management fees and repaid approximately $145,000 plus accrued interest under an existing outstanding promissory note. A Maryland-Virginia thoroughbred racing circuit will continue for ten years under the agreement, with live thoroughbred racing concluding in Maryland by June 17 of each year and commencing at Colonial Downs thereafter. No live thoroughbred racing in Maryland will resume any earlier than August 1 of each year.

The purpose of the transaction was to obviate the approximately $1.8 million annual management fees payable to the Circuit under the contract which was effective until 2036. Colonial will, however, incur additional costs since it now will be responsible for the full cost of the thoroughbred meet as it assumes full management of the racing satellite wagering facilities. The stock acquisition which resulted in the indirect acquisition of the management agreement has been characterized as a termination of a contract because the primary asset owned by the Circuit was the management agreement with Colonial. As such, $10.4 million, consisting of the $10 million purchase price plus $400,000 in legal and professional fees associated with this transaction, has been expensed in our 2005 financial statements.

Elko, Nevada Land Lease. 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. The lease has a five-year term with three five-year renewals at our option. Rent under the lease is $225,000 for the first year, with $50,000 of the first-year rent abated as an allowance for tenant improvements. The second year’s rent is $375,000 and for years three through five the annual rent is $450,000.

We have the right to buy the land and the building any time after the first 12 months through the 60^th month for $5 million and from the 61^st month through the 120^th month for $5.4 million.

Our plan, which is subject to gaming approval and suitable financing, is to renovate and upgrade the building and install approximately 350 slot machines, six table games and appropriate food and beverage offerings. We estimate total pre-opening and gaming device costs to be approximately $25 million. Although there can be no assurance, we expect to commence renovation during the fourth quarter of 2006.

Dakota Works Land Lease and Option. On September 12, 2005, we entered into an agreement with Dakota/Blackhawk, LLC, an unaffiliated Colorado limited liability company (“Dakota”), granting us the option to purchase 2.2258 acres of undeveloped land situated in Gilpin County, Colorado, 40,788 square feet of which is situated within the Black Hawk Gaming District of Gilpin County, Colorado.

Pursuant to the option agreement, we have the exclusive right to purchase the property for $13 million. The option has an initial term of one year, with a right in our favor to extend the initial term for an additional one year period upon the payment of a non-refundable extension fee of $500,000. The option agreement provides for an initial option fee of $500,000 comprised of the following: (i) an initial deposit in the amount of $250,000, which was paid on the execution of the option agreement and (ii) a second payment of $250,000, which will be due 180 days from the execution date, provided that the option agreement has not been terminated earlier. Fifty percent of the initial option fee and fifty percent of the extension fee are to be applied to the purchase price if the property is purchased.

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If the real estate purchase contract is closed, the purchase price must be paid as follows: (i) 50% of the purchase price minus the option fee credit, in cash or immediately available funds at closing; and (ii) a four year promissory note in the amount of 50% of the purchase price executed by us.

The property is across Main Street from our Lodge Casino. During the near term we intend to level the property to grade (at an estimated cost of $3.7 million) and utilize the additional surface parking to facilitate parking at The Lodge. In the long term, while no plans have been finalized, we may seek to develop the property into a hotel/casino which will be integrated with The Lodge facilities.

Video Gaming Truck Plazas. In December 2005, we acquired two of our 11 Louisiana truck plaza video gaming facilities from two unaffiliated companies for an aggregate consideration of $12.3 million. We paid $3.5 million of the purchase price from internal funds and our owners contributed $8.8 million in additional capital to the company to pay the balance. The two truck plazas acquired were Fuel Stop 36 located in Calcasieu Parish and Larose Truck Plaza located in Lafourche Parish. Fuel Stop 36 is located near Lake Charles, Louisiana and had 39 video draw poker gaming devices when purchased. We are currently expanding that operation to fifty devices. Larose is located in Lockport, Louisiana and currently contains 40 video draw poker gaming devices. We acquired all of the land and buildings associated with both of these operations.

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 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 plaza video gaming operations in late 2005. 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 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 online computer gaming, 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. In the future, we may compete with gaming at other venues.

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 20 other casinos operating in Black Hawk on

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December 31, 2005. There were approximately 9,700 gaming devices (slot machines, blackjack and poker tables) in Black Hawk as of December 31, 2005.

Central City is located adjacent to Black Hawk and provides the most direct competition to the gaming establishments in Black Hawk. There were six casinos operating in Central City with approximately 2,000 gaming devices as of December 31, 2005. Black Hawk has historically enjoyed a competitive advantage over Central City in large part because access by State Highway 119 (formerly the only major access to Black Hawk from the Denver metropolitan area and Interstate 70) requires customers to drive by and, in part, through Black Hawk to reach Central City. Central City acquired a right-of-way and formed an entity to construct a road from I-70 directly into Central City, commonly referred to as the Southern Access. Financing was obtained and road construction was completed in late 2004. It is now possible for certain traffic that passed through Black Hawk to proceed directly to Central City from Interstate 70. Nonetheless, motorists driving from the Denver metropolitan area still have the option of choosing to go either to Black Hawk or Central City without having to drive through the other town. Since completion of the Southern Access, three additional casinos have reopened or developed in Central City.

Large, well-financed companies have entered the Black Hawk and other Colorado markets and others may enter through the purchase or expansion of existing facilities, which could have a material adverse effect on our results of operations and financial position. For example, the Mountain High Casino (formerly the Black Hawk Casino by Hyatt) opened in December 2001. The Mountain High Casino is directly across the street from The Lodge Casino. On January 1, 2005, Ameristar Casinos, Inc. purchased this facility and has since announced that it will commence construction of a 537 hotel room tower, a convention center, and other amenities. Under Ameristar’s ownership, this facility has been expanded to approximately 1,900 slot machines and 24 table games, and a parking garage accommodating 800 vehicles. No other casinos are currently under construction in Black Hawk. In 2003, the Isle of Capri Casinos, Inc. purchased Colorado Central Station, directly 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 the largest in Black Hawk with approximately 2,200 gaming devices, 400 hotel rooms and 2,500 parking spaces. The Isle of Capri is noted for its aggressive marketing programs. The Mardi Gras casino, next to our Lodge casino, was purchased in 2005 and the new owners can be expected to develop and implement new marketing programs.

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.

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, 2005, there were 153 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, some of which augment their purses with slot machine 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 in Virginia may continue to seek legislative approval. Additionally, certain Native American tribes are considering seeking federal recognition which, if successful, could result in additional gaming venues.

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, Laurel Park, and Rosecroft Raceway in Maryland, and Delaware Park in Delaware. In connection with our acquisition of the Circuit, a subsidiary of MEC, we entered into an agreement pursuant to which a Maryland-Virginia thoroughbred racing circuit continues for ten years, with live thoroughbred racing concluding in Maryland by June 17 of each year and commencing at Colonial Downs thereafter. No live thoroughbred racing in Maryland will resume any earlier than August. If the Virginia or Maryland Racing Commissions do not agree to the party’s proposed racing days in any of the next ten years, our track may compete directly with Pimlico Race Course and Laurel Park in Maryland.

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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 our agreements with two licensed account wagering companies provide us with fair compensation for their activities. 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 year end, we had approximately 1,000 full-time and part-time employees at our facilities in Black Hawk, Colorado, and Reno, Nevada, 400 employees at our facilities in Virginia and 185 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 represented by any union or other labor organization.

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. 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. Black Hawk Gaming’s failure or inability to obtain and maintain necessary gaming licenses would have a material adverse effect on its gaming operations.

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 annually. The current licenses for both Colorado casinos were renewed on April 21, 2005. There can be no assurance that the Colorado casinos can successfully renew their licenses in a timely manner from year to year.

All persons employed by Black Hawk Gaming 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. Messrs. Jacobs and Roark and Stanley Politano (Black Hawk Gaming’s Secretary), among others, hold key licenses.

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 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 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.

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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 Gameco, Black Hawk Gaming may be sanctioned unless the person or entity disposes of its voting interest. Sanctions may include the loss of the casino licenses. 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

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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.

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.

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 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.

Colorado casinos may operate only between 8:00 a.m. and 2:00 a.m., and may permit only individuals 21 years or older to gamble or consume alcohol in the casino. Slot machines, black jack, poker and other approved variations of those games and video poker are the only permitted games, with a maximum single wager of $5.00. Colorado casinos may not extend credit to gaming patrons. The Colorado Constitution and Regulations restrict the percentage of space a casino may use for gaming to 50% of any floor and 35% of the overall square footage of the building in which the casino is located. Effective July 1 of each year, Colorado establishes the gross gaming revenue tax rate for the ensuing 12 months. Under the Colorado Constitution, the rate can be increased to as much as 40% of adjusted gross proceeds. Colorado has both raised and lowered gaming tax rates since they were initially set in 1991. Currently, the maximum gaming tax rate is 20%.

Gaming Regulation and Licensing—Nevada

The ownership and operation of casino gaming facilities in Nevada, including the Nevada casino operated by our indirect subsidiary Gold Dust West Casino, Inc. (“Gold Dust West”), 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 City of Reno (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

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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 our Nevada gaming operations.

Gold Dust West has been licensed by the Nevada Gaming Authorities. Gaming licenses require the periodic payment of fees and taxes and are not transferable. Our subsidiary Black Hawk Gaming & Development Company, Inc. (“Black Hawk Gaming”) is currently registered by the Nevada Commission as an intermediary company and has been found suitable to own the stock of Gold Dust West, which is a corporate licensee under the terms of the Nevada Act. Jacobs Entertainment is currently 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. 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 Entertainment, Black Hawk Gaming and Gold Dust West must be reported to or approved by the Nevada Commission. No person may become a stockholder of, or holder of an interest in, or receive any percentage of profits from a corporate licensee without first obtaining licenses and approvals from the Nevada Gaming Authorities. Jacobs Entertainment, Black Hawk Gaming, and Gold Dust West’s controlling persons, directors and certain officers have obtained from the Nevada Gaming Authorities the various registrations, findings of suitability, approvals, permits and licenses required in order to engage in gaming activities in Reno, Nevada.

The Nevada Gaming Authorities may investigate any individual who has a material relationship to, or material involvement with, Jacobs Entertainment, Black Hawk Gaming or Gold Dust West 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 Entertainment must file applications with and be licensed or found suitable by the Nevada Gaming Authorities. The officers, directors and certain key employees of Black Hawk Gaming and Gold Dust West must file applications with the Nevada Gaming Authorities and may be required to be licensed or found suitable by the Nevada Gaming Authorities. The officers, directors and key employees of Jacobs Entertainment and Black Hawk Gaming who are actively and directly involved in the gaming activities of Gold Dust West 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 Entertainment, Black Hawk Gaming or Gold Dust West, the companies involved would have to sever all relationships with that person. In addition, the Nevada Commission may require Jacobs Entertainment, Black Hawk Gaming or Gold Dust West 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.

Jacobs Entertainment, Black Hawk Gaming and Gold Dust West 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 of Jacobs Entertainment’s, Black Hawk Gaming’s and Gold Dust West’s material loans, leases, sales of securities and similar financing transactions must be reported to or approved by the Nevada Commission.

If it were determined that the Nevada Act was violated by Jacobs Entertainment, Black Hawk Gaming or Gold Dust West, the registrations or gaming licenses that Jacobs Entertainment, Black Hawk Gaming, and Gold Dust West hold could be limited, conditioned, suspended or revoked, subject to compliance with certain statutory and regulatory procedures. In addition, Jacobs Entertainment, Black Hawk Gaming, Gold Dust West 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 Gold Dust West Casino and, under certain

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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 Gold Dust West or the appointment of a supervisor could (and revocation of any gaming license would) have a material adverse effect on Jacobs Entertainment’s gaming operations, financial condition and results of operations.

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. Under certain circumstances, an “institutional investor,” as defined in the Nevada Act, that acquires more than 10%, but not more than 15%, of our 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. In certain circumstances, an institutional investor that has obtained a waiver may hold up to 19% of our voting securities for a limited period of time and maintain the waiver. 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 our board of directors, any change in our corporate charter, bylaws, management, policies or operations, or of any of our gaming affiliates, or any other action that the Nevada Commission finds to be inconsistent with holding our 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 its 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.

Any person who fails or refuses to apply for a finding of suitability or a license within 30 days after being ordered to do so by the Nevada Commission or the Chairman of the Nevada Board may be found unsuitable. The same restrictions apply to a record owner if the record owner, after request, fails to identify the beneficial owner. Any stockholder found unsuitable and who holds, directly or indirectly, any beneficial ownership of the common stock beyond such period of time as may be prescribed by the Nevada Commission may be guilty of a criminal offense. We will be subject to disciplinary action if, after we receive notice that a person is unsuitable to be a stockholder or to have any other relationship with us, we (i) pay that person any dividend or interest on our voting securities, (ii) allow that person to exercise, directly or indirectly, any voting right conferred through securities held by that person, (iii) pay remuneration in any form to that person for services rendered or otherwise, or (iv) fail 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 City of Reno has the authority to approve all persons owning or controlling the stock of any corporation controlling a gaming licensee operating in Reno.

The Nevada Commission may, in its discretion, require the holder of any of our debt or similar securities, such as the notes or exchange notes, to file applications, be investigated and be found suitable to own our 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, we can be sanctioned, including by revocation of our approvals, if without the prior approval of the Nevada Commission, we (i) pay to the unsuitable person any dividend, interest, or any distribution whatsoever; (ii) recognize any voting right by the unsuitable person in connection with our securities; (iii) pay the unsuitable person remuneration in any form; or (iv) make any payment to the unsuitable person by way of principal, redemption, conversion, exchange, liquidation, or similar transaction.

Jacobs Entertainment and Black Hawk Gaming are required to maintain a current stock ledger 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. We are also required to render maximum assistance in determining the identity of the beneficial owner. The Nevada Commission has the power to require our 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 on us.

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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 incurred for those purposes or for similar transactions. On September 27, 2005, 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 us which is a publicly traded corporation or would become a publicly traded corporation pursuant to a public offering. The Shelf Approval, however, 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 Jacobs Entertainment or Black Hawk Gaming 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 Jacobs Entertainment or Black Hawk Gaming, may not occur without the prior approval of the Nevada Commission. Entities seeking to acquire control of us must satisfy the Nevada Board and Nevada Commission on a variety of stringent standards prior to assuming control of us. 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.

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 we 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 us in response to a tender offer made directly to our stockholders for the purposes of acquiring control of us.

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 licensee’s 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 casino entertainment tax is also paid by casino operations where entertainment is furnished in connection with an admission fee and the selling or serving of food or refreshments or the selling of merchandise. See “—Taxation” below.

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

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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, 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.

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.

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.

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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 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 who has 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 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.

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 truck stop facility may have up to fifty video draw poker devices, with the number being determined by the amount of fuel sales of the truck stop facility.

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 truck stop facility 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 truck stop facility 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 truck stop facility—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 truck stop facility 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; (iii) 50,000 gallons of fuel, of which at least 10,000 are diesel—not more than 35 devices. Once licensed, if a truck stop facility sells less than an average of

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50,000 gallons per month but more than 25,000 gallons per month in any calendar quarter, the truck stop facility will not be permitted to operate any video draw poker devices in the following calendar quarter. A qualified truck stop facility that sells less than an average of 25,000 gallons per month in any calendar quarter will be subject to revocation of its video draw poker license. Bulk sales or transfers may not be used to calculate monthly averages. The fuel facility is required to offer fuel for sale in the regular course of business at retail, at a price at least 6% above the delivered cost of the fuel.

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; (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 have 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 Statutes of 1950, to serve or sell alcoholic beverages for on-premises consumption.

Additionally, no license can be granted to any truck stop facility located, at the time application is made for a license to operate video draw poker devices, within five hundred feet of any property that is on the National Historic Registry, any public playground, or a building used exclusively as a church, synagogue, public library, or school.

All suitability information and applications required to be submitted with respect to the 11 Louisiana truck plazas currently owned by our affiliates have been submitted to the Board and the Division. The approval of the December 2005 acquisitions of Fuel Stop 36 and Larose 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 the 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

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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 us.

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 license expires December 31, 2006.

Our agreement with the VHBPA expires December 31, 2007. Our agreement with the VHHA expires March 31,2006. We have signed a new agreement with the VHHA and have submitted it to the Virginia Racing Commission for approval. In the event the agreement is not approved, the Virginia Racing Commission has the right to suspend our licenses to operate our racetrack and the satellite wagering facilities until agreements are in place although it has not indicated that it will do so. Although it is difficult to the predict the likelihood of such an event, closure of the satellite wagering facilities would be detrimental to the horsemen’s groups as well as us since each horsemen’s group’s primary source of purse funds is its percentage of wagering at the satellite facilities.

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 racing center 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.

The National Gaming Commission conducted a comprehensive legal and factual study of gambling in the United States and existing federal, state, and local policies and practices with respect to the legalization or prohibition of gambling activities. The commission published its findings and recommendations in 1999. Although no proposals have been put forward to implement the commission’s recommendations, the future adoption of some or all of these recommendations could have a material adverse effect on our business and operations.

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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.

The sale of alcoholic beverages in Reno, Nevada, is subject to licensing, control and regulation by the City of Reno. 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 the Gold Dust West Casino.

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 by the local municipal ordinance, of a public playground or of a building used exclusively as a church or synagogue, public library, or school. 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 truck plaza facilities 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.

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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. Currently, gaming tax rates are as follows:

Tax as Percentage of	Annual Amount of Adjusted
Adjusted Gross Proceeds	Gross Proceeds
0.25%	$	0	–	2,000,000
2.00%	2,000,001		–	4,000,000
4.00%	4,000,001		–	5,000,000
11.00%	5,000,001		–	10,000,000
16.00%	10,000,001		–	15,000,000
20.00%	15,000,001		and above

Both of Black Hawk Gaming’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. Under the Colorado constitution, the Colorado Gaming Commission could increase the top rate to as much as 40%. A more recent tax limitation amendment to the Colorado constitution, however, states that neither the state nor any local government may increase a tax rate without an affirmative vote of the people; therefore, there is a question as to whether the Colorado Gaming Commission could constitutionally increase the state tax levied on gross gaming revenues without such a vote. The Colorado legislature rejected this argument after the top tax rate was increased to 20% in 1996, and no court was asked to rule on the applicability of the tax limitation amendment to gaming tax rates.

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 County and the City of Reno. 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%.

Video gaming operators in truck plazas in Louisiana are subject to state and local taxes and fees in addition to ordinary federal and state income taxes. The state of Louisiana has imposed a franchise tax of 32.5% of the net device revenue from each video gaming device located at a truck plaza. The net device revenue is the amount remaining after all winnings have been paid. This franchise tax is collected twice per month by the Louisiana state police based on the data that is provided directly to them from the devices. There is also an annual state establishment license fee of $1,000. In addition, the state imposes a device operation fee of $1,000 per year per device, which is paid quarterly, and each parish imposes an annual occupational license tax of up to $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 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.

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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. 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, 2005 we had total indebtedness excluding accounts payable and accrued expenses of approximately $183 million and total stockholders’ equity of approximately $68 million. Our substantial indebtedness could have important 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.

In addition, subject to specified limitations in the indenture governing the notes, we may be able to incur additional indebtedness in the future. Our credit facility will permit borrowings of up to $10 million, and all of the security interests securing those borrowings will be contractually senior to the notes and guarantees, as provided in the intercreditor agreement between the trustee and Wells Fargo Foothill, Inc., the lender under our credit facility. If new debt is added to our and our subsidiaries’ current debt levels, the related risks we and they now face could intensify.

Our debt agreements impose many restrictive covenants on us.

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

•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.

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Our credit facility also requires us to meet a number of financial ratios and tests. The covenants governing the notes and the covenants governing our credit facility restrict the operations of our subsidiaries and these limitations could impair our ability to meet such financial ratios and tests. In addition, our ability to meet these ratios and tests and to comply with provisions governing our indebtedness may be affected by changes in economic or business conditions or other events beyond our control. Our failure to comply with our debt-related obligations could result in an event of default which, if not cured or waived, could result in an acceleration of our indebtedness. Acceleration of indebtedness outstanding under our credit facility or any of our other indebtedness may cause us to be unable to make interest payments on our debt and to repay the principal amount of our debt or may cause the guarantors to be unable to make payments under their guarantees.

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.

We and our subsidiaries may be able to incur substantial additional indebtedness in the future. Our principal debt agreement, our note indenture, does 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. Therefore, we cannot assure you that our business will generate sufficient cash flow from operations or that borrowings will 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.

Furthermore, 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.

Risks Related to Our Senior Secured Notes

Holders’ rights to receive payments on our 11⁷/₈% Senior Secured Notes in the principal amount of $148 million as of December 31, 2005 (the “notes”) are effectively subordinated to payments under our Senior Credit Facility and any equipment financing to the extent of the collateral securing this other debt. The proceeds from the collateral securing the notes may not be sufficient to pay all amounts owed under the notes if an event of default occurs, even if the fair market value of the collateral would otherwise be sufficient to pay the amounts owed under the notes.

The notes and guarantees are effectively subordinated to (i) up to $10.0 million principal amount of indebtedness that may be incurred under our Senior Credit Facility with respect to the assets securing the Senior Credit Facility, pursuant to the intercreditor agreement described below, and (ii) any future equipment financing and purchase money debt, in each case to the extent of the assets securing that indebtedness. We may incur purchase money obligations and capital lease obligations in an aggregate principal amount not to exceed the greater of $5.0 million or 15% of our consolidated earnings before interest, depreciation and amortization for the trailing four quarters. Those obligations may be secured by liens on the financed collateral senior to the lien securing the notes and guarantees, and the right of payment of those obligations will be pari passu with the notes. As a result, upon any distribution to our creditors or the creditors of any subsidiary guarantors in bankruptcy, liquidation, reorganization or similar proceedings, or following acceleration of our indebtedness or an event of default under such indebtedness, our lenders under our Senior Credit Facility, our equipment financing and our purchase money indebtedness will be entitled to be repaid in full from the proceeds of the assets securing such indebtedness, or the sale of the equipment subject to such equipment financing, before any payment is made to note holders from such proceeds. There

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can be no assurance that the fair market value of the collateral securing the notes would be sufficient to pay the amounts due under the notes, even absent the Senior Credit Facility, any equipment financing and any purchase money debt.

The trustee under our note indenture and the lenders under our Senior Credit Facility have entered into an intercreditor agreement governing the relationships among them and their obligations and rights. Financing by multiple lenders with security interests in common collateral may result in increased complexity and lack of flexibility in a debt restructuring or other work-out relating to us. Furthermore, under the intercreditor agreement, the trustee’s remedies in the event of a default are limited. Under the intercreditor agreement, if the notes become due and payable prior to the stated maturity or are not paid in full at the stated maturity at a time during which we have indebtedness outstanding under our Senior Credit Facility, the trustee will not have the right to foreclose upon the assets securing the Senior Credit Facility unless and until the lenders under the Senior Credit Facility fail to take steps to exercise remedies with respect to or in connection with the collateral within 180 days following notice to such lenders of the occurrence of an event of default under the indenture. In addition, the intercreditor agreement prevents the trustee and the holders of the notes from pursuing remedies with respect to the assets securing the Senior Credit Facility in an insolvency proceeding. The intercreditor agreement also provides that the net proceeds from the sale of the assets securing the Senior Credit Facility will first be applied to repay indebtedness outstanding under the credit facility and thereafter to the holders of the notes.

The value of the collateral securing the notes may not be sufficient to pay all amounts owed under the notes if an event of default occurs.

A large portion of the collateral securing the notes consists of our casinos, truck plazas and personal property, which depreciate in value over time. As a result, if an event of default occurs with respect to the notes, we can give no assurance that the liquidation of the collateral securing the notes will produce sufficient proceeds to pay all amounts owed under the notes. The value of the collateral at any time will depend on market and other economic conditions, including the availability of suitable buyers for the collateral. If the proceeds are insufficient, the deficiency would be an unsecured obligation. There can be no assurance that note holders would recover any deficiency.

We may have subsidiaries in the future that will not guarantee the notes.

We may have subsidiaries in the future that will not guarantee the notes. Any non-guarantor subsidiary would have no obligation to make payments to us or in respect of the notes. In the event of a bankruptcy, liquidation or reorganization of any non-guarantor subsidiary, the creditors of such subsidiary (including trade creditors) would generally be entitled to payment of their claims from the assets of such subsidiary before any assets were made available for distribution to us as a stockholder. After paying its own creditors, a non-guarantor subsidiary may not have any remaining assets available for payment to note holders. As a result, the notes would be effectively junior in right of payment to the obligations of any non-guarantor subsidiary.

The trustee’s ability to realize on the collateral securing the notes may be limited.

The trustee’s ability to foreclose on the pledged shares and other collateral comprising our gaming businesses is limited by relevant gaming laws. Regulations of the gaming authorities in the several states in which we operate provide that no person may acquire an interest in a gaming licensee or enforce a security interest in the stock of a corporation that is the holder of a gaming license or that owns stock in such a corporation without the prior approval of the gaming authority. As such, neither the trustee nor any note holder is permitted to operate or manage any gaming business or assets unless that person has been licensed under applicable law for that purpose.

Gaming law requires that any person who proposes to own shares of licensed corporations or of registered holding corporations must be found suitable as a stockholder of such corporations by the applicable gaming authority and other relevant gaming authorities before acquiring ownership of those interests. Consequently, it would be necessary for the trustee to file an application with the gaming authorities requesting approval to enforce the security interest in any pledged stock and obtain that approval before it may take any steps to enforce the security interest. Additionally, the trustee must file applications with the gaming authorities requesting approval to enforce a security interest in our gaming assets before it may take steps to enforce the security interest. Moreover, it would be necessary for a prospective purchaser of the pledged stock or of the gaming assets to file the necessary applications, be investigated, and be licensed or found suitable by the gaming authorities before acquiring the gaming assets or the pledged stock through the foreclosure sale. These requirements may therefore limit the number of potential bidders who would participate in any foreclosure sale and may delay the sale of any pledged stock or other gaming assets, either of which could have an adverse effect on the proceeds received from those sales.

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In addition, the trustee’s ability to foreclose on and sell the collateral will be subject to the procedural restrictions of state real estate law and the Uniform Commercial Code. Furthermore, the right of the trustee to foreclose upon and sell the collateral is likely to be significantly impaired by applicable bankruptcy law if a bankruptcy proceeding were to be commenced by or against us or any of our subsidiaries prior to, or possibly even after, the trustee has repossessed and disposed of the collateral.

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

We are a holding company. Substantially all of the operations necessary to fund payment on the notes are conducted by our subsidiaries. Our ability to make payment on the notes depends on our subsidiaries’ cash flow and their payment of funds to us. Our subsidiaries’ ability to make payments to us depends 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 the note indenture.

Upon the occurrence of certain specific kinds of change of control events, we will be required to offer to repurchase all outstanding notes. However, it is possible that we will not have sufficient funds at the time of such a change of control to make the required repurchase of notes. The change of control provisions may not protect note holders 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 the note indenture.

Our original senior notes in the amount of $125 million were issued in February 2002 with original issue discount. As a result, holders of these notes will generally be required for United States federal income tax purposes to include in gross income accrued original issue discount on the notes before the receipt of a cash payment on account thereof, and in the event of a bankruptcy of the Company, a note holder’s claim would not include any unamortized original discount.

Original issue discount (the difference between the notes’ stated redemption price at maturity and their issue price) will accrue from the February 2002 issue date of the notes, and purchasers of these notes generally will be required to include such amounts in gross income for United States federal income tax purposes in advance of their receipt of the cash payments to which the income is attributable.

If a bankruptcy case is commenced by or against us under the United States Bankruptcy Code after the issuance of the notes, the claim of a holder of the notes may be limited to an amount equal to the sum of (i) the notes’ issue price, (ii) accrued and unpaid interest thereon through the date of the bankruptcy filing, and (iii) that portion of the original issue discount deemed to have accrued from the issue date through the date of the bankruptcy filing. Any original issue discount deemed not to have accrued as of the date of any such bankruptcy filing would constitute “unmatured interest” and would not be allowed under the Bankruptcy Code. Accordingly, the holder’s claim would likely be less than the notes’ stated redemption price at maturity.

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 the 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.

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In addition, a court could void any payment by us or the guarantor pursuant to the 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 the 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 these 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. There can be no assurance, however, as to what standard a court would apply in making those determinations or that a court would agree with our conclusions in this regard.

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, 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 Casinos, Inc. purchased Mountain High Casino (formerly the Black Hawk Casino by Hyatt) in a bankruptcy sale. That casino is directly across from our Lodge Casino and it has expanded the casino area and parking garage. Ameristar has announced plans to construct a 537-room hotel and add a convention center and other amenities and facilities. In all respects, Ameristar is known to be a fierce competitor in gaming markets in which it operates;

•Isle of Capri Casinos, Inc. recently purchased Colorado Central Station, directly across the street from its existing facility, and in 2005 completed a major renovation and expansion project physically linking the two properties. The combined casinos are the largest in Black Hawk with approximately 2,300 gaming devices, 400 hotel rooms and 2,500 parking spaces. Isle of Capri is noted for its aggressive marketing programs;

•the Mardi Gras casino, next to our Lodge casino, was purchased in 2005 and the new owners have expanded and improved their property and can be expected to develop and implement new and aggressive marketing programs;

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•late in 2004, Central City, a gaming area about one mile from Black Hawk, completed the “Southern Access,” a road which directly connects Central City to Interstate 70. The new access road to Central City enables existing casinos and possible new casinos to pose a significant competitive threat to gaming activities in Black Hawk;

•the Cheyenne and Arapahoe Indian tribes claiming significant treaty rights to land in Colorado have pursued a plan to exchange those rights for land east of the Denver metropolitan area on which to build and operate a large casino gaming facility. Although this project appears to be dormant at present, if it is renewed and survives political and other challenges, it could have a material adverse effect on gaming revenues in Black Hawk and at our Lodge and Gilpin casinos; and

•the 2005 acquisition of four Colorado racetracks (two of which are in the Denver metropolitan area) that have been owned and operated by Wembley, Plc, may reinvigorate efforts to authorize video lottery terminals at the state’s racetracks. If this authorization is granted by the Colorado Lottery Division, the Colorado state legislature, or the voters, it could have a material adverse effect on gaming revenues in Black Hawk and at our Lodge and Gilpin casinos.

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 a significant Native American gaming facility located near the California-Nevada state line.

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 Reno property.

Louisiana Truck Plaza Operations. Our Louisiana truck plaza operations compete with other truck plazas located in Louisiana and other forms of gaming, such as land-based, riverboat and Native American casinos, as well as slot machines located at horseracing tracks and video poker machines located in bars, restaurants, hotels and off-track wagering facilities. There were 153 licensed video poker truck plazas in Louisiana at December 31, 2005.

Pari-Mutuel Wagering Operations. We operate a racetrack in New Kent, Virginia, and off-track wagering facilities in Brunswick County, Chesapeake (two), Hampton, Martinsville, Scott County, Vinton, and Richmond (two), Virginia.

We compete with racetracks located outside Virginia (including several in Delaware, Maryland, New Jersey, New York, Pennsylvania, and West Virginia, some of which augment their purses with slot machine 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, Laurel Park, and Rosecroft Raceway 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 our agreements with two licensed account wagering companies provide us with fair compensation for their activities.  Unlicensed account wagering companies have lower costs than Colonial Downs and thus are able to attract customers in Virginia with large wagering rebates.

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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 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.

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 two principal 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.

Members of the Jacobs family own a controlling interest in our capital stock and may significantly influence our affairs or may pursue other activities that compete with us.

Jeffrey P. Jacobs, our Chairman and Chief Executive Officer, and his family trusts own 50% of our equity securities and trusts controlled by Richard E. Jacobs, his father, own the remaining 50% of our equity securities. Each has the ability significantly to influence our affairs, including the election of our directors and transactions including mergers, consolidations or sales of assets. Although Messrs. Jacobs have agreed not to pursue any U.S. casino or gaming activities except through us, they are allowed to purchase additional truck plazas in Louisiana which we have the right to buy at their cost. Any such activities by them could be competitive with our operations in that state.

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We need to increase 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 market 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 generate internal cash flow or borrow funds for such purposes.

Economic conditions, seasonality and weather conditions could affect our operations.

Our business, financial condition and results of operations may be harmed by general and local economic conditions. If the U.S. economy or the local economy in a market in which we operate suffers a downturn, our properties could be harmed as the disposable income of consumers or their willingness to patronize our operations declines, resulting in a decrease in the number of patrons at our properties or a decrease in the amount that patrons are willing to 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 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 plaza video gaming operations in late 2005. 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. Our agreement with the Virginia Horsemen’s Benevolence and Protective Association (the “VaHBPA”) expires on December 31, 2007. We have signed a new agreement with the VaHBPA and have submitted it to the Virginia Racing Commission for approval.

In the event the agreement is not approved, the Virginia Racing Commission has the right to suspend our licenses to operate our racetrack and the satellite wagering facilities until agreements are in place although it has not indicated that it will do so. Although it is difficult to predict the likelihood of such an event, closure of the satellite wagering facilities would be detrimental to the horsemen groups as well as us since each horsemen group’s primary source of purse funds is its percentage of wagering at the satellite facilities.

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.

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 and senior secured notes. See note 6 to our consolidated financial statements included elsewhere herein.

Item 3.Legal Proceedings

We are involved in routine litigation arising in the ordinary course of business. We believe these matters are covered by appropriate insurance policies.

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Item 4.Submission of Matters to a Vote of Security Holders

There were no matters submitted to a vote of our security holders during the fourth quarter of the fiscal year covered by this report.

Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

All of our outstanding common stock is held by one person and four related trusts and, accordingly, there is no established trading market for our common stock. We have elected to be taxed under the provisions of SubChapter S of the Internal Revenue Code of 1986. Under those provisions, the owners of our common stock pay taxes on our taxable income. Our ability to make distributions to our stockholders is limited by the terms of credit agreements and the indenture related to our indebtedness.

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

We have made no repurchases of our equity securities since our inception in 2001.

Item 6.Selected Financial Data

Jacobs Entertainment, Inc.

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.

	2001			2002			2003			2004			2005
	(In Thousands)
Statements of Operations Data:
Net revenues	$	46,653		$	153,720		$	171,849		$	194,152		$	234,083
Total costs and expenses	42,568			130,869			149,645			170,620			216,173
Operating income	4,085			22,851			22,204			23,532			17,910
Interest expense, net	(4,130		)	(18,106		)	(19,573		)	(19,641		)	(22,232		)
Income tax expense	—			—			—			—			(423		)
Equity in earnings (loss) of investments and minority interest	4,635			(1,807		)	—			—			—
Net income (loss)	$	4,590		$	2,938		$	2,631		$	3,891		$	(4,745	)
Balance Sheet Data (end of period):
Current assets	$	5,148		$	26,850		$	22,045		$	28,284		$	30,078
Total assets	105,992			236,226			238,984			252,266			278,753
Current liabilities	10,233			24,351			24,107			25,329			30,572
Long-term debt, capital lease obligations and other liabilities	14,692			147,113			145,867			152,333			180,379
Minority interest	17,308			—			—			—			—
Stockholders’ equity	63,759			64,762			69,010			74,604			67,802

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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 TO MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)

Description of item
1.	Company background
2.	Significant transactions occurring during the year ended December 31, 2005 and their related accounting treatment
3.	Overview and discussion of our operations—i.e., how we look at things
4.	Comparison of our historical operations for the year ended December 31, 2005 to the year ended December 31, 2004
5.	Comparison of our historical operations for the year ended December 31, 2004 to the year ended December 31, 2003
6.	Liquidity and capital resources—December 31, 2005
7.	Critical accounting policies and estimates
8.	EBITDA segment information and discussion of operations—three years ended December 31, 2005

1.Company background

We are a geographically diversified gaming and pari-mutuel wagering company with properties in Colorado, Louisiana, Nevada and Virginia. Presently, we own and operate three land-based casinos, eleven truck plaza video gaming facilities (including the five additional truck plazas we acquired in March and December 2005) and a horseracing track with nine satellite wagering facilities, two of which were opened in 2005. We are also a party to an agreement that entitles us to a portion of the gaming revenues from an additional truck plaza video gaming facility.

On February 22, 2002, we completed several acquisitions, which were primarily funded from the proceeds of $125 million in senior secured notes issued on February 8, 2002. On March 2, 2005, we issued $23 million in principal amount of additional notes to acquire three video gaming truck plazas from a related party. We are paying an interest rate of 11⁷/₈% on all of these notes and they are due in February 2009. In December 2005, we purchased two additional video gaming truck plazas in Louisiana from unrelated parties.

We have elected to be taxed under the provisions of Subchapter “S” of the Internal Revenue Code of 1986. Under those provisions, the owners of our company pay income taxes on our taxable income.

2. Significant transactions occurring during the year ended December 31, 2005 and their related accounting treatment

Sale of additional notes and purchase of three video poker truck plazas

On March 2, 2005 we sold $23 million of new notes subject to the same terms and conditions as our existing senior secured notes, carrying a coupon of 11 7/8% are due 2009 with interest payable on each February 1 and August 1. We issued the new notes at a 10% premium over their principal amount which yielded total proceeds, before offering costs, of approximately $25.3 million. We used $22.5 million of the proceeds to acquire three video poker truck-plaza operations

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known as Breaux Bridge, Eunice and Jefferson Parish from a related party which is owned and controlled by our owners. The balance of the proceeds was used to pay the offering costs of the new notes. Breaux Bridge opened for gaming operations on September 22, 2004, Eunice opened for gaming operations on March 28, 2005, and due to the impacts of hurricanes Katrina and Rita, our Jefferson Parish facility’s license was delayed 90 days, and became licensed and operational for gaming purposes on September 22, 2005. Generally, these three locations conducted truck, fuel and convenience store sales operations for several months prior to being allowed to commence video poker gaming operations.

Due to the related party nature of this transaction (and under the terms of the indenture governing our notes) we obtained a fairness opinion from an investment banking firm that the acquisition of the three video poker truck plazas was fair to us from a financial point of view. For accounting and financial reporting purposes, the transaction was accounted for as a combination of entities under common control which is treated similarly to a pooling of interests. Under this method of accounting, the acquisitions were recorded at the related party’s historical identifiable cash cost in the net assets acquired, approximately $10.1 million. The difference between the purchase price of $22.5 million and the net assets acquired of $10.1 million was recorded for accounting and financial reporting purposes as a net distribution to our two owners of approximately $12.4 million, and accordingly our stockholders’ equity  was reduced by that net amount.

The consolidated financial statements presented in this Form 10-K have been restated to the dates of the formation of each of the three acquired truck plaza entities during 2003.

The accompanying management’s discussion and analysis of operations for the years ended December 31, 2005, 2004 and 2003 includes retroactive adjustments to account for the acquisition of the three video poker truck plazas as though the transaction had occurred at the beginning of each of the years presented. Accordingly, certain historical data that was previously reported in prior filings has been adjusted to account for this business combination.

Termination of management contract and acquisitions

On September 30, 2005, Colonial completed a transaction with Magna Entertainment Corp. (“MEC”), an affiliate of the Maryland Jockey Club (“MJC”), under which Colonial acquired all of the outstanding shares of Maryland-Virginia Racing Circuit, Inc. (the “Circuit”), a wholly-owned subsidiary of MEC, for $10 million. The sale was approved by the Virginia Racing Commission on September 28, 2005. Under the terms of the purchase agreement, Colonial paid $7 million in cash at closing and issued a one-year $3 million note bearing interest at the prime rate plus 1% (7.75% at December 31, 2005). The note is guaranteed by JEI. The stock acquisition has been characterized as a termination of a contract because the primary assets owned by the Circuit was a management agreement with Colonial and as such, $10.4 million, which is the $10 million purchase price plus $0.4 million in legal and professional fees associated with this transaction, has been expensed in the current year. As part of the transaction, Colonial paid off an existing promissory note to MJC in the amount of $73,000, plus accrued interest. Colonial also paid the Circuit’s prorated 2005 management fees of approximately $1.8 million. Under the agreement, a Maryland-Virginia thoroughbred racing circuit will continue for ten years with live thoroughbred racing in Maryland concluding on the later of the Monday following the running of the Preakness Stakes or June 17 of each year and beginning at Colonial Downs thereafter. Under the agreement, no live thoroughbred racing will resume in Maryland before August 1^st of each year.

On December 16, 2005, we acquired from an unaffiliated party Fuel Stop 36 in Lake Charles, Louisiana for $6.1 million. On December 20, 2005, we acquired from an unaffiliated party the assets of Larose Truck Plaza in Larose Louisiana for $6.2 million. The purchases of these two truck plaza video gaming facilities were recorded using the purchase method of accounting.

3.Overview and discussion of our operations—i.e., how we look at things

During the fourth quarter of 2005 we began to consolidate the management and accounting functions of our company. We relocated our offices and have made Golden, Colorado our corporate headquarters. We believe that over the long-term we will gain greater operational efficiencies and costs savings. Each of our casino properties (The Lodge, the Gilpin, and the Gold Dust), i.e., the Western Division, is managed by an on-site General Manager, each of whom reports to a Vice-President of Operations who is located in our Golden, Colorado offices. Our Eastern Division comprises all of our video poker truck-plaza operations and our Virginia race-track and satellite betting parlor facilities. Each of our respective divisions is headed by a President, each of whom reports to our Chief Executive Officer located in West Palm Beach, Florida. Our management team conducts monthly video conferencing and teleconferencing calls and each of the divisions functions as a

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separate profit center. We account for our businesses in segments, with each segment designated by the respective state in which the properties operate. Presently, we operate with four segments: Colorado, Louisiana, Nevada and Virginia. By centralizing our operations we believe we are able to obtain some economies of scale in accounting, human resources, centralized purchasing and other areas. We will continue to consolidate several of our other corporate functions as we expand the company’s operations and acquire additional properties.

When we analyze and run our business units, we focus on several measurements which we believe provide us with the necessary ratios and key performance indicators in order for us to determine how we are doing versus our competition and against our own internal goals and budgets. We confer monthly and discuss and analyze significant variances and try to identify trends and changes in our business. Additionally, we utilize EBITDA (earnings before interest, taxes, depreciation and amortization) as one of the primary methods of reviewing and analyzing the results of our operations of each property. While we recognize that EBITDA is not a generally accepted accounting principle (i.e., a non-GAAP financial measure), we nonetheless believe it is useful because it allows investors 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 analysts following the gaming industry utilize EBITDA as a financial measurement and when our note holders inquire and discuss our operational performance with us, they invariably inquire as to our EBITDA and our EBITDA margins versus our competitors. Finally, EBITDA is a key component of certain financial covenants contained in our debt agreements and as such it is a critical ingredient that we watch closely in order to measure our historical performance as well as to determine our ability to achieve future growth and ensure compliance with our note indenture covenants.

In addition to the performance measurements discussed above, 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 watch our cash closely. Every six months (February 1 and August 1) we have a cash interest payment due on our $148 million of senior secured notes amounting to $8.8 million. We have a $10 million revolver with a lender on which we usually draw about $2 to $5 million every nine months in order to make our interest payments. This is generally a function of the timing of cash receipts from our operations coupled with the amount of cash we need to run the business—i.e., our cash inventory. We estimate that we require approximately $12 million of cash inventory to run our business. We may be able to reduce this amount when we are able to consolidate our cash from our various operations. This would reduce the amount of borrowings we would need and free up cash and working capital to pay interest on our notes and/or to finance operations. This will be another byproduct of our goal to centralize our business operations. See also “Liquidity and Capital Resources.”

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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, 2005, 2004 and 2003 is as follows:

	Year Ended December 31,
	2005			2004			2003
	(In Thousands)
Revenues
Gaming:
Casino	$	115,607		$	108,347		$	96,816
Truck plaza	37,432			24,842			24,108
Pari-mutuel	35,988			32,946			29,189
Food and beverage	19,774			17,964			16,383
Convenience store—fuel	37,361			21,690			17,229
Other	11,096			8,538			7,776
Less: promotional allowances	(23,175		)	(20,175		)	(19,652		)
Total net revenues	234,083			194,152			171,849
Costs and expenses	216,173			170,620			149,645
Operating income	17,910			23,532			22,204
Interest expense, net	(22,232		)	(19,641		)	(19,583		)
Other income	—			—			10
Income tax expense	(423		)
Net (loss) income	$	(4,745	)	$	3,891		$	2,631

4. Comparison of our historical operations for the year ended December 31, 2005 to the year ended December 31, 2004

Revenues:

Casino revenues increased approximately $7.3 million or 7% from $108.3 million for the year ended December 31, 2004 to $115.6 million for the year ended December 31, 2005. The increase in casino revenues is a result of increased casino revenues at The Lodge of $4.1 million or 6% and the Gilpin of $2.9 million or 16%, and the Gold Dust of $0.3 million or 1%. The increase in the revenues at our properties is a result of several factors. We have continued to focus our capital investments in our slot products including the implementation of Ticket-In Ticket-Out (“TITO”) systems at The Lodge and Gilpin. The Gilpin’s poker room was opened in March 2005 resulting in increased casino revenues of approximately $0.9 million as compared to the prior year. In addition, casino revenues at our two Colorado properties were positively affected due to construction disruptions at two competing casinos.

Truck plaza gaming revenues increased approximately $12.6 million or 51% for the year ended December 31, 2005 compared to the year ended December 31, 2004. We attribute $7.1 million of this increase to the gaming operations of our five new truck plaza locations acquired during the year ended December 31, 2005. The Breaux Bridge truck plaza commenced gaming operations in the third quarter of 2004. The Eunice and Jefferson truck plaza locations commenced gaming operations in the late first and third quarters of 2005 respectively. The Larose and Fuel Stop 36 truck plaza locations commenced gaming operations late in the fourth quarter of 2005.

Pari-mutuel revenues increased $3.0 million or 9% from $32.9 million to $35.9 million for the year ended December 31, 2004 compared to the year ended December 31, 2005.  The increase was primarily due to the opening in August of a new satellite wagering facility in Henry County, Virginia, and the opening in October 2005 of a second satellite wagering facility in Chesapeake, Virginia, and an increase in the number of live racing days in 2005 from 66 to 76.

Food and Beverage revenues increased $1.8 million or 10% from $18 million to $19.8 million for the year ended December 31, 2004 as compared to the year ended December 31, 2005. Of this increase, $0.5 million is attributable to the Lodge, $0.5 million to Colonial and $0.8 million to the truck plaza facilities. The increase at Colonial is attributable to the opening in August 2005 of a new satellite wagering facility in Henry County, Virginia, the opening in October 2005 of a second

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satellite wagering facility in Chesapeake, Virginia, and an increase in the number of live racing days from 66 in 2004 to 76 in 2005. The increase at the truck plazas is attributable to the acquisitions of the 5 additional truck plaza locations, which was $0.5 million of the increase, and the remaining $0.3 was attributable to overall change in the food menu in mid 2005.

Convenience store fuel revenues increased $15.7 million or 72% from $21.7 million to $37.4 million for the year ended December 31, 2005 compared to the year ended December 31, 2005. The increase was the result of the average selling price of fuel rising from $1.78 to $2.29 per gallon, and the acquisition of the five additional truck plaza locations in 2005.

Other revenues increased $2.6 million or 30% from $8.5 million for the year ended December 31, 2004 to $11.1 million for the year ended December 31, 2005. The increase is primarily attributable to miscellaneous sales made at the new satellite wagering facility that opened in November 2005 in Richmond, Virginia, and the new satellite wagering facility opened in October 2005 in Vinton, Virginia as well as the convenience store revenues generated from the opening of the Breaux Bridge, Louisiana truck plaza location in 2004.

Promotional allowances increased $3 million or 15% from $20.2 million for the year ended December 31, 2004 to $23.2 million for the year ended December 31, 2005. The increase is primarily associated with an increase in promotional allowances at The Lodge of $2.1 million, the Gilpin of $0.1 million, the Gold Dust West $0.1 million and the truck plazas in Louisiana of $0.7 million. The increase at The Lodge, the Gilpin and the Gold Dust West is attributable to a combination of increased complimentary sales and cash incentives to our customers. The increase in Louisiana is attributable primarily to $0.3 million in complimentary food and beverage sales at the five new truck plaza locations and $0.4 million in additional promotional allowances from new customer reward programs which began in mid 2005.

Cost and Expenses:

The total costs and expenses shown in the above summary of our consolidated operating results include all costs and expenses for our casino operations, pari-mutuel facilities, video poker truck plaza operations, as well as our corporate overhead and abandonment costs. Total costs and expenses increased $45.5 million or 27% from $170.6 million for the year ended December 31, 2004 to $216.2 million for the year ended December 31, 2005 and was primarily attributable to the increased revenue discussed above and as detailed below.

Included in our total costs and expenses is our casino operating costs which we review when we analyze our casino performance. Our total casino operating costs increased $4.9 million or 6% to $84.2 million from $79.3 million for the year ended December 31, 2005 compared to the year ended December 31, 2004.

The Lodge casino comprised $2.2 million of this increase, the Gilpin accounted for $2.6 million of the increase, with the balance of $0.1 million  attributable to Gold Dust West. The increase in The Lodge expenses was due to increased gaming taxes (resulting from increased gaming revenues), slot participation costs, general operating supplies, and maintenance. The increase at the Gilpin was attributable to gaming taxes and operating costs of the Gilpin Poker room which opened in the first quarter of 2005. The increase at the Gold Dust West was related to an increase depreciation and an increase in repairs and maintenance costs related to the snow storms that impacted the Reno market in January 2005.

Included in our total costs and expenses is our video poker truck plaza operating costs which we review when we analyze our truck plaza performance. Our total operating costs and expenses at our video poker truck plaza expenses increased $24 million or 54% to 69 million for the year ended December 31, 2005 compared to 44.8 million for the year ended December 31, 2004. Approximately $12 million of this increase is due to the opening of the five new truck plazas, $8.5 million was the result of increased fuel costs and approximately $3.7 million reflects other costs primarily associated with direct costs incurred on increased gaming and convenience store revenues of the truck plazas.

Included in our total costs and expenses is our pari-mutual facilities which we review when we analyze our race-track and our off track betting facilities. Our total operating costs and expenses at our pari-mutual facilities increased $16.5 million or 43% to $54.7 million for the year ended December 31, 2005 compared to $38.2 million for the year ended December 31, 2004. This increase is primarily attributable to the opening of the new satellite wagering facilities in Chesapeake, Virginia and Henry County, Virginia which we opened in August 2005 and October 2005, respectively, an increase in expense due to additional live race days, and $10.4 million in costs related to the Circuit contract termination described in Section 2 above.

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On September 30, 2005, Colonial completed a transaction with MEC under which Colonial acquired all of the outstanding shares of the Circuit for a purchase price of $10 million. Under the terms of the purchase agreement, Colonial paid $7 million in cash at closing of the transaction and issued a one-year $3 million note bearing interest at the prime rate plus 1% (7.75% at September 30, 2005). The stock acquisition has been characterized as a termination of a contract. As such, $10.4 million, including the $10 million purchase price and $0.4 million in legal and professional fees associated with this transaction, has been expensed in 2005.

Our total corporate overhead costs and expenses increased by $1.4 million for the year ended December 31, 2005 compared to the year ended December 31, 2004. The increase is primarily the result of $0.6 million in costs to organize and operate a charity poker festival in Cleveland, Ohio from July through September 2005. The remaining $0.8 million increase is due to increased travel expenses, compensation, and legal fees.

Abandonment costs decreased $1.5 million or 51% for the year ended December 31, 2005 compared to the year ended December 31, 2004. During the year ended 2004, we recorded a $2.9 million charge to operations attributable to the write-off of abandoned project costs. Included in these costs was $1.8 million related to development costs associated with a potential gaming site in D’Iberville, Mississippi, $0.8 million in direct acquisition costs consisting of option payments, and legal and accounting fee expenditures associated with four separate unrelated parties to acquire seven video poker truck plaza operations in Louisiana and approximately $0.3 million in other capitalized costs charged to operations due to abandonment of miscellaneous other projects. The 2005 abandonment charge of $1.4 million represents the allocated net book value of a stand-alone portion of the Gold Dust West’s motel building (“the L-wing”) containing 66 of the property’s 106 motel rooms. After considering alternative plans for this stand-alone portion of the motel including a refurbishing, it was decided that the property would be better served with improved access and expanded parking. We began demolition of the L-wing during the first quarter of 2006 and expect to complete the project late in the second quarter at an estimated total cost of $1.4 million. We expect to add approximately 75 parking spaces as a result of the demolition. We will continue to operate the remaining 40 hotel rooms.

Interest expense increased $2.7 million for the year ended December 31, 2005 as compared to the year ended December 31, 2004. The increase is attributable to the issuance of $23 million in additional senior secured notes in conjunction with the acquisition of three truck plaza facilities as discussed above.

Income tax expense of $0.4 million was incurred during the year ended December 31, 2005. On March 11, 2002, we received notice from the Internal Revenue Service asserting deficiencies in federal corporate income taxes for a subsidiary for the 1998 tax year. The proposed adjustment relates to the deductibility of depreciation taken against certain costs incurred by The Lodge to build and improve public assets. We are in the final phases of settling this issue with the Internal Revenue Service and have estimated and charged to earnings $423,000 which includes $149,000 of interest.

5. Comparison of our historical operations for the year ended December 31, 2004 to the year ended December 31, 2003

Revenues:

Casino revenues increased $11.5 million or 12% from $96.8 million for the year ended December 31, 2003 to $108.3 million for the year ended December 31, 2004. The increase in casino revenues is a result of increased casino revenues at The Lodge of $6.5 million or 11%, the Gilpin of $2.5 million or 15% and Gold Dust West of $2.5 million or 13%. We expanded capital expenditures in our slot product during 2004 including the implementation of a Ticket-In Ticket-Out (“TITO”) system at Gold Dust West. Additionally, it appears that our marketing efforts proved successful as we continue to receive more than our fair share of the market (i.e. the percentage of casino revenues in our market as compared to the percentage of machines in our market). Finally, casino revenues at our two Colorado properties were positively affected due to construction disruption at two competing casinos. It is anticipated that these competing casinos will have completed additions to their garages, restaurants and gaming facilities in the spring of 2006 with the completion of a hotel addition in the spring of 2007.

Truck plaza revenues increased $0.7 million or 3% from $24.1 million for the year ended December 31, 2003 to $24.8 million for the year ended December 31, 2004. The increase in gaming revenues is a result of continuing marketing programs implemented to drive video poker revenue and the opening of the Breaux Bridge, Louisiana truck plaza in July 2004.

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Pari-mutuel revenues increased $3.8 million or 13% from $29.2 million for the year ended December 31, 2003 to $32.9 million for the year ended December 31, 2004. The increase in revenues is due to the new satellite wagering facility that we opened in November 2003 in Richmond, Virginia, and the new satellite wagering facility opened in October 2004 in Vinton, Virginia, coupled with eight additional live racing days at our track in New Kent, Virginia, during the year ended 2004 as compared to the year ended 2003.

Food and beverage revenues increased $1.6 million or 10% from $16.4 million for the year ended December 31, 2003 to $18 million for the year ended December 31, 2004. This increase is attributable to an increase of $0.5 million at the Gilpin, $0.5 million at The Lodge, $0.1 at Colonial, and $0.5 at the truck plazas in the current period as compared to the prior year. The increase in food and beverage revenues at The Lodge and Gilpin casinos was a result of increased traffic through the casinos as discussed above. The increase in food and beverage revenues at Colonial is attributable to the new satellite facility that opened in November 2003 in Richmond, Virginia, and the new satellite wagering facility opened in October 2004 in Vinton, Virginia. The increase in food and beverage revenues at the truck plazas in 2004 as compared to the year ended 2003 was a result of increased complimentary activity to customers which was designed to drive an increase in fuel sales volume and truck plaza casino revenues as well as the opening of the Breaux Bridge, Louisiana location in 2004.

Convenience store fuel revenues increased $4.5 million or 26% from $17.2 million for the year ended December 31, 2003 to $21.7 million for the year ended December 31, 2004. The increase is primarily attributable to the increase in the average price of fuel during 2005 as compared to 2004 as well as the opening of the Breaux Bridge, Louisiana location in 2004.

Other revenues increased $0.8 million or 10% from $7.8 million for the year ended December 31, 2003 to $8.5 million for the year ended December 31, 2004. The increase is primarily attributable to miscellaneous sales made at the new satellite wagering facility that opened in November 2003 in Richmond, Virginia, and the new satellite wagering facility opened in October 2004 in Vinton, Virginia as well as the convenience store revenues generated from the opening of the Breaux Bridge location in 2004.

Promotional allowances increased $0.5 million or 3% from $19.7 million for the year ended December 31, 2003 to $20.2 million for the year ended December 31, 2004. The increase is primarily due to an increase of $0.3 million in promotional allowance at the truck plaza facilities and a $0.3 million increase in promotional allowance at the Gilpin, offset by a decrease of $0.1 million in promotional allowances at The Lodge. The increases in the truck plaza and the Gilpin’s promotional allowances are associated with increased complimentary food and beverage promotions for our players and the opening of the Breaux Bridge, Louisiana location in 2004. The decrease in promotional allowances at The Lodge was attributable to a change in the marketing cash back program during 2004.

Cost and Expenses:

Costs and expenses increased $21 million or 14% from $149.6 million for the year ended December 31, 2003 to $170.6 million for the year ended December 31, 2004. The increase in costs and expenses was primarily related to the increased revenue levels discussed above. During the year ended 2004, we recorded a $2.9 million charge to operations attributable to the write-off of abandoned project costs. Included in these costs is $1.8 million related to development costs associated with a potential gaming site in D’Iberville, Mississippi. After considering various development projects, we chose to pursue other alternatives which, in our estimation, would result in greater returns than the potential of the D’Iberville site. The majority of these abandoned project cost expenditures were primarily associated with land option payments and design, development and planning costs. Further, we charged to operations approximately $0.8 million in direct acquisition costs consisting of option payments, and legal and accounting fee expenditures associated with four separate unrelated parties to acquire seven video poker truck plaza operations in Louisiana. Based on the results of the due diligence work, we abandoned the potential acquisitions with all seven truck plaza operations targeted for acquisition. Finally, approximately $0.3 million in other capitalized costs was charged to operations due to abandonment of miscellaneous other projects.

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6. Liquidity and capital resources—December 31, 2005

As of December 31, 2005, we had cash and cash equivalents of $21.8 million which was relatively unchanged compared to $21.5 million in cash and cash equivalents as of December 31, 2004.

We have a $10 million senior credit facility of which $5.4 million and $10 million was available as of December 31, 2005 and December 31, 2004, respectively. The senior credit facility carries an interest rate of 1.75% above the prime rate and expires in July 2007.

As discussed above, on March 2, 2005, we sold $23 million of new notes. The new notes are subject to the same terms and conditions of our existing senior secured notes which carry a coupon of 11 7/8% and are due in February 2009, and like our existing notes the interest is payable on each February 1 and August 1. We issued the tack-on notes at a 10% premium of their principal amount which yielded total proceeds, before offering costs, of approximately $25.3 million. We paid $3.3 million in costs to obtain this financing and used $22.5 million of the proceeds to acquire three video poker truck plaza operations.

As previously discussed, on September 30, 2005, Colonial completed a transaction with MEC, under which Colonial acquired all of the outstanding shares of the Circuit, a wholly-owned subsidiary of MEC, for $10 million ($7 million of which was paid in cash and $3 million in the form of a 1-year promissory note bearing interest at 7.75% as of December 31, 2005. Our two shareholders provided capital contributions of $3.5 million to assist in funding this transaction.

Also, as previously discussed our owners contributed $8.8 million in late December 2005 to facilitate the acquisition of two video poker truck plazas from two unaffiliated third parties. Further, as discussed earlier our owners contributed approximately $8.1 million in 2005  to facilitate the acquisition of three video poker truck plaza operations from a related party.

While our owners have made capital contributions to facilitate various acquisitions of the company from time to time we can give no assurance that they will continue to do so in the future. Additionally, as we are a Subchapter S Corporation, we may from time-to-time make distributions to our owners on any taxes due as a result of income generated by us.

As of December 31, 2005 our total debt approximates $183 million. Our future liquidity, which includes our ability to make semiannual interest payments on our notes on February 1 and August 1 of each year, depends upon our future operational success.

We do not have any off-balance sheet financing arrangements or transactions with unconsolidated or limited purpose entities, nor are any contemplated in the future.

We believe that our cash flow from operations, cash and cash equivalents and our senior credit facility of $10 million discussed above will be adequate to meet our debt service obligations as well as our capital expenditure requirements for the next twelve months. However, 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 sustain our current operations. Our ability to incur additional debt is restricted by the terms and covenants of our senior secured notes. We can give no assurance that we will be able to raise 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 a decline in the demand for our products and services, which would reduce our ability to generate funds from operations. 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 gaming market. Should the Black Hawk market 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 IA above.

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The following table provides disclosure concerning JEI’s 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, 2005.

			Less than 1		1-3		4-5		After 5
	Total		Year		Years		Years		Years
	(In Thousands)
Long-term debt(1)	$	278,707	$	24,135	$	46,655	$	181,707	$	26,210
Operating leases(2)	19,735		1,600		2,969		1,908		13,258
Other long-term obligations(3)	5,161		2,991		1,423		747
Total contractual cash obligations	$	303,603	$	28,726	$	51,047	$	184,362	$	39,468

(1)Long-term debt includes principal and interest owing under the terms of our notes, the senior credit facility, the Black Hawk special assessment bonds, indebtedness of Colonial, and our subordinated debt to affiliates.

(2)Operating leases include a land and warehouse leased by the Gold Dust in Reno, Nevada, as well as other leases for property and equipment.

(3)Other long-term obligations include the payment of one dollar per video poker machine per day, plus $1 per machine annually in licensing to an unaffiliated party to maintain our video poker machines in our truck plaza operations.

In addition, we have the following commitments and obligations:

•Through our subsidiary Colonial, we have 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 basic terms of the agreement state that the totalisator company shall provide totalisator services to Colonial for all wagering held at Colonial’s facilities through 2004 at a rate of .365% of handle. In addition, Colonial agreed to use certain equipment provided by the totalisator company. On March 16, 2005, Colonial entered into an amendment with the totalisator company extending the term of the agreement to 2012, providing replacement equipment for the existing equipment, and increasing the rate to .385% of handle up to $270 million in handle. Handle above $270 million is charged a rate of .345%. The amendment also provides for a minimum charge per calendar year of $330,000.

•Through our Lucky Magnolia truck plaza, we have an obligation to pay to an individual 4.9% of the plaza’s net video poker revenue, after associated state taxes, for as long as video poker machines are operated on the property.

Finally, our outstanding senior secured notes aggregating $148 million (after giving effect to the March 2005 “tack-on” described above) are redeemable on or after February 1, 2006 at the following redemption prices (expressed as percentages of principal amounts) plus accrued and unpaid interest, as follows:

Year	Percentage
2006	105.938	%
2007	102.969	%
2008	100.000	%

In the event that interest rates and market conditions dictate, we would more than likely be willing to refinance our notes at lower rates. However, a refinancing would be predicated upon our ability to secure financing on terms favorable and in amounts necessary to generate borrowings in excess of current principal amounts as illustrated in the above table. If we were unable to secure such refinancing, our ability to repay the entire current principal amount outstanding (which is due in 2009) may be difficult, if not impossible, barring an entire liquidation of our assets. However, we believe we will be able to secure a refinancing package which will be acceptable to us some time between 2006 and 2009 in order to repay our existing senior secured notes.

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7. 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, Louisiana, Nevada 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 71% of our total assets. We estimate that the undiscounted future cash flows expected to result from the use of these assets exceed the current carrying value of these assets. 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 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 be shorter than 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.

Goodwill and other intangible assets

We have approximately $33 million in goodwill recorded on our consolidated balance sheet resulting from the acquisition of other 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. Once an impairment of goodwill has been recorded, it cannot be reversed. We completed our initial assessment for impairment of goodwill in 2002 and determined that no impairment of our goodwill existed. Further, we performed our most recent annual impairment test as of September 30, 2005 and determined that goodwill was not impaired. Finally, we have reassessed the useful lives of our identifiable intangible assets without any change to the previously established amortization periods of such assets.

8. EBITDA segment information and results of operations—three years ended December 31, 2005

As discussed above, we have four segments representing the geographic regions of our operations. Each segment is managed separately because of the unique characteristics of the revenue stream and customer base attributable to that segment.

The Colorado segment consists of The Lodge and Gilpin casinos and the Nevada segment consists of the Gold Dust West casino. The Louisiana operations consist of our truck plaza video poker facilities and the Virginia segment consists of Colonial’s pari-mutuel operations.

The information presented is by each segment in which we have operations and also presents our EBITDA (earnings before interest, 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 investors 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 properties using EBITDA measures as do most analysts following the gaming industry. Additionally, EBITDA is an element of certain financial covenants in our debt agreements and, as such, is a critical component that we closely watch in order to determine our ability

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to achieve future growth and to ensure we are in compliance with our debt agreements. We present EBITDA in the tables below as supplemental information and to provide further discussion and analysis of our operating results. EBITDA can be reconciled directly to our consolidated net income by adding the amounts shown for depreciation, amortization, interest and taxes to our net income. 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, 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 components of operations presented below differ from the analysis provided above for actual results because many items are reclassified or grouped in order to show our operations by the segments we measure.

	For the Years Ended
	December 31,
	2005			2004			2003
	(In Thousands)
NET REVENUES
Colorado	$	88,414		$	82,281		$	72,477
Nevada	22,331			22,465			19,864
Louisiana	82,371			52,305			46,505
Virginia	40,967			37,101			33,003
Total net revenues	$	234,083		$	194,152		$	171,849
COSTS AND EXPENSES
Colorado	$	62,663		$	58,067		$	53,769
Nevada	16,228			14,930			14,122
Louisiana	66,638			42,851			36,207
Virginia	51,993			35,500			31,220
Net corporate overhead	7,646			9,314			5,256
Total costs and expenses	$	205,168		$	160,662		$	140,574
EBITDA
Colorado	$	25,751		$	24,214		$	18,708
Nevada	6,103			7,535			5,742
Louisiana	15,733			9,454			10,298
Virginia	(11,026		)	1,601			1,783
Net corporate overhead	(7,646		)	(9,314		)	(5,256		)
EBITDA	$	28,915		$	33,490		$	31,275

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The following table sets forth a reconciliation of EBITDA, a non-GAAP financial measure, to net income, a GAAP financial measure.

								Income
				Depreciation and		Interest		Interest		Tax		Net
Year ended December 31, 2005	EBITDA			Amortization		Income		Expense		Expense		Income
Colorado	$	25,751		$	5,017	$	44	$	10,934	$		$	9,844
Nevada	6,103			1,691		15		3,141				1,286
Louisiana	15,733			2,387		20		2,794				10,572
Virginia	(11,026		)	1,685		86		322				(12,947		)
Corporate overhead	(7,646		)	225		7		5,213		423		(13,500		)
Totals	$	28,915		$	11,005	$	172	$	22,404	$	423	$	(4,745	)

										Income
				Depreciation and		Interest		Interest		Tax		Net
Year ended December 31, 2004	EBITDA			Amortization		Income		Expense		Expense		Income
Colorado	$	24,214		$	4,838	$	13	$	10,807			$	8,582
Nevada	7,535			1,436		3		3,142				2,960
Louisiana	9,454			1,962		3		2,216				5,279
Virginia	1,601			1,544		29		121				(35		)
Corporate overhead	(9,314		)	178		16		3,419				(12,895		)
Totals	$	33,490		$	9,958	$	64	$	19,705	$	—	$	3,891

										Income
				Depreciation and		Interest		Interest		Tax		Net
Year ended December 31, 2003	EBITDA			Amortization		Income		Expense		Expense		Income
Colorado	$	18,708		$	4,759	$	3	$	10,774			$	3,178
Nevada	5,742			1,241		—		3,123				1,378
Louisiana	10,298			1,650		14		1,986				6,676
Virginia	1,783			1,285		44		264				278
Corporate overhead	(5,256		)	136		11		3,498				(8,879		)
Totals	$	31,275		$	9,071	$	72	$	19,645	$	—	$	2,631

The following is a discussion of our results of operations by segment, for the year ended December 31, 2005 compared to the year ended December 31, 2004.

COLORADO

Overview

A summary of the net revenue, costs and expenses and EBITDA of our Colorado properties is as follows:

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	For the Years Ended
	December 31,
	2005		2004		2003
	(In Thousands)
Net revenues
Lodge	$	67,428	$	64,144	$	57,136
Gilpin	20,986		18,137		15,341
Total net revenues	88,414		82,281		72,477
Costs and expenses
Lodge	46,166		43,973		40,262
Gilpin	16,497		14,094		13,507
Total costs and expenses	62,663		58,067		53,769
EBITDA
Lodge	21,262		20,171		16,874
Gilpin	4,489		4,043		1,834
EBITDA	$	25,751	$	24,214	$	18,708

The following table sets forth a reconciliation of EBITDA, a non-GAAP financial measure, to net income, a GAAP financial measure.

			Depreciation and		Interest		Interest		Net
For the year ended December 31, 2005	EBITDA		Amortization		Income		Expense		Income
	(In Thousands)
Lodge	$	21,262	$	3,372	$	32	$	8,342	$	9,580
Gilpin	4,489		1,645		12		2,592		264
Total	$	25,751	$	5,017	$	44	$	10,934	$	9,844

			Depreciation and		Interest		Interest		Net
For the year ended December 31, 2004	EBITDA		Amortization		Income		Expense		Income
Lodge	$	20,171	$	3,385	$	10	$	8,378	$	8,418
Gilpin	4,043		1,453		3		2,429		164
Total	$	24,214	$	4,838	$	13	$	10,807	$	8,582

			Depreciation and		Interest		Interest		Net
For the year ended December 31, 2003	EBITDA		Amortization		Income		Expense		Income
Lodge	$	16,874	$	3,339	$	2	$	8,341	$	5,196
Gilpin	1,834		1,420		1		2,433		(2,018		)
Total	$	18,708	$	4,759	$	3	$	10,774	$	3,178

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Increased Competition in the Black Hawk Market

The competitive aspects of the market in Black Hawk continue to be a significant factor in our operations. As a result of the increased level of development activity in Black Hawk over the last three years, there were approximately 9,700 gaming devices in the city at December 31, 2005. At December 31, 2005 we had 1,400 devices in this market (950 at The Lodge and 450 at the Gilpin), which represented approximately 14.4% of the total devices in the Black Hawk market.

For the year ended December 31, 2005 our gross gaming revenues at The Lodge and the Gilpin totaled $93.1 million ($88.4 million in net revenues), which represented 17.3% of the total gaming revenues in Black Hawk. While the overall market in 2005 grew by 1.5% in gross gaming revenues, the average total gaming devices increased by 2.6%. We managed to generate 120% efficiencies (our percentage of the gross gaming revenues divided by our percentage of the gaming devices) within the market for 2005. We follow our efficiency levels 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 fair share of the market, our personnel costs, marketing costs, and other costs will likely increase as we attempt to keep our market share.

Net Revenues. The $6.1 million increase in net revenues of our Colorado operations for the year ended December 31, 2005 compared to the same period of 2004 is attributable to an increase in net revenues at the Gilpin of $2.8 million and $3.3 million in net revenues at The Lodge. We expanded capital expenditures in our slot product in Colorado over the past year attempting to provide the latest games available to our customers and opened the Gilpin poker room in March of 2005. In addition, our Colorado casino revenues were positively affected due to construction disruptions at two competing casinos.

Costs and Expenses. Total costs and expenses associated with our Colorado operations increased $4.6 million for the year ended December 31, 2005 compared to the same period of 2004. The increase was a result of increased costs and expenses at the Gilpin of $2.4 million and $2.2 million at The Lodge. The increase in costs and expenses attributable to The Lodge was a result of increased gaming taxes (due to increased gaming revenues), food and beverage cost of sales, slot participation, and marketing-related expenses. The increase at the Gilpin was a result of opening the new poker room, increased gaming taxes (due to increased gaming revenues), food and beverage costs of sales, slot participation expenses, and marketing-related expenses.

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA). One additional measurement that management utilizes to gauge performance of our operating segments is what we refer to as “flow-through” on incremental revenue. Generally speaking, we have significant fixed costs and when we are able to increase our revenues, we would expect a significant portion of those incremental revenues, after the payment of gaming taxes and promotional and advertising costs to capture those additional revenues, will flow through to our EBITDA. As discussed above, because our net revenues at The Lodge increased approximately $3.3 million during 2005 causing an increase in our costs and expenses of approximately $2.2 million, our EBITDA in 2005 increased over 2004 by approximately $1.1 million. In other words, we realized approximately 33% of those incremental revenues which flowed through to our EBITDA. Additionally, our net revenues at the Gilpin increased approximately $2.8 million in 2005 as compared to 2004, approximately 16% of that amount flowed through to our EBITDA in 2005. The decline in incremental flow through at the Gilpin is due to the additional costs associated with opening the poker room. This measurement is only one of the tools we use to gauge the success of our marketing programs and it also serves to highlight our fixed cost infra-structure and how those costs affect the operations and performance of our properties.

NEVADA

Overview

We acquired our Reno, Nevada, property in January 2001. In September 2001 we installed a slot-player tracking system and began to directly market to our local customer base. During 2002, we made several improvements to the property including a significant remodeling of the Wildwood kitchen and serving line, the addition of outdoor signage, and general landscaping improvements. During 2003, we improved the exterior signage and focused on the casino’s slot product improvements. During 2004 and 2005, we continued to focus on our slot product by introducing Ticket-In Ticket-Out (“TITO”) technology to our gaming floor.

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Net revenues. The net revenues of Gold Dust West decreased by $0.1 million for the year ended December 31, 2005 as compared to the same period of 2004. During the first quarter of 2005 the Reno market was hit with a significant snow storm that severely impacted the entire Reno market. However, we continued to expand capital expenditures in our slot product over the last year including the increase in TITO available games for our customers. Additionally, we continue to realize success with our marketing and slot club efforts.

Costs and Expenses. Costs and expenses of Gold Dust West increased $1.3 million for the year ended December 31, 2005 as compared to the same period of 2004. This increase in costs and expenses was the result of the Company recording an abandonment charge of $1.4 million partially offset by a $0.1 million reduction in operating costs of the casino. The abandonment charge of $1.4 million represents the allocated net book value of a stand-alone portion of the Gold Dust West’s motel building (“the L-wing”) containing 66 of the property’s 106 motel rooms. After considering alternative plans for this stand-alone portion of the motel including a possible refurbish, it was decided that the property would be better served by improved access and expanded parking. We began demolition of the L-wing during the first quarter of 2006 and expects to complete the project late in the second quarter at an estimated total cost of $1.4 million. We expect to add approximately 75 parking spaces as a result of the demolition. We will continue to operate the remaining 40 hotel rooms.

Earnings Before Interest, Taxes, Depreciation and Amortization. The Gold Dust West’s EBITDA was approximately $6.1 million for the year ended December 31, 2005 compared to $7.5 million for the years ended December 31, 2004 with the difference being the result of the L-wing abandonment charge discussed above.

Overview

The Louisiana truck plaza video gaming properties consist of eleven truck plaza gaming facilities located in Louisiana and a share in the gaming revenues of an additional truck plaza.

Each truck plaza features a convenience store, fueling operations, a  restaurant operating not fewer than 12 hours per day, and 50 video gaming devices (except for the Fuel Stop 36 and Larose Truck plazas, which have 39 video gaming devices, and Eunice  Truck Plaza and Casino,  which has 40 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 instantaneously via a computer phone line directly to the Louisiana State Police. The Louisiana truck plazas’ revenues are heavily dependent on meeting the minimum gallons of fuel sales requirements necessary to operate video poker gaming machines in Louisiana. These requirements must be complied with on a quarterly basis. In the event of noncompliance, the Louisiana State Police must turn off a portion of the video poker machines. We believe the Louisiana truck plazas will continue to meet the fuel sales requirements necessary to operate video poker gaming machines in Louisiana at current levels.

Net revenues. The Louisiana truck plazas generated net revenues of $82.3 million for the year ended December 31, 2005 compared to $52.3 million for the year ended December 31, 2004. We attribute $14.4 million of this increase in net revenues to our five new truck plaza locations, acquired during the year ended December 31, 2005. This remaining increase of $15.6 million or 29% is due to increases in gaming and fuel revenues. Gaming revenues have increased as a result of the continuing advertising and promotional marketing efforts driven to create a brand and identity for our locations. Fuel revenues have increased primarily due to a weighted average price per gallon increase from $1.78 per gallon in 2004 to $2.29 per gallon in 2005.

Costs and Expenses. The Louisiana truck plazas’ costs and expenses were $66.6 million and $42.9 million for the years ended December 31, 2005 and 2004, respectively. We attribute $12 million of this increase in costs and expenses to our five new truck plaza locations, acquired during the year ended December 31, 2005. The remaining increase of $11.8 million or 27% is primarily due to the costs attributable to increased gaming operations and the cost of fuel sold.

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Earnings Before Interest, Taxes, Depreciation and Amortization. The Louisiana properties’ EBITDA was approximately $15.7 million and $9.5 million for the years ended December 31, 2005 and 2004, respectively. We attribute $2.7 million of this increase in EBITDA to our five new truck plaza locations, acquired during the year ended December 31, 2005. This remaining increase of $3.5 million or 56% is primarily due to the increase in gaming revenues.

VIRGINIA

Overview

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) admission fees, program and racing form sales, and certain other ancillary activities; and (iv) 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 and where the wagering takes place. 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.

As previously discussed, on September 30, 2005 Colonial acquired the management contract from MEC and now is able to manage the track’s operations. We believe this will enable us to immediately influence the operational aspects of Colonial. The 2005 EBITDA reflects a charge of $10.4 million representing the purchase price of the contract plus $0.4 million in legal and professional fees associated with the transaction.

On March 8, 2004, the Virginia Racing Commission granted the license to Colonial to open its sixth satellite wagering facility in Vinton, Virginia. Construction on the facility started in the second quarter of 2004 and the facility opened for business on October 11, 2004.

On April 28, 2004, the Virginia Racing Commission granted Colonial a license to accept wagers over the telephone or through the internet through its advanced deposit wagering system. The advanced deposit wagering system became fully operational late in the third quarter of 2004.

On November 2, 2004, referenda were passed in the following counties in Virginia: Henry County; Scott County and Westmoreland County. On March 16, 2005, Colonial received a license to own and operate a seventh satellite wagering facility in Henry County, Virginia. We opened the Henry County facility in the third quarter of 2005. On April 27, 2005, Colonial received a license to own and operate its eighth satellite wagering facility at a second location in Chesapeake, Virginia. We opened the second Chesapeake facility in the fourth quarter of 2005. On May 25, 2005, Colonial was granted a license to own and operate a ninth satellite wagering facility in Scott County, Virginia. We opened the Scott County facility in the first quarter of 2006.

Total Revenues. Colonial generated net revenues for the year ended December 31, 2005 of $41.0 million compared to $37.1 million for the same period of 2004. The increase of total revenues of $3.9 million, or 10.4%, is due primarily to the opening in August 2005 of a second satellite wagering facility in Chesapeake, Virginia, the opening in October 2005 of a new satellite wagering facility in Henry County, Virginia, and an increase in the number of live racing days from 66 in 2004 to 76 in 2005.

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Costs and Expenses. Colonial’s direct operating costs and expenses were $52.0 million for the year ended December 31, 2005 compared to $35.5 million for the same period of 2004. Costs and expenses increased $16.5 million, or 46.5%, for the year ended December 31, 2005 from the same period of 2004. This increase is primarily attributable to the opening of the new satellite wagering facilities in Henry County and Chesapeake, Virginia which we opened in August 2005 and October 2005, respectively, an increase in expense due to additional live race days, and $10.4 million in costs related to the Circuit contract termination.

Earnings Before Interest, Taxes, Depreciation and Amortization. Colonial’s property level EBITDA was approximately ($11.0) million and $1.6 million for the years ended December 31, 2005 and 2004, respectively. The decrease of $12.6 million was due primarily to expenses associated with the new satellite wagering facilities in Henry County and Chesapeake, Virginia, additional live racing days, and costs related to the Circuit contract termination.

Net Corporate Overhead

Overview

Our corporate operations directs the overall management, operational, accounting, and administrative aspects of our Company.

Costs and Expenses. Corporate overhead costs and expenses decreased from $9.3 million for the year ended December 31, 2004 to $7.6 million in 2005. The $1.7 million decrease is primarily due to a $2.9 million charge to earnings associated with the abandonment of projects during 2004 with no such charge occurring in 2005. The increase in other corporate overhead expenses of $1.2 million is attributable to costs incurred for a charity poker festival in Cleveland, Ohio, an increase in labor, rent and satellite wagering facility referenda campaign costs in Virginia as well as an increase in travel, labor and consulting costs associated with the Sarbanes Oxley Act of 2002 Section 404 compliance preparatory work.

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 interest rates, foreign currency exchange rates, and commodity prices. On February 8, 2002, we issued $125.0 million in 11⁷/₈% senior secured notes due in 2009 and in March 2005 we issued an additional $23.0 million of such notes. All debt currently bears interest at a fixed rate, except our $10 million line of credit (which currently has no amounts outstanding), which bears interest at 1.75% above the prime rate published by Wells Fargo Bank, N.A.

If market interest rates increase, our cash requirements for interest on the senior credit facility balance would also increase. Conversely, if market interest rates decrease, our cash requirements for interest on the senior credit facility balance would also decrease. A 1% change in the variable interest rate would not have a material impact on our results of operations.

There would be an approximate change in our cash requirements of $54,000 annually for interest should market rates increase or decrease by 10% compared to interest rate levels at December 31, 2005.

We currently do not invest in derivative financial instruments, interest rate swaps or other similar investments to alter interest rate exposure.

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.

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Item 9A.Controls and Procedures

We have carried out under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, an evaluation 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, 2005. Based on such evaluation, we 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 and reported within the time periods specified in applicable SEC rules and forms.  There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is 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, 2005 that was not so reported.

Item 10.Directors and Executive Officers of the Registrant

The following table provides information regarding our directors and executive officers and key employees of Black Hawk Gaming, Colonial and the Louisiana properties as of March 1, 2006:

Name	Age	Position
Jeffrey P. Jacobs	52	Chief Executive Officer, President, Secretary, Treasurer and Chairman of the Board
Richard E. Jacobs	80	Director
Stephen R. Roark	58	Chief Financial Officer and President of Casino Operations
Ian M. Stewart	51	President of Pari-Mutuel Wagering and Video Poker Operations
Michael T. Shubic	51	Vice President of Casino Operations
Stan Guidroz	39	Vice President of Louisiana Operations

Jeffrey P. Jacobs is our Chairman, Chief Executive Officer, President, Secretary and Treasurer. From 1996 to present, he served as Chairman and Chief Executive Officer of Diversified Opportunities Group Ltd., a company co-founded by Mr. Jacobs and his father, Richard E. Jacobs, and based in Cleveland, Ohio, that has investments in gaming companies and ventures. Diversified was acquired by Jacobs Entertainment on February 22, 2002. From 1975 to present, Mr. Jacobs has also served as Chairman and Chief Executive Officer of Jacobs Investments, Inc., a company engaged in the development, construction and operation of residential and commercial real estate projects in Ohio. He is also involved in a variety of private equity transactions and investments. Mr. Jacobs served in the Ohio House of Representatives from 1982 until 1986. He is also Chairman and Chief Executive Officer of Colonial, and Chairman and Chief Executive Officer of Black Hawk Gaming.

Richard E. Jacobs is our other Director. Mr. Jacobs was Chairman of the Board, President and Chief Executive Officer of Cleveland Indians Baseball Company, Inc. from its inception in 1998 to February 2000. From 1986 to 1998, Mr. Jacobs was Chairman of the Board, President and Chief Executive Officer of Cleveland Baseball Corporation, which previously served as the general partner of the partnership that now owns the Cleveland Indians Baseball team. Mr. Jacobs is also Chairman of the Board and Chief Executive Officer of The Richard E. Jacobs Group Inc., a real estate management and development company.

Stephen R. Roark is currently our Chief Financial Officer and President of Casino Operations. He has been 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.

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Ian M. Stewart is currently our President of Pari-Mutuel Wagering and Video Poker 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 is currently our Vice President of Casino Operations, having joined us in December 2002. 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 marketing 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.

Stan Guidroz is currently our Vice President of Louisiana Operations, having joined us in July 2002. Prior to that he was Director of Sales and Marketing for our Louisiana operations where he managed the sales and marketing efforts as well as the development of a proprietary fuel program for our truck stop plazas. Prior to joining us, Mr. Guidroz held the position of Director of Operations for Pumpelly Oil, the largest petroleum marketing company in the Gulf Coast for six years. Mr. Guidroz recently completed his MBA at the University of Louisiana of Lafayette.

We are a company wholly owned 50% by Jeffrey P. Jacobs and two of his family trusts, and revocable and irrevocable trusts established by his father, Richard E. Jacobs. Our board of directors, consisting of Messrs. Jeffrey P. Jacobs and Richard E. Jacobs, has no nominating, audit, compensation or other committees. The board has adopted a code of ethics policy which is applicable to our CEO, CFO and our employees, and is an exhibit to this report. 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.

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Item 11.Executive Compensation

Because we are a SubChapter S corporation under the Internal Revenue Code of 1986 and our stockholders, rather than we, pay taxes on our income, we anticipate making distributions to our stockholders in amounts sufficient to enable them to make the required tax payments. We formulate additional incentive compensation plans for upper management and selected middle management personnel based on Jacobs Entertainment’s achievement of multi-year financial and growth objectives. The terms of the incentive compensation plans are established by Jacobs Entertainment’s board of directors.

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

					Long-Term Compensation
		Annual Compensation			Awards	Payouts
Name and Principal Position(1)	Year	Salary	Bonus	Other Annual Compensation	Restricted Stock Awards(s)	Securities Underlying Options/ SARs (#)	LTIP Payouts	All Other Compensation
		($)	($)	($)	($)		($)	($)
Jeffrey P. Jacobs	2005	500,000	250,000
	2004	500,000	250,000	—	—	—	—	(2	)
	2003	500,000	-0-	—	—	—	—	(2	)
Stephen R. Roark	2005	350,000	107,000
	2004	350,000	72,700	—	—	—	—	—
	2003	300,000	30,000	—	—	—	—	—
Ian M. Stewart	2005	250,000	75,000
	2004	250,000	30,000	—	—	—	—
	2003	215,000	40,000	—	—	—	—
Michael T. Shubic	2005	242,000	73,000
	2004	240,000	59,440
	2003	200,000	30,000

(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 an affiliate of Mr. Jacobs.

Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth certain information regarding the beneficial ownership of our common stock as of March 1, 2006, for (i) each stockholder who is known by us to own beneficially more than 5% of our common stock, (ii) each director and executive officer, and (iii) all of our directors and executive officers as a group. Except as otherwise indicated, we believe, based on information furnished by the persons named in this table, that such persons have voting and investment power with respect to all shares of common stock beneficially owned by them, subject to community property laws, where applicable.

As of March 1, 2006, 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 10,000 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.

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	Number of Shares		Percentage
Stockholder	Class A	Class B	Class A		Class B
Jeffrey P. Jacobs(1)	264	—	20	%	—
Golden Bear Plaza
East Tower
1170 U.S. Highway One, Suite 600
North Palm Beach, Florida 33408
Jacobs Family Economic and Control Trusts(2)	396	90	30	%	50	%
Hahn Loeser & Parks LLP
200 Public Square, Suite 3300
Cleveland, Ohio 44114
Richard E. Jacobs(3)	660	90	50	%	50	%
25425 Center Ridge Road
Cleveland, Ohio 41445
All executive officers and directors as a group	924	90	70	%	50	%

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

(2)The Jacobs Family Economic Trust owns 396 Class A shares and the Jacobs Family Control Trust owns 90 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.

(3)All shares shown as beneficially owned by Richard E. Jacobs are owned by The Richard E. Jacobs Revocable Trust, and the Richard E. Jacobs Irrevocable Trust. Richard E. Jacobs is the trustee of the Revocable Trust and Jeffrey P. Jacobs is the trustee of the Irrevocable Trust.

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Item 13.Certain Relationships and Related Transactions

In order to assist us in our efforts to research, develop, perform due diligence on and possibly acquire new gaming opportunities, we entered into an agreement with Premier One Development Company, effective October 1, 1997. On May 9, 2000, Premier merged into Jacobs Investments Management Co. Inc., 82% of which is owned by Jeffrey P. Jacobs and the remaining 18% of which is owned in equal portions by two former directors of Colonial. Jacobs Entertainment, Inc. paid or accrued $450,000 to Jacobs Investments Management Company for services during the year ended December 31, 2005, 2004 and 2003. In 2002, this agreement was extended until December 31, 2009, at the rate of $450,000 annually.

We provide monthly management and accounting services to truck stops owned by an affiliate of Jeffrey P. Jacobs and the Trusts. In addition, the affiliate purchases repair parts from us. Total charges to the affiliate for management services and repair part purchases totaled $480,000, $384,000 and $318,000 for the years ended December 31, 2005, 2004 and 2003, respectively. Accounts receivable due from affiliates totaled $260,000 and $224,000 as of December 31, 2005 and 2004, respectively.

Jacobs Entertainment is the obligor on notes to Jeffrey P. Jacobs and the Richard E. Jacobs Revocable Trust totaling $9.0 million, with interest only payable semi-annually at 12% per annum, and the principal amount due and payable on January 31, 2010. These notes were issued in connection with our acquisition of the Louisiana truck stops. We are also an obligor on $10.5 million of notes issued in connection with our acquisition of additional truck stops from an unaffiliated party. These notes were purchased from the seller in February 2003 for $7 million by Jeffrey P. Jacobs and the Richard E. Jacobs Revocable Trust. The amount and terms of the notes now payable to Mr. Jacobs and the Richard E. Jacobs Revocable Trust are identical to those described above. As a result of this transaction, for tax purposes our shareholders recognized taxable income in the form of a discharge of indebtedness of $3.5 million representing the difference between the $10.5 million face amount of the notes and the purchase price of $7.0 million.

In March 2005, we issued an additional $23 million in principal amount of our 11⁷/₈ Senior Secured Notes due 2009. We used proceeds derived from the sale of the notes to complete a purchase and sale agreement with Gameco Holdings, Inc., a company owned and controlled by our two directors and then sole owners. We purchased from Gameco all of the membership interests of three limited liability companies, each of which owned or leased a video gaming truck plaza in Louisiana. The aggregate purchase price of the entire membership interests in the three LLCs was $22.5 million. The assets of each LLC were purchased free and clear of liens and encumbrances and were pledged as additional collateral under our indenture. The acquisition of the three video gaming truck plazas was a combination of entities under common control and, as a result, the transaction was treated for accounting and financial reporting purposes similar to a pooling of interests. Under this method of accounting, the acquisitions were recorded at the transferor’s (Gameco’s) book value (rather than fair value), which is primarily represented by the historical identifiable cash cost in the assets transferred. This amount is approximately $10.1 million. The difference between this amount and the purchase price of $22.5 million was regarded for accounting and financial reporting purposes as a distribution to our then two owners and our stockholders’ equity was reduced by that amount. We received an opinion from an independent investment bank that the cash consideration paid was fair from a financial point of view.

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Item 14.Principal Accountant Fees and Services

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

	Year Ended December 31,
	2005		2004
Audit fees	$	765,000	$	675,000
Audit related fees*	31,000		177,500
Tax fees**	165,000		166,000
All other fees***	128,000		541,000

*Audit-related fees are principally comprised of our 401(k) audits and fees related to the internal control consulting services associated with our Sarbanes-Oxley implementation project of $13,000 and $170,000 for 2005 and 2004, respectively.

**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.

***2004 includes $538,000 in audit fees related to several Louisiana truck plazas we ultimately decided not to purchase and $3,000 in other miscellaneous consulting services. 2005 includes $90,000 in fees attributable to the March 2, 2005 debt tack-on offering.

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

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Item 15.Exhibits and Financial Statement Schedules

(a)Financial Statements and Financial Statement Schedules

(1)Financial Statements 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

Exhibit No.	Description
2.1(1)	Agreement and Plan of Merger dated as of April 25, 2001, among Black Hawk Gaming & Development Company, Gameco, Inc. and BH Acquisition, Inc.
2.2(1)	Amendment to Agreement and Plan of Merger dated as of November 12, 2001 among Black Hawk Gaming & Development Company, Inc., Gameco, Inc. and BH Acquisition, Inc.
2.3(1)	Exchange Agreement dated February 22, 2002 among Gameco, Inc., Jeffrey P. Jacobs and The Richard E. Jacobs Revocable Trust.
2.4(1)	Agreement and Plan of Merger dated as of June 11, 2001 among Colonial Holdings, Inc., Gameco, Inc. and Gameco Acquisitions, Inc.
2.5(1)	Amendment to Agreement and Plan of Merger dated as of November 16, 2001 among Colonial Holdings, Inc., Gameco, Inc. and Gameco Acquisition, Inc.
2.6(1)	Agreement and Plan of Merger, dated February 22, 2002 between Gameco, Inc. and Jacobs Entertainment, Inc.
3.1(1)	Certificate of Incorporation of Gameco, Inc.
3.2(1)	By-Laws of Gameco, Inc.
3.3(1)	Articles of Incorporation of Black Hawk Gaming & Development Company, Inc.
3.4(1)	Bylaws of Black Hawk Gaming & Development Company, Inc.
3.5(1)	Articles of Incorporation of Gold Dust West Casino, Inc.
3.6(1)	Code of By-laws of Gold Dust West Casino, Inc.
3.7(1)	Articles of Organization of Black Hawk/Jacobs Entertainment, LLC.
3.8(1)	Operating Agreement of Black Hawk/Jacobs Entertainment, LLC.
3.9(1)	Joint Venture Agreement of Gilpin Hotel Venture.
3.10(1)	Articles of Incorporation of Gilpin Ventures, Inc.
3.11(1)	By-Laws of Gilpin Ventures, Inc.
3.12(1)	Articles of Incorporation of Jalou II Inc.
3.13(1)	By-Laws of Jalou II Inc.

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3.14(1)	Articles of Incorporation of Winner’s Choice Casino, Inc.
3.15(1)	By-Laws of Winner’s Choice Casino, Inc.
3.16(1)	Articles of Organization of Diversified Opportunities Group Ltd.
3.17(1)	Articles of Organization of Jalou L.L.C.
3.18(1)	Articles of Organization of Houma Truck Plaza & Casino, L.L.C.
3.19(1)	Articles of Organization of Jalou-Cash’s L.L.C.
3.20(1)	Articles of Incorporation of JACE, Inc.
3.21(1)	Articles of Organization of Lucky Magnolia Truck Stop and Casino, L.L.C.
3.22(1)	Articles of Organization of Bayou Vista Truck Plaza and Casino, L.L.C.
3.23(1)	Articles of Organization of Raceland Truck Plaza and Casino, L.L.C.
3.24(1)	Articles of Incorporation of JACE, Inc. (duplicate of Exhibit 3.20).
3.25(2)	Certificate of Amendment of Certificate of Incorporation of Gameco, Inc.
3.26(2)	Amended and Restated Certificate of Limited Partnership of Colonial Downs, L.P.
3.27(2)	Limited Partnership Agreement of Colonial Downs, L.P.
3.28(2)	Amended and Restated Articles of Incorporation of Colonial Downs Holdings, Inc.
3.29(2)	Amendment to Articles of Incorporation of Colonial Downs Holdings, Inc.
3.30(2)	Bylaws of Colonial Downs Holdings, Inc.
3.31(2)	Articles of Incorporation of Stansley Racing Corp.
3.32(2)	Articles of Amendment to the Articles of Incorporation of Stansley Racing Corp.
3.33(2)	Bylaws of Stansley Racing Corp.
3.34(2)	Amended and Restated Operating Agreement of Diversified Opportunities Group Ltd.
3.35(2)	Amendment to the Operating Agreement of Black Hawk/Jacobs Entertainment, LLC.
3.36(2)	Amendment to the Certificate of Incorporation of Gameco, Inc.
3.37(8)	Articles of Organization of Jalou Breaux Bridge, LLC dated January 29, 2003.
3.38(8)	Articles of Organization of Jalou Eunice, LLC dated March 27, 2003.
3.39(8)	Articles of Organization of Jalou of Jefferson, LLC dated September 23, 2003.
3.40(10)	Certificate of Amendment of Certificate of Incorporation of Jacobs Entertainment, Inc. dated September 27, 2005.
3.41(10)	Articles of Incorporation of Jacobs Pinon Plaza Entertainment, Inc. dated November 2, 2005.

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3.41A(12)	Bylaws of Jacobs Pinon Plaza Entertainment, Inc. dated November 8, 2005.
3.42(12)	Articles of Incorporation of Fuel Stop 36, Inc. dated August 24, 1989.
3.43(12)	Articles of Organization of Jalou of Larose, LLC dated November 3, 2005.
4.1(1)	Indenture dated February 8, 2002 by and among Gameco, Inc., certain guarantors and Wells Fargo Bank Minnesota, National Association relating to 117/8% Senior Secured Notes due 2009.
4.2(1)	Form of Gameco, Inc. 117/8% Senior Secured Notes due 2009 (included as part of the Indenture at Exhibit 4.1).
4.3(1)	Supplemental Indenture dated February 22, 2002 by and among Gameco, Inc., certain guarantors and Wells Fargo Bank Minnesota, National Association relating to 117/8% Senior Secured Notes due 2009.
4.4(1)	Form of Subsidiary Guaranty for 117/8% Senior Secured Notes due 2009 (included as part of the Indenture at 4.1).
4.5(1)	Registration Rights Agreement dated as of February 8, 2002 by and among Gameco, Inc., certain guarantors, CIBC World Markets Corp. and Libra Securities, LLC.
4.6(1)	Security Agreement dated February 8, 2002 among Gameco, Inc., certain guarantors and Wells Fargo Bank Minnesota, National Association as Trustee.
4.7(1)	Amendment to the Security Agreement dated February 22, 2002 among Gameco, Inc., certain guarantors and Wells Fargo Bank Minnesota, National Association.
4.7A(12)	Amendment to Security Agreement dated December 21, 2005 between Jacobs Entertainment, Inc. (formerly Gameco, Inc.) and Wells Fargo Bank, National Association.
4.8(1)	Joinder Agreements dated February 22, 2002 between Wells Fargo Bank Minnesota, National Association and each guarantor.
4.9(1)	Guaranty of each guarantor dated February 22, 2002.
4.10(1)	Fee and Leasehold Deed of Trust, Assignment of Leases and Rents, Security Agreements and fixture filings by Black Hawk/Jacobs Entertainment LLC and Gilpin Hotel Venture to the Public Trustee of Gilpin County, State of Colorado, as Trustee for the Benefit of Wells Fargo Bank Minnesota, National Association as Beneficiary, dated February 22, 2002.
4.11(1)	Fee and Leasehold Deed of Trust, Assignment of Leases and Rents, Security Agreements and fixture filings by Gold Dust Casino, Inc. to the First American Title Company of Nevada, as Trustee for the benefit of Wells Fargo Bank Minnesota, National Association as Beneficiary, dated February 22, 2002.
4.12(1)	Leasehold Mortgage, Assignment of Leases and Rents, Security Agreement and fixture filing by Houma Truck Plaza & Casino, L.L.C. to Wells Fargo Bank Minnesota, National Association, as Trustee dated February 22, 2002.
4.13(1)	Mortgage, Assignment of Leases and Rents, Security Agreements and fixture filing by Winner’s Choice Casino, Inc. to Wells Fargo Bank Minnesota, National Association as Trustee dated February 22, 2002.
4.14(1)	Mortgage, Assignment of Leases and Rents, Security Agreements and fixture filing by Raceland Truck Plaza and Casino, LLC to Wells Fargo Bank Minnesota, National Association as Trustee dated February 22, 2002.

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4.15(1)	Mortgage, Assignment of Leases and Rents, Security Agreements and fixture filing by Bayou Vista Truck Plaza and Casino, LLC to Wells Fargo Bank Minnesota, National Association as Trustee dated February 22, 2002.
4.16(1)	Mortgage, Assignment of Leases and Rents, Security Agreements and fixture filing by Lucky Magnolia Truck Stop and Casino, L.L.C. to Wells Fargo Bank Minnesota, National Association as Trustee dated February 22, 2002.
4.17(1)	Mortgage, Assignment of Leases and Rents, Security Agreements and fixture filing by JACE, Inc. to Wells Fargo Bank Minnesota, National Association as Trustee dated February 22, 2002.
4.18(1)	Collateral Assignment of Deeds of Trust, Assignments of Rents and Leases, Security Agreements and fixture filings and other loan documents by Gameco, Inc. to Wells Fargo Bank Minnesota, National Association as Trustee dated February 22, 2002.
4.19(1)	Escrow Agreement between Gameco, Inc. and Wells Fargo Bank Minnesota, National Association dated February 22, 2002.
4.20(1)	Supplemental Indenture dated June 14, 2002 by and among Jacobs Entertainment, Inc., certain guarantors and Wells Fargo Bank Minnesota, National Association relating to 117/8% Senior Secured Notes due 2009.
4.21(2)	Joinder Agreements dated June 14, 2002 between Wells Fargo Bank, National Association and each guarantor.
4.22(2)	Subsidiary Guarantee of each subsidiary guarantor dated June 14, 2002 for 117/8% Senior Secured Notes due 2009.
4.23(2)	Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing by Colonial Downs, L.P. to David F. Belkowitz and James L. Weinberg as Trustees for the benefit of Wells Fargo Bank Minnesota, National Association, dated June 14, 2002.
4.24(2)	Leasehold Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing by Colonial Downs, L.P. to David F. Belkowitz and James L. Weinberg as Trustees for the benefit of Wells Fargo Bank Minnesota, National Association, dated June 14, 2002.
4.25(2)	Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing by Colonial Holdings, Inc. to David F. Belkowitz and James L. Weinberg as Trustees for the benefit of Wells Fargo Bank Minnesota, National Association, dated June 14, 2002.
4.26(2)	Loan and Security Agreement dated July 12, 2002 by and among Jacobs Entertainment, Inc., certain subsidiaries and Foothill Capital Corporation.
4.27(2)	Promissory Note dated July 12, 2002 by and among Jacobs Entertainment, Inc., certain borrowers and Foothill Capital Corporation.
4.28(2)	Guaranty of Gold Dust West Casino, Inc. and Diversified Opportunities Group Ltd. dated July 12, 2002.
4.29(2)	Intercreditor Agreement dated July 12, 2002 by and between Wells Fargo Bank Minnesota, National Association and Foothill Capital Corporation.
4.30(2)	Memorandum of Intercreditor Agreement dated July 12, 2002 by and among Foothill Capital Corporation, Wells Fargo Bank Minnesota, National Association and Borrowers.

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4.31(2)	Fee and Leasehold Deed of Trust, Assignment of Leases and Rents, Securiting Agreement and Fixture Filing by Black Hawk Gaming & Development Company, Inc., Black Hawk/Jacobs Entertainment, LLC, and Gilpin Hotel Venture to the Public Trustee of Gilpin County, State of Colorado and Foothill Capital Corporation, dated July 12, 2002.
4.32(5)	Second Supplemental Indenture dated June 14, 2002 among Jacobs Entertainment, Inc., certain guarantors and Wells Fargo Bank Minnesota, National Association (Trustee).
4.33(a)(5)	Subsidiary Guarantees of Colonial Holding, Inc. dated June 28, 2002.
4.33(b)(5)	Subsidiary Guarantee of Colonial Downs, L.P. dated June 28, 2002.
4.33(c)(5)	Subsidiary Guarantee of Stansley Racing Corp. dated June 28, 2002.
4.34(a)(5)	Joinder Agreement of Colonial Holdings, Inc. dated June 28, 2002.
4.34(b)(5)	Joinder Agreement of Colonial Downs, L.P. dated June 28, 2002.
4.34(c)(5)	Joinder Agreement of Stansley Racing Corp. dated June 28, 2002.
4.34(d)(12)	Joinder Agreement of Jacobs Pinon Plaza Entertainment, Inc. dated December 21, 2005.
4.35(a)(1)(5)	Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing by Colonial Holdings, Inc. (New Kent Racetrack) dated June 28, 2002.
4.35(a)(2)(5)	Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing (Richmond Southwest) dated June 28, 2002.
4.35(b)(1)(5)	Leasehold Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing (New Kent and Chesapeake) dated June 28, 2002.
4.36(5)	Form of Control Agreement Concerning Deposit Accounts (Citizens Bank/Colonial Downs, L.P.) dated June 14, 2002.
4.37(5)	Form of Control Agreement Concerning Deposit Accounts (Citizens Bank/Colonial Holdings, Inc.) dated June 14, 2002.
4.38(6)	Subsidiary Guarantee—Colonial Downs, LLC dated June 4, 2003.
4.39(6)	Security Agreement Amendment by Colonial Holdings, Inc. dated June 4, 2003.
4.40(6)	Supplemental Letter by Colonial Downs, LLC dated June 4, 2003.
4.41(6)	Third Supplemental Indenture dated June 4, 2003 among Jacobs Entertainment, Inc., certain Guarantors and Wells Fargo Bank Minnesota, National Association (Trustee).
4.42(6)	Supplemental Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing by Colonial Downs, LLC dated June 4, 2003.
4.43(a)(7)	Fourth Supplemental Indenture among Jacobs Entertainment, Inc., certain Guarantors and Wells Fargo Bank, National Association dated March 2, 2005.
4.43(b)(7)	Fifth Supplemental Indenture among Jacobs Entertainment, Inc., certain Guarantors and Wells Fargo Bank, National Association dated March 2, 2005.

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4.43(c)(12)	Sixth Supplemental Indenture among Jacobs Entertainment, Inc., certain Guarantors and Wells Fargo Bank, National Association dated December 21, 2005.
4.44(8)	Amendment No. 2 to Security Agreement dated March 2, 2005 between Jalou, LLC and Wells Fargo Bank, National Association.
4.45(8)	Supplement to Security Agreement dated March 2, 2005 by Jalou Breaux Bridge, LLC, Jalou Eunice, LLC and Jalou of Jefferson, LLC and Wells Fargo Bank, National Association.
4.46(8)	Leasehold Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated March 2, 2005 by Jalou of Jefferson, LLC and Wells Fargo Bank, National Association.
4.47(8)	Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated March 2, 2005 by Jalou Breaux Bridge, LLC and Wells Fargo Bank, National Association.
4.48(8)	Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated March 2, 2005 by Jalou Eunice, LLC and Wells Fargo Bank, National Association.
4.49(a)(8)	Subsidiary Guarantee dated March 2, 2005 by Jalou of Jefferson, LLC.
4.49(b)(8)	Subsidiary Guarantee dated March 2, 2005 by Jalou Breaux Bridge, LLC.
4.49(c)(8)	Subsidiary Guarantee dated March 2, 2005 by Jalou Eunice, LLC.
4.49(d)(12)	Subsidiary Guarantee dated December 21, 2005 of Jacobs Pinon Plaza Entertainment, Inc.
4.50(8)	First Amendment to Fee and Leasehold Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated March 2, 2005 between Black Hawk Gaming & Development Company, Inc., et al, and Wells Fargo Bank, National Association.
4.51(8)	First Amendment to Fee and Leasehold Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated March 2, 2005 between Gold Dust West Casino, Inc. and Wells Fargo Bank, National Association.
4.52(9)	Fourth Supplemental Indenture dated March 2, 2005 among Jacobs Entertainment, Inc. and Wells Fargo Bank, National Association.
4.53(9)	Fifth Supplemental Indenture dated March 2, 2005 among Jacobs Entertainment, Inc. and Wells Fargo Bank, National Association.
10.1(1)	Consulting Agreement between Diversified Opportunities Group Ltd. and Ian M. Stewart dated January 1, 2001.
10.2(1)	Executive Employment Agreement between Gameco, Inc. and Jeffrey P. Jacobs dated February 22, 2002.
10.3(1)	Executive Employment Agreement between Gameco, Inc. and Richard E. Jacobs dated February 22, 2002.
10.4(1)	Executive Employment Agreement between Gameco, Inc. and Stephen R. Roark dated February 22, 2002.
10.5(1)	Executive Employment Agreement between Colonial Holdings, Inc. and Ian M. Stewart dated February 22, 2002.
10.7(3)	Standardbred Horsemen’s Contract effective March 1, 2003 among Colonial Downs, L.P., Stansley Racing Corp. and The Virginia Harness Horse Association.

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10.8(3)	Thoroughbred Horsemen’s Agreement dated December 23, 2002 between Colonial Downs, L.P. and The Virginia Horsemen’s Benevolent and Protective Association, Inc.
10.8A(3)	First Amendment dated January 1, 2003 to Thoroughbred Horsemen’s Agreement dated December 23, 2002 between Colonial Downs, L.P. and the Virginia Horsemen’s Benevolent and Protective Association.
10.9(4)	Consulting Agreement dated January 1, 2003 between Jacobs Entertainment, Inc. and Jacobs Investments Management Co., Inc.
10.10(3)	Option Agreement dated January 20, 2004 regarding Vinton, Virginia, Off Track Wagering Facility.
10.11(3)	Deed of Lease dated May 8, 2003 between Haynes Chippenham Plaza, LLC and Colonial Downs, L.P.
10.12(8)	Assignment of Membership Interests between Jacobs Entertainment, Inc. and Gameco Holdings, LLC dated February 22, 2005.
10.13(8)	Registration Rights Agreement dated March 2, 2005 by and among Jacobs Entertainment, Inc., the Guarantors and the Purchasers.
10.14(10)	Stock Purchase Agreement dated August 18, 2005 among Pimlico Racing Association, Inc., Laurel Racing Association Limited Partnership, The Maryland Jockey Club of Baltimore City, Inc., Maryland-Virginia Racing Circuit, Inc. and Colonial Downs, L.P.
10.14A(10)	First Amendment to the Stock Purchase Agreement dated August 18, 2005 among Pimlico Racing Association, Inc., Laurel Racing Association Limited Partnership, The Maryland Jockey Club of Baltimore City, Inc., Maryland-Virginia Racing Circuit, Inc. and Colonial Downs, L.P.
10.15(10)	Asset Purchase Agreement dated November 2, 2005 among Capital City Entertainment, Inc. and Jacobs Pinon Plaza Entertainment, Inc.
10.15A(12)	Pinon Plaza Ground Lease (proposed) by and between Clark G. Russell and Jean M. Russell, Trustees of The Clark and Jean Russell Family Trust and Jacobs Entertainment, Inc.
10.16(11)	Triple Net Lease dated November 14, 2005 among Route 225 Investments, LLC and Jacobs Entertainment, Inc.
10.17(12)	Ground Lease and Option Purchase Agreement dated September 12, 2005 between Dakota/Blackhawk, LLC and Jacobs Entertainment, Inc.
10.18(12)	Thoroughbred Horseman’s Agreement dated January 1, 2005 between Colonial Downs, L.P., Stansley Racing Corp. and The Virginia Horsemen’s Benevolent and Protective Association, Inc.
10.19(12)	Shopping Center Lease dated February 28, 2005 between Jay F. Wilks, Trustee under Indenture dated December 20, 1976 by and between Herbert Cashvan and Marvin Simon, as Settlors, and Jay F. Wilks as Trustee, and Colonial Downs, L.P.
10.20(12)	Asset Purchase Agreement dated November 2, 2005, between Larose Truck Plaza & Casino, LLC, Midway Recreation, L.L.C., Joe F. Penn, Jr., Melissa Penn, and Gameco Holdings, Inc., including an Amendment dated December 19, 2005 adding Jalou of Larose, LLC, as a party.
10.21(12)	Stock Purchase Agreement dated December 12, 2005 between Jalou II, Inc. and several persons relating to the purchase and sale of the common stock of Fuel Stop 36, Inc.
14.1(12)	Code of Ethics
21.1(12)	Subsidiaries of Jacobs Entertainment, Inc.

60

25.1(1)	Statement of Eligibility of Trustee on Form T-1.
31.1(12)	Chief Executive Officer Certificate under Section 302 of the Sarbanes-Oxley Act of 2002.
31.2(12)	Chief Financial Officer Certification under Section 302 of the Sarbanes-Oxley Act of 2002.
32.1(12)	Chief Executive Officer Certification under Section 906 of the Sarbanes-Oxley Act of 2002.
32.2(12)	Chief Financial Officer Certification under Section 906 of the Sarbanes-Oxley Act of 2002.
99.1(1)	Form of Letter of Transmittal.
99.2(1)	Form of Notice of Guaranteed Delivery.
99.3(1)	Jacobs Entertainment, Inc. Exchange of all Outstanding 117/8% Senior Secured Notes Due 2009 For 117/8% Senior Secured Notes Due 2009.
99.4(1)	Jacobs Entertainment, Inc. Letter to Depository Trust Company Participants.
99.5(8)	Significant Guarantor Information.

(1)	Incorporated hereby by reference from our registration statement on Form S-4 (SEC Registration No. 333-88242) filed on May 14, 2002.
(2)	Incorporated hereby by reference from Amendment No. 1 of our registration statement on Form S-4 (SEC Registration No. 333-88242) filed on August 8, 2002.
(3)	Incorporated hereby by reference from our Form 10-K filed on March 29, 2004.
(4)	Incorporated hereby by reference from our Form 10-K filed on March 31, 2003.
(5)	Incorporated by reference from our Form 10-Q filed August 13, 2004.
(6)	Incorporated hereby by reference from our Report on Form 8-K filed October 7, 2004.
(7)	Incorporated hereby by reference to Exhibits 2.01(a)and 2.01(b) from our Report on Form 8-K dated March 4, 2005.
(8)	Incorporated hereby by reference from our Form 10-K filed March 28, 2005.
(9)	Incorporated hereby by reference from our Report on Form 8-K filed on March 4, 2005.
(10)	Incorporated by reference from our Form 10-Q filed November 14, 2005.
(11)	Incorporated hereby by reference from our Report on Form 8-K filed on November 15, 2005.
(12)	Filed herewith.

61

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/ STEPHEN R. ROARK
	Stephen R. Roark
	Chief Financial Officer

Date: March 29, 2006

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 29, 2006
Jeffrey P. Jacobs	Executive Officer (Principal Executive Officer)
/s/ STEPHEN R. ROARK	Chief Financial Officer	March 29, 2006
Stephen R. Roark	(Principal Financial and Accounting Officer)
/s/ RICHARD E. JACOBS	Director	March 29, 2006
Richard E. Jacobs

62

Jacobs Entertainment, Inc.

Consolidated Financial Statements as of December 31, 2005 and 2004, and for the Years Ended December 31, 2005, 2004, and 2003, and Report of Independent Registered Public Accounting Firm

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Jacobs Entertainment, Inc.
Golden, Colorado

We have audited the accompanying consolidated balance sheets of Jacobs Entertainment, Inc. and subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2005. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. 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, 2005 and 2004, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2005, in conformity with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

Denver, Colorado

March 28, 2006

JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2005 AND 2004

(Dollars in thousands)

	2005			2004
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	21,804		$	21,497
Restricted cash	1,619			1,670
Accounts receivable—net	2,728			1,634
Inventory	1,843			1,413
Prepaid expenses and other current assets	2,084			2,070
Total current assets	30,078			28,284
PROPERTY, PLANT, AND EQUIPMENT:
Land and improvements	53,583			52,299
Buildings and improvements	136,378			122,995
Equipment and furniture and fixtures	44,920			37,516
Leasehold improvements	2,364			2,344
Construction in progress	4,483			1,948
Total property, plant, and equipment	241,728			217,102
Less accumulated depreciation and amortization	(42,889		)	(34,399		)
Property, plant, and equipment—net	198,839			182,703
OTHER ASSETS:
Goodwill	32,930			26,773
Identifiable intangible assets—net	7,830			7,790
Debt issue costs—net	6,702			5,426
Other assets	2,374			1,290
Total other assets	49,836			41,279
TOTAL	$	278,753		$	252,266

F-2

	2005		2004
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	15,292	$	12,721
Gaming taxes payable	3,130		2,841
Interest payable	8,181		6,942
Due to affiliate	386		1,819
Current maturities of long-term debt and capital lease obligations	3,583		1,006
Total current liabilities	30,572		25,329
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS	160,418		132,421
LONG-TERM DEBT—Related parties	19,489		19,489
OTHER	472		423
Total liabilities	210,951		177,662
COMMITMENTS AND CONTINGENCIES (Note 11)
STOCKHOLDERS’ EQUITY:
Common stock, $.01 par value—1,500 authorized, 1,500 shares issued and outstanding as of December 31, 2004
Class A Common stock, $.01 par value; 1,800 shares authorized, 1,320 shares issued and outstanding as of December 31, 2005
Class B Common stock, $.01 par value; 200 shares authorized, 180 shares issued and outstanding as of December 31, 2005
Additional paid-in capital	51,755		31,312
Retained earnings	16,047		43,292
Total stockholders’ equity	67,802		74,604
TOTAL	$	278,753	$	252,266

See notes to consolidated financial statements.

F-3

JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2005, 2004, AND 2003

(Dollars in thousands)

	2005			2004			2003
REVENUES:
Gaming:
Casino	$	115,607		$	108,347		$	96,816
Truck stop	37,432			24,842			24,108
Pari-mutuel	35,988			32,946			29,189
Food and beverage	19,774			17,964			16,383
Convenience store—fuel	37,361			21,690			17,229
Convenience store—other	5,441			3,825			3,403
Hotel	1,982			1,382			1,370
Other	3,673			3,331			3,003
Total revenues	257,258			214,327			191,501
Promotional allowances	(23,175		)	(20,175		)	(19,652		)
Net revenues	234,083			194,152			171,849
COSTS AND EXPENSES
Gaming:
Casino	41,804			38,586			36,209
Truck stop	19,810			13,689			12,704
Pari-mutuel	31,356			27,505			24,212
Food and beverage	10,302			9,607			8,133
Convenience store—fuel	34,843			20,171			15,881
Convenience store—other	7,272			4,683			4,203
Hotel	355			747			743
Marketing, general, and administrative	47,635			42,783			38,316
Abandonment costs	1,424			2,891			173
Termination of contract	10,367
Depreciation and amortization	11,005			9,958			9,071
Total costs and expenses	216,173			170,620			149,645
OPERATING INCOME	17,910			23,532			22,204
INTEREST INCOME	172			64			72
INTEREST EXPENSE	(22,404		)	(19,705		)	(19,645		)
(LOSS) INCOME BEFORE INCOME TAX EXPENSE	(4,322		)	3,891			2,631
INCOME TAX EXPENSE	(423		)
NET (LOSS) INCOME	$	(4,745	)	$	3,891		$	2,631

See notes to consolidated financial statements.

F-4

JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2005, 2004, AND 2003

(Dollars in thousands)

	Common Stock						Additional
			Class A	Class B			Paid-in		Retained
	Shares		Shares	Shares	Amount*		Capital		Earnings			Total
BALANCES—January 1, 2003	1,500		—	—	$	—	$	27,992	$	36,770		$	64,762
Capital contribution							1,617					1,617
Net income									2,631			2,631
BALANCES—December 31, 2003	1,500		—	—	—		29,609		39,401			69,010
Capital contribution							1,703					1,703
Net income									3,891			3,891
BALANCES—December 31, 2004	1,500		—	—	—		31,312		43,292			74,604
Capital contribution							20,443					20,443
Stockholder distributions									(22,500		)	(22,500		)
Common stock exchange (see Note 13)	(1,500	)	1,320	180								—
Net loss									(4,745		)	(4,745		)
BALANCES—December 31, 2005	—		1,320	180	$	—	$	51,755	$	16,047		$	67,802

*The par value amount of Jacobs Entertainment, Inc. common stock outstanding for the periods presented is less than $500 and is therefore presented as $0 above due to rounding.

See notes to consolidated financial statements.

F-5

JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2005, 2004, AND 2003

(Dollars in thousands)

	2005			2004			2003
OPERATING ACTIVITIES:
Net (loss) income	$	(4,745	)	$	3,891		$	2,631
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Noncash charge termination of contract (see Note 13)	3,000
Depreciation and amortization	11,005			9,958			9,071
Loss on sale of equipment	45			75			94
Deferred financing cost amortization	2,072			1,363			1,361
Bond issue discount amortization	708			710			707
Bond issue premium amortization	(489		)
Loan discount amortization				23			180
Noncash abandonment costs	1,424			1,500			35
Changes in operating assets and liabilities—net of the effect of acquisitions:
Accounts receivable—net	(1,094		)	(547		)	369
Inventory	(232		)	(211		)	85
Prepaid expenses and other assets	(1,098		)	(734		)	(88		)
Accounts payable and accrued expenses	2,048			2,644			582
Gaming taxes payable	289			132			105
Interest payable	1,239			(28		)	(1,507		)
Due to affiliate	(1,433		)	982			837
Net cash provided by operating activities	12,737			19,758			14,462
INVESTING ACTIVITIES:
Additions to property, plant, and equipment	(18,591		)	(18,374		)	(16,281		)
Proceeds from sale of equipment	155			295			66
Purchase of device rights	(546		)	(907		)	(566		)
Capitalized project costs							(1,465		)
(Increases) decreases restricted cash	51			237			(512		)
Truck stop acquisitions, net of cash acquired of $100	(12,161		)
Net cash used in investing activities	(31,092		)	(18,749		)	(18,758		)
FINANCING ACTIVITIES:
Proceeds from bond issuance	25,300
Payments to obtain financing	(3,348		)				(49		)
Proceeds from long-term debt	1,338			5,100			228
Proceeds from revolving line of credit	17,821			4,265			11,210
Contributions from stockholders	14,113			1,703			1,617
Payments on long-term debt	(831		)	(2,553		)	(2,620		)
Payments on revolving line of credit	(13,231		)	(4,265		)	(11,210		)
Distributions to stockholders	(22,500		)
Net cash provided by (used in) financing activities	18,662			4,250			(824		)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	307			5,259			(5,120		)
CASH AND CASH EQUIVALENTS—Beginning of year	21,497			16,238			21,358
CASH AND CASH EQUIVALENTS—End of year	$	21,804		$	21,497		$	16,238
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest, net of amounts capitalized in 2005, 2004, and 2003 of $106, $110, and $140, respectively	$	18,790		$	17,329		$	17,582
Noncash investing and financing activity:
Capital contribution exchanged for retirement of note paid by affiliate	$	6,330		$	—		$	—
Acquisition of property for payables incurred	$	800		$	1,357		$	303
Acquisition of property under capital lease agreements	$	3,288		$	1,732		$	—
Notes payable incurred on termination of contract	$	3,000		$	—		$	—
Debt conversion to related party	$	—		$	—		$	10,489

See notes to consolidated financial statements.

F-6

JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2005 AND 2004, AND FOR THE
YEARS ENDED DECEMBER 31, 2005, 2004, AND 2003

(Dollars in thousands)

1.BUSINESS AND ORGANIZATION

Jacobs Entertainment, Inc. (“JEI”, the ”Company”, “us”, “our”, or “we”) was formed on April 17, 2001, as a Subchapter S Corporation under the Internal Revenue Code of 1986, as amended, to become a geographically diversified gaming and pari-mutuel wagering company with properties in Colorado, Nevada, Louisiana, and Virginia. The Company’s sole stockholders, who each own beneficially 50% of each class of JEI’s common stock, are Jeffrey P. Jacobs and Richard E. Jacobs (collectively, “Jacobs”). As of December 31, 2005, we own and operate three casinos through Black Hawk Gaming & Development Company, Inc. (“Black Hawk”), a wholly owned subsidiary. They are The Lodge Casino at Black Hawk (“The Lodge”) and the Gilpin Hotel Casino (“Gilpin”), both in Colorado, and the Gold Dust West Casino (“Gold Dust”) in Nevada. JEI also owns and operates eleven truck plaza video gaming facilities in Louisiana through two wholly owned subsidiaries, Jalou LLC and Jalou II which are collectively referred to as “Jalou”, “Truck stops” or “Truck Plazas”. We also receive a percentage of gaming revenue from an additional truck plaza video gaming facility. Finally, JEI owns and operates a horse racing track with nine satellite wagering facilities in Virginia through a wholly owned subsidiary Colonial Holdings, Inc. (“Colonial”).

On February 25, 2005, we filed an application for gaming licenses to open a Jefferson Parish, Louisiana truck plaza location. The license was approved on August 16, 2005, and the location opened on September 22, 2005.

On March 2, 2005, we acquired three truck plaza video gaming facilities in Louisiana previously owned by Jacobs for $22.5 million. The purchase of the three truck plaza video gaming facilities was accounted for as a combination of entities under common control, which is similar to the pooling of interests method of accounting for business combinations. Accordingly, the accompanying consolidated financial statements have been retroactively adjusted to include the operations of the acquired truck plazas from January 1, 2003. See Note 4 below.

On March 16, 2005, we received a license to own and operate a seventh satellite wagering facility in Martinsville, Virginia. This facility was opened on August 15, 2005. On April 27, 2005, we received a license to own and operate an eighth satellite wagering facility and second location in Chesapeake, Virginia. We opened this facility on October 12, 2005. On May 25, 2005, we received a license to own and operate a ninth satellite wagering facility in Scott County, Virginia. We opened this facility on January 18, 2006.

On December 16, 2005, we acquired from an unaffiliated party Fuel Stop 36 in Lake Charles, Louisiana for $6.1 million. On December 20, 2005, we acquired from an unaffiliated party the assets of Larose Truck Plaza in Larose, Louisiana for $6.2 million. The purchases of these two truck plaza video gaming facilities were recorded using the purchase method of accounting. See Note 4 below.

F-7

2.SIGNIFICANT ACCOUNTING POLICIES

Consolidation—The accompanying consolidated financial statements include the accounts of JEI, Black Hawk, Jalou and Colonial. All significant inter-company transactions and balances have been eliminated in consolidation.

Cash and Cash Equivalents—The Company considers 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.

Inventory—Inventory consists of food and beverages and uniforms at the 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 and 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.

Goodwill—Goodwill represents the excess purchase price over the fair value of the net identifiable assets acquired related to acquisitions. See Note 4 for current year acquisitions.

Identifiable Intangible Assets—Identifiable intangible assets are comprised of revenue rights, device use rights, and a noncompete agreement associated with the Jalou truck stop acquisitions. Amortization of the revenue rights are being amortized on a straight line basis over 50 years representing the initial term of the related agreement. Amortization of device use rights and the noncompete agreement are being amortized on a straight line basis over five years, representing the initial terms of the related agreements.

Debt Issue Costs—Debt issue costs that are incurred by the Company in connection with the issuance of debt are deferred and amortized to interest expense, using the effective interest method, over the life of the related loan, and are included as a component of other assets in the accompanying consolidated balance sheets.

Slot Club Liability—The Company’s 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 the Company’s casinos to earn “points.” Based on their point totals, members receive various cash rewards and gift prizes. The Company accrues the cost of points as they are earned by the members of the slot clubs as a component of accounts payable and accrued expenses in the accompanying consolidated balance sheets.

F-8

Outstanding Gaming Chip and Token Liability—When customers exchange cash for gaming chips and tokens, the Company has 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 accounts payable and 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 and are recognized as earned.

Revenue—Truck Stop—Video poker revenue is the net winnings from gaming activities of the Company’s truck stops, which is the difference between gaming wins and losses and are recognized as earned.

Revenue—Pari-Mutuel—Pari-mutuel revenue includes the Company’s share of pari-mutuel wagering on live races after payments of amounts returned on winning wagers, and the Company’s share of wagering from import and export simulcasting at its racing centers and are recognized as earned.

Revenue—Food and Beverage—The Company recognizes food and beverage revenue at the time that goods or services are rendered.

Revenue—Convenience Store—Fuel and Other—The Company recognizes revenue at the time of sale for fuel and convenience-store items.

Revenue—Hotel—The Company recognizes hotel revenue at the time rooms are provided to customers.

Revenue—Other—Other revenue consists of ATM commissions, cash advance commissions, miscellaneous vending commissions, 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 provided gratuitously to customers. When computing net revenues, the retail amount of rooms, food and beverages and coupons, gratuitously provided to customers, as well as slot club player point redemptions, 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 and was $9,811, $9,191, and $9,388 for the years ended December 31, 2005, 2004, and 2003, respectively. The estimated cost of such complimentary services in our truck stops related to video poker operations for food and beverages is charged to truck stop operations and was $798, $276, and $121 for the years ended December 31, 2005, 2004, and 2003, respectively. The estimated cost of such complimentary services in our truck stops related to fuel operations for food and beverages is charged to convenience store operations and was $261, $136, and $323 for the years ended December 31, 2005, 2004, and 2003, respectively.

Income Taxes—The Company has elected for income tax purposes to be treated as a Subchapter S Corporation 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 stockholders. See Note 6 for information relating to $423 income tax expense charged for the year ended December 31, 2005.

F-9

Long-Lived Assets—The Company periodically evaluates the value of long-lived assets, including property, plant and equipment, goodwill and identifiable intangibles, for potential impairment. If an impairment is indicated, such impaired assets are written down to their estimated fair value. As of December 31, 2005 and 2004, management determined that there was no impairment of the Company’s long-lived assets other than those costs abandoned as described in Note 10.

Operating Segments—The Company has four reportable segments (Colorado, Nevada, Virginia, and Louisiana), as defined by SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information. See Note 16.

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. Management periodically evaluates the Company’s policies, and the estimates and assumptions related to such policies. All of JEI’s subsidiary companies operate in a highly regulated industry. Colonial, Jalou and Black Hawk 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. Management estimates certain liabilities with payment periods that extend for longer than several months. Such estimates include the self-insured medical and workers compensation liabilities and litigation costs. Furthermore, JEI believes 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 could differ from those estimates.

Furthermore, we have determined that the policy associated with our long-lived assets, goodwill and identifiable intangible assets, and related estimates are critical to the preparation of our consolidated financial statements. We have a significant investment in long-lived property and equipment. We estimate that the undiscounted future cash flows expected to result from the use of these assets exceeds the current carrying value of these assets. Any adverse change to the estimate of these undiscounted cash flows could necessitate an impairment charge that would adversely affect operating results. We estimate the useful lives for our assets based on historical experience, estimates of assets’ commercial lives, and the likelihood of technological obsolescence. Should the actual useful life of a class of assets differ from the estimated useful life, we would record an impairment charge. We review useful lives and obsolescence and assess commercial viability of our assets periodically.

Reclassifications—In the accompanying Consolidated Statements of Cash Flows for the years ended December 31, 2004 and 2003, we have changed the classification of changes in restricted cash balances to present such activity as an investing activity. We previously presented such changes as an operating activity. This reclassification has resulted in a $0.24 million increase and a $0.51 million decrease to investing cash flows during 2004 and 2003, respectively, and a corresponding $0.24 million decrease and $0.51 million increase to operating cash flows from the amounts previously reported. Certain other amounts have been reclassified within the 2004 and 2003 financial statements to conform to the presentation used in 2005. Management believes these reclassifications are immaterial as they had no impact on the Company’s financial position or net income.

3.GOODWILL AND OTHER INTANGIBLE ASSETS

The Company tests goodwill for impairment as of September 30^th each year. Testing compares the estimated fair values of the Company’s reporting units to the reporting units’ carrying value. The Company considers a variety of factors when estimating the fair value of its reporting units, including

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estimates about furture operating results of each reporting unit, multiples of EBITDA, investment banker market analysis, and recent sales of comparable business units if such information is available to the Company. A variety of estimates and judgments about the relevance and comparability of these factors to the reporting units are made. As of September 30, 2005 and as updated at year-end, management of the Company believes the goodwill held in our reporting units is not imparied. In addition, the Company has reassessed the useful lives of its identifiable intangible assets without any charge to the previously established amortization periods of such assets.

The changes in the carrying amount of goodwill for the years ended December 31, 2005 and 2004 are as follows (in thousands):

	2005		2004
Balance as of beginning of year	$	26,773	$	26,773
Goodwill acquired during year	6,157		—
Balance as of end of year	$	32,930	$	26,773

Acquired intangible assets as of December 31, 2005 and 2004, consist of the following (in thousands):

	2005						2004
	Gross				Net		Gross				Net
	Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
	Amount		Amortization		Amount		Amount		Amortization		Amount
Amortizable intangible assets:
Revenue rights	$	6,000	$	480	$	5,520	$	6,000	$	360	$	5,640
Device use rights	4,232		2,018		2,214		3,518		1,368		2,150
Other	100		4		96
Total	$	10,332	$	2,502	$	7,830	$	9,518	$	1,728	$	7,790

	Years Ended December 31
	2005		2004		2003
Aggregate amortization expense	$	821	$	624	$	581

Estimated amortization expense for the years ending December 31 (in thousands):

2006	$	987
2007	588
2008	546
2009	499
2010	290
Thereafter	4,920
Total	$	7,830

4.SALE OF DEBT AND ACQUISITIONS

On March 2, 2005, we completed the issuance of $23,000 of additional notes subject to the same terms and conditions as our existing senior secured notes which carry a coupon of 11 7/8% due 2009, with interest payable each February 1, and August 1. The notes were issued at 10% above their principal

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amount resulting in a premium of $2,300, which is being amortized using the effective interest method over the remaining life of the notes. We used $22,500 of the proceeds from the sale of the notes to fund the acquisition of a 100% interest in three truck plaza video gaming facilities in Louisiana known as Breaux Bridge, Eunice and Jefferson Parish, all of which were owned by Jacobs. The balance of the proceeds was used to pay for the offering costs of the additional notes. Due to the related party nature of the transaction (and under the terms of our indenture) we obtained a fairness opinion from an investment banking firm that the acquisition of the three video poker truck stops was fair from a financial point of view.

The acquisition of the three truck plaza facilities was accounted for as a combination of entities under common control, and as such is reflected for accounting and financial reporting purposes similar to a pooling of interests. Therefore, the acquisitions have been recorded at the related party’s historical cash cost in the assets transferred. Accordingly, the accompanying consolidated financial statements have been retroactively restated from January 1, 2003 through the acquisition date to include the operations of the acquired truck plazas. See Note 1 above.

A distribution of $22,500 was recorded on the acquisition date as the assets of the entities acquired have been retroactively accounted for in JEI’s financial statements. Therefore a net distribution of $12,380 (the $22,500 distribution reduced by the $10,121 of net assets acquired) has been recorded by us as of March 2, 2005, acquisition date.

The following table summarizes the value of assets acquired and liabilities assumed and recorded as of March 2, 2005, for the transaction occurring on that date.

	Breaux Bridge		Eunice		Jefferson		Total
Current assets	$	402	$	285	$	309	$	996
Property and equipment—net	3,089		2,461				5,550
Construction in progress					2,545		2,545
Other assets	14		20		331		365
Identifiable intangible assets	463		329		390		1,182
Total assets acquired	3,968		3,095		3,575		10,638
Current liabilities	217		184		22		423
Noncurrent liabilities					94		94
Total liabilities assumed	217		184		116		517
Net assets acquired	$	3,751	$	2,911	$	3,459	$	10,121

The consolidated financial statements for the years ended December 31, 2004 and 2003, have been retroactively restated as though the transaction had occurred at the beginning of each of the periods presented.

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The following table summarizes the operations of the acquired truck plaza entities:

	2004			2003
Net revenues	$	4,437		$	—
Costs and expenses	5,533			42
Net loss	$	(1,096	)	$	(42	)

On September 30, 2005, we entered into an agreement with Dakota/Blackhawk, LLC, an unaffiliated Colorado limited liability company (“Dakota”), granting us the option to purchase 2.2 acres of undeveloped land (approximately 1 acre of which is located within the Black Hawk Gaming District) directly across the street from The Lodge.

Under the terms of the option agreement, we have the exclusive right to purchase the property for $13 million. The option has an initial term of one year, with a right in our favor to extend the option for an additional one year period upon the payment of a nonrefundable extension fee of $500,000. The option agreement provides for an initial option fee of $500,000. Fifty percent of the initial option fee and fifty percent of the extension fee are to be applied to the purchase price if the property is purchased.

If the real estate purchase contract is closed, the purchase price must be paid as follows: (i) 50% of the purchase price minus the option fee credit, in cash or immediately available funds at closing; and (ii) a four year promissory note in the amount of 50% of the purchase price executed by us.

On November 2, 2005, we formed a new wholly owned subsidiary, Jacobs Pinon Plaza Entertainment, Inc. and entered into a definitive Asset Purchase Agreement with Capital City Entertainment, Inc. (“CCI”), a nonaffiliated party, under which we agreed to acquire all of the assets of the Best Western Pinon Plaza Resort (“Pinon Plaza”), a division of CCI. The assets to be purchased include all of the personal property, buildings and improvements used by Pinon Plaza in the operation of its casino, hotel, bowling alley and RV park in Carson City, Nevada. The purchase price for the assets is $14,500. Upon entering into the agreement, we deposited $500 into escrow which will be allocable to the purchase price. We anticipate closing this transaction during the second quarter of 2006. Under the agreement, the Company has until June 30, 2006 to close the transaction. If the transaction is not closed by June 30, 2006, the Company may extend the closing deadline to September 30, 2006, for a one time nonrefundable $250 payment to the seller. If the transaction is not closed by September 30, 2006, the $500 deposit will be forfeited and paid to the seller. No further recourse will be available to the seller.

Contemporaneously, we entered into a triple net ground lease covering land underlying the assets which will begin upon closing of the Asset Purchase Agreement discussed above. The lessor is a family trust affiliated with CCI. The lease has a ten year term with two ten year extensions at the option of JEI. Rentals under the lease are $250 per year for years one through five, $300 per year for years six through ten, and a rate based on an appraisal performed by a Member of the Appraisal Institute “MAI” of the property during the first and second extension terms.

JEI has the right to purchase the leased land at an MAI appraised value at the end of the first ten year term. It also has a right of first refusal should the lessor seek to sell the leased land to a third party.

Consummation of the Asset Purchase Agreement and entry into the land lease are subject to several customary conditions, particularly including approval of the Nevada State Gaming Control Board and the Nevada Gaming Commission. Nevada gaming approvals could take several months.

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On December 16, 2005, we acquired from an unaffiliated party Fuel Stop 36 in Lake Charles, Louisiana for $6.1 million. On December 20, 2005, we acquired from an unaffiliated party the assets of Larose Truck Plaza in Larose, Louisiana for $6.2 million. The following table summarizes the assets acquired and liabilities assumed and recorded as of the acquisition dates.

	Fuel Stop 36		Larose		Total
Current assets	$	176	$	122	$	298
Property and equipment—net	2,748		2,729		5,477
Goodwill	2,860		3,297		6,157
Identifiable intangible assets	278		71		349
Total assets acquired	6,062		6,219		12,281
Total liabilities assumed			16		16
Net assets acquired	$	6,062	$	6,203	$	12,265

Goodwill resulting from the Larose and Fuel Stop 36 transactions is attributable to anticipated future cash flows associated with the acquired entities. Amortization expense recorded on these identifiable intangible assets was $4 for the year ended December 31, 2005.

Assuming the transactions had occurred at the beginning of each period presented, combined unaudited pro forma revenue and net (loss) income would have been as follows.

	2005			2004
Net revenues	$	251,705		$	205,931
Costs and expenses	254,885			201,902
Net (loss) income	$	(3,180	)	$	4,029

The pro forma information is not necessarily indicative of the results of operations that would have occurred had the acquisitions occurred at the beginning of each period presented, nor are they indicative of future operating results.

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5.LONG-TERM DEBT, NOTES PAYABLE-RELATED PARTIES, AND CAPITAL LEASES

Long-term debt, notes payable-related parties, and capital leases, as of December 31, 2005 and 2004, consist of the following:

	2005		2004
Indebtedness of JEI:
Senior secured notes due 2009, with interest only payable each February 1, and August 1, beginning August 1, 2002, at a fixed interest rate of 11 7/8%.	$	147,622	$	122,103
A $10 million line of credit (“LOC”) agreement with Wells Fargo Foothill, expiring July 12, 2007. The LOC bears interest at the prime rate published by Wells Fargo Bank, N.A., plus 1.75%. The LOC is collateralized by the land, buildings and related improvements of The Lodge and the Gilpin, the Company’s Colorado casino properties. The security interests under the terms of the LOC are contractually senior to the notes.	4,590
Capital Lease with interest and principal payments of $3 per month until October 2006, increasing to $15 per month through October 2007, increasing to $21 per month thereafter, maturing October 2010, with the right to extend the lease three time for five years, or to purchase the land and building for $5,000 any time commencing with the day after the last day of the first year of the initial term through the end of the initial term, or for $5,398 at any time during the first renewal period. The purchase option is no longer available after the first renewal period. The effective interest rate is 17%. Each lease renewal if elected will result in an increase in monthly payment based on a base index rate established with the August 2005 Consumer Price Index (“CPI”) as published.	1,227
	153,439		122,103
Indebtedness of Black Hawk:
Bonds payable; issued in two series with interest payments varying between 6.25% and 6.50%; principal and interest payments approximating $360 are due semi-annually beginning in June 2000 continuing until December 2011; secured by infrastructure improvements made by the Lodge.	3,526		3,997
Indebtedness of Colonial:
Note payable to Maryland Jockey Club, maturing December 2005, bearing interest at a rate of 7.75% payable quarterly for the first two years, and equal installments of interest and principal to be paid quarterly over the remaining five year term of the note, beginning in the first quarter of 2001.			290
Note payable to John Deere Credit, maturing October 2008, bearing interest at a rate of 2.25% payable monthly in equal installments of interest and principal beginning November 2003, secured by the equipment purchased with the Note.	133		177
Capital lease with interest and principal payments of $10 per month, maturing September 11, 2009, with the right to extend the term of the lease five times for five year intervals, or to purchase the land for $800 at any time after the term and first renewal period of the lease (after September 11, 2014). The effective interest rate is 11.84%. Each lease renewal if elected will result in an increase in monthly payments by 10% over the previous lease term.	971		976

(continued)

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	2005	2004
Indebtedness of Colonial (continued):
Capital lease with interest and principal payments of $4 per month, until the earlier of occupancy or June 1, 2005, then interest and principal payments of $8 per month, maturing June 1, 2010, with the right to extend the term of the lease four times for five year intervals, or to purchase the land and building for $700 at any time after the initial term of the lease (after June 1, 2010), with the purchase price increasing 8% with any successive renewal term. The effective interest rate is 10.31%. Each lease renewal if elected will result in an increase in annual payments by $8 over the lease term.	764	756
Capital lease with interest and principal payments of $8 per month until October 2006, then interest and principal payments of $10 per month until October 2010, then interest and principal payments of $11 per month until October 2015, with three renewal period terms of five years each with monthly payments starting at $13 per month increasing to $17 per month. The effective interest is 10.5% per annum.	1,195
Note payable to individuals, with interest and principal payments of $8 per month through maturity at October, 2020, at an interest rate of 6.5% per annum, secured by the building and land.	954
Note payable to Pimlico Racing Association, Inc, and Laurel Racing Association Limited Partnership, maturing September 2006, interest accruing at the prime rate published by the Wall Street Journal, plus 1%, payable at maturity, guaranteed by Jacobs Entertainment, Inc.	3,000
Other	19	28
	7,036	2,227
Indebtedness of Jalou:
Note payable to Cameron State Bank, maturing October 1, 2018, interest only monthly payments through April 1, 2005 bearing interest at a rate of 7%, beginning May 1, 2005 monthly principal and interest payments of $22 due until October 1, 2008, beginning November 1, 2008 monthly principal and interest payments of $21 due until September 1, 2018 bearing interest at a rate of the five year treasury bill plus 3%, October 1, 2018 all remaining interest and principal due. The note is secured by the land and improvements purchased with the note and inventory, equipment and fixtures.		2,300
Note payable to Cameron State Bank, maturing July 1, 2018, interest only monthly payments through January 1, 2005 bearing interest at a rate of 7%, beginning February 1, 2005 monthly principal and interest payments of $27 due until July 1, 2008, beginning August 1, 2008 monthly principal and interest payments of $25 due until June 1, 2018 bearing interest at a rate of the five year treasury bill plus 3%, July 1, 2018 all remaining interest and principal due. The note is secured by the land and improvements purchased with the note and inventory, equipment and fixtures.		2,800
	—	5,100

(continued)

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	2005			2004
Indebtedness to related parties:
Notes payable to affiliates, maturing January 31, 2010, semi-annual payments of interest only at 12.0%, unsecured	$	9,000		$	9,000
Note payable to affiliates maturing March 2009, semi-annual payments of interest only at 8.5%, secured by the land, buildings, and related improvements of Houma	1,811			1,811
Note payable to affiliates maturing March 2009, semi-annual payments of interest only at 8.5%, secured by the land, buildings and related improvements of Winner’s	1,208			1,208
Note payable to affiliates maturing March 2009, semi-annual payments of interest only at 8.5%, secured by the land, buildings, and related improvements of Cash’s	1,717			1,717
Note payable to affiliates maturing March 2009, semi-annual payments of interest only at 8.5%, secured by the land, buildings, and related improvements of Colonel’s	2,172			2,172
Note payable to affiliates maturing March 2009, semi-annual payments of interest only at 8.5%, secured by the land, buildings, and related improvements of Lucky Magnolia’s	788			788
Note payable to affiliates maturing March 2009, semi-annual payments of interest only at 8.5%, secured by the land, buildings, and related improvements of Bayou Vista	1,679			1,679
Note payable to affiliates maturing March 2009, semi-annual payments of interest only at 8.5%, secured by the land, buildings, and related improvements of Raceland	1,114			1,114
	19,489			19,489
Total indebtedness	183,490			152,916
Less current indebtedness	(3,583		)	(1,006		)
Total long-term indebtedness	$	179,907		$	151,910

(concluded)

On February 8, 2002, JEI completed a $125,000 of 11 7/8% Senior Secured Notes (the ”Notes”) due 2009, with interest payable on each February 1, and August 1, with payments beginning August 1, 2002. The Notes were issued at a 3.96% discount from their principal amount, resulting in a discount of $4,950, which is being amortized using the effective interest method over the life of the Notes. The proceeds of the Notes were primarily used to fund the acquisition of the common stock of Black Hawk, Jalou LLC, Jalou II, and Colonial, and to refinance certain debt of these entities in connection with the acquisitions. The Notes are secured by the assets and stock of the acquired entities. JEI has no independent assets or operations and the subsidiaries’ guarantees on the Notes are full and unconditional and joint and several. The Notes contain a number of affirmative and negative covenants which among other things require JEI to maintain certain financial ratios and refrain from certain actions without prior approval from the Trustee of the Notes. As of December 31, 2005, management believes JEI is in compliance with all such debt covenants.

On February 13, 2003, $10,489 of notes issued by the seller in connection with the acquisition of certain Jalou truck stops from an unaffiliated party were acquired by a related party. See discussion in Note 9 below.

On March 2, 2005, JEI issued $23,000 in debt subject to the indenture of the Notes described above. The terms of the new notes are the same as the existing notes, which carry a coupon rate of 11 7/8% per annum and mature February 2009. See Note 4.

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Scheduled principal payments as of December 31, 2005, are as follows:

2006	$	3,429
2007	5,181
2008	683
2009	159,182
2010	10,447
Thereafter	4,928
Total	$	183,850

Effective July 12, 2002, the Company entered into a $10,000 line of credit (“LOC”) agreement with Wells Fargo Foothill, Inc., expiring July 12, 2007. The LOC bears interest at the prime rate published by Wells Fargo Bank, N.A., plus 1.75%. The LOC is collateralized by the land, buildings and related improvements of The Lodge and the Gilpin Hotel and Casino, the Company’s Colorado casino properties. The security interests under the terms of the LOC are contractually senior to the Notes. There were no amounts outstanding under the LOC as of December 31, 2005 and 2004.

6.INCOME TAXES

On March 11, 2002, the Company received notice from the Internal Revenue Service asserting deficiencies in federal corporate income taxes for Black Hawk’s 1998 tax year. The proposed adjustment related to the deductibility of depreciation taken against certain costs incurred by The Lodge to build and improve public assets. The Company has settled this issue with the Internal Revenue Service and has recorded a charge to earnings of $423 including $149 in interest. No penalties were assessed on this settlement.

7.ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

The following disclosure of estimated fair value of the Company’s financial instruments has been determined by the Company using available market information and generally accepted valuation methodologies. However, considerable judgment is required to interpret market data in order to develop the estimates of fair value. Accordingly, the estimates herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. The estimated fair value of the Company’s financial instruments are as follows:

	2005				2004
			Estimated				Estimated
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Liabilities—long-term debt and capital lease obligations	$	183,490	$	189,190	$	152,916	$	173,208

The estimation methodologies utilized by the Company are summarized as follows:

Debt—The fair value of variable-rate debt is estimated to be equal to its carrying amount. The fair value of senior secured notes issued in 2002 and 2005 is based upon quoted market rates. The fair value of other fixed rate debt is estimated based on a discounted cash flow analysis, using the prevailing market interest rates for debt of similar dollar amount, maturity and risk.

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The estimated fair value of the Company’s other financial instruments, such as cash and cash equivalents, accounts receivable, inventory and accounts payable, have been determined to approximate carrying value based on the short-term nature of those financial instruments.

8.EMPLOYEE BENEFIT PLANS

In June 1998, Colonial implemented a 401(k) Plan in which all full time and part time employees are eligible to participate after six months of employment. The Plan is a defined contribution plan covering eligible employees of Colonial. The Plan allows eligible employees to make tax-deferred contributions that are matched by the Company up to a specified level. On July 9, 2004, the Colonial 401(k) plan was merged into the Black Hawk Gaming & Development Company Inc. 401(k) plan (renamed Jacobs Entertainment, Inc. plan on December 21, 2004). The Company’s contributions to the 401(k) Plan were approximately $14 and $14 for the period ended July 9, 2004, and for the year ended 2003, respectively.

On January 1, 1997, the Gilpin Hotel Casino Employees’ 401(k) Plan (renamed Black Hawk Gaming & Development Company Inc.’s 401(k) Plan on March 31, 1999, further re-named Jacobs Entertainment, Inc.’s 401(k) plan on December 20, 2004) (the ”Plan”) was organized and began accepting contributions on September 1, 1997. The Plan is a defined contribution plan covering eligible employees of Black Hawk, The Lodge, the Gilpin, GDW, and Colonial (after July 9, 2004). The Plan allows eligible employees to make tax-deferred contributions that are matched by the Company up to a specified level. The Company contributed approximately $307, $257, and $249 to the Plan for the years ended December 31, 2005, 2004, and 2003, respectively. On July 9, 2004, Colonial’s Plan and Jacobs Entertainment, Inc.’s Plan were merged into one plan covering all eligible employees of JEI.

9.RELATED-PARTY TRANSACTIONS

In order to assist JEI in its efforts to research, develop, perform due diligence on and possibly acquire new gaming opportunities, Black Hawk entered into an agreement with Premier One Development Company effective October 1, 1997. On May 9, 2000, Premier merged into Jacobs Investments Management Co. Inc. (“Management”), 82% of which is owned by Jeffrey P. Jacobs and the remaining 18% of which is owned in equal portions by two former directors of Colonial Holdings. Black Hawk paid or accrued $450, $450, and $450 for Management’s services during the years ended December 31, 2005, 2004, and 2003, respectively. The agreement expired on December 31, 2002, but was renewed on January 2, 2003 for a period of nine years, at $450 per year, payable on January 15 of each year.

The Company provides monthly management and accounting services to truckstops owned by an affiliate. In addition, the affiliates purchase repair parts from the Company. Total charges to affiliates for management services and repair part purchases totaled $480, $384 and $318 for the years ended December 31, 2005, 2004 and 2003, respectively. Accounts receivables due from affiliate totaled $286 and $224 as of December 31, 2005 and 2004, respectively.

As part of the acquisition agreement for the Breaux Bridge, Eunice, and Jefferson locations, the affiliated party seller provided capital to the Company. Amounts payable to this affiliated party totaled $386 and $1,819 as of December 31, 2005 and 2004, respectively.

JEI is the obligor on notes to Jacobs totaling $9,000, with interest only payable semi-annually at 12% per annum, and the principal amount due and payable on January 31, 2010. These notes were issued in connection with the acquisition of certain Louisiana truck stops. JEI is also the obligor of $10,489 of notes issued by the seller in connection with the acquisition of additional truck stops from an unaffiliated party. These notes were acquired from the seller by Jacobs on February 13, 2003, for $7,000. Interest

F-19

payable to related parties was $723 for each of the years ended December 31, 2005 and 2004, respectively.

10.ABANDONMENT COSTS

In December 2005, the Company recorded an abandonment charge of $1,424 representing the net book value of a stand-alone portion of the Gold Dust West’s motel building (the ”L-wing”) containing 66 of the properties 106 motel rooms. After considering alternative plans for this stand-alone portion of the motel including a possible refurbish, it was decided that the property would be better served with improved access and expanded parking. The Company began demolition of the L-wing during the first quarter of 2006 and expects to complete the project late in the second quarter at an estimated total cost of $1.4 million. The Company expects to add approximately 75 parking spaces as a result of the demolition. The Company will continue to operate the remaining 40 hotel rooms.

During the year ended 2004, we recorded a $2,900 charge to operations which is attributable to the write-off of abandoned project costs. Included in these costs is approximately $1,800 related to development costs associated with a potential gaming site in D’Iberville, Mississippi. After considering various development alternatives, we chose to abandon the project to pursue other alternatives which, in our estimation would result in greater returns than the potential of the D’Iberville site. The majority of these expenditures were primarily associated with land option payments and design, development and planning costs. Further, we charged to operations approximately $800 consisting of option payments, legal and accounting fee expenditures associated with four separate unrelated parties to acquire seven video poker stop operations in Louisiana. Based on the results of the due diligence work, we abandoned the potential acquisitions with all seven truck stop operations targeted for acquisition. Finally, approximately $300 in other capitalized costs were charged to operations due to abandonment of miscellaneous other projects.

11.COMMITMENTS AND CONTINGENCIES

In 1996, Colonial entered into a Management and Consulting Agreement, as amended (the ”Management Agreement”), with Maryland-Virginia Racing Circuit, Inc. (the ”Circuit”), a wholly owned subsidiary of Magna Entertainment Corp. (“MEC”), which is an affiliate of the Maryland Jockey Club (“MJC”). The Management Agreement provided for management services for Colonial’s racetrack and its satellite facilities and created a Virginia-Maryland thoroughbred racing circuit. Under the Management Agreement, MJC agreed to suspend live racing at its racetracks, Laurel Park and Pimlico Race Course, during Colonial’s live thoroughbred meets. Parties to the Management Agreement also exchanged simulcast signals for their live thoroughbred meets at no cost to either party. The effect of the exchange of signals is immaterial to the consolidated financial statements of JEI. The Circuit managed Colonial’s satellite facilities, as well as, the live standardbred and thoroughbred meets and provided certain personnel, at its expense, for the live thoroughbred meet. For its services, the Circuit received a management fee of 1.0% of the first $75 million of the aggregate gross amounts wagered in any calendar year in the Commonwealth of Virginia, excluding certain amounts specified in the Management Agreement (“Handle”), 2.0% of all Handle of $75 million to $125 million per calendar year, 1.5% of all Handle in excess of $125 million, and 3.25% of any Handle for satellite wagering facilities located in the counties of Loudoun, Fairfax, Prince William, and Arlington and the Virginia cities of Manassas, Manassas Park, Fairfax City, Falls Church, and Alexandria. The Management Agreement was to remain

F-20

in effect until 2036 provided Colonial owned, controlled, or operated its racetrack under its existing licenses. At Colonial’s option, Colonial could terminate the Management Agreement any time after 2021 upon payment of a fee equal to 17 times the average management fee paid during the three years immediately preceding such termination. Management fees incurred under the Management Agreement were approximately $1,787, $2,082, and $1,831 during each of the years ended December 31, 2005, 2004, and 2003, respectively.

On September 30, 2005, Colonial acquired all of the outstanding shares of the Circuit. See Note 14 for discussion of this transaction.

Colonial has entered into an agreement with a totalisator company which provides wagering services and designs, programs, and manufactures totalisator systems for the Company’s pari-mutuel wagering applications. The basic terms of the agreement state that the totalisator company shall provide totalisator services to Colonial for all wagering held at Colonial’s facilities through 2004 at a rate of .365% of the gross amounts wagered. Totalisator fees incurred under this agreement was approximately $731, $622, and $497 for the years ended December 31, 2005, 2004, and 2003, respectively. On March 16, 2005, Colonial entered into an amendment with the totalisator company to extend the term of the agreement to 2012, to provide replacement equipment for the existing equipment, and to increase the rate to .385% of handle up to $270,000 in handle. Handle above $270,000 will be charged a rate of .345%. The amendment also provides for minimum charge per calendar year of $330.

Colonial has entered into agreements with a company which provides broadcasting and simulcasting equipment and services. The agreements for live racing services at the horse racing track, and equipment leases at two of the off track wagering facilities were extended during 2002 until December 31, 2007. Effective November 6, 2002, Colonial acquired certain equipment located at the horse racing track previously leased under these agreements. Total expense incurred for totalisator and broadcasting and simulcasting equipment was approximately $1,094, $922, and $745 for the years ended December 31, 2005, 2004, and 2003, respectively.

Colonial leases automobiles, building space, and certain equipment under operating leases expiring at various dates. Total rental expense under these noncancelable leases was approximately $400, $420, and $357 for the years ended December 31, 2005, 2004, and 2003, respectively.

Black Hawk leases land and warehouse space for the Gold Dust in Reno, Nevada as well as automobiles, and other property and equipment under operating leases expiring at various dates. Total rental expense under these noncancelable leases was approximately $368, $357, and $352 for the years ended December 31, 2005, 2004, and 2003, respectively.

The following are the future estimated minimum commitments relating to JEI’s noncancelable operating agreements and leases:

Years Ending
December 31
2006	$	1,600
2007	1,599
2008	1,370
2009	1,077
2010	831
Thereafter	13,258
Total	$	19,735

F-21

Other long-term obligations include the commitment of the Louisiana truck plaza video gaming facilities to pay $1 per video poker machine per day, plus $1,000 per machine annually in licensing to an outside party to maintain its video poker machines in its truck stop premises. Other long-term obligations also include commitments under employment contracts with members of senior management.

The following analysis of the leased property under capital leases:

Class of Property	2005			2004
Land	$	1,523		$	1,323
Building	959			409
Construction in progress	1,200
Other	16			16
Less accumulated depreciation	(42		)	(5		)
Total leased property under capital lease	$	3,656		$	1,743

As of December 31, 2005, the following is a schedule by years of future minimum lease payments under capital leases together with the present value of the net minimum lease payments:

Years Ending
December 31
2006	$	363
2007	522
2008	584
2009	587
2010	1,256
Thereafter	8,350
Total future minimum lease payments	11,662
Less amount representing interest ranging from 1.6% to 17.1% per annum	7,503
Net present value of net minimum lease payments	$	4,159

The Company is also involved in routine litigation arising in the ordinary course of business. These matters are believed by the Company to be covered by appropriate insurance policies.

12.COMMON STOCK

In connection with estate planning activities by our two shareholders, effective September 27, 2005, all 1,500 shares of our common stock, $.01 par value, were converted into a total of 1,320 Class A Common Shares, $.01 par value, and 180 Class B Common Shares, $.01 par value. The shares are identical in all respects except that the Class A Common Shares are entitled to one vote per share and the Class B Common Shares are entitled to 50,000 votes per share. The Class A and Class B Shares are owned equally by Richard E. Jacobs and Jeffrey P. Jacobs and their family trusts. No proceeds were obtained by the Company in connection with the stock conversion and no underwriters were involved. The conversion was deemed exempt from the registration requirements of the Securities Act of 1933, as amended, as a transaction not involving a public offering.

F-22

13.TERMINATION OF CONTRACT

On September 30, 2005, Colonial completed a transaction with MEC under which Colonial acquired all of the outstanding shares of the Circuit for a purchase price of $10 million. The sale was subject to the approval of the Virginia Racing Commission which was granted on September 28, 2005. Under the terms of the purchase agreement, Colonial paid $7 million in cash at closing of the transaction and issued a one-year $3 million note bearing interest at the prime rate plus 1% (7.75% at September 30, 2005). The note is guaranteed by JEI. The stock acquisition has been characterized as a termination of a contract because the primary asset owned by the Circuit was a Management Agreement with Colonial. Statement of Financial Accounting Standards No. 146, Accounting for Costs Associated with Exit or Disposal Activities; prescribes expensing of the costs associated with the termination of a contract. As such, $10.4 million, including the $10 million purchase price and $0.4 million in legal and professional fees associated with this transaction, has been expensed in the current period. As part of the transaction, Colonial paid off an existing promissory note to MJC in the amount of $73, plus accrued interest. Colonial must also pay the Circuit’s prorated 2005 management fees of $1,787. As of December 31, 2005 $178 of these fees were still owed to MJC. Also under the purchase agreement, a Maryland-Virginia thoroughbred racing circuit will continue for ten years with live thoroughbred racing in Maryland concluding on the latter of the Monday following the running of the Preakness Stakes or June 17 of each year and beginning at Colonial Downs thereafter. No live thoroughbred racing will resume in Maryland before August 1 each year under the agreement.

14.HURRICANE

On August 29, 2005 and September 20, 2005, hurricanes Katrina and Rita struck Louisiana causing severe damage to the region. The Company’s Louisiana operations sustained minimal damage. The Company estimates total damages after consideration of insurance company deductibles to be approximately $125.

15.SEGMENT INFORMATION

At December 31, 2005, 2004, and 2003, the Company has four segments representing the geographic regions of their operations. Each segment is managed separately because of the unique characteristics of revenue stream and customer base.

The Colorado segment consists of The Lodge and Gilpin casinos. We have aggregated the operations of The Lodge and the Gilpin in our Colorado segment based on similarities in the nature of the properties' businesses, customers and regulatory environment in which each property operates. The Nevada segment consists of the Gold Dust West casino. The Virginia segment consists of Colonial’s pari-mutuel operations and the Louisiana operations consist of Jalou’s truck plaza/video poker facilities.

The accounting policies of the segments are the same as those described in Note 1. The corporate operations represent all other revenues and expenses, and are also presented. The following segment information is presented after elimination of inter-segment transactions.

F-23

	Year Ended December 31, 2005
	(Dollars in thousands)
	Colorado			Nevada			Virginia			Louisiana			Total
Total revenues:
Gaming:
Casino	$	93,088		$	22,519		$	—		$	—		$	115,607
Truck stop										37,432			37,432
Pari-mutuel							35,988						35,988
Food and beverage	10,177			3,459			2,560			3,578			19,774
Convenience store—fuel										37,361			37,361
Convenience store—other										5,441			5,441
Hotel	1,662			320									1,982
Other	742			141			2,420			370			3,673
Total revenues	105,669			26,439			40,968			84,182			257,258
Promotional allowances	(17,255		)	(4,108		)				(1,812		)	(23,175		)
Net revenues	$	88,414		$	22,331		$	40,968		$	82,370		$	234,083
Depreciation and amortization	$	5,017		$	1,691		$	1,685		$	2,387		$	10,780
Corporate adjustments and eliminations													225
Consolidated depreciation and amortization													$	11,005
Interest income	$	44		$	15		$	86		$	20		$	165
Corporate adjustments and eliminations													7
Consolidated total interest income													$	172
Interest expense	$	10,934		$	3,141		$	322		$	2,794		$	17,191
Corporate adjustments and eliminations													5,213
Consolidated total interest expense													$	22,404
Income tax expense	$	—		$	—		$	—		$	—		$	423
Net income (loss)	$	9,844		$	1,286		$	(12,947	)	$	10,572		$	8,755
Corporate adjustments and eliminations													(13,500		)
Consolidated net income (loss)													$	(4,745	)
EBITDA (1)	$	25,751		$	6,103		$	(11,026	)	$	15,733		$	36,561
Corporate adjustments and eliminations													(7,646		)
Consolidated EBITDA													$	28,915
Goodwill	$	6,710		$	8,836		$	—		$	17,384		$	32,930
Identifiable intangible assets—net	$	—		$	—		$	—		$	7,830		$	7,830
Property, plant, and equipment—net	$	87,173		$	11,158		$	68,640		$	29,832		$	196,803
Corporate adjustments and eliminations													2,036
Consolidated net property, plant, and equipment—net													$	198,839
Total assets	$	110,211		$	23,711		$	73,453		$	65,334		$	272,709
Corporate adjustments and eliminations													6,044
Consolidated total assets													$	278,753
Long-term debt	$	82,802		$	22,813		$	3,940		$	26,317		$	135,872
Corporate adjustments and eliminations													44,035
Consolidated total long-term debt													$	179,907
Capital expenditures	$	5,844		$	1,212		$	2,316		$	8,665		$	18,037
Corporate adjustments and eliminations													554
Consolidated capital expenditures													$	18,591

F-24

	Year Ended December 31, 2004
	(Dollars in thousands)
	Colorado			Nevada			Virginia			Louisiana			Total
Total revenues:
Gaming:
Casino	$	86,115		$	22,232		$	—		$	—		$	108,347
Truck stop										24,842			24,842
Pari-mutuel							32,946						32,946
Food and beverage	9,618			3,527			2,056			2,763			17,964
Convenience store—fuel										21,690			21,690
Convenience store—other										3,825			3,825
Hotel	800			582									1,382
Other	755			152			2,099			325			3,331
Total revenues	97,288			26,493			37,101			53,445			214,327
Promotional allowances	(15,007		)	(4,028		)				(1,140		)	(20,175		)
Net revenues	$	82,281		$	22,465		$	37,101		$	52,305		$	194,152
Depreciation and amortization	$	4,838		$	1,436		$	1,544		$	1,962		$	9,780
Corporate adjustments and eliminations													178
Consolidated depreciation and amortization													$	9,958
Interest income	$	13		$	3		$	29		$	3		$	48
Corporate adjustments and eliminations													16
Consolidated total interest income													$	64
Interest expense	$	10,807		$	3,142		$	121		$	2,216		$	16,286
Corporate adjustments and eliminations													3,419
Consolidated total interest expense													$	19,705
Net income	$	8,582		$	2,960		$	(35	)	$	5,279		$	16,786
Corporate adjustments and eliminations													(12,895		)
Consolidated net income													$	3,891
EBITDA (1)	$	24,214		$	7,535		$	1,601		$	9,454		$	42,804
Corporate adjustments and eliminations													(9,314		)
Consolidated EBITDA													$	33,490
Goodwill	$	6,711		$	8,836		$	—		$	11,226		$	26,773
Identifiable intangible assets—net	$	—		$	—		$	—		$	7,790		$	7,790
Property, plant, and equipment—net	$	87,391		$	11,594		$	59,690		$	23,578		$	182,253
Corporate adjustments and eliminations													450
Consolidated net property, plant, and equipment—net													$	182,703
Total assets	$	111,277		$	24,577		$	63,538		$	49,741		$	249,133
Corporate adjustments and eliminations													3,133
Consolidated total assets													$	252,266
Long-term debt	$	78,265		$	22,682		$	1,888		$	24,394		$	127,229
Corporate adjustments and eliminations													24,681
Consolidated total long-term debt													$	151,910
Capital expenditures	$	5,585		$	1,619		$	5,665		$	6,182		$	19,051
Corporate adjustments and eliminations
Consolidated capital expenditures													$	19,051

F-25

	Year Ended December 31, 2003
	(Dollars in thousands)
	Colorado			Nevada			Virginia		Louisiana			Total
Total revenues:
Gaming:
Casino	$	77,137		$	19,679		$	—	$	—		$	96,816
Truck stop									24,108			24,108
Pari-mutuel							29,189					29,189
Food and beverage	8,646			3,446			1,951		2,340			16,383
Convenience store—fuel									17,229			17,229
Convenience store—other									3,403			3,403
Hotel	792			578								1,370
Other	722			131			1,863		287			3,003
Total revenues	87,297			23,834			33,003		47,367			191,501
Promotional allowances	(14,820		)	(3,970		)			(862		)	(19,652		)
Net revenues	$	72,477		$	19,864		$	33,003	$	46,505		$	171,849
Depreciation and amortization	$	4,759		$	1,241		$	1,285	$	1,650		$	8,935
Corporate adjustments and eliminations												136
Consolidated depreciation and amortization												$	9,071
Interest income	$	3		$			$	44	$	14		$	61
Corporate adjustments and eliminations												1
Consolidated total interest income												$	62
Other income												$	10
Interest expense	$	10,774		$	3,123		$	264	$	1,986		$	16,147
Corporate adjustments and eliminations												3,498
Consolidated total interest expense												$	19,645
Net income	$	3,178		$	1,378		$	278	$	6,676		$	11,510
Corporate adjustments and eliminations												(8,879		)
Consolidated net income												$	2,631
EBITDA (1)	$	18,708		$	5,742		$	1,783	$	10,298		$	36,531
Corporate adjustments and eliminations												(5,256		)
Consolidated EBITDA												$	31,275
Goodwill	$	6,711		$	8,836		$	—	$	11,226		$	26,773
Identifiable intangible assets—net	$	—		$	—		$	—	$	7,507		$	7,507
Property, plant, and equipment—net	$	86,770		$	11,579		$	55,569	$	18,713		$	172,631
Corporate adjustments and eliminations												576
Consolidated net property, plant, and equipment—net												$	173,207
Total assets	$	108,775		$	24,071		$	59,363	$	42,897		$	235,106
Corporate adjustments and eliminations												3,878
Consolidated total assets												$	238,984
Long-term debt	$	78,302		$	22,549		$	471	$	19,489		$	120,811
Corporate adjustments and eliminations												24,539
Consolidated total long-term debt												145,350
Capital expenditures	$	8,226		$	1,080		$	2,804	$	3,729		$	15,839
Corporate adjustments and eliminations												440
Consolidated capital expenditures												$	16,279

F-26

(1)EBITDA (earnings before interest, taxes, depreciation and amortization) is presented as supplemental information in the tables above and in the discussion of our operating results. EBITDA can be reconciled directly to our consolidated net income by adding the amounts shown for depreciation, amortization, and interest. 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 (loss) income, 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. Management believes that presentation of a non-GAAP financial measure such as EBITDA is useful because it allows investors and management to evaluate and compare the Company’s 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 its properties using EBITDA measures as do most analysts following the gaming industry. EBITDA is also a component of certain financial covenants in the Company’s debt agreements.

******

F-27

EXHIBIT INDEX

Exhibit No.	Description
2.1(1)	Agreement and Plan of Merger dated as of April 25, 2001, among Black Hawk Gaming & Development Company, Gameco, Inc. and BH Acquisition, Inc.
2.2(1)	Amendment to Agreement and Plan of Merger dated as of November 12, 2001 among Black Hawk Gaming & Development Company, Inc., Gameco, Inc. and BH Acquisition, Inc.
2.3(1)	Exchange Agreement dated February 22, 2002 among Gameco, Inc., Jeffrey P. Jacobs and The Richard E. Jacobs Revocable Trust
2.4(1)	Agreement and Plan of Merger dated as of June 11, 2001 among Colonial Holdings, Inc., Gameco, Inc. and Gameco Acquisitions, Inc.
2.5(1)	Amendment to Agreement and Plan of Merger dated as of November 16, 2001 among Colonial Holdings, Inc., Gameco, Inc., and Gameco Acquisition, Inc.
2.6(1)	Agreement and Plan of Merger, dated February 22, 2002 between Gameco, Inc. and Jacobs Entertainment, Inc.
3.1(1)	Certificate of Incorporation of Gameco, Inc.
3.2(1)	By-Laws of Gameco, Inc.
3.3(1)	Articles of Incorporation of Black Hawk Gaming & Development Company, Inc.
3.4(1)	Bylaws of Black Hawk Gaming & Development Company, Inc.
3.5(1)	Articles of Incorporation of Gold Dust West Casino, Inc.
3.6(1)	Code of By-laws of Gold Dust West Casino, Inc.
3.7(1)	Articles of Organization of Black Hawk/Jacobs Entertainment, LLC
3.8(1)	Operating Agreement of Black Hawk/Jacobs Entertainment, LLC
3.9(1)	Joint Venture Agreement of Gilpin Hotel Venture
3.10(1)	Articles of Incorporation of Gilpin Ventures, Inc.
3.11(1)	By-Laws of Gilpin Ventures, Inc.
3.12(1)	Articles of Incorporation of Jalou II Inc.
3.13(1)	By-Laws of Jalou II Inc.
3.14(1)	Articles of Incorporation of Winner’s Choice Casino, Inc.
3.15(1)	By-Laws of Winner’s Choice Casino, Inc.
3.16(1)	Articles of Organization of Diversified Opportunities Group Ltd.
3.17(1)	Articles of Organization of Jalou L.L.C.
3.18(1)	Articles of Organization of Houma Truck Plaza & Casino, L.L.C.
3.19(1)	Articles of Organization of Jalou-Cash’s L.L.C.

E-1

3.20(1)	Articles of Incorporation of JACE, Inc.
3.21(1)	Articles of Organization of Lucky Magnolia Truck Stop and Casino, L.L.C.
3.22(1)	Articles of Organization of Bayou Vista Truck Plaza and Casino, L.L.C.
3.23(1)	Articles of Organization of Raceland Truck Plaza and Casino, L.L.C.
3.24(1)	Articles of Incorporation of JACE, Inc. (duplicate of Exhibit 3.20)
3.25(2)	Certificate of Amendment of Certificate of Incorporation of Gameco, Inc.
3.26(2)	Amended and Restated Certificate of Limited Partnership of Colonial Downs, L.P.
3.27(2)	Limited Partnership Agreement of Colonial Downs, L.P.
3.28(2)	Amended and Restated Articles of Incorporation of Colonial Downs Holdings, Inc.
3.29(2)	Amendment to Articles of Incorporation of Colonial Downs Holdings, Inc.
3.30(2)	Bylaws of Colonial Downs Holdings, Inc.
3.31(2)	Articles of Incorporation of Stansley Racing Corp.
3.32(2)	Articles of Amendment to the Articles of Incorporation of Stansley Racing Corp.
3.33(2)	Bylaws of Stansley Racing Corp.
3.34(2)	Amended and Restated Operating Agreement of Diversified Opportunities Group Ltd.
3.35(2)	Amendment to the Operating Agreement of Black Hawk/Jacobs Entertainment, LLC
3.36(2)	Amendment to the Certificate of Incorporation of Gameco, Inc.
3.37(8)	Articles of Organization of Jalou Breaux Bridge, LLC dated January 29, 2003
3.38(8)	Articles of Organization of Jalou Eunice, LLC dated March 27, 2003
3.39(8)	Articles of Organization of Jalou of Jefferson, LLC dated September 23, 2003
3.40(10)	Certificate of Amendment of Certificate of Incorporation of Jacobs Entertainment, Inc. dated September 27, 2005
3.41(10)	Articles of Incorporation of Jacobs Pinon Plaza Entertainment, Inc. dated November 2, 2005
3.41A(12)	Bylaws of Jacobs Pinon Plaza Entertainment, Inc. dated November 8, 2005
3.42(12)	Articles of Incorporation of Fuel Stop 36, Inc. dated August 24, 1989
3.43(12)	Articles of Organization of Jalou of Larose, LLC dated November 3, 2005
4.1(1)	Indenture dated February 8, 2002 by and among Gameco, Inc., certain guarantors and Wells Fargo Bank Minnesota, National Association relating to 117/8% Senior Secured Notes due 2009
4.2(1)	Form of Gameco, Inc. 117/8% Senior Secured Notes due 2009 (included as part of the Indenture at Exhibit 4.1)
4.3(1)	Supplemental Indenture dated February 22, 2002 by and among Gameco, Inc., certain guarantors and Wells Fargo Bank Minnesota, National Association relating to 117/8% Senior Secured Notes due 2009

E-2

4.4(1)	Form of Subsidiary Guaranty for 117/8% Senior Secured Notes due 2009 (included as part of the Indenture at 4.1)
4.5(1)	Registration Rights Agreement dated as of February 8, 2002 by and among Gameco, Inc., certain guarantors, CIBC World Markets Corp. and Libra Securities, LLC
4.6(1)	Security Agreement dated February 8, 2002 among Gameco, Inc., certain guarantors and Wells Fargo Bank Minnesota, National Association as Trustee
4.7(1)	Amendment to the Security Agreement dated February 22, 2002 among Gameco, Inc., certain guarantors and Wells Fargo Bank Minnesota, National Association
4.7A(12)	Amendment to Security Agreement dated December 21, 2005 between Jacobs Entertainment, Inc. (formerly Gameco, Inc.) and Wells Fargo Bank, National Association
4.8(1)	Joinder Agreements dated February 22, 2002 between Wells Fargo Bank Minnesota, National Association and each guarantor
4.9(1)	Guaranty of each guarantor dated February 22, 2002
4.10(1)	Fee and Leasehold Deed of Trust, Assignment of Leases and Rents, Security Agreements and fixture filings by Black Hawk/Jacobs Entertainment, LLC and Gilpin Hotel Venture to the Public Trustee of Gilpin County, State of Colorado, as Trustee for the Benefit of Wells Fargo Bank Minnesota, National Association as Beneficiary, dated February 22, 2002
4.11(1)	Fee and Leasehold Deed of Trust, Assignment of Leases and Rents, Security Agreements and fixture filings by Gold Dust Casino, Inc. to the First American Title Company of Nevada, as Trustee for the benefit of Wells Fargo Bank Minnesota, National Association as Beneficiary, dated February 22, 2002
4.12(1)	Leasehold Mortgage, Assignment of Leases and Rents, Security Agreement and fixture filing by Houma Truck Plaza & Casino, L.L.C. to Wells Fargo Bank Minnesota, National Association, as Trustee dated February 22, 2002
4.13(1)	Mortgage, Assignment of Leases and Rents, Security Agreements and fixture filing by Winner’s Choice Casino, Inc. to Wells Fargo Bank Minnesota, National Association as Trustee dated February 22, 2002
4.14(1)	Mortgage, Assignment of Leases and Rents, Security Agreements and fixture filing by Raceland Truck Plaza and Casino, LLC to Wells Fargo Bank Minnesota, National Association as Trustee dated February 22, 2002
4.15(1)	Mortgage, Assignment of Leases and Rents, Security Agreements and fixture filing by Bayou Vista Truck Plaza and Casino, LLC to Wells Fargo Bank Minnesota, National Association as Trustee dated February 22, 2002
4.16(1)	Mortgage, Assignment of Leases and Rents, Security Agreements and fixture filing by Lucky Magnolia Truck Stop and Casino, L.L.C. to Wells Fargo Bank Minnesota, National Association as Trustee dated February 22, 2002
4.17(1)	Mortgage, Assignment of Leases and Rents, Security Agreements and fixture filing by JACE, Inc. to Wells Fargo Bank Minnesota, National Association as Trustee dated February 22, 2002
4.18(1)	Collateral Assignment of Deeds of Trust, Assignments of Rents and Leases, Security Agreements and fixture filings and other loan documents by Gameco, Inc. to Wells Fargo Bank Minnesota, National Association as Trustee dated February 22, 2002
4.19(1)	Escrow Agreement between Gameco, Inc. and Wells Fargo Bank Minnesota, National Association dated February 22, 2002

E-3

4.20(1)	Supplemental Indenture dated June 14, 2002 by and among Jacobs Entertainment, Inc., certain guarantors and Wells Fargo Bank Minnesota, National Association relating to 117/8% Senior Secured Notes due 2009
4.21(2)	Joinder Agreements dated June 14, 2002 between Wells Fargo Bank, National Association and each guarantor
4.22(2)	Subsidiary Guarantee of each subsidiary guarantor dated June 14, 2002 for 117/8% Senior Secured Notes due 2009
4.23(2)	Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing by Colonial Downs, L.P. to David F. Belkowitz and James L. Weinberg as Trustees for the benefit of Wells Fargo Bank Minnesota, National Association, dated June 14, 2002
4.24(2)	Leasehold Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing by Colonial Downs, L.P. to David F. Belkowitz and James L. Weinberg as Trustees for the benefit of Wells Fargo Bank Minnesota, National Association, dated June 14, 2002
4.25(2)	Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing by Colonial Holdings, Inc. to David F. Belkowitz and James L. Weinberg as Trustees for the benefit of Wells Fargo Bank Minnesota, National Association, dated June 14, 2002
4.26(2)	Loan and Security Agreement dated July 12, 2002 by and among Jacobs Entertainment, Inc., certain subsidiaries and Foothill Capital Corporation
4.27(2)	Promissory Note dated July 12, 2002 by and among Jacobs Entertainment, Inc., certain borrowers and Foothill Capital Corporation
4.28(2)	Guaranty of Gold Dust West Casino, Inc. and Diversified Opportunities Group Ltd., dated July 12, 2002
4.29(2)	Intercreditor Agreement dated July 12, 2002 by and between Wells Fargo Bank Minnesota, National Association and Foothill Capital Corporation
4.30(2)	Memorandum of Intercreditor Agreement dated July 12, 2002 by and among Foothill Capital Corporation, Wells Fargo Bank Minnesota, National Association and Borrowers
4.31(2)	Fee and Leasehold Deed of Trust, Assignment of Leases and Rents, Securiting Agreement and Fixture Filing by Black Hawk Gaming & Development Company, Inc., Black Hawk/Jacobs Entertainment, LLC, and Gilpin Hotel Venture to the Public Trustee of Gilpin County, State of Colorado and Foothill Capital Corporation, dated July 12, 2002
4.32(5)	Second Supplemental Indenture dated June 14, 2002 among Jacobs Entertainment, Inc., certain guarantors and Wells Fargo Bank Minnesota, National Association (Trustee)
4.33(a)(5)	Subsidiary Guarantees of Colonial Holding, Inc. dated June 28, 2002
4.33(b)(5)	Subsidiary Guarantee of Colonial Downs, L.P. dated June 28, 2002
4.33(c)(5)	Subsidiary Guarantee of Stansley Racing Corp. dated June 28, 2002
4.34(a)(5)	Joinder Agreement of Colonial Holdings, Inc. dated June 28, 2002
4.34(b)(5)	Joinder Agreement of Colonial Downs, L.P. dated June 28, 2002
4.34(c)(5)	Joinder Agreement of Stansley Racing Corp. dated June 28, 2002
4.34(d)(12)	Joinder Agreement of Jacobs Pinon Plaza Entertainment, Inc. dated December 21, 2005

E-4

4.35(a)(1)(5)	Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing by Colonial Holdings, Inc. (New Kent Racetrack) dated June 28, 2002
4.35(a)(2)(5)	Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing (Richmond Southwest) dated June 28, 2002
4.35(b)(1)(5)	Leasehold Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing (New Kent and Chesapeake) dated June 28, 2002
4.36(5)	Form of Control Agreement Concerning Deposit Accounts (Citizens Bank/Colonial Downs, L.P.) dated June 14, 2002
4.37(5)	Form of Control Agreement Concerning Deposit Accounts (Citizens Bank/Colonial Holdings, Inc.) dated June 14, 2002.
4.38(6)	Subsidiary Guarantee—Colonial Downs, LLC dated June 4, 2003
4.39(6)	Security Agreement Amendment by Colonial Holdings, Inc. dated June 4, 2003
4.40(6)	Supplemental Letter by Colonial Downs, LLC dated June 4, 2003
4.41(6)	Third Supplemental Indenture dated June 4, 2003 among Jacobs Entertainment, Inc., certain Guarantors and Wells Fargo Bank Minnesota, National Association (Trustee)
4.42(6)	Supplemental Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing by Colonial Downs, LLC dated June 4, 2003
4.43(a)(7)	Fourth Supplemental Indenture among Jacobs Entertainment, Inc., certain Guarantors and Wells Fargo Bank, National Association dated March 2, 2005
4.43(b)(7)	Fifth Supplemental Indenture among Jacobs Entertainment, Inc., certain Guarantors and Wells Fargo Bank, National Association dated March 2, 2005
4.43(c)(12)	Sixth Supplemental Indenture among Jacobs Entertainment, Inc., certain Guarantors and Wells Fargo Bank, National Association dated December 21, 2005
4.44(8)	Amendment No. 2 to Security Agreement dated March 2, 2005 between Jalou, LLC and Wells Fargo Bank, National Association
4.45(8)	Supplement to Security Agreement dated March 2, 2005 by Jalou Breaux Bridge, LLC, Jalou Eunice, LLC and Jalou of Jefferson, LLC and Wells Fargo Bank, National Association
4.46(8)	Leasehold Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated March 2, 2005 by Jalou of Jefferson, LLC and Wells Fargo Bank, National Association
4.47(8)	Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated March 2, 2005 by Jalou Breaux Bridge, LLC and Wells Fargo Bank, National Association
4.48(8)	Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated March 2, 2005 by Jalou Eunice, LLC and Wells Fargo Bank, National Association
4.49(a)(8)	Subsidiary Guarantee dated March 2, 2005 by Jalou of Jefferson, LLC
4.49(b)(8)	Subsidiary Guarantee dated March 2, 2005 by Jalou Breaux Bridge, LLC
4.49(c)(8)	Subsidiary Guarantee dated March 2, 2005 by Jalou Eunice, LLC
4.49(d)(12)	Subsidiary Guarantee dated December 21, 2005 of Jacobs Pinon Plaza Entertainment, Inc.

E-5

4.50(8)	First Amendment to Fee and Leasehold Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated March 2, 2005 between Black Hawk Gaming & Development Company, Inc., et al, and Wells Fargo Bank, National Association
4.51(8)	First Amendment to Fee and Leasehold Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated March 2, 2005 between Gold Dust West Casino, Inc. and Wells Fargo Bank, National Association
4.52(9)	Fourth Supplemental Indenture dated March 2, 2005 among Jacobs Entertainment, Inc. and Wells Fargo Bank, National Association
4.53(9)	Fifth Supplemental Indenture dated March 2, 2005 among Jacobs Entertainment, Inc. and Wells Fargo Bank Minnesota, National Association
10.1(1)	Consulting Agreement between Diversified Opportunities Group Ltd. and Ian M. Stewart dated January 1, 2001
10.2(1)	Executive Employment Agreement between Gameco, Inc. and Jeffrey P. Jacobs dated February 22, 2002
10.3(1)	Executive Employment Agreement between Gameco, Inc. and Richard E. Jacobs dated February 22, 2002
10.4(1)	Executive Employment Agreement between Gameco, Inc. and Stephen R. Roark dated February 22, 2002
10.5(1)	Executive Employment Agreement between Colonial Holdings, Inc. and Ian M. Stewart dated February 22, 2002
10.7(3)	Standardbred Horsemen’s Contract effective March 1, 2003 among Colonial Downs, L.P., Stansley Racing Corp. and The Virginia Harness Horse Association
10.8(3)	Thoroughbred Horsemen’s Agreement dated December 23, 2002 between Colonial Downs, L.P. and the Virginia Horsemen’s Benevolent and Protective Association, Inc.
10.8A(3)	First Amendment dated January 1, 2003 to Thoroughbred Horsemen’s Agreement dated December 23, 2002 between Colonial Downs L.P. and the Virginia Horsemen’s Benevolent and Protective Association, Inc.
10.9(4)	Consulting Agreement dated January 1, 2003 between Jacobs Entertainment, Inc. and Jacobs Investments Management Co., Inc.
10.10(3)	Option Agreement dated January 20, 2004 regarding Vinton, Virginia, Off Track Wagering Facility
10.11(3)	Deed of Lease dated May 8, 2003 between Haynes Chippenham Plaza, LLC and Colonial Downs, L.P.
10.12(8)	Assignment of Membership Interests between Jacobs Entertainment, Inc. and Gameco Holdings, LLC dated February 22, 2005
10.13(8)	Registration Rights Agreement dated March 2, 2005 by and among Jacobs Entertainment, Inc., the Guarantors and the Purchasers
10.14(10)	Stock Purchase Agreement dated August 18, 2005 among Pimlico Racing Association, Inc., Laurel Racing Association Limited Partnership, The Maryland Jockey Club of Baltimore City, Inc., Maryland-Virginia Racing Circuit, Inc. and Colonial Downs, L.P.
10.14A(10)	First Amendment to the Stock Purchase Agreement dated August 18, 2005 among Pimlico Racing Association, Inc., Laurel Racing Association Limited Partnership, The Maryland Jockey Club of Baltimore City, Inc., Maryland-Virginia Racing Circuit, Inc. and Colonial Downs, L.P.
10.15(10)	Asset Purchase Agreement dated November 2, 2005 among Capital City Entertainment, Inc. and Jacobs Pinon Plaza Entertainment, Inc.

E-6

10.15A(12)	Pinon Plaza Ground Lease (proposed) by and between Clark G. Russell and Jean M. Russell, Trustees of The Clark and Jean Russell Family Trust and Jacobs Entertainment, Inc.
10.16(11)	Triple Net Lease dated November 14, 2005 among Route 225 Investments, LLC and Jacobs Entertainment, Inc.
10.17(12)	Ground Lease and Option Purchase Agreement dated September 12, 2005 between Dakota/Blackhawk, LLC and Jacobs Entertainment, Inc.
10.18(12)	Thoroughbred Horseman’s Agreement dated January 1, 2005 between Colonial Downs, L.P., Stansley Racing Corp. and The Virginia Horsemen’s Benevolent and Protective Association, Inc.
10.19(12)	Shopping Center Lease dated February 28, 2005 between Jay F. Wilks, Trustee under Indenture dated December 20, 1976 by and between Herbert Cashvan and Marvin Simon, as Settlors, and Jay F. Wilks as Trustee, and Colonial Downs, L.P.
10.20(12)	Asset Purchase Agreement dated November 2, 2005, between Larose Truck Plaza & Casino, LLC, Midway Recreation, LLC, Joe F. Penn, Jr., Melissa Penn, and Gameco Holdings, Inc., including an Amendment dated December 19, 2005 adding Jalou of Larose, LLC, as a party
10.21(12)	Stock Purchase Agreement dated December 12, 2005 between Jalou II, Inc. and several persons relating to the purchase and sale of the common stock of Fuel Stop 36, Inc.
14.1(12)	Code of Ethics
21.1(12)	Subsidiaries of Jacobs Entertainment, Inc.
25.1(1)	Statement of Eligibility of Trustee on Form T-1
31.1(12)	Chief Executive Officer Certificate under Section 302 of the Sarbanes-Oxley Act of 2002
31.2(12)	Chief Financial Officer Certification under Section 302 of the Sarbanes-Oxley Act of 2002
32.1(12)	Chief Executive Officer Certification under Section 906 of the Sarbanes-Oxley Act of 2002
32.2(12)	Chief Financial Officer Certification under Section 906 of the Sarbanes-Oxley Act of 2002
99.1(1)	Form of Letter of Transmittal
99.2(1)	Form of Notice of Guaranteed Delivery
99.3(1)	Jacobs Entertainment, Inc. Exchange of All Outstanding 117/8% Senior Secured Notes Due 2009 for 117/8% Senior Secured Notes Due 2009
99.4(1)	Jacobs Entertainment, Inc. Letter to Depository Trust Company Participants
99.5(8)	Significant Guarantor Information

E-7

(1)	Incorporated hereby by reference from our registration statement on Form S-4 (SEC Registration No. 333-88242) filed on May 14, 2002.
(2)	Incorporated hereby by reference from Amendment No. 1 of our registration statement on Form S-4 (SEC Registration No. 333-88242) filed on August 8, 2002.
(3)	Incorporated hereby by reference from our Form 10-K filed on March 29, 2004.
(4)	Incorporated hereby by reference from our Form 10-K filed on March 31, 2003.
(5)	Incorporated by reference from our Form 10-Q filed August 13, 2004.
(6)	Incorporated hereby by reference from our Report on Form 8-K filed October 7, 2004.
(7)	Incorporated hereby by reference to Exhibits 2.01(a)and 2.01(b) from our Report on Form 8-K dated March 4, 2005.
(8)	Incorporated hereby by reference from our Form 10-K filed March 28, 2005.
(9)	Incorporated hereby by reference from our Report on Form 8-K filed on March 4, 2005.
(10)	Incorporated by reference from our Form 10-Q filed November 14, 2005.
(11)	Incorporated hereby by reference from our Report on Form 8-K filed on November 15, 2005.
(12)	Filed herewith.

E-8

EX-3.41A

EXHIBIT 3.41A

BYLAWS

OF

JACOBS PIÑON PLAZA ENTERTAINMENT, INC.

as of November 8, 2005

ARTICLE I

Offices

The principal office of the Corporation shall initially be located at 17301 West Colfax Avenue, Suite 250, Denver, Colorado 80401 and other offices at such places within or without the State of Nevada and as the Board of Directors may from time to time establish.

ARTICLE II

Registered Office and Agent

The registered office of the Corporation shall be located at 6100 Neil Road, Suite 500, Reno, Nevada 89511, and the registered agent shall be The Corporation Trust Company of Nevada. The Board of Directors may, by appropriate resolution from time to time, change the registered office and/or agent.

ARTICLE III

Meetings of Stockholders

Section 1. Annual Meetings. The annual meeting of the Stockholders for the election of Directors and for the transaction of such other business as may properly come before such meeting shall be held at such time and date as the Board of Direct ors shall designate from time to time by resolution duly adopted.

Section 2. Special Meetings. A special meeting of the Stockholders may be called at any time by the President, the Chairman of the Board of Directors, or the Board of Directors, and shall be called by the President or the Chairman of the Board of Directors upon the written request of Stockholders of record holding in the aggregate fifty-one percent (51%) or more of the outstanding shares of stock of the Corporation entitled to vote, such written request to state the purpose or purposes of the meeting and to be delivered to the President or the Chairman of the Board of Directors.

Section 3. Place of Meetings. All meetings of the Stockholders shall be held at the principal office of the Corporation or at such other place, within or without the State of

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Nevada, as shall be determined from time to time by the Board of Directors or the Stockholders of the Corporation.

Section 4. Change in Time or Place of Meetings. The time and place specified in this Article III for annual meetings shall not be changed within thirty (30) days next before the day on which such meeting is to be held. A notice of any such change shall be given to each Stockholder at least twenty (20) days before the meeting, in person or by letter mailed to his last known post office address.

Section 5. Notice of Meetings. Written notice, stating the place, day and hour of the meeting, and in the case of a special meeting, the purposes for which the meeting is called, shall be given by or under the direction of either the President, the Chairman of the Board of Directors, or Secretary at least ten (10) days but not more than fifty (50) days before the date fixed for such meeting. Notice shall be given to each Stockholder entitled to vote at such meeting, of record at the close of business on the day fixed by the Board of Directors as a record date for the determination of the Stockholders entitled to vote at such meeting, or if no such date has been fixed, of record at the close of business on the day next preceding the day on which notice is given. Notice shall be in writing and shall be delivered to each Stockholder in person or sent by United States Mail, postage prepaid, addressed as set forth on the books of the Corpor ation. A waiver of such notice, in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to such notice. Except as otherwise required by statute, notice of any adjourned meeting of the Stockholders shall not be required.

Section 6. Quorum. Except as may otherwise be required by statute, the presence at any meeting, in person or by proxy, of the holders of record of one-third of the shares then issued and outstanding and entitled to vote shall be necessary and sufficient to constitute a quorum for the transaction of business. In the absence of a quorum, a majority in interest of the Stockholders entitled to vote, present in person or by proxy, or, if no Stockholder entitled to vote is present in person or by proxy, any Officer entitled to preside or act as secretary of such meeting, may adjourn the meeting from time to time for a period not exceeding sixty (60) days in any one case. At any such adjourned meeting at which a quorum may be present, any business may be transacted which might have been transacted at the meeting as originally called. The Stockholders present at a duly organized meeting may continue to do business until adjournment, notwithstanding the withdrawal of enough Stockholders to leave less than a quorum.

Section 7. Voting. Except as may otherwise be provided by statute or these Bylaws, including the provisions of Section 4 of Article VIII hereof, each Stockholder shall at every meeting of the Stockholders be entitled to one (1) vote, in person or by proxy, for each share of the voting capital stock held by such Stockholder. However, no proxy shall be voted on after eleven (11) months from its date, unless the proxy provides for a longer period. At all meetings of the Stockholders, except as may otherwise be required by statute, the Articles of Incorporation of this Corporation, or these Bylaws, if a quorum is

2

present, the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the Stockholders.

Persons holding stock in a fiduciary capacity shall be entitled to vote the shares so held, and persons whose stock is pledged shall be entitled to vote, unless in the transfer by the pledgor on the books of the Corporation he shall have expressly empowered the pledgee to vote thereon, in which case only the pledgee or his proxy may represent said stock and vote thereon.

Shares of the capital stock of the Corporation belonging to the Corporation shall not be voted directly or indirectly.

Section 8. Consent of Stockholders in Lieu of Meeting. Whenever the vote of Stockholders at a meeting thereof is required or permitted to be taken in connection with any corporate action, by any provision of statute, these Bylaws, or the Articles of Incorporation, the meeting and vote of Stockholders may be dispensed with if a majority of the Stockholders who would have been entitled to vote upon the action if such meeting were held shall consent in writing to such corporate action being taken.

Section 9. Telephonic Meeting. Any meeting held under this Article III may be held by telephone, in accordance with the provisions of the Nevada Revised Statutes.

Section 10. List of Stockholders Entitled to Vote. The Officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every annual meeting, a complete list of the Stockholders entitled to vote at such meeting, arranged in alphabetical order, and showing the address of each Stockholder and the number of shares registered in the name of each Stockholder. Such list shall be open to the examination of any Stockholder during ordinary business hours, for a period of at least ten (10) days prior to election, either at a place within the city, town or village where the election is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where said meeting is to be held. The list shall be produced and kept at the time and place of election during the whole time thereof and be subject to the inspection of any Stockholder who may be present.

ARTICLE IV

Board of Directors

Section 1. General Powers. The business and affairs of the Corporation shall be managed by the Board of Directors, except as otherwise provided by statute, the Articles of Incorporation of the Corporation, or these Bylaws.

Section 2. Number and Qualifications. The Board of Directors shall consist of at least one (1) member, and not more than three (3) members, as shall be designated by the Board of Directors from time to time, and in the absence of such designation, the Board

3

of Directors shall consist of one (1) member. This number may be changed from time to time by resolution of the Board of Directors. Directors need not be residents of the State of Nevada or Stockholders of the Corporation. Directors shall be natural persons of the age of eighteen (18) years or older.

Section 3. Election and Term of Office. Members of the initial Board of Directors of the Corporation shall hold office until the first annual meeting of Stockholders. At the first annual meeting of Stockholders, and at each annual meeting thereafter, the Stockholders shall elect Directors to hold office until the next succeeding annual meeting. Each Director shall hold office until his successor is duly elected and qualified, unless sooner displaced. Election of Directors need not be by ballot.

Section 4. Compensation. The Board of Directors may provide by resolution that the Corporation shall allow a fixed sum and reimbursement of expenses for attendance at meetings of the Board of Directors and for other services rendered on behalf of the Corporation. Any Director of the Corporation may also serve the Corporation in any other capacity, and receive compensation therefor in any form, as the same may be determined by the Board in accordance with these Bylaws.

Section 5. Removals and Resignations. Except as may otherwise be provided by statute, the Stockholders may, at any special meeting called for the purpose, by a vote of the holders of the majority of the shares then entitled to vote at an election of Directors, remove any or all Directors from office, with or without cause.

A Director may resign at any time by giving written notice to either the Board of Directors, the President, the Chairman of the Board of Directors, or the Secretary of the Corporation. The resignation shall take effect immediately upon the receipt of the notice, or at any later period of time specified therein. The acceptance of such resignation shall not be necessary to make it effective, unless the resignation requires acceptance for it to be effective.

Section 6. Vacancies. Any vacancy occurring in the office of a Director, whether by reason of an increase in the number of directorships or otherwise, may be filled by a majority of the Directors then in office, though les s than a quorum. A Director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office, unless sooner displaced.

When one or more Directors resign from the Board, effective at a future date, a majority of the Directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective. Each Director so chosen shall hold office as herein provided in the filling of other vacancies.

Section 7. Committees. By resolution adopted by a majority of the Board of Directors, the Board may designate one or more committees, including an Executive Committee, each consisting of one (1) or more Directors. The Board of Directors may designate one

4

(1) or more Directors as alternate members of any such committee, who may replace any absent or disqualified member at any meeting of such committee. Any such committee, to the extent provided in the resolution and except as may otherwise be provided by statute, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation and may authorize the seal of the Corporation to be affixed to all papers which may require the same. The designation of such committee and the delegation thereto of authority shall not operate to relieve the Board of Directors, or any member thereof, of any responsibility imposed upon it or him by law. If there be more than two (2) members on such committee, a majority of any such committee may determine its action and may fix the time and place of its meetings, unless provided otherwise by the Board. If there be only two (2 ) members, unanimity of action shall be required. Committee action may be by way of a written consent signed by all committee members. The Board shall have the power at any time to fill vacancies on committees, to discharge or abolish any such committee, and to change the size of any such committee.

Except as otherwise prescribed by the Board of Directors, each committee may adopt such rules and regulations governing its proceedings, quorum, and manner of acting as it shall deem proper and desirable.

Each such com mittee shall keep a written record of its acts and proceedings and shall submit such record to the Board of Directors. Failure to submit such record, or failure of the Board to approve any action indicated therein will not, however, invalidate such action to the extent it has been carried out by the Corporation prior to the time the record of such action was, or should have been, submitted to the Board of Directors as herein provided.

ARTICLE V

Meetings of Board of Directors

Section 1. Annual Meetings. The Board of Directors shall meet each year immediately after the annual meeting of the Stockholders for the purpose of organization, election of Officers, and consideration of any other business that may properly be brought before the meeting. No notice of any kind to either old or new members of the Board of Directors for such annual meeting shall be necessary.

Section 2. Regular Meetings. The Board of Directors from time to time may provide by resolution for the holding of regular meetings and fix the time and place of su ch meetings. Regular meetings may be held within or without the State of Nevada. The Board need not give notice of regular meetings provided that the Board promptly sends notice of any change in the time or place of such meetings to each Director not present at the meeting at which such change was made.

5

Section 3. Special Meetings. The Board may hold special meetings of the Board of Directors at any place, either within or without the State of Nevada, at any time when called by the President, the Chairman of the Board of Directors, or two or more Directors. Notice of the time and place thereof shall be given to and received by each Director at least three (3) days before the meeting. A waiver of such notice in writing, signed by the person or persons entitled to notice, either before or after the time stated therein, shall be deemed equivalent to notice. Notice of adjourned special meetings of the Board of Directors need not given.

Section 4. Quorum. The presence, at any meeting, of a majority of the total number of Directors shall be necessary and sufficient to constitute a quorum for the transaction of business. Except as otherwise required by statute, the act of a majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors; however, if only two (2) Directors are present, unanimity of action shall be required. In the absence of a quorum, a majority of the Directors present at the time and place of any meeting may adjourn such meeting from time to time until a quorum is present.

Section 5. Consent of Directors in Lieu of Meeting. Unless otherwise restricted by statute, the Board may take any action required or permitted to be taken at any meeting of the Board of Directors without a meeting, if a written consent thereto is signed by all members of the Board, and such written consent is filed with the minutes of proceedings of the Board.

Section 6. Telephonic Meeting. Any meeting held under this Article V may be held by telephone, in accordance with the provisions of the Nevada Revised Statutes.

Section 7. Attendance Constitutes Waiver. Attendance of a Director at a meeting constitutes a waiver of any notice to which the Director may otherwise have been entitled, except where a Director a ttends a meeting for the express purpose of objecting the transaction of any business because the meeting is not lawfully called or convened.

ARTICLE VI

Officers

Section 1. Number. The Corporation shall have a Chairman of the Board, a President, one or more Vice Presidents as the Board may from time to time elect, a Secretary and a Treasurer, and such other Officers and Agents as may be deemed necessary. One person may hold any two offices.

Section 2. Election, Term of Office, and Qualifications. The Board shall choose the Officers specifically designated in Section 1 of this Article VI at the annual meeting of the Board of Directors and such Officers shall hold office until their successors are

6

chosen and qualified, unless sooner displaced. Officers need not be Directors of the Corporation.

Section 3. Subordinate Officers. The Board of Directors, from time to time, may appoint other Officers and Agents, including one or more Assistant Secretaries and one or more Assistant Treasurers, each of whom shall hold office for such period, and each of whom shall have such authority and perform such duties as are provided in these Bylaws or as the Board of Directors from time to time may determine. The Board of Directors may delegate to any Officer or the Chairman of the Board of Directors the power to appoint any such subordinate Officers and Agents and to prescribe their respective authorities and duties.

Section 4. Removals and Resignations. The Board of Directors may, by vote of a majority of their entire number, remove from office any Officer or Agent of the Corporation, appointed by the Board of Directors.

Any Officer may resign at any time by giving written notice to the Board of Directors. The resignation shall take effect immediately upon the receipt of the notice, or any later period of time specified therein. The acceptance of such resignation shall not be necessary to make it effective, unless the resignation requires acceptance for it to be effective.

Section 5. Vacancies. Whenever any vacancy shall occur in any office by death, resignation, removal, or otherwise, it shall be filled for the unexpired portion of the term in the manner prescribed by these Bylaws for the regular election or appointment to such office, at any meeting of Directors.

Section 6. The Chairman of the Board. The Chairman of the Board shall be the Chief Executive Officer of the Corporation and, subject to the direction and under the supervis ion of the Board of Directors, shall have general charge of all of the affairs of the Corporation. The Chairman shall preside at all meetings of the Stockholders and of the Board of Directors at which he is present.

Section 7. The President. The President shall be the chief operating officer of the Corporation and, subject to the direction and under the supervision of the Board of Directors, shall have general charge of the day-to-day operations and of the property of the Corporation, and shall have control over its Officers, Agents and Employees. The President shall preside at all meetings of the Stockholders and of the Board of Directors at which the Chairman is not present. The President shall do and perform such other duties and may exercise such other powers as the se Bylaws or the Board of Directors from time to time may assign to him.

Section 8. The Vice President. At the request of the President or in the event of his absence or disability, the Vice President, or in case there shall be more than one Vice President, the Vice President designated by the President, or in the absence of such designation, the Vice President designated by the Board of Directors, shall perform all

7

the duties of the President, and when so acting, shall have all the powers of, and be subject to all the restrictions upon, the President. Any Vice President shall perform such other duties and may exercise such her powers as from time to time these Bylaws or by the Board of Directors or the President be assign to him.

Section 9. The Secretary. The Secretary shall:

a. record all the proceedings of the meetings of the corporation and D irectors in a book to be kept for that purpose;

b. have charge of the stock ledger (which may, however, be kept by any transfer agent or agents of the Corporation under the direction of the Secretary), an original or duplicate of which shall be kept at the principal office or place of business of the Corporation;

c. see that all notices are duly and properly given;

d. be custodian of the records of the Corporation and the Board of Directors, and the seal of the Corporation, and see that the seal is affixed to all stock certificates prior to their issuance and to all documents for which the Corporation has authorized execution on its behalf under its seal;

e. see that all books, reports, statements, certificates, and other documents and records required by law to be kept or filed are properly kept or filed;

f. in general , perform all duties and have all powers incident to the office of Secretary, and perform such other duties and have such other powers as these Bylaws, the Board of Directors, the Chairman of the Board of Directors, or the President from time to time may assign to him; and

g. prepare and make, at least ten (10) days before every election of Directors, a complete list of the stockholders entitled to vote at said election, arranged in alphabetical order.

Section 10. The Treasurer. The Treasurer shall:

a. have supervision over the funds, securities, receipts and disbursements of the Corporation;

b. cause all moneys and other valuable effects of the Corporation to be deposited in its name and to its credit, in such depositories as the Board of Directors or, pursuant to authority conferred by the Board of Directors, its designee shall select;

c. cause the funds of the Corporation to be disbursed by checks or drafts upon the authorized depositaries of the Corporation, when such disbursements shall have been duly authorized;

8

d. cause proper vouchers for all moneys disbursed to be taken and preserved;

e. cause correct books of accounts of all its business and transactions to be kept at the principal office of the Corporation;

f. render an account of the financial condition of the Corporation and of his transactions as Treasurer to the President, the Chairman of the Board of Directors, or the Board of Directors, whenever requested;< /p>

g. be empowered to require from the Officers or Agents of the Corporation reports or statements giving such information as he may desire with respect to any and all financial transactions of the Corporation; and

h. in general, perform all duties and have all powers incident to the office of Treasurer and perform such other duties and have such other powers as from time to time may be assigned to him by these Bylaws or by the Chairman of the Board of Directors, the Board of Directors or the President.

Section 11. Salaries. The Board of Directors shall from time to time fix the salaries of the Officers of the Corporation. The Board of Directors may delegate to any person the power to fix the salaries or other compensation of any Officers or Agents appointed, in accordance with the provisions of Section 3 of this Article VI. No Officer shall be prevented from receiving such salary by reason of the fact that he is also a Director of the Corporation. Nothing contained in this Bylaw shall be construed so as to obligate the Corporation to pay any Officer a salary, which is within the sole discretion of the Board of Directors.

Section 12. Surety Bond. The Board of Directors may in its discretion secure the fidelity of any or all of the Officers of the Corporation by bond or otherwise.

ARTICLE VII

Execution of Instruments

Sect ion 1. Checks, Drafts, Etc. The President or the Chairman of the Board of Directors and the Secretary or Treasurer shall sign all checks, drafts, notes, bonds, bills of exchange, and orders for the payment of money of the Corporation, and all assignments or endorsements of stock certificates, registered bonds, or other securities, owned by the Corporation, unless otherwise directed by the Board of Directors, or unless otherwise required by law. The Board of Directors or the Chairman of the Board of Directors may, however, authorize any Officer or the Chairman of the Board to sign any of such instruments for and on behalf of the Corporation without necessity of countersignature, and may designate Officers, or Employees of the corporation other than those named above who may, in the name of the Corporation, sign such instruments.

9

Section 2. Execution of Instruments Generally. Subject always to the specific direction of the Board of Directors, the President or the Chairman of the Board of Directors shall execute all deeds and instruments of indebtedness made by the Corporation and all other written contracts and agreements to which the Corporation shall be a party, in its name, attested by the Secretary. The Secretary, when necessary required, shall affix the corporate seal thereto.

Section 3. Proxies. The President, the Chairman of the Board and the Secretary or an Assistant Secretary of the Corporation or by any other person or persons duly authorized by the Board of Directors ma y execute and deliver proxies to vote with respect to shares of stock of other corporations owned by or standing in the name of the Corporation from time to time on behalf of the Corporation

ARTICLE VIII

Capital Stock

Section 1. Certificates of Stock. Every holder of stock in the Corporation shall be entitled to have a certificate, signed in the name of the Corporation by either the Chairman of the Board of Directors or the President and by the Secretary of the Corporation, certifying the number of shares owned by that person in the Corporation.

Certificates of stock shall be in such form as shall, in conformity to law, be prescribed from time to time by the Board of Directors.

Section 2. Transfer of Stock. Shares of stock of the Corporation shall only be transferred on the books of t he Corporation by the holder of record thereof or by his attorney duly authorized in writing, upon surrender to the Corporation of the certificates for such shares endorsed by the appropriate person or persons, with such evidence of the authenticity of such endorsement, transfer, authorization and other matters as the Corporation may reasonably require. Surrendered certificates shall be canceled and shall be attached to their proper stubs in the stock certificate book.

Section 3. Rights of Corporation with Respect to Registered Owners. Prior to the surrender to the Corporation of the certificates for shares of stock with a request to record the transfer of such shares, the Corporation may treat the registered owner as the person entitled to receive dividends, to vote, t o receive notifications, and otherwise to exercise all the rights and powers of an owner.

Section 4. Closing Stock Transfer Book. The Board of Directors may close the Stock Transfer Book of the Corporation for a period not exceeding fifty (50) days preceding the date of any meeting of Stockholders, the date for payment of any dividend, the date for the allotment of rights, the date when any change, conversion or exchange of capital stock shall go into effect, or for a period not exceeding fifty (50) days in connection with

10

obtaining the consent of Stockholders for any purpose. However, in lieu of closing the Stock Transfer Book, the Board of Directors may in advance fix a date, not exceeding fifty (50) days preceding the date of any meeting of Stockholders, the date for the payment of any dividend, the date for the allotment of rights, the date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining such consent, as a record date for the determination of the Stockholders entitled to notice of, and to vote at, any such meeting and any adjournment thereof, or entitled to receive payment of any such dividend, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, or to give such consent. In such case such Stockholders of record on the date so fixed, and only such Stockholders shall be entitle d to such notice of, and to vote at, such meeting and any adjournment thereof, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, or to give such consent, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any such record date fixed as aforesaid.

Section 5. Lost, Destroyed and Stolen Certificates. The Corporation may issue a new certificate of shares of stock in the place of any certificate theretofore issued and alleged to have been lost, destroyed or stolen. However, the Board of Directors may require the owner of such lost, destroyed or stolen certificate or his legal representative, to: (a) request a new certificate before the Corporation has notice that the sha res have been acquired by a bona fide purchaser; (b) furnish an affidavit as to such loss, theft or destruction; (c) file with the Corporation a sufficient indemnity bond; or (d) satisfy such other reasonable requirements, including evidence of such loss, destruction, or theft as may be imposed by the Corporation.

ARTICLE IX

Dividends

Section 1. Sources of Dividends. The Directors of the Corporation, subject to the Nevada Revised Statutes, as amended, may declare and pay dividends upon the shares of the capital stock of the Corporation.

Section 2. Reserves. Before the payment of any dividend, the Directors of the Corporation may set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose, and the Directors may abolish any such reserve in the manner in which it was created.

Section 3. Reliance on Corporate Records. A Director in relying in good faith upon the books of account of the Corporation or statements prepared by any of its officials as to the value and amount of the assets, liabilities, and net profits of the Corporation, or any other facts pertinent to the existence and amount of surplus or other funds from which dividends might properly be declared and paid shall be fully protected.

11

Section 4. Manner of Payment. Dividends may be paid in cash, in property, or in shares of the capital stock of the Corporation.

ARTICLE X

Seal and Fiscal Year

Section 1. Seal. The corporate seal, subject to alteration by the Board of Directors, shall be in the form of a circle, shall bear the name of the Corporation, and shall indicate its formation under the laws of the State of Nevada and the year of incorporation. Such seal may be used by causing it or a facsimile thereof to be impressed, affixed, or otherwise re-produced.

Section 2. Fiscal Year. The Board of Directors shall, in its sole discretion, designate a fiscal year for the Corporation.

ARTICLE XI

Amendments

Except as may otherwise be provided herein, a majority vote of the whole Board of Directors at any meeting of the Board, is required to amend or repeal any provision of these Bylaws.

ARTICLE XII

< font size="2" face="Times New Roman" style="font-size:10.0pt;"> 

Indemnification of Officers and Directors

Section 1. Exculpation. No Director or Officer of the Corporation shall be liable for the acts, defaults, or omissions of any other Director or Officer, or for any loss sustained by the Corporation, unless the same has resulted from his own willful misconduct, willful neglect, or gross negligence.

Section 2. Indemnification. Each Director and Officer of the Corporation and each person who shall serve at the Corporation’s request as a director or officer of another corporation in which the Corporation owns shares of capital stock or of which it is a creditor shall be indemnified by the Corporation to the fullest extent permitted from time to time by the Nevada Revised Statutes against all reasonable costs, expenses and liabilities (including reasonable attorneys’ fees) actually and necessarily incurred by or imposed upon him in connection with, or resulting from any claim, action, suit, proceeding, investigation, or inquiry of whatever nature in which he may be involved as a party or otherwise by reason of his being or having been a Director or Officer of the Corporation or such director or officer of such other corporation, whether or not he

12

continues to be a Director or Officer of the Corporation or a director or officer of such other corporation, at the time of the incurring or imposition of such costs, expenses or liabilities, except in relation to matters as to which he shall be finally adjudged in such action, suit, proceeding, investigation, or inquiry to be liable for willful misconduct, willful neglect, or gross negligence toward or on behalf of the Corporation in the performance of his duties as such Director or Officer of the Corporation or as such director or officer of such other corporation. As to whether or not a Director or Officer was liable by reason of willful misconduct, willful neglect, or gross negligence toward or on behalf of the Corporation in the performance of his duties as such Director or Officer of the Corporation or as such director or officer of such other corporation, in the absence of such final adjudication of the existence of such liability, the Board of Directors and each Director and Officer may conclusively rely upon an opinion of independent legal counsel selected by or in the manner designated by the Board of Directors. The foregoing right to indemnification shall be in addition to and not in limitation of all other rights which such person may be entitled as a matter of law, and shall inure to his legal representatives’ benefit.

Section 3. Liability Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation or who is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, asso ciation, or other enterprise against any liability asserted against him and incurred by him in any such capacity or arising out of his status as such, whether or not he is indemnified against such liability by this Article XII.

THESE BYLAWS are effective as of November 8, 2005.

/s/ Jeffrey P. Jacobs

Jeffrey P. Jacobs, Director

13

EX-3.42

Exhibit 3.42

SECRETARY OF STATE

As Secretary of State, of the State of Louisiana, I do hereby Certify that the annexed and following is a True and Correct copy of the Articles of Incorporation, Initial Report, Notice of Change, Notice of Intent to Revoke, Application for Reinstatement and 2005 Annual Report of

FUEL STOP 36, INC.

A LOUISIANA CORPORATION domiciled at LAKE CHARLES,

As shown by comparison with documents filed and recorded in this Office.

In testimony whereof, I have hereunto set
my hand and caused the Seal of my Office
to be affixed at the City of Baton Rouge on,
December 2, 2005
/s/ Al Ater
ABA 343328210D
Secretary of State

CERTIFICATE SS 102 PRINTED SEAL (Rev. 07/05)

ARTICLES OF INCORPORATION

OF

FUEL STOP 36, INC

STATE OF LOUISIANA

PARISH OF CALCASIEU

BE IT KNOWN, that on this 24 day of August 1989, personally came and appeared before me, the undersigned duly qualified Notary Public, the subscribers hereto, each of the full age of majority, who declared to me, in the presence of the undersigned competent witnesses, that, for purposes of forming a corporation for profit in accordance with the Louisiana Business Corporations Law, they do hereby adopt the following Articles of Incorporation:

ARTICLE I.

The name of this corporation is Fuel Stop 36, Inc.

ARTICLE II.

The objects and purposes for which this corporation is organized and the nature of the business to be carried on by it are stated and declared to be as follows:

To enter into any business or activity lawful under the laws of the State of Louisiana, either for its own account, or for the account of others as agent, and either as agent or principal to enter upon or engage in any kind of business or activity of any nature whatsoever in which corporations organized under the Louisiana Business Corporations Law may engage; and to the extent not prohibited thereby to enter upon and engage in any kind of business or activity of any nature whatsoever, in any state of the United States of America, any foreign nation, and any territory of any country to the extent permitted by the laws of such state, nation or territory; and to have and exercise all the express, implied and incidental powers conferred by the laws of the State of Louisiana or by any other applicable governmental body or agency.

ARTICLE III

The Corporation has authority to issue an aggregate of 100 shares of capital stock, all of which are designated common stock having no par value per share.

ARTICLE IV

Shareholders shall have preemptive rights.

ARTICLE V

Whenever the affirmative vote of shareholders is required to authorize or constitute corporate action, the consent in writing to such action signed only by shareholders holding that proportion of the total voting power or the question which is required by law or by these Articles of Incorporation shall be sufficient for the purpose, without necessity for a meeting of shareholders.

ARTICLE VI

The number of members of the Board of Directors shall be such number as may be designated from time to time in the by -laws, and if not so designated, as may from time to time be elected by the shareholders. Any director absent from a meeting of the Board of Directors or any committee thereof may be represented by any other director as proxy, who may cast the vote of the absent director according to the written instructions, general or special, of the absent director.

ARTICLE VII

Cash, property or share dividends, shares issuable to shareholders in connection with a reclassification of stock, or the redemption price of redeemed shares, which are not claimed by the shareholders entitled thereto within one year after the dividend or redemption price became payable or the shares became issuable, despite reasonable efforts by the Corporation to pay the dividend or redemption price or deliver the certificates for the shares to such shareholders within such time, shall, at the expiration of such time, revert in full ownership to the Corporation, and the Corporation’s obligation to pay such dividend or redemption price or issue such shares, as the case may be, shall thereupon cease; provided that the Board of Directors may, at any time, for any reason satisfactory to it, but need not, authorize (1) payment of the amount of any cash or property dividend or redemption price or (2) issuance of any shares, ownership of which has reverted to the Corporation pursuant to this Article, to the entity who or which would be entitled thereto had such reversion not occurred.

ARTICLE VIII

A. Except as to transfer on death or gift of the stock of a stockholder to his spouse orlinear descendents, no stock in this corporation shall be transferred unless the stock shall have been

first offered for sale to the corporation, and, if the corporation shall fail or refuse to accept the offer, to each of the other stockholders of this corporation. The offeree shall have an option to purchase the stock to be transferred at the following price: at the same price and on the same terms and conditions as the offeror shall have been offered by a third person at arm’s length, acting in good faith. The offer shall be in writing and shall set forth the price and terms on which the stock is offered. It shall be sent by certified mail to the President and Secretary of the corporation and to each stockholder at the address listed on the corporation books. The right to transfer stock shall not exist until the corporation and all existing stockholders either refuse in writing the offer so made, or waive the requirement of an offer in writing, or until they fail for a period of thirty (30) days after receipt of the written offer to accept it by compliance with the terms therein set forth. Regulations as to the formalities and procedures to be followed in effecting the transfer may be prescribed in the by-laws of the corporation.

B.Should the corporation be unable or unwilling for anyreason to exercise its option as granted above, the option may be exercised by such stockholders as desire to exercise it,in the proportions in which these stockholders hold stock in the corporation.

C.After the expiration of the option period, no transfer at a price less than has been offered to the corporation and the other stockholders, or on terms or conditions varying from those stated in the letter notifying the corporation and the stockholders of a proposal to transfer, shall be valid, until the rights shall have been offered to the corporation and the stockholders to purchase the stock proposed to be transferred at the precise price and on the precise terms and conditions which were offered to or by the stockholder who proposes to transfer his stock.

D.The stockholders in this corporation may make arrangements, either in by-laws or by a shareholder agreement, between themselves relative to the purchase, among themselves, of the stock of this corporation in the event of the death, insanity, retirement or disability of any stockholder, and in the event of a transfer of his stock by donation to the stockholder’s spouse and linear descendants.  A copy of any such agreement shall be filed with the Secretary of this corporation, and the provisions of any such agreement shall be binding upon the persons who are parties to it and their respective heirs, administrators, legatees, executors, successors, and assigns.

E.Except as to transfer on death or gift of the stock of a stockholder to his spouse or linear descendants (which shall becontrolled if at all by the by-laws or by a shareholder agreement), no sale, mortgage, pledge, conveyance, transfer, seizure, donation sale under legal process of attachment or by virtue of any pledge or hypothecation, and no other disposal of stock of any nature whatsoever shall have any effects as related to the corporation or its stockholders, nor shall it be valid in any fashion until the option period provided above shall have expired.

F.The provisions of this Article or any part thereof may be altered and superseded by written shareholder agreements unanimously agreed upon and entered into by the corporation and all shareholders.

ARTICLE IX

Directors and officers of the Corporation shall not be personally liable to the Corporation or its shareholders for monetary damages for breach of fiduciary duty as a director or officer for any act or omission, except for liability (i) for any breach of the director’s or officer’s duty of loyalty to the Corporation or its shareholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law; (iii) for liability under Section 92(D) of the Louisiana Business Corporation Law; or (iv) for any transaction from which the director or officer derives in improper personal benefit.

If the Louisiana Business Corporation Law is hereafter amended to authorize corporate action further eliminating or limiting the personal liability of directors or officers, then the liability of a director or an officer of the Corporation shall be eliminated or limited to the fullest extent permitted by the Louisiana Business Corporation Law, as so amended, or by any other successor provision or provisions.

Any repeal or modification of this Article by the shareholders of the Corporation shall not adversely affect any right or protection of a director or officer of the Corporation under this Article with respect to any act or omission occurring prior to the time of such repeal or modification.

ARTICLE X

The name and post office address of the incorporators are:

Roger L. Miller	Robert E. Christman
2712Oliver Road	809 Henrietta Lane
Westlake, LA 70669	Lake Charles, LA 70605

THUS DONE AND SIGNED in Lake Charles, Louisiana, on the day, month and year set forth above, in the presence of the the

undersigned competent witnesses and me, Notary, after reading of the whole.

WITNESSES:		INCORPORATORS:
/s/ [ILLEGIBLE]		/s/ Roger L. Miller
		ROGER L. MILLER
/s/ [ILLEGIBLE]		/s/ Robert E. Christman
		ROBERT E. CHRISTMAN
	BEFORE ME:	/s/ [ILLEGIBLE]
		NOTARY PUBLIC

INITIAL REPORT

OF

FUEL STOP 36, INC.

I.

The corporation’s registered office is located at municipal address 135 La. Highway 397, Lake Charles, Louisiana 70601.

II.

Its registered agents and their municipal addresses are:

Roger L. Miller

2712 Oliver Road

Westlake, LA 70669

Robert E. Christman

809 Henrietta Lane

Lake Charles, LA 70605

III.

Its first directors and their municipal addresses are:

Roger L. Miller	Yvonne L. Miller
2712 Oliver	2712 Oliver Road
Westlake, LA 70669	Westlake, LA 70669
Robert E. Christman	Louise C. Christman
809 Henrietta Lane	809 Henrietta Lane
Lake Charles, LA 70605	Lake Charles, LA 70605

Executed by the Incorporators on this 24 day of August, 1989, at Lake Charles, Louisiana.

/s/ Roger L. Miller

ROGER L. MILLER

/s/ Robert E. Christman

ROBERT E. CHRISTMAN

AFFIDAVIT OF ACCEPTANCE OF APPOINTMENT

BY DESIGNATED REGISTERED AGENTS

ACT 769 OF 1987

To the State Corporation Department

State of Louisiana

STATE OF LOUISIANA

PARISH OF CALCASIEU

On this 24 day of August, 1989, before me, a Notary Public in and for the State and Parish aforesaid, personally came and appeared Roger L. Miller and Robert E. Christman, who are to me known to be the persons and who, being duly sworn, acknowledged to me that they each do hereby accept appointment as the Registered Agents of Fuel Stop 36, Inc., which is a Corporation authorized to transact business in the State of Louisiana pursuant to the provisions of the Title 12, Chapter 1, 2 and 3.

	/s/ Roger L. Miller
	ROGER L. MILLER, REGISTERED AGENT
	/s/ Robert E. Christman
	ROBERT E. CHRISTMAN, REGISTERED AGENT
Subscribed and sworn to before me
on the day, month and year
first above set forth
[/s/ ILLEGIBLE]
NOTARY PUBLIC

FUEL STOP 36, INC.

NOTICE OF CHANGE OF LOCATION OF REGISTERED OFFICE

Name of Corporation:	Fuel Stop 36, Inc.
Registered Office:	108 North Highway 397
	Lake Charles, Louisiana 70605 *

SIGNED at Lake Charles, Louisiana, on this 25 day of January, 1990.

	/s/ Roger L. Miller
	ROGER L. MILLER, President
ATTEST:
/s/ Robert E. Christman
ROBERT E. CHRISTMAN, Secretary

*Preferable address for mailing purposes:	P.O. Box 16621
	Lake Charles, Louisiana 70616-6621

FUEL STOP 36, INC.

MINUTES OF MEETING OF BOARD OF DIRECTORS

A unanimous consent agreement of the Board of Directors of Fuel Stop 36, Inc. was executed on the 25 day of January, 1990, executed by each member of the Board, to-wit:

IT IS HEREBY RESOLVED THAT the registered office of Fuel Stop 36, Inc. be changed to 108 North Highway 357, Lake Charles, Louisiana 70605, and that the officers of this corporation are authorized and directed to execute all documents and take whatever action is necessary to effect the change of location of the registered office.

CERTIFICATE

I HEREBY CERTIFY that the above and foregoing is true and correct extract taken from a unanimous consent agreement of the Board of Directors of Fuel Stop 36, Inc. executed on the 25 day of January, 1990, and the same has not been amended, revoked or rescinded subsequent to its adoption.

ATTEST my official signature at Lake Charles, Louisiana, on this 25 day of January, 1990.

/s/ Robert E. Christman

ROBERT E. CHRISTMAN, Secretary

	STATE OF LOUISIANA SECRETARY OF STATE	Commercial (226) 025-4704 Administrative Services (225) 822-0415 Fax (225) 825-4726 (225) 022-0435 Fax-On-Demand (225) 022-2044 Uniform Commercial Code (225) 342-5542 Fax (225) 342-7011
W. FOX MCKEITHEN SECRETARY OF STATE
HELEN J. CUMBO ADMINISTRATOR
October 15, 1997 ROGER L. MILLER 2712 OLIVER ROAD WESTLAKE, LA 70669

RE:	34338210D 34600160
	FUEL STOP 36, INC.

Gentlemen:

In accordance with the provisions of R.S. 12:163, whereby a corporation has failed to file an annual report for three consecutive years, the Secretary of State is directed by law to revoke the Articles of Incorporation.

You are hereby notified that the articles of incorporation and franchise of your corporation will be revoked unless the corporation places itself in good standing. The revocation shall become effective thirty (30) days from the date of this letter.

Please disregard if the corporation has filed its current annual report with the Secretary of State prior to receipt of this notice.

Forms are available upon request from this office by calling (504) 925-4704.

Sincerely,

/s/ Earl Wayne Watts

Earl Wayne Watts

First Assistant Secretary of State

Mailing Address: P.O. Box 94125, Baton Rouge, LA 70604-9125

Office Location: 3851 Lason Lane, Baton Rouge, LA 70808

Web Site Address: www.sec.state.la.us

W. Fox McKeithen Secretary of State	APPLICATION FOR REINSTATEMENT OF A DOMESTIC CORPORATION (R.S. 12:163)
	Domestic Corporation Enclose $60.00 filing fee Make remittance payable to Secretary of State Do not send cash	Return to:	Corporations Division P.O. Box 94125 Baton Rouge, LA 70804-9125 Phone (504) 925-4704

STATE OF Louisiana

PARISH OF Calcasieu

Corporation Name: FUEL STOP 36, INC

It is hereby requested that you reinstate the above referenced corporation as of the date of receipt of this application for reinstatement, current annual report and the fee of $60, plus the fee for filing the current annual report as required by R.S. 12:163(E), as amended by Act 714 of 1984.

The certificate of Incorporation and articles of Incorporation shall be reinstated provided (i) a suit for liquidation or receivership of the corporation has not been filed at the time reinstatement is applied for and, (ii) if a suit for liquidation or receivership of the corporation has been so filed, a unanimous written consent to the reinstatement by the shareholders, certified by the corporation’s secretary to contain the signatures of all shareholders, is filed with the Secretary of State with the application for reinstatement; and (iii) an application for reinstatement signed and acknowledged by an officer of the corporation, the reinstatement fee, and the current annual report is filed with the Secretary of State within three (3) years from the effective date of revocation, or as otherwise provided by law.

/s/ Robert E. Christman

Robert E. Christman          Officer

Secretary/Treasurer

Title

BEFORE ME, the undersigned authority, duly commissioned and qualified within and for the State and Parish aforesaid, personally came and appeared Robert E. Christman, to me known to be the identical person who executed the above and foregoing instrument, who declared and acknowledged to me, Notary, that he executed the above and foregoing instrument of his own free will, as his own act and deed, for the uses, purposes and benefits therein expressed.

Sworn to and subscribed before me at Lake Charles, LA, this 9^th day of December, 1997.

/s/ Anita G. Simeon

Notary

s350 Rev. 2/91 (See instructions on back)

W. Fox McKeithen Secretary of State	DOMESTIC CORPORATION ANNUAL REPORT For Period Ending August 25, 2005
Mailing Address Only	(INDICATE CHANGES TO THIS ADDRESS IN THIS BOX)	(INDICATE CHANGES TO THIS ADDRESS IN THIS BOX)
34338210 D                                                                                                                                            & nbsp;                                                                          415 FUEL STOP 36, INC. P. O. BOX 16621 LAKE CHARLES, LA  70616-6621		Registered Office Address in Louisiana             (Do Not Use P. O. Box) 108 N. HIGHWY 397 LAKE CHARLES, LA 70615
		Federal Tax ID Number 721150382	Issued Shares

Our records indicate the following registered agents for the corporation. Indicate any changes or deletions below. All agents must have a Louisiana address. Do not use a P. O. Box.
A NEW REGISTERED AGENT REQUIRES A NOTARIZED SIGNATURE.

  ROGER L. MILLER

6128 WHITE OAK DR./LAKE CHARLES, LA 70615

  ROBERT E. CHRISTMAN

809 HENRIETTA LANE/LAKE CHARLES, LA 70605

[SEAL]

I hereby accept the appointment of registered agent(s).	Sworn to and subscribed before me, on NOTARY NAME MUST BE TYPED OR PRINTED WITH NOTARY #
/s/ Robert E. Christman	/s/ Anita G. Simeon
New Registered Agent Signature	Notary Signature

Our records indicate the following officers or directors for the corporation. Indicate any changes or deletions below. If space is needed for additional officers/directors, attach an addendum. Include addresses. Do not use a P. O. Box. Indicate all offices held by each individual listed.

ROGER L. MILLER	PRES
6128 WHITE OAK DR./LAKE CHARLES, LA 70615
YVONNE L. MILLER	VICE PRES
6128 WHITE OAK DR./LAKE CHARLES, LA 70615
ROBERT E. CHRISTMAN	SECT/TREAS
809 HENRIETTA LANE/LAKE CHARLES, LA 70605

SECRETARY OF STATE

2005 AUG - 8 AM 9:37

	To be signed by an officer, director or agent	Title	Phone	Date
SIGN	/s/ Robert E. Christman	SEC/TREAS	337 491-993	8/4/05
	Signee’s Address	E-mail address

Enclose Filing fee of $25.00
Make remittance payable to Secretary of State
Do Not Send Cash
Do Not Staple
web site: www.sec.louisiana.gov Return by:

to: DO NOT STAPLE August 25, 2005 Commercial Division
P.O. Box 94125
Baton Rouge, LA 70804-9125
Phone (225) 925-4704 CHECK
IF NO
CHANGE

(         )

071405

UNSIGNED REPORTS WILL BE RETURNED

EX-3.43

Exhibit 3.43

SECRETARY OF STATE

As Secretary of State, of the State of Louisiana, I do hereby Certify that the annexed transcript of

JALOU OF LAROSE, LLC

Was prepared by and in this office from the record on file, of which purports to be a copy, and that it is full, true and correct.

In testimony whereof, I have hereunto set my hand and caused the Seal of my Office to be affixed at the City of Baton Rouge on,
December 15, 2005
/s/ Al Ater
ABA 36044558K
Secretary of State

Al Ater Secretary of State	ARTICLES OF ORGANIZATION (R.S. 12:1301)
	Domestic Limited Liability Company Enclose $75.00 filing fee Make remittance payable to Secretary of State Do not send cash	Return to:Commercial Division P.O. Box 94125 Baton Rouge, LA 70804-9125 Phone (225) 925-4704 Web Site: www.sos.louisiana.gov

STATE OF Ohio Check one: ý Business  o Nonprofit

PARISH/COUNTY OF Cuyahoga

1. The name of this limited liability company is: Jalou of Larose, LLC

2. This company is formed for the purpose of: (check one)

ýEngaging in any lawful activity for which limited liability companies may be formed.

o

(use for limiting activity)

3. The duration of this limited liability company is : (may be perpetual) perpetual

4. Other provisions:

Signatures:
	/s/ Christopher S.W. Blake
	Christopher S.W. Blake, Esq., authorized representative

On this 3rd day of November, 2005, before me, personally appeared

Christopher S.W. Blake, to me known to be the person described in and who executed the foregoing instrument, and [ILLEGIBLE] he/she executed it as his/her free act and deed.

NOTARY NAME MUST BE TYPED OR PRINTED WITH NOTARY #

[SEAL]

[ILLEGIBLE]

/s/ [ILLEGIBLE]

Notary Signature

[ILLEGIBLE] (see instructions on back)

[ILLEGIBLE]

Al Ater Secretary of State
LIMITED LIABILITY COMPANY INITIAL REPORT (R.S. 12:1305 (E))

1.The name of this limited liability company is: Jalou of Larose, LLC

2.The location and municipal address, not a post office box only, of this limited liability company’s registered office:

1869 Mills Highway, Breaux Bridge, Louisiana 70517

3.The full name and municipal address, not a post office box only, of each of this limited liability company’s registered agent(s) is/are:

C T Corporation System, 8550 United Plaza Boulevard, Baton Rouge, Louisiana 70809

4.The names and municipal addresses, not a post office box only, of the first managers, or the members:

Garneco Holdings, Inc., Sole Member, 10515 Colonial Downs Parkway, New Kent, VA 23124

To be signed by each person who signed the articles of organization:

/s/ Christopher S.W. Blake

Christopher S.W. Blake, Esq., authorized representative

AGENT’S AFFIDAVIT AND ACKNOWLEDGEMENT OF ACCEPTANCE

I hereby acknowledge and accept the appointment of registered agent for and on behalf of the above named limited liability company.

Registered agent(s) signature(s):

/s/ Joyce A. Gilbert

JOYCE A. GILBERT

ASSISTANT SECRETARY

Sworn to and subscribed before me, the undersigned Notary Public, on this date: 11-3-05

NOTARY NAME MUST BE TYPED OR PRINTED WITH NOTARY #

/s/ Rita R. Palmer

Notary Signature

[SEAL]

RITA R. PALMER

NOTARY PUBLIC • STATE OF OHIO

Recorded in Lorain County

My commission expires Aug. 8, 2010

[ILLEGIBLE] (see instructions on back)

EX-4.7A

EXHIBIT 4.7A

AMENDMENT TO SECURITY AGREEMENT

This Security Pledge Amendment, dated as of December 21, 2005, is delivered pursuant to Section 5.1 of that certain security agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”; capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement), dated as of February 8, 2002, among Jacobs Entertainment, Inc. (formerly known as Gameco, Inc.) (the “Issuer”), the undersigned, the other Guarantors from time to time party thereto and Wells Fargo Bank, National Association, as Trustee (in such capacity and together with any successors in such capacity, the “Trustee”). The undersigned hereby agrees that this Pledge Amendment may be attached to the Security Agreement and that the Pledged Securities and/or Intercompany Notes listed on this Pledge Amendment shall be deemed to be and shall become part of the Pledged Collateral and shall secure all Secured Obligations.

PLEDGED SECURITIES

ISSUER	CLASS OF STOCK OR INTERESTS	CERTIFICATE NO(S).	PERCENTAGE OF ALL ISSUED CAPITAL OR OTHER EQUITY INTERESTS OF ISSUER
Jacobs Piñon Plaza Entertainment, Inc.	Common Stock	1	100	%

INTERCOMPANY NOTES

ISSUER	PRINCIPAL AMOUNT	DATE OF ISSUANCE	INTEREST RATE	MATURITY DATE
		None

[Signature Page Follows]

			JACOBS ENTERTAINMENT, INC., a Delaware corporation, as Pledgor
			By:	/s/ Jeffrey P. Jacobs
				Name: Jeffrey P. Jacobs
				Title:  President
AGREED TO AND ACCEPTED:
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee
By:	/s/ Joseph P. O’Donnell
	Name:	Joseph P. O’Donnell
	Title:	Vice President

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EX-4.34(D)

EXHIBIT 4.34(d)

JACOBS ENTERTAINMENT, INC

240 Main Street
Black Hawk, Colorado 80422

December 21, 2005

Wells Fargo Bank, National Association

Corporate Trust Services

213 Court Street - Suite 703

Middletown, CT 06457

Ladies and Gentlemen:

Reference is made to that certain security agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”; capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement), dated as of February 8, 2002, among Gameco, Inc. (renamed Jacobs Entertainment, Inc., the “Issuer”), each of the Guarantors listed on the signature pages thereto or from time to time party thereto by execution of a joinder agreement, and Wells Fargo Bank, National Association, as Trustee (in such capacity and together with any successors in such capacity, the “Trustee”).

This letter supplements the Security Agreement and is delivered by the undersigned, JACOBS PIÑON PLAZA ENTERTAINMENT, INC., a Nevada corporation (the “New Pledgor”), pursuant to Section 3.5 of the Security Agreement. The New Pledgor hereby agrees to be bound as a Guarantor and as a Pledgor by all of the terms, covenants and conditions set forth in the Security Agreement to the same extent that it would have been bound if it had been a signatory to the Security Agreement on the execution date of the Security Agreement and without limiting the generality of the foregoing, hereby grants and pledges to the Trustee, for its benefit and for the benefit of the Secured Parties, as collateral security for the full, prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of the Secured Obligations, a Lien on and security interest in, all of its right, title and interest in, to and under the Pledged Collateral and expressly assumes all obligations and liabilities of a Guarantor and Pledgor thereunder. The New Pledgor hereby makes each of the representations and warranties and agrees to each of the covenants applicable to the Pledgors contained in the Security Agreement.

The New Pledgor represents, warrants and agrees that in connection with its obligations under Section 3.4(b) of the Security Agreement, with respect to each Deposit Account described on Schedule 3.4(b) annexed hereto, the New Pledgor shall, within thirty (30) days after the date hereof, either (1) enter into a control agreement with the applicable depositary which form shall be in form and substance reasonably acceptable to the Trustee and shall perfect the Trustee’s security interest in such Deposit Account by control or (2) close such Deposit Account.

Attached hereto are supplements to each of the schedules to the Security Agreement with respect to the New Pledgor. Such supplements shall be deemed to be part of the Security Agreement.

This agreement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original, but all such counterparts together shall constitute one and the same agreement.

THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

IN WITNESS WHEREOF, the New Pledgor has caused this letter agreement to be executed and delivered by its duly authorized officer as of the date first above written.

JACOBS PIÑON PLAZA ENTERTAINMENT, INC.
	By:	/s/ Jeffrey P. Jacobs
	Jeffrey P. Jacobs, Chief Executive
	Officer and President

AGREED TO AND ACCEPTED:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Joseph P. O’Donnell
Name:	Joseph P. O’Donnell
Title:	Vice President

EX-4.43(C)

EXHIBIT 4.43(c)

SIXTH SUPPLEMENTAL INDENTURE

THIS SIXTH SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of December 21, 2005 among Jacobs Piñon Plaza Entertainment, Inc., a Nevada corporation (the “New Guarantor”), Jacobs Entertainment, Inc., a Delaware corporation (formerly known as Gameco, Inc.) (the “ Company”), the guarantors listed on the signature pages attached hereto (the “Guarantors”) and Wells Fargo Bank, National Association, as trustee under the Indenture referred to below (the “ Trustee”);

W I T N E S S E T H THAT:

WHEREAS, the Company has heretofore executed and delivered to the Trustee an Indenture (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Indenture”), dated as of February 8, 2002, providing for the issuance of its 11 7/8% Senior Secured Notes due 2009;

WHEREAS, Section 4.18 of the Indenture provides that under certain circumstances the Company is required or permitted to cause the New Guarantor to execute and deliver to the Trustee a supplemental indenture pursuant to which the New Guarantor shall unconditionally guarantee all of the Company’s obligations under the Notes pursuant to a Guarantee on the terms and conditions set forth herein; and

WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee and the Company are authorized to execute and deliver this Supplemental Indenture;

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the New Guarantor, the Company, the Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

1.Definitions.

(a)Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

(b)For all purposes of this Supplemental Indenture, except as otherwise herein expressly provided or unless the context otherwise requires: (i) the terms and expressions used herein shall have the same meanings as corresponding terms and expressions used in the Indenture; and (ii) the words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof.

2.Agreement to Guarantee. The New Guarantor hereby agrees, jointly and severally with all other Guarantors, to guarantee the Company’s obligations under the Notes on the terms and subject to the conditions set forth in Article 12 of the Indenture and to be bound by all other applicable provisions of the Indenture. From and after the date hereof, the New Guarantor shall be a Guarantor for all purposes under the Indenture and the Notes.

3.Ratification of Indenture; Supplemental Indenture Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof, as previously amended, amended and restated, supplemented or otherwise modified from time to time, shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of any Note heretofore or hereafter authenticated and delivered shall be bound hereby.

4.Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SUPPLEMENTAL INDENTURE OR THE NOTES.

5.Trustee Makes No Representation. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which are made solely by the Company.

6.Multiple Counterparts. The parties may sign multiple counterparts of this Supplemental Indenture. Each signed counterpart shall be deemed an original, but all of them together represent one and the same agreement.

7.Headings. The headings of this Supplemental Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof.

[Remainder of page intentionally blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date and year first above written.

NEW GUARANTOR:
JACOBS PIÑON PLAZA
ENTERTAINMENT, INC.
By:	/s/ Jeffrey P. Jacobs
Name: Jeffrey P. Jacobs
Title: Chief Executive Officer and President
THE TRUSTEE:
WELLS FARGO BANK,
NATIONAL ASSOCIATION
By:	/s/ Joseph P. O’Donnell
Name:			Joseph P. O’Donnell
Title:		Vice President
THE COMPANY:
JACOBS ENTERTAINMENT, INC.
By:	/s/ Jeffrey P. Jacobs
Name: Jeffrey P. Jacobs
Title: President
BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
By:	/s/ Jeffrey P. Jacobs
Name:  Jeffrey P. Jacobs
Title:   Chief Executive Officer and Director
GOLD DUST WEST CASINO, INC.
By:	/s/ Jeffrey P. Jacobs
Name:  Jeffrey P. Jacobs
Title:   Chairman of the Board and President

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BLACK HAWK/JACOBS ENTERTAINMENT, LLC
By:			Black Hawk Gaming & Development Company,
			Inc., its Authorized Manager
			/s/ Stephen R. Roark
			Stephen R. Roark
			President
GILPIN HOTEL VENTURE
By:			Gilpin Ventures, Inc., its Partner
By:	/s/ Stephen R. Roark
Name:			Stephen R. Roark
Title:			President
By:			Black Hawk Gaming & Development Company, Inc.,
			its Partner
By:		/s/ Stephen R. Roark
Name:			Stephen R. Roark
Title:			President
GILPIN VENTURES, INC.
By:		/s/ Stephen R. Roark
Name:			Stephen R. Roark
Title:			President and Director
JALOU II INC.
By:		/s/ Ian M. Stewart
Name:			Ian M. Stewart
Title:			President and Director
WINNER’S CHOICE CASINO, INC.
By:		/s/ Ian M. Stewart
Name:			Ian M. Stewart
Title:			President and Director

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DIVERSIFIED OPPORTUNITIES GROUP LTD.
By: Jacobs Entertainment, Inc., its Managing Manager
By:	/s/ Jeffrey P. Jacobs
Name:		Jeffrey P. Jacobs
Title:		President
JALOU L.L.C.
By:	/s/ Ian M. Stewart
Name:		Ian M. Stewart
Title:		President and Manager
HOUMA TRUCK PLAZA & CASINO, L.L.C.
By:	/s/ Ian M. Stewart
Name:		Ian M. Stewart
Title:		President and Manager
JALOU-CASH’S L.L.C.
By:	/s/ Ian M. Stewart
Name:		Ian M. Stewart
Title:		President and Manager
JACE, INC.
By:	/s/ Ian M. Stewart
Name:		Ian M. Stewart
Title:		President and Director
LUCKY MAGNOLIA TRUCK STOP AND CASINO, L.L.C.
By:	/s/ Ian M. Stewart
Name:		Ian M. Stewart
Title:		President and Manager

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BAYOU VISTA TRUCK PLAZA AND CASINO, L.L.C.
By:	/s/ Ian M. Stewart
Name:		Ian M. Stewart
Title:		President and Manager
RACELAND TRUCK PLAZA AND CASINO, L.L.C.
By:	/s/ Ian M. Stewart
Name:		Ian M. Stewart
Title:		President and Manager
COLONIAL HOLDINGS, INC.
By:	/s/ Ian M. Stewart
Name:		Ian M. Stewart
Title:		President
COLONIAL DOWNS, LP
By: STANSLEY RACING CORP., ITS GENERAL
PARTNER
By:	/s/ Ian M. Stewart
Name:		Ian M. Stewart
Title:		President
STANSLEY RACING CORP.
By:	/s/ Ian M. Stewart
Name:		Ian M. Stewart
Title:		President
COLONIAL DOWNS, LLC
By:	/s/ Ian M. Stewart
Name:		Ian M. Stewart
Title:		Manager

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JRJ PROPERTIES, LLC
By:	/s/ Ian M. Stewart
Name:		Ian M. Stewart
Title:		President and Manager
JALOU BREAUX BRIDGE, LLC
By:	/s/ Ian M. Stewart
Ian M. Stewart, President and Manager
JALOU EUNICE, LLC
By:	/s/ Ian M. Stewart
Ian M. Stewart, President and Manager
JALOU OF JEFFERSON, LLC
By:	/s/ Ian M. Stewart
Ian M. Stewart, President and Manager

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EX-4.49(D)

EXHIBIT 4.49(d)

SUBSIDIARY GUARANTEE

The Subsidiary Guarantor listed below (hereinafter referred to as the “Subsidiary Guarantor,” which term includes any successors or assigns under the Indenture and any additional Subsidiary Guarantors), has irrevocably and unconditionally guaranteed the Guarantee Obligations, which include that: (a) the principal of, and premium and interest and Additional Interest, if any, on the 11 7/8% Senior Secured Notes due 2009 (the “Notes”) of Gameco, Inc. (renamed Jacobs Entertainment, Inc., the “Company”), shall be duly and punctually paid in full when due, whether at maturity, by acceleration or otherwise, and interest on overdue principal, and premium, if any, and (to the extent permitted by law) interest on any interest, if any, on the Notes and all other Obligations of the Company to the Holders or the Trustee hereunder or under the Notes or under the Collateral Documents (including fees, expenses or other) shall be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other Obligations, the same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise.

The Obligations of the Subsidiary Guarantor to the Holders and to the Trustee pursuant to this Subsidiary Guarantee and this Indenture are expressly set forth in Article 12 of the Indenture and reference is hereby made to the Indenture for the precise terms of this Subsidiary Guarantee. The Obligations are secured by a pledge of the Collateral pursuant to Articles 10 and 11 of the Indenture and the Collateral Documents.

No stockholder, officer, director or incorporator, as such, past, present or future of the Subsidiary Guarantor shall have any liability under this Subsidiary Guarantee by reason of his or its status as such stockholder, officer, director or incorporator.

Except as set forth in the Indenture, this is a continuing Guarantee and shall remain in full force and effect and shall be binding upon the Subsidiary Guarantor and its successors and assigns until full and final payment of all of the Company’s Obligations under the Notes and the Indenture and shall inure to the benefit of the successors and assigns of the Trustee and the Holders, and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges herein conferred upon that party shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof. This is a Guarantee of payment and not of collectibility.

The Obligations of the Subsidiary Guarantor under this Subsidiary Guarantee shall be limited to the extent necessary to insure that it does not constitute a fraudulent conveyance under applicable law.

THE TERMS OF ARTICLE 12 OF THE INDENTURE ARE INCORPORATED HEREIN BY REFERENCE.

Capitalized terms used herein have the same meanings given in the Indenture unless otherwise indicated.

Dated as of December 21, 2005

JACOBS PIÑON PLAZA
ENTERTAINMENT, INC.
By:	/s/ Jeffrey P. Jacobs
		Jeffrey P. Jacobs, Chief Executive
		Officer and President

EX-10.15A

EXHIBIT 10.15A

GROUND LEASE

This GROUND LEASE AGREEMENT (“Lease”) is made this                day of                       , 2005, by and between CLARK G. RUSSELL and JEAN M. RUSSELL, Trustees of “THE CLARK AND JEAN RUSSELL FAMILY TRUST” (hereinafter called “Landlord”), and JACOBS ENTERTAINMENT, INC., a Delaware corporation (hereinafter called “Tenant”).

WITNESSETH:

1.LEASED PREMISES.

A.Leased Premises.  Landlord is the owner of certain real property situated in Carson City, State of Nevada, having a street address of 2171 Highway 50 East, consisting of approximately 17.67 acres, Assessor’s Parcel Number 8-152-15, more particularly described and shown on Exhibit “A”, attached hereto and incorporated herein (the “Leased Premises”).  Landlord and Tenant acknowledge and agree that at the time of this Lease various buildings and other improvements exist on, under or above the Leased Premises, a schedule of which is attached to this Lease as Exhibit “B”, attached hereto and incorporated herein (collectively, the “Improvements”).

B.Lease.  Landlord leases to Tenant, and Tenant leases from Landlord, the Leased Premises.

C.As-Is.  Except as set out in this Lease to the contrary, Landlord disclaims any representations or warranties with respect to the Leased Premises and Tenant acknowledges that the Leased Premises are leased to Tenant in an As-Is condition.

D.Severance of Improvements.  Landlord represents and warrants to Tenant that the Improvements are not part of the Leased Premises and that legal title to such Improvements has been severed from the legal title to the Leased Premises by virtue of that certain Affidavit of Conversion dated                       and filed of record in the                   records of               County, Nevada as Instrument No.             , an unrecorded copy of which is attached hereto as Exhibit “C” and incorporated herein as if set out word for word.  Landlord and Tenant agree that upon recording of the Affidavit of Conversion, a recorded copy of such document shall be substituted in replacement of the unrecorded version.  Landlord further represents and warrants to Tenant that legal title to the Improvements is vested with Capital City Entertainment, Inc., a Nevada corporation.  Landlord hereby disclaims any claim to title to the Improvements or to any lien rights in same.

E. Adjacent Property.

(1)Landlord represents to Tenant that Landlord believes in good faith that Landlord has the right, pursuant to a written agreement with the Nevada Department of Transportation (“NDOT”) to purchase that certain seven (7) acre tract of land situated adjacent to the Leased Premises (the “Adjacent Tract”), a depiction and legal description of which is attached hereto and incorporated herein as Exhibit “D”, as if set out word for word.

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(2)Landlord agrees with Tenant that if the Adjacent Tract becomes available for purchase, Landlord will exercise its best efforts to promptly consummate the purchase of the Adjacent Tract (and to promptly and fully advise Tenant in writing as to the status of such efforts as well as the time and date of the closing of such purchase).

(3)Landlord and Tenant further agree that upon the consummation of the purchase of the Adjacent Tract, such Adjacent Tract shall become part of the Leased Premises (and this Lease shall be amended by written agreement executed by Tenant and Landlord to reflect the addition of the Adjacent Tract to the Leased Premises).

(4)Upon the addition of the Adjacent Tract to the Leased Premises, the Annual Rent defined and described in Section 4, below shall be increased by an amount determined as follows:

(i)In the event the Adjacent Tract Option is exercised during the Initial Term, the Annual Rent shall be increased by the amount paid actually by Landlord to NDOT as the purchase price for the Adjacent Tract (as evidenced by the Purchaser’s Settlement Statement or such other similar instrument utilized by the title company at the closing of same) multiplied by an annualized “capitalization rate” of eight percent (8%)(By way of illustration only:  assuming a purchase price of $2,000,000.00 and the annualized capitalization rate of 8%, the annual rent amount resulting from the formula set out in this subpart (bb) would be $160,000.00 [$2,000,000.00 x ..08=$160,000.00]).

(ii) In the event the Adjacent Tract Option is exercised during either the First Extension Term or the Second Extension Term, the Annual Rent shall be increased pursuant to the same alternatives identified in subsection 1.E.(4)(i), above.

(iii) Notwithstanding the above, any amounts due for Annual Rent in relation to the Adjacent Tract shall be prorated in accordance with Section 4.D., below.

(iv)   After the expiration of the Initial Term (or the expiration of the First Extension Term, in the event the Adjacent Tract Option is exercised in such extension term), the Annual Rent shall be determined in accordance with Sections 4.B. and 4.C., as applicable.

2.CONTROL OF LEASED PREMISES.

Tenant, during the Term of this Lease, shall have exclusive control of the Leased Premises, and Landlord shall take no action pertaining to the Leased Premises (including the construction of new, or the alteration of existing, structures on the Leased Premises) without the prior written consent of Tenant subject to the provisions hereof which require or allow Landlord to take action with respect to the Leased Premises.

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3.TERM.

A.Initial Term.  The initial Term of this Lease shall commence on                                   , and shall continue for ten (10) calendar years, having a termination date of                            (the “Initial Term”).

B.First Extension Term.  Tenant shall have the exclusive, non-revocable right and option, at Tenant’s sole election, to extend the Initial Term of this Lease (the “First Extension Right”) for an additional term of ten (10) years (the “First Extension Term”).  Tenant may exercise the First Extension Right by giving notice to Landlord of its intention so to do at least six (6) months prior to the expiration of the Initial Term.  The First Extension Term shall be upon all of the terms and conditions set out in this Lease.

C.Second Extension Term.  Tenant shall have the exclusive, non-revocable right and option, at Tenant’s sole election, to extend the First Extension Term of this Lease (the “Second Extension Right”) for an additional term of ten (10) years (the “Second Extension Term”).  Tenant may exercise the Second Extension Right by giving notice to Landlord of its intention so to do at least six (6) months prior to the expiration of the First Extension Term.  The Second Extension Term shall be upon all of the terms and conditions set out in this Lease.

D.Term Defined.  For purposes of this Lease, any reference to “Term” shall mean the Initial Term, the First Extension Term or the Second Extension Term, as the context requires as determined by Tenant, in Tenant’s discretion.

4.RENT.  The annual rent to be paid to Landlord by Tenant under the Lease (the “Annual Rent”) shall be as follows:

A. Initial Term.  During the Initial Term, Tenant agrees to pay to Landlord as an Annual Rent for the use and occupancy of the Leased Premises, as follows:

(1)Years 1-5:$250,000.00 per year

(2)Years 6-10:$300,000.00 per year

B.First Extension Term.  The Annual Rent to be paid to Landlord during the First Extension Term shall be calculated as follows:

(1)Years 1-5:   The Annual Rent for Years 1-5 of the First Extension Term shall be the First Extension Term MAI Valuation Rate.

(2)Years 6-10:  The Annual Rent for Years 6-10 shall be calculated by taking the amount of Annual Rent paid for Year 5 of the First Extension Term multiplied by the CPI Escalation Factor existing on the first day of the sixth year of the First Extension Term.

(3)First Extension Term MAI Valuation Rate Defined.  For purposes of this Lease, the term “First Extension Term MAI Valuation Rate” shall mean the ground lease rental rate agreed to by Landlord and Tenant, but if they cannot

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agree, then the fair market value ground lease rate for the Leased Premises (based on the fair market value of the Leased Premises and rental rates for ground leases in Carson City, Nevada) as determined by an Appraisal Team, selected as set forth in Section 31.F. The valuation appraisal described in this Section 4.B.(3) shall be in writing and shall be conducted and prepared in accordance with MAI standards and methodologies and be based on a valuation date which is not more than 60 days prior to the commencement of the First Extension Term.   Such valuation appraisal shall exclude the value of all Improvements (as well as any additions to the Improvements as may have been constructed on the Leased Premises after the commencement date of this Lease and shall further exclude the value of any existing lease on the Leased Premises, including this Lease, or extension rights to this Lease, such that it is appraised as unencumbered real property).

C. Second Extension Term.  The Annual Rent to be paid to Landlord during the Second Extension Term shall be calculated as follows:

(1)Years 1-5: The Annual Rent for Years 1-5 of the Second Extension Term shall be the Second Extension Term MAI Valuation Rate.

(2)Years 6-10: The Annual Rent for Years 6-10 shall be calculated by taking the amount of Annual Rent paid for Year 5 of the Second Extension Term multiplied by the CPI Escalation Factor existing on the first day of the sixth year of the Second Extension Term.

(3)Second Extension Term MAI Valuation Rate Defined.  For purposes of this Lease, the term “Second Extension Term MAI Valuation Rate” shall mean the ground lease rental rate agreed to by Landlord and Tenant, but if they cannot agree, then the fair market value ground lease rate of the Leased Premises (based on the fair market value of the Leased Premises and rental rates for ground leases in Carson City, Nevada) as determined by an Appraisal Team, selected as set forth in Section 31.F. The valuation appraisal described in this Section 4.C.(3) shall be in writing and shall be conducted and prepared in accordance with MAI standards and methodologies and be based on a valuation date which is not more than 60 days prior to the commencement of the Second Extension Term.   Such valuation appraisal shall exclude the value of all Improvements (as well as any additions to the Improvements as may have been constructed on the Leased Premises after the commencement date of this Lease and shall further exclude the value of any existing lease on the Leased Premises, including this Lease, or extension rights to this Lease, such that it is appraised as unencumbered real property).

D.Monthly Payment.  The Annual Rent described above is to be paid in equal monthly installments in advance on the first day of each and every calendar month of the Term.  The Annual Rent for any other portion of the Term which is less than twelve (12) months shall be the proration of the Annual Rent above which the number of months in such portion of the Term bears to twelve (12).

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E.Late Payment.  If, during the Term or any extension thereof, any annual calendar time period, Tenant fails to pay the Annual Rent on or before the tenth (10^th) of the month, then such payments shall bear interest from the first of the month of the lesser of the prime lending rate of U.S. Bank, plus one percent (1%) or the highest rate allowed by the law of the State of Nevada.

F.Payments Location.  Payments of Annual Rental shall be made to Landlord at the address specified in Section 14 hereof, or at such other place as Landlord may from time to time in writing direct (not less than thirty (30) days in advance of the date of the address change effective date).

G.No Security Deposit. Lessee shall not be obligated to pay a security deposit in connection with this Lease.

H.No Set Off.  Annual Rent, and all other sums payable hereunder to or on behalf of Landlord shall be paid (except as permitted herein otherwise or by applicable law) without notice or demand and without set-off, counterclaim, abatement, suspension, deduction or defense.

I.CPI Escalation Factor.  For purposes of this Lease, the term “CPI Escalation Factor” shall mean that percentage increase in the Consumer Price Index (“CPI”) established for the West Region of the United States of America for the relevant immediately preceding twelve (12) month time period as provided by the United States Bureau of Labor Statistics.

5.TRIPLE NET LEASE.  Landlord and Tenant agreethat this Lease is a triple net lease as to the Leased Premises and except as specifically referred herein, Landlord is not obligated to expend any funds in connection with the operation of the Leased Premises.

6.FIXTURES; EQUIPMENT.

A.Tenant Equipment.  Tenant at its own expense shall provide, install and maintain all trade fixtures, furniture and equipment (collectively such furniture, fixtures and equipment, the “Equipment) reasonably required in Tenant’s sole discretion to enable it to conduct its business on the Leased Premises.  Such Equipment shall remain the property of Tenant and Tenant may remove same at any time prior to the expiration or earlier termination of the Term (and Tenant shall remove same within thirty (30) days of the expiration or earlier termination of this Lease).

B.Repair of Leased Premises.  Tenant shall repair at its own expense any damage to the Leased Premises caused by the removal of such Equipment.

C.Disclaimer.  Landlord hereby expressly disclaims and waives any rights (whether by Landlord’s lien laws or laws concerning fixtures or otherwise) to the Equipment.

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7.USE OF PREMISES.

Tenant may use the Leased Premises for any lawful purpose, and in particular (but not limited to), the purpose of operating a hotel, motel, casino, restaurant, bowling center and R.V. park.  Tenant shall conduct its business insofar as the same relates to Tenant’s use and occupancy of the Leased Premises in a lawful manner and in compliance with all governmental laws, rules, regulations and orders applicable to the business of Tenant.  Landlord agrees to promptly execute and deliver to Tenant, upon Tenant’s request, any and all forms and documents, and to assist and cooperate with Tenant at Tenant’s expense, to comply with the provisions of this Section 7.

8.PAYMENT OF TAXES.

A.Leased Premises.  Tenant agrees that it shall pay before delinquency any real property taxes and special assessments for public improvements levied or assessed against the Leased Premises and payable during the Term.  Such taxes which are to be paid by Tenant shall be prorated with respect to any taxes levied for a fiscal tax year extending beyond the end of the Term such that Tenant shall pay only such portion of taxes as the portion of the fiscal tax year preceding the end of the Term bears to the entire fiscal tax year.

B.Exclusions.  Nothing contained in this Lease shall require Tenant to pay any franchise, corporate, estate, inheritance, succession, stamp, transfer, use, income or excess profits tax of Landlord.

C.Special Assessments.  In the event any additional tax or any special assessment is levied or assessed against the Leased Premises, which such additional tax or special assessment becomes due and payable in whole or in part during the Term, Tenant shall pay in a timely manner such part of the tax or assessment that becomes due and payable during the Term.

D.Tenant’s Property.  Tenant shall also pay before delinquency any and all taxes and assessments levied or assessed, and becoming payable during the Term, against Tenant’s property located upon the Leased Premises.

E.Contest.  Notwithstanding any provision in this Section 8 to the contrary, Tenant may contest any tax or assessment referenced in this Section 8, provided that such contest is at no expense to Landlord and any late charges or penalties imposed (on such tax amounts due to Tenant’s failure to timely pay same) are paid by Tenant.  Landlord agrees to promptly execute and deliver to Tenant, upon Tenant’s request, any and all forms and documents, and to assist and cooperate with Tenant, at Tenant’s expense, to comply with the provisions in Tenant’s reasonable discretion of this Subsection 8.E.  During such contests, Tenant shall take all steps appropriate, including payment under protest, to prevent foreclosure and public sale or other divesting of Landlord’s title by reason of nonpayment of taxes.  In any event, Tenant shall pay all taxes prior to the issuance of any execution therefore by the applicable jurisdiction unless adequate provisions have been made for the bonding of same.  In the event that a written notice of tax sale is given by the applicable taxing authority, Landlord, upon five (5) days advance written notice to Tenant, shall have the right to pay all past due taxes and any penalties.  Tenant shall pay to Landlord all costs incurred in good faith of any such performance by Landlord within thirty (30) days of Tenant’s receipt of a written invoice supported by reasonable evidence

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as to such amounts.  Tenant’s failure to timely pay such amounts to Landlord shall constitute a default.

F.Delivery of Tax Receipt.  During the Term of this Lease, Tenant shall provide Landlord with a copy of its paid tax receipt within forty-five (45) days of the date of Tenant’s receipt of a written request from Landlord of same.

9.INSURANCE AND INDEMNIFICATION.

A.Indemnity.  Tenant, with respect to its use and occupancy of the Leased Premises, agrees to defend, assume legal liability for, indemnify, and hold free and harmless Landlord, its agents, servants, employees, officers, and directors, from any and all loss, damages, liability, cost, or expenses (including, but not limited to, attorneys’ fees, reasonable investigative and discovery costs and court costs) and all other sums which Landlord, its agents, servants, employees, officers, and directors may reasonably pay or become obligated to pay on account of any, all, and every demand, claim, assertion of liability, or action directly caused by the act or omission of Tenant (but not as to claims and liability arising out of the negligent or willful conduct of Landlord or its agents), its agents, servants or employees, whether such claim, demand, assertion of liability or action be for damages or injury to person or property, including the property of Landlord, or death of any person, made by any person, group, or organization, whether employed by either of the parties hereto or otherwise.

B.General Liability Insurance. Tenant agrees that it shall, at its own cost and expense, at all times during the term of this Lease, maintain in force a policy or policies of insurance written by one or more responsible insurance carriers, legally qualified to issue such insurance in the State of Nevada which shall insure against liability for injury to and/or death of and/or damage to property of any person or persons, with a combined single policy limit of not less than TWO MILLION DOLLARS ($2,000,000.00).  Such policy or policies shall provide, among other things, that it or they specifically recognize and insure the liability assumed by Tenant pursuant to Section 9.A. hereof.

C.Workers Compensation Insurance.  Tenant agrees to maintain and keep in force, during the Term, all employees’ compensation insurance required under applicable worker’s compensation acts, currently referred to in the State of Nevada as State Industrial Insurance.

D.Evidence.  Within ten (10) days of Landlord’s written request, Tenant shall deliver the certificates of insurance evidencing the existence in force of the policies of insurance referenced in Section 9.B., above.  Each of such certificates shall provide that such insurance shall not be canceled or materially amended unless the insurer shall give thirty (30) days prior written notice of such cancellation or amendment to the party designated on such certificate as the holder thereof, which shall include notice to Landlord.

E.Self-Insurance Option.  Notwithstanding anything to the contrary contained in this Lease, Tenant shall have the right to self insure as to State Industrial Insurance under Chapter 616, on meeting the requirements set forth herein.

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10.CONDEMNATION.

A.Leased Premises.  Subject to the rights of Tenant hereinafter set forth in this Section 10, Tenant hereby irrevocably assigns to Landlord any award or payment to which Tenant may be or become entitled by reason of any taking of the Leased Premises or any part thereof, in or by condemnation or eminent domain proceedings pursuant to any law, general or special.  Landlord shall be entitled to participate in any such proceedings at Landlord’s expense.

B.Tenant Property.  Notwithstanding anything herein to the contrary, Tenant shall have the right to pursue a claim with and retain any award from the condemning authority or entity for damage to or loss of Tenant’s leasehold estate in the Leased Premises as well as for any other separate damages that Tenant may suffer in relation to the Improvements or the Equipment.

C.Governmental Action.  In the event of the temporary requisition of the use or occupancy of the Leased Premises or any part thereof, by any governmental authority, civil or military, Tenant shall retain any award or payment therefore, whether the same shall be paid or payable in respect of Tenant’s leasehold interest, the Improvements, the Equipment or otherwise; provided, however, that Tenant shall continue to pay Annual Rent, and any other sums payable by Tenant hereunder during the period of such temporary requisition.

D.Right of Termination.  Notwithstanding the provisions of Section 10.B., if all of the Leased Premises (or so much thereof as to render the Leased Premises unsuitable for Tenant’s business use, to be determined by Tenant in its sole discretion) be taken or appropriated by some public authority or private corporation having the power of eminent domain, or if the Leased Premises be conveyed by the Landlord or its successors-in-interest for the purpose of avoiding proceedings in appropriation, this Lease shall terminate as of the date of such appropriation or conveyance with the same force and effect as if such date had been originally set forth herein as the expiration date of the Term.  Upon such event, Landlord shall rebate to Tenant the amount of Annual Rent paid under this Lease relating to the time period after such date of termination.

E.Partial Taking.  If only a portion of the Leased Premises be taken or appropriated by eminent domain proceedings and if the Leased Premises are still suitable for Tenant’s business use, to be determined by Tenant in its sole discretion, after such taking, this Lease shall terminate as to that portion of the Leased Premises so taken but shall remain in full force and effect as to the remainder of the Leased Premises.  Upon such event, the future rentals to be paid by the Tenant shall be equitably abated in the ratio that the value of the Leased Premises taken bears to the value of the whole of the Leased Premises.

F.Restriction Obligation.  To the extent possible, any amounts awarded shall be used by Landlord to fully restore the Leased Premises to its former condition, with excess funds belonging to the Landlord.

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G.Consent Required.  For the purpose of this Lease, all amounts payable pursuant to any agreement with a condemning authority which agreement has been made in settlement of or under threat of any condemnation, or other eminent domain proceeding affecting the Leased Premises shall be deemed to constitute an award made in such proceeding; provided, however, that no such agreement shall be made with any condemning authority by either Landlord or Tenant without the written consent of the other.

11.UTILITIES, ETC.

Tenant shall pay during the Term all electrical, water, gas, telephone and other public or private utility charges in connection with its occupancy and use of the Leased Premises, including all business licenses and similar permit fees.

12.COVENANTS AGAINST LIENS.

A.Discharge; Reimbursement.  Except for any indebtedness imposed on Tenant’s leasehold interest in the Leased Premises by Tenant’s lenders pursuant to Section 35, below (the “Tenant Lender Liens”), Tenant covenants and agrees that it shall not, during the Term, suffer or permit any lien to be attached to or upon the Leased Premises or any part thereof by reason of any act or omission on the part of Tenant, and hereby agrees to save and hold harmless Landlord from or against any such lien or claim of lien.  In the event that any such lien (other than the Tenant Lender Liens) does so attach, and is not released within ninety (90) days after notice to Tenant thereof, or if Tenant has not indemnified Landlord against any such lien within such ninety (90) day period, Landlord, in its sole discretion, may pay and discharge the same and relieve the Leased Premises therefrom. Tenant agrees to repay and reimburse Landlord for the amount so paid by Landlord within thirty (30) days of Tenant’s receipt of a notice for such charges supported by detailed evidence of such expenditures.

B.Good Faith Contest.  Notwithstanding the above, Tenant may in good faith contest any mechanics, laborers’, materialmen’s or other liens filed or established against the Leased Premises, and in such event may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom.  Upon such circumstances, Landlord shall not have the rights set out in Section 12.A., above, unless by nonpayment of any such items the interest of Landlord will be materially and imminently endangered or the Leased Premises or any part thereof will be subject to imminent material loss or forfeiture, in which event Tenant shall promptly pay and cause to be satisfied and discharged all such unpaid items or secure such payment by posting a bond, in form reasonably satisfactory to Landlord, with the Landlord.  Landlord will cooperate fully with the Tenant in any such contest provided that Tenant shall fully and promptly reimburse Landlord for all reasonable costs incurred by Landlord in that regard.  Tenant shall hold Landlord whole and harmless from any loss, cost or expenses Landlord may reasonably incur related to any such contest.

C.Landlord Representation.  Landlord hereby represents and warrants to Tenant that the Leased Premises are free from all liens, encumbrances, claims, impediments to title, encroachments, development restrictions (other than zoning and gaming laws), restrictive covenants, special taxing districts or the like.  Landlord hereby further represents and warrants to Tenant that the Leased Premises are free from any other matter which may impair or restrict Tenant’s business operations or the expansion of, or the construction of additions to, the

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Improvements and that the Leased Premises are situated within a zoning and gaming district which is compatible with the use designations set out in Section 7, above.

13.ASSIGNMENT AND SUBLETTING.

A.General.  Tenant shall have the right to assign or sublet the Leased Premises, or any part thereof, without consent from Landlord, provided that no such assignment or subletting shall relieve Tenant from any of its obligations as Tenant hereunder (unless Landlord agrees otherwise in writing).  Tenant shall be entitled to retain all proceeds (whether in the form of rent or recoupments or otherwise) generated from such sublease or assignment.  Every such assignment or sublease shall recite that it is and shall be subject and subordinate to the provisions of this Lease, and the termination or cancellation of this Lease shall constitute a termination and cancellation of every such assignment or sublease (subject to the Lender rights, described in Section 35, below).

B.Assignment To Affiliate.  Notwithstanding anything herein to the contrary, Tenant shall have the right to assign this Lease to an Affiliate of Tenant’s election and upon such assignment, Tenant shall be released from the duties and obligations of this Lease.  For purposes of this Lease, the term “Affiliate” shall mean any person, partnership, joint venture, corporation or other form of enterprise, domestic or foreign, including but not limited to subsidiaries whether one or more, that directly or indirectly, control, are controlled by, or are under common control with or have an ownership interest in, with or of Tenant.

14.NOTICES.

All notices, demands, requests, elections, approvals, disapprovals, consents or other communications which this Agreement contemplates, or requires or permits either party to give to the other, shall be in writing and shall be personally delivered or sent by certified mail return receipt requested, postage prepaid, or by telecopy or by Federal Express or similar delivery service addressed to the respective parties as follows:

Landlord:	CLARK G. RUSSELL, Trustee
	JEAN M. RUSSELL, Trustee
	“The Clark and Jean Russell Family Trust”
	P.O. Box 1966
	Carson City, Nevada 89702
Tenant:	JACOBS ENTERTAINMENT, INC.
	17301 West Colfax Avenue
	Suite 250
	Golden, Colorado 80401
	Attention: Stephen R. Roark, CFO
	(303) 215-5201
	(303) 215-5219 facsimile

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With A Copy To:	Jones & Keller, P.C.
	1625 Broadway, 16th Floor
	Denver, Colorado 80202
	Attention: Samuel E. Wing, Esq.
	(303) 573-1600
	(303) 893-6506 (facsimile)

or to such other address as either party may from time to time designate by notice to the other given in accordance with this Section 14.  Notice shall be deemed to have been given upon receipt thereof in the case of personal delivery or delivery service, or three (3) days after deposit in the U.S. mail in the case of mailing.

15.RIGHT TO INSPECT.

During the Term, Landlord hereby reserves the right for itself or its duly authorized agents and representatives upon forty-eight (48) hours advance written notice to Tenant to enter upon the Leased Premises during regular business hours of Tenant for the purpose of inspecting the same and of showing the same to any prospective purchaser. Notwithstanding the above, Landlord shall not have the right to enter into any of the Improvements situated on the Leased Premises.

16.MAINTENANCE.

Tenant shall, at its own expense, maintain the entire Leased Premises in good condition and repair, and at the end of the Term or sooner termination of this Lease, (whether by operation of law, for failure to comply with the provisions hereof, or otherwise), Tenant shall deliver up the Leased Premises in the same order, condition, and repair as when received by Tenant; provided, however, Tenant shall not be obligated to restore diminution in condition caused by: (i) ordinary wear and tear; or (ii) elements and damages due to casualty or condemnation; or (iii) the construction of additional buildings, structures or other improvements over, upon or under the Leased Premises; or (iv) the demolition or alteration of existing buildings, structures, or other improvements over, upon or under the Leased Premises.

17.DEFAULT.

A. Tenant Default.

(1)Should Tenant default in the performance of any covenant or agreement herein, and such default continues for sixty (60) days after receipt by Tenant of written notice thereof from Landlord (specifying the nature of such default and the remedy for same), or if the default of Tenant is of a type which is not reasonably possible to cure within sixty (60) days, if Tenant has not commenced to cure such default within the sixty (60) day period and does not thereafter diligently prosecute the curing of such default to completion, Landlord may, so long as such default continues, as Landlord’s exclusive remedy, either: (i) waive such default; or (ii) accelerate the Annual Rent due under the remainder of the then current Term by written notice to Tenant (which written notice shall specify the amount to be paid to Landlord); (iii) terminate this

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Lease (subject to the Tenant Lender Rights set out in Section 17.C. and Section 35 below, and the rights of Tenant pursuant to the provisions of subsection A.(3), below).

(2)Notwithstanding the above, in the event Tenant’s default is for failure to pay Annual Rent, such default must be cured within thirty (30) days after Tenant’s receipt of written notice from Landlord specifying each breach (and the cure for same).

(3)In the event that Landlord elects to terminate this Lease in accordance with subsection A. above, Tenant, at Tenant’s election and notwithstanding Landlord’s election to terminate this Lease,   shall have the right to exercise the Option described in Section 31 below, provided such Option is exercised by Tenant within thirty (30) days of the date Tenant receives written notice from Landlord of its election to terminate this Lease.

(4)In the event that Landlord elects to terminate this Lease in accordance with subsection A. above (and in the event Tenant has not exercised the Option described in Section 31 below), Landlord shall take possession of the Leased Premises and title to all improvements existing thereon shall pass to Landlord.  Notwithstanding the immediately preceding sentence, Landlord’s right to take possession of the Leased Premises and to take title to the improvements existing thereon shall be expressly subject and subordinate to the Tenant Lender Rights set out in Section 35 below.

B.Landlord Default. Should Landlord default in the performance of any covenant or agreement herein, and such default continues for thirty (30) days after receipt by Landlord of written notice thereof from Tenant specifying such breach and the cure for same (except as otherwise provided herein) or if the default of Landlord is of a type which is not reasonably possible to cure within a thirty (30) day period and does not thereafter diligently prosecute the curing of such default to completion (except as otherwise provided herein), Tenant shall have the right to pursue all rights and remedies which are available at law or in equity.

C.Tenant Lender Rights.  Notwithstanding anything in this Section 17 to the contrary, all rights of Landlord set out in this Section 17 (in addition to all other provisions of this Lease) shall be expressly subject and subordinate to the Tenant Lender Rights set out in Section 35, below.

18.SIGNS.

A.Tenant Signage.  Tenant shall have the right to install, erect and maintain upon the Leased Premises all signs necessary or appropriate to the conduct of its business.  Tenant shall not install, erect, or maintain any sign in violation of any applicable law, ordinance, or use permit of any governmental authority. Tenant may remove (but shall not be required to remove) such signage at any time during such Term. Within thirty (30) days after such expiration or termination of this Lease, Tenant, at its expense, shall remove such signage.

B.Landlord Signage.  Landlord shall not install, erect or maintain any signs on the Leased Premises during the Term, except that, unless this Lease shall have previously been extended or renewed, Landlord may erect a “For Sale” or “To Rent” sign during the last two (2) months of the applicable Term; provided, however, that such sign shall not obstruct any sign of Tenant or interfere unreasonably with the conduct of Tenant’s business.

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19.LANDLORD LIEN RESTRICTION.

Landlord shall not at any time during the Term create or suffer to be created any lien or encumbrance upon or affecting the Leased Premises or any portion thereof, except taxes and other liens created by operation of law upon the Leased Premises (which, except as to taxes required hereby to be paid by Tenant, Landlord shall pay and discharge before delinquency).

20.HOLDING OVER.

If Tenant continues to occupy the Leased Premises after the expiration of the Term and Landlord elects to accept Annual Rent, thereafter, a monthly tenancy terminable by either party on one month’s notice shall be created, which shall be upon the same rental, terms and conditions as those herein specified.

21.SUCCESSORS IN INTEREST.

Each and all of the covenants, agreements, obligations, conditions and provisions of this Lease shall inure to the benefit of and shall bind the successors and assigns of the respective parties hereto.

22.RECORDING MEMORANDUM OF LEASE.

Upon execution of this Lease, Landlord shall execute, cause to be notarized, and deliver to Tenant that certain Memorandum of Lease, in form and substance as set out on Exhibit “E”, attached hereto and incorporated herein.  Tenant shall have the right to cause the recording of such Memorandum of Lease in the public records of the State of Nevada.  Upon the termination or other expiration of this Lease, Tenant agrees to deliver within twenty (20) days of Landlord’s request a quitclaim of its interest in such Lease.

23.REMEDIES ARE CUMULATIVE.

Unless expressly provided otherwise herein, remedies conferred by this Lease upon the respective parties are not intended to be exclusive, but are cumulative and in addition to remedies otherwise afforded by law.

24.QUIET POSSESSION.

Landlord covenants that Landlord is seized of the Leased Premises and has full right to make this Lease, and that so long as Tenant is not in default hereunder, Tenant shall have quiet, peaceful and exclusive possession thereof as against any adverse claim of any party whether claiming by, through or under Landlord or otherwise.  During the Term, Landlord shall not have the right to construct any improvements or make any alterations to any Improvements and/or structure on, under or above the Leased Premises.

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25.ALTERATION OR EXPANSION.

Tenant shall have the right during the Term and upon its sole and absolute discretion to cause alterations, expansions, additions or demolitions to the existing Improvements (whether structural or non-structural) without the obligation or necessity of securing Landlord’s consent.  Tenant shall have the right during the Term and upon its sole and absolute discretion to construct new buildings, structures or infrastructure on, under or above the Leased Premises (whether structural or non-structural) subject to the consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed.  Notwithstanding the immediately preceding sentence, Tenant shall not be required to obtain Landlord’s consent for such new construction unless such new construction would cause a material diminution in the value of the Leased Premises, in the reasonable commercial judgment of the Appraisal Team described in Section 31.F., below.  All such construction, alterations, demolitions and expansions described in the immediately preceding sentence (whether new construction, construction to existing structures or otherwise) shall be deemed to constitute part of the Improvements.

26.INVESTMENT CREDIT.

Landlord shall have the right or interest in any investment credits allowed by any law, as to the Leased Premises.  Tenant shall have the right or interest in any investment credits allowed by any law, as to any Improvements or any additions or expansion to same.

27.GRANTING OF EASEMENTS.

A.Tenant Rights.  Tenant shall have the right from time to time during the Term to enter into agreements with various parties (including but not limited to utility providers creating easements, licenses, rights of way or the like) as same may be appropriate for Tenant’s ownership, operation, alteration, demolition or construction of new buildings, structures and infrastructure comprising the Improvements.  To the extent such agreements materially affect the Leased Premises, Tenant shall seek written consent of Landlord for same, which consent shall not be unreasonably withheld, conditioned or delayed.

B.Landlord Obligation.  Landlord agrees from time to time during the Term at the request of Tenant, without additional consideration and upon condition that Tenant shall submit satisfactory documentation to Landlord that the easements, licenses, rights of way, or other rights and privileges so requested will not adversely affect the utilization of the Leased Premises or the valuation thereof: (i) to grant easements, licenses, rights of way (and other rights and privileges in the nature of easements) of such nature, extent and duration (including perpetual) as Tenant may request; (ii) to release existing easements and appurtenances which are for the benefit of the Leased Premises; and (iii) to execute and deliver any instrument necessary or appropriate to confirm such grants or releases to any person; in each of the foregoing instances (i), (ii) and (iii), the same to be without consideration, but only upon receipt by Landlord of and delivery of (x) a certificate of the President or a Vice President of Tenant stating (A) that such grant or release is not detrimental to the proper conduct of the business of Tenant on the Leased Premises, (B) that such grant or release does not materially impair the effective use of the Leased Premises for its intended purposes or materially and adversely affect its value; (y) a duly authorized undertaking of Tenant, in form and substance satisfactory to Landlord, to the effect that Tenant will remain obligated hereunder to the same extent as if such grant or release had not been made; and (z)

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such instruments, certificates (including evidence of authority) and opinions as Landlord may reasonably request.

28.GENERAL CONDITIONS.

A.Time of Essence.  Time is of the essence of this Lease.

B.Waiver.  No waiver of any breach of the covenants, agreements, obligations and conditions of this Lease to be kept or performed by either party hereto shall be construed to be a waiver of any succeeding breach of the same or any other covenant agreement, obligation, condition or provision hereof.

C.Commissions.  Landlord shall be solely responsible for the payment of any commissions in relation to the leasing transaction represented by this Lease (and shall further indemnify, defend and hold Tenant harmless from any claims of commissions by any other party).

D.Further Acts.  Landlord and Tenant agree to undertake such further acts and execute and deliver such further documents in order to effectuate the purpose and intent of this Lease.

29.HAZARDOUS SUBSTANCES.

A.Restrictions On Hazardous Materials.  Tenant covenants, represents, and warrants that Tenant’s use of the Leased Premises do not and will not involve the use, storage, generation, or disposal of Hazardous Materials (as defined herein), and that Tenant shall not cause or permit any Hazardous Materials to be brought, used, stored, generated, or disposed on or about the Leased Premises by Tenant, in compliance with all laws, including, without limitation, Environmental Laws (as defined herein).

B.Tenant Indemnification.  Tenant shall indemnify, defend and hold harmless Landlord, its officers, directors, owners, employees, agents,  successors and assigns (collectively, the “Landlord Indemnitees”) from and against any and all losses, damages, claims, judgments, liabilities, enforcement actions, remedial actions, fines, penalties, taxes, fees, costs and expenses (including, without limitation, attorneys= fees, consultants’ fees, laboratory costs, and expert fees) which arise during the Term as a result of any breach by Tenant of the obligations set forth in this Section 29.  Subject to the provisions of this Section 29, Tenant shall promptly take, at its sole expense, all actions necessary to investigate, clean up, remediate, and remove any Hazardous Materials which come to be located in, on, under, or about the Leased Premises due to Tenant’s (or its agents) use of or activities on or about the Leased Premises. Within sixty (60) days after the expiration of the Term or the earlier termination of this Lease (subject to the Tenant Lender Rights set out in Section 35, below), Tenant shall restore the Leased Premises to the condition existing prior to the introduction of such Hazardous Materials to the Leased Premises.  Tenant shall comply with all applicable Environmental Laws (as defined herein) and the requirements of governmental authorities in undertaking such actions.  No consent of Landlord to the presence of Hazardous Materials or Tenant’s compliance with Environmental Laws (as defined herein) shall relieve Tenant of its indemnification obligations hereunder.

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C.Landlord Indemnification.  Landlord shall indemnify, defend and hold harmless Tenant, its officers, directors, owners, managers, employees, agents,  successors and assigns (collectively, the “Tenant Indemnitees”) from and against any and all losses, damages, claims, judgments, liabilities, enforcement actions, remedial actions, fines, penalties, taxes, fees, costs and expenses (including, without limitation, attorneys= fees, consultants’ fees, laboratory costs, and expert fees) which arise during the Term as a result of any breach by Landlord of the obligations set forth in this Section 29.  Subject to the provisions of this Section 29, Landlord shall promptly take, at its sole expense, all actions necessary to investigate, clean up, remediate, and remove any Hazardous Materials which come to be located in, on, under, or about the Leased Premises due to Landlord’s (or its agents) use of or activities on or about the Leased Premises, and Landlord shall restore the Leased Premises, and any other properties (including the Improvements), to the condition existing prior to the introduction of such Hazardous Materials to the Leased Premises.  Landlord shall comply with all applicable Environmental Laws (as defined herein) and the requirements of governmental authorities in undertaking such actions.  Landlord shall obtain Landlord’s prior written approval of such actions and of any consultants or contractors to be used by Landlord in connection therewith.  No consent of Tenant to the presence of Hazardous Materials or Landlord’s (or its agents) compliance with Environmental Laws (as defined herein) shall relieve Landlord of its indemnification obligations hereunder.

D.Representations and Warranties of Landlord.

(1)Uses. Landlord represents and warrants to Tenant, after due inquiry and investigation, that the Leased Premises have not been used by previous owners and/or operators, Landlord, or any tenant of Landlord to generate, manufacture, refine, transport, treat, store, handle, or dispose of Hazardous Materials.

(2)Storage.  Landlord represents and warrants to Tenant, after due inquiry and investigation, that the Leased Premises have not contained, nor do the Leased Premises now contain, either asbestos, PCB, toxic materials or Hazardous Materials.

(3)Governmental or Private Action.  Landlord represents and warrants to Tenant, after due inquiry and investigation, that Landlord has not received a summons, citation, directive, letter or other communication, written or oral, from any agency or Department of the State of Nevada or the U.S. Government or any other public agency or entity or any private agency or entity concerning any intentional or unintentional action or omission on Landlord’s part:  (i) concerning any release or discharge of any Hazardous Materials on, under, above or adjacent to the Leased Premises; or (ii) any alleged violation of any Environmental Laws; or (iii) the releasing, spilling, leaking, pumping, pouring, emitting, emptying, or dumping of Hazardous Materials into waters or onto lands of the State of Nevada, or into waters or onto lands outside the jurisdiction of the State of Nevada.  Landlord further represents and warrants to Tenant that there is no litigation pending or threatened with respect to the Leased Premises concerning any Hazardous Materials or the violation of any Environmental Laws.

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E.Definition.  As used herein, “Hazardous Materials” shall mean and include all hazardous and toxic substances, waste or other materials, any pollutants or contaminants as defined in Section 101 (14) of the Comprehensive Environmental Response Compensation and Liability Act, as amended, 42 U.S.C. Section 9601 (14) (including, without limitation, asbestos and raw materials which include hazardous constituents), or other similar substances, or materials which are included under or regulated by any local, state, or federal law, rule, or regulation pertaining to environmental regulation, contamination or clean-up, including, without limitation, “CERCLA”, “RCRA”, “SARA”, or state superlien or environmental clean-up statutes (all such laws, rules and regulations being referred to collectively as “Environmental Laws”).  Any other terms mentioned in this Section 29 which are defined in state or federal statutes and/or regulations promulgated in relation thereto shall have the meaning subscribed to such terms in such statutes and regulations.

F.Reports.  Attached to this Lease as Exhibit “F” and incorporated herein by reference are all reports and correspondence which Landlord has received as of the date of this Lease regarding any environmental status of the Leased Premises or of any alleged violation of any Environmental Laws.  Landlord further agrees to promptly disclose to Tenant (but in any event within five (5) days of Landlord’s receipt) of any other reports, correspondence, claims, documents, pleadings or the like as to any alleged violation of any Environmental Laws or of the environmental status of the Leased Premises, which come into Landlord’s possession, custody or control after the commencement of this Lease.

30.TENANT’S PREFERENTIAL RIGHT TO PURCHASE.

A.Preferential Right.  Tenant, during the Term, shall have the prior right to buy the whole or any part of the Leased Premises if Landlord receives from a third party an acceptable bona fide offer to buy, or if Landlord offers to sell such Leased Premises in a general offering or solicitation for the sale of same (a “General Solicitation”).

B.Offer Notice; Procedure.  Landlord shall within three (3) days of receipt of an offer for the sale of the Leased Premises or of a General Solicitation (either, an “Offer”) (and not less than ten (10) days prior to the execution of any contract for the sale of same) give Tenant written notice of such Offer, together with a copy thereof. Tenant shall have thirty (30) business days from the receipt of such Offer to notify Landlord that it will or will not buy such Leased Premises at the terms of the Offer, or at such lesser terms as Landlord and Tenant may agree upon (the “Refusal Right”).  If Tenant fails to notify Landlord of its intent to purchase within such thirty (30) business day time period, Landlord shall have the right to consummate such sale but only to the party identified in the Offer and only upon the strict terms set out in such Offer.  If Tenant notifies Landlord within such thirty (30) business day period that Tenant has elected to exercise the Refusal Right and to purchase the Leased Premises pursuant to the Offer, Tenant shall have ninety (90) days after the date of Tenant’s notice to Landlord (of its election to so purchase the Leased Premises) within which to consummate the purchase of the Leased Premises on the terms stated in the Offer (or such other terms as may be agreed to by Landlord and Tenant).

C.Sale Requirement.  In the event Tenant elects not to exercise the Refusal Right and if Landlord sells such Leased Premises to a third person, such sale shall be made subject to all of the terms and provisions of this Lease.

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D.Nominee.  The rights of Tenant under this Section 30 may be exercised by a nominee which Tenant may designate and whose financial responsibility Tenant hereby guarantees.  Furthermore, Tenant’s preferential right to purchase shall not apply to a transfer to a lender pursuant to foreclosure proceedings.

31.OPTION TO PURCHASE.

A.Grant of Exclusive Option.  For the independent consideration of $10.00 and other valuable consideration of (which Landlord acknowledges receipt), Landlord hereby grants to Tenant the exclusive, non-revocable right and option (the “Option”) to purchase the Leased Premises (including the Adjacent Tract) pursuant to the purchase price and terms described below.

B.Purchase Price.  The purchase price for the Leased Premises (the “Purchase Price”) shall be equal to the fair market value of the Leased Premises (as of the date which is not more than thirty (30) days from the Exercise Notice, defined below), as such value is determined by a written appraisal conducted and prepared in accordance with MAI standards (the “Valuation Appraisal”) by an appraisal team (the “Appraisal Team”) duly licensed by the State of Nevada.  Such Appraisal Team shall be selected in accordance with the procedures set out in Section 31.F., below.   Such Valuation Appraisal shall exclude the value of the Improvements (as well as any additions to the Improvements as may have been constructed on the Leased Premises after the commencement date of this Lease and shall further exclude any other improvements made to the Leased Premises by Tenant or any third party), and shall be made without regard to any existing lease on the Leased Premises or extension rights to the Lease, such that it is appraised as unencumbered real property.

C.Exercise.  The Option may be exercised by Tenant pursuant to any of the following notice provisions (each, an “Exercise Notice”):

(1)By written notice to Landlord by Tenant at any time during the time period commencing with the day after the last day of the Initial Term and ending sixty (60) days thereafter; or

(2)By written notice to Landlord by Tenant at any time during the time period commencing with the day after the last day of each calendar year within the First Extension Term and ending thirty (30) days thereafter; or

(3)By written notice to Landlord by Tenant at any time during the time period commencing with the day after the last day of each calendar year within the Second Extension Term and ending thirty (30) days thereafter.

D.Real Estate Contract.    Within twenty (20) days of Tenant’s delivery of the applicable Exercise Notice, Landlord and Tenant shall execute and deliver a Real Estate Purchase Contract containing such terms as are acceptable to Tenant and as are customary for commercial real estate transactions of like nature and price in the Carson City, Nevada area.

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E.Memorandum of Option. Upon execution of this Lease, Landlord shall execute, cause to be notarized and deliver to Tenant that certain Memorandum of Option, in form and substance as set out on Exhibit “G”, attached hereto and incorporated herein.  Tenant shall have the right to cause the recording of such Memorandum of Option in the public records of the State of Nevada.  Upon the termination or other expiration of this Option, Tenant agrees to deliver within twenty (20) days of Landlord’s request a quitclaim of its interest in such Option.

F.Appraisal Team Selection.

(1)The Appraisal Team shall be comprised of three (3) MAI appraisers duly licensed in the State of Nevada.

(2)Within five (5) days of an Exercise Notice, Landlord and Tenant shall designate in writing to each other their respective selection of an appraiser to participate on the Appraisal Team (collectively, the “Designated Appraisers”and singularly, a “Designated Appraiser”).  If either Landlord or Tenant shall fail to timely notify the other as to the selection of their respective Designated Appraiser, then the party who timely selected their Designated Appraiser shall have the right to select the remaining Desginated Appraiser on behalf of the non-timely party.

(3)Within three (3) days of the selection of the Designated Appraisers, such Designated Appraisers shall act in good faith to select a third appraiser to participate on the Appraisal Team (the “Final Appraiser”).  In the event that the Designated Appraisers cannot agree on the selection of the Final Appraiser, then the selection of such Final Appraiser shall be determined by Tenant, upon good faith consultation with Landlord (but with the ultimate decision as to same to reside with Tenant).

(4)The determination of the Appraisal Team as to the Valuation Appraisal shall be final, conclusive and binding (without right of appeal or initiation of legal action).

32.APPLICABLE LAW.

This Lease shall be subject to the laws of the State of Nevada and it is agreed that if any word, phrase, clause, sentence, article, provision or paragraph of this Lease is or shall be held invalid or unlawful under the laws of the State of Nevada for any reason, the same shall be deemed severed from the remainder hereof, and stricken therefrom, and shall in no way affect or impair the validity of this Lease or of any portion thereof, and this Lease shall otherwise remain in full force and effect.

33.ENTIRE AGREEMENT/SUBTITLES.

A.Entire Agreement.  This Lease contains the entire agreement of the parties, and no modifications thereof or statement or representation in connection therewith shall be effective or binding upon either party unless the same is reduced to writing signed by Landlord and Tenant, and attached hereto.

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B.Headings; Captions.  The descriptive headings of the Lease are inserted for convenience only and shall not control or affect the meaning or construction of any provisions hereto.

34.ATTORNEYS FEES.

In the event either Landlord or Tenant brings a suit against the other in connection with this Lease, either for the collection of money or for the breach of the terms of this Lease, then the prevailing party in any such action shall be entitled to its reasonable attorney’s fees and costs as part of its recovery.

35.TENANT LENDER RIGHTS.

A.Tenant’s Right to Encumber.  Tenant may encumber all or any portion of its interest in this Lease and the leasehold estate created by this Lease by a deed of trust, mortgage or other security instrument (collectively, a “Leasehold Mortgage”), provided that such Leasehold Mortgage, shall be a lien only on Tenant’s interest in and to this Lease and the leasehold estate created hereby.  For purposes of this Section 35, the holder of a Leasehold Mortgage or anyone claiming by or through or under such holder shall be referred to as a “Leasehold Mortgagee”.

B.Rights of Leasehold Mortgagee.

(1)Rights of Enforcement.  A Leasehold Mortgagee may enforce its rights under its Leasehold Mortgage and acquire title to the Tenant’s leasehold estate in the Leased Premises in any lawful manner, and upon foreclosure under the Leasehold Mortgage and the issuance of evidence of title, take possession of the Leased Premises, subject, however, to all of the terms, provisions and conditions of this Lease.  During such time as a Leasehold Mortgagee or any successor in interest is the owner and holder of the leasehold estate created under this Lease, whether by foreclosure or otherwise, such interests so acquired shall be subject to all of the terms, covenants and provisions of this Lease.

(2)Notice of Default.  Landlord shall deliver to such Leasehold Mortgagee a copy of each notice of default under this Lease (a “Lease Default”) given by Landlord to Tenant (a “Landlord Notice”) concurrently with and whenever any such Landlord Notice shall thereafter be given by Landlord to Tenant, addressed to such Leasehold Mortgagee at its address last furnished to Landlord.  No such Landlord Notice shall be deemed to have been duly given unless and until a copy thereof has been delivered to such Leasehold Mortgagee.

(3)Landlord Covenants.Landlord agrees that it will not:  (i) accept the surrender of the Leased Premises by Tenant prior to the termination of the Lease, or (ii) consent to the modification of any material term of this Lease or the termination of this Lease by Tenant, without prior written notice to the Leasehold Mortgagee in each instance.  Landlord further agrees that it will not seek to terminate this Lease by reason of any act or omission of Tenant until Landlord has given to the Leasehold Mortgagee a

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copy of the Landlord Notice with respect to the Lease Default upon which the proposed termination is based.

(4)Additional Required Notices To Leasehold Mortgagee.After the expiration of all applicable notice and grace periods set forth in this Lease with respect to any such default, Landlord shall give written notice to the Leasehold Mortgagee (“Mortgagee Notice”) of the failure of Tenant to cure such Lease Default.  The Mortgagee Notice shall be sent by certified mail, return receipt requested, or by a nationally recognized commercial overnight delivery service, to the address set forth in the Leasehold Mortgage (or such other address as may hereafter be designated in writing to Landlord by the Leasehold Mortgagee).  Landlord shall not declare or assert a termination of this Lease by reason of any such Lease Default until a “reasonable period of time” (as defined below) shall have elapsed following the receipt of the Mortgagee Notice, during which period the Leasehold Mortgagee shall have the right, but shall not be obligated, to remedy such Lease Default.  Landlord hereby agrees to accept performance by any such Leasehold Mortgagee of any covenant, condition or agreement on Tenant’s part to be performed hereunder with the same force and effect as though performed by Tenant.

(5)Reasonable Period of Time Defined.  As used in Section 35.B.(4), above, “a reasonable period of time” shall be:  (i) thirty (30) days if such Lease Default can be remedied during such thirty (30) day period, or (ii) if such Lease Default cannot be remedied during such thirty (30) day period, then such period of time as is necessary to remedy such Lease Default (not to exceed, however, one hundred one hundred eighty (180) days), provided that the Leasehold Mortgagee has commenced to cure such Lease Default or to foreclose the lien of its Leasehold Mortgage within such initial thirty (30) day period and continues to diligently prosecute same to completion.

(6)Time Extension.  The time for the Leasehold Mortgagee to cure any Lease Default by Tenant that reasonably requires the Leasehold Mortgagee be in possession of the Leased Premises to do so, or the time for a Leasehold Mortgagee to obtain Tenant’s interest in this Lease in order to elect to enter into a new lease with Landlord as provided in Section 35.B.(7) below, shall be deemed extended to include the period of time required by such Leasehold Mortgagee to obtain such possession or obtain Tenant’s interest in this Lease (by foreclosure or otherwise) with due diligence; provided, however, as a condition precedent:  (i) such Leasehold Mortgagee shall have delivered to Landlord its written commitment to cure all outstanding Lease Defaults reasonably requiring possession of the Lease Premises; and (ii) during such period all other obligations of Tenant under this Lease are being duly performed by such Leasehold Mortgagee.

(7)New Lease Covenants.If this Lease is terminated for any reason, including, but not limited to, a termination following a Leasehold Mortgagee’s failure to cure a Lease Default as permitted in this Section 35, or the rejection or disaffirmance of this Lease pursuant to bankruptcy laws or other laws affecting creditors’ rights, Landlord will enter into a new lease of the Leased Premises with the Leasehold Mortgagee, or any party designated by the Leasehold Mortgagee within thirty (30) days after the request of the Leasehold Mortgagee.  The new lease shall be effective as of the date of termination,

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rejection or disaffirmance of this Lease and shall be upon the same terms, covenants and provisions as are contained in this Lease, including the amount of the Annual Rent and other sums due from Tenant hereunder.  In order to obtain a new lease, a Leasehold Mortgagee must make a written request to Landlord for the new lease within (30) days after the Leasehold Mortgagee is notified of the effective date of termination, rejection or disaffirmance of the Lease, as the case may be, in which event no further action shall be taken by Landlord pending the execution and delivery thereof.  In addition, prior to making written request to Landlord for the new lease, the Leasehold Mortgagee must cure all Lease Defaults that can be cured by the payment of money and pay to Landlord all rent and other sums that would have been due and payable by Tenant under this Lease but for the rejection, disaffirmance or termination.  Further, the Leasehold Mortgagee shall promptly reimburse Landlord for its reasonable costs and expenses (including attorneys fees) incurred in connection with such termination, rejection or dissaffirmance as the case may be.  If the Leasehold Mortgagee or the party so designated by the Leasehold Mortgagee shall have entered into a new lease with Landlord pursuant this Section 35.B.(7), then any Lease Default that cannot be cured by the payment of money shall be deemed cured.  To the extent Landlord is able, Landlord shall assure that any new lease made pursuant hereto shall be senior and superior to any other encumbrances on the Leased Premises.  The Leasehold Mortgagee’s right under this Section 35.B.(7) are in addition to and not limited by such Leasehold Mortgagee’s right to cure under Section 35.B.(4) and (5), above.  The provisions of this Section 35.B.(7) are a separate and independent contract made by Landlord and each Leasehold Mortgagee.  From the effective date of termination, rejection or disaffirmance of this Lease to the date of execution and delivery of such new lease or the expiration of the period during which a Leasehold Mortgagee may make a request, such Leasehold Mortgagee may, upon payment of any rent and any other sums as may be due from Tenant, use, occupy and enjoy the leasehold estate created by this Lease without hindrance by Landlord.

(8)Benefit.The provisions of this Section 35 are for the benefit of each Leasehold Mortgagee and may be relied upon and shall be enforceable by each Leasehold Mortgagee.  Neither a Leasehold Mortgagee nor any other holder or owner of the indebtedness secured by a leasehold mortgage or otherwise shall be liable with respect to the terms, covenants, agreements or obligations of Tenant contained in this Lease, unless and until such Leasehold Mortgagee or that holder or owner acquires the interest of Tenant hereunder.

(9)Estoppel.  Landlord agrees to promptly (but in any event within seven (7) days of Tenant’s or Leashold Mortgagee’s request for same) execute, have notarized and deliver to Tenant and Leasehold Mortgagee an estoppel certificate (the “Estoppel Certificate”) in such from, substance, scope and application as may be requested by Leasehold Mortgagee.  Such Estoppel Certificate shall state, but not be limited to, a representation and covenant of Landlord that:  (i) the Lease is in full force and effect; (ii) there exists no condition of default of either Landlord or Tenant under the Lease or if such condition of default does exist, a statement from Landlord specifying the nature of such default including the sums due from or action necessary of the defaulting party in order to cure same; and (iii) such other items as the Leasehold Mortgagee may require.

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IN WITNESS WHEREOF, the Landlord and Tenant hereunto set their hands and seals as of the date above.

LANDLORD:

THE CLARK AND JEAN RUSSELL
FAMILY TRUST

Clark G. Russell, Trustee

Jean M. Russell, Trustee

TENANT:

JACOBS ENTERTAINMENT, INC.,
a Delaware corporation

And/Or Assigns

By:

Printed Name: Stephen R. Roark

Title:  President and Chief Financial Officer

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EX-10.17

EXHIBIT 10.17

GROUND LEASE AGREEMENT

This Ground Lease Agreement (the “Agreement”), is made and entered into by and between Dakota\Blackhawk, LLC, a Colorado limited liability company (hereinafter referred to as “Lessor”) and Jacobs Entertainment, Inc., a Delaware corporation and/or assigns (hereinafter referred to as “Lessee”) (sometimes Lessor and Lessee are referred to singularly as a “Party” and collectively as the “Parties”).

P R E M I S E S:

WHEREAS, Lessor and Lessee are the Parties to that certain “Option Purchase Agreement” dated September 12, 2005, 2005 (the “Option Agreement”), a copy of which is attached hereto as Exhibit “A” and incorporated herein by reference as if fully copied and set forth at length;

WHEREAS, attached to the Option Agreement, as an exhibit, is that certain “Real Estate Sales Contract” (the “Real Estate Contract”) which is to be executed by Lessor and Lessee pursuant to the terms of the Option Agreement, an unsigned copy of which is attached hereto as Exhibit “B” and incorporated herein by reference as if fully copied and set forth at length;

WHEREAS, Lessor is the owner of that certain tract of real property (hereinafter referred to as the “Property”), as more particularly described on Exhibit “C” attached hereto and incorporated herein by reference as if fully copied and set forth at length; and

WHEREAS, pursuant to the Option Agreement, Lessor desires to lease to Lessee and Lessee desires to lease from Lessor the Property upon the terms and conditions herein provided.

A G R E E M E N T:

NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are acknowledged and confirmed, the Parties agree to the lease of the Property upon the following terms and conditions:

1.PROPERTY.  Lessor hereby leases to Lessee and Lessee hereby leases from Lessor the Property.

2.TERM.  The term of this Agreement (“Term”) shall begin on the date hereof and end on the date the Option Agreement terminates or, if the Option thereunder is exercised and the Real Estate Contract is signed, on the termination or Closing of the Real Estate Contract.

3.RENT.  Lessee agrees to pay to Lessor as rent due under this Agreement the sum of $1.00, at Lessor’s address described in Section 13, below.

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4.USE OF PROPERTY.  Lessee may use the Property for any and all lawful purposes including all inspection, testing and examination purposes as described in the Option Agreement and the Real Estate Contract.  Lessee shall not use the Property in any manner that violates any statute applicable thereto or for any illegal purpose.  Lessee shall have the right to erect fencing of Lessee’s discretion (with locked gates) surrounding the perimeter of the Property in order to limit access to the Property (subject to the rights of Lessor set out in this Agreement).  Lessor shall not erect any other improvement on the Property without the written consent of Lessor which may be withheld in Lessor’s sole discretion.  If Lessee does not obtain title to the Property, Lessee shall remove the fence and any other permitted improvements at Lessee’s expense at the end of the Term of the Lease.

5.CONDITION OF PROPERTY.  Lessee accepts the Property in its present condition and state of repair.

6.INSPECTIONS.  Lessor may enter upon the Property at all reasonable times upon forty-eight (48) hours prior written notice to Lessee to inspect the condition of the Property.

7.REPAIRS AND MAINTENANCE.  At the end of the Term, Lessee shall bear all expenses of restoring the Property to its prior condition subject to and in accordance with the terms of the Option Agreement and the Real Estate Contract.

8.ASSIGNMENT.  Lessee may assign its rights under this Agreement at any time during the Term without the prior written consent of Lessor, provided such assignment is effected as part of an assignment of contract rights pursuant to the terms of the Option Agreement and/or Real Estate Contract.

9.DEFAULT AND REMEDIES.  Should Lessee default in the payment of rent as and when due and not correct same within five (5) days after receipt of written notice from Lessor to Lessee, Lessor may declare this Agreement, and all rights and interest created by it, to be terminated.

10.WARRANTY OF TITLE.  Lessor hereby represents and warrants that it is the owner of the Property and has the express actual authority to execute this Agreement.  Lessor covenants and agrees that as long as Lessee pays the rent as provided in this Agreement and observes and keeps the covenants, conditions, and terms of this Agreement, Lessee shall lawfully and quietly hold, occupy, and enjoy the Property during the Term.

11.NOTICES.  All notices, demands, requests, and other communications under this Agreement shall be in writing or electronic format and shall be deemed properly served and delivered when: (a) delivered by hand to the Party to whose attention it is directed; or (b) posted, if sent by registered or certified mail, return receipt requested, postage pre-paid addressed; or (c) actually received by the addressee thereof, after being sent by overnight delivery (such as Federal Express); or (d) sent to the addressee by confirmed telecopier, facsimile, electronic transmission (email) or similar transmission, as follows (or at such changed address as the Parties may from time to time specify in writing):

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If to Lessor:
	Dakota/Blackhawk, LLC
	1700 Kylie Drive, Suite 240
	Longmont, Colorado 80501
	Attn: Wendell Pickett and Roger Pomainville
	303-772-8348
	303-772-8565 (facsimile)
With A Required Copy To:
	Christopher C. O’Dell
	O’Dell & Fell, LLC
	1600 Jackson Street
	Suite 250
	Golden, Colorado 80401
	(303) 436-9200
	(303) 436-9700 (facsimile)
If to Lessee:
	Jacobs Entertainment, Inc.
	240 Main Street
	Black Hawk, Colorado 80224
	Attention: Stephen R. Roark, President
	(303) 582-1117
	(303) 582-0239 (facsimile)
With A Required Copy To:
	Jones & Keller, P.C.
	1625 Broadway, 16th Floor
	Denver, Colorado 80202
	Attention:	Samuel E. Wing, Esq.
		R. Steven Jones, Esq.
	(303) 573-1600
	(303) 893-6506 (facsimile)

12.EXPENSES.  Lessee shall not be responsible for any expenses associated with the ownership, operation and/or possession of the Property except for the maintenance of casualty and liability insurance (in such amounts and coverage scope as Lessee may elect, in its sole discretion), maintenance of commercial general liability coverage (including contractual coverage and a waiver of subrogation) with limits of no less that $3,000,000 and snow removal, litter removal and weed cutting as required by the City of Blackhawk.  Lessor shall be responsible for all other costs and expense associated with the ownership, operation and/or possession of the Property including but not limited to property taxes, assessments, insurance and utilities. Lessee hereby indemnifies, holds harmless and agrees to defend Lessor of and from any and all claims, demands, liabilities, actions, costs, expenses or causes of action, including,

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but not limited to, attorneys’ fees and costs, arising our of or related to the use or possession of the Property by Lessee under this Lease except when caused solely by Lessor or its agents’ or employees’: (a)  negligence; (b) willful misconduct; or (c) breach of this Lease.

13.NO PARTNERSHIP.  The relationship between Lessor and Lessee at all times shall remain solely that of lessor and lessee and not be deemed a partnership or a joint venture.

14.EXHIBITS.  The first page of all exhibits to this Agreement shall bear the initials of each party hereto, and when so initialed, shall be conclusively deemed to be an Exhibit hereto, whether or not physically attached to this Agreement.

15.ENTIRE AGREEMENT.  With the exception of Section 33 of the Option Agreement, this Agreement contains the entire understanding between the Parties hereto concerning the lease of the Property.

16.ADVICE OF COUNSEL.  Each of the Parties hereto represent that they have the advice and counsel of their own attorneys and that no representation or statement made by any other party has influenced them in executing or induced them to execute this Agreement.

17.FURTHER ACTS.  Each Party hereto agrees to perform any and all such further and additional acts and execute and deliver any and all such further and additional instruments and documents as may be reasonably necessary in order to carry out the provisions and effectuate the intent of this Agreement.

18.MODIFICATION.  Any modification of this Agreement shall be in writing and agreed to by all Parties.

19.AUTHORITY.  Each Party hereto represents and warrants that it has full authority to execute the Agreement and bind to the Agreement its respective partners, trustees, beneficiaries, remaindermen, directors, officers, employees, agents, advisors, attorneys, successors, assigns and personal representatives.

20.SEVERABILITY.  If any provision hereof is held to be illegal, invalid, or unenforceable under present or future laws effective during the Term, such provisions shall be duly severable; this Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part hereof; and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the severance of the illegal, invalid, or unenforceable provision or provisions.

21.GOVERNING LAW AND VENUE.  This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado.  The terms of this Agreement shall be specifically performable in Gilpin County, Colorado.

22.BREACH.  Should any party breach any part of this Agreement, and litigation ensue, the Parties agree that the prevailing party shall be entitled to its reasonable attorneys’ fees and costs in prosecuting or defending its claims.

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23.BENEFIT.  Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of the Parties hereto and their successors, assigns, legal representatives, heirs and legatees.

24.PARAGRAPH HEADINGS.  All paragraph headings set forth in this Agreement are for purposes of identification and are intended for convenience only, and shall not control or affect the meaning, construction or effect of this Agreement or any provision hereof.

25.COUNTERPART EXECUTION.  This Agreement may be executed in multiple counterparts, each of which shall be fully effective as an original, for which together shall constitute only one (1) instrument.

26.MEMORANDUM OF LEASE.  Lessee shall have the right to file a “Memorandum of Lease” with the Office of the Clerk and Recorder or other appropriate public record custodian having jurisdictional authority over the Property in the State of Colorado as to the existence of this Lease.

IN WITNESS WHEREOF, the Parties hereunto set their hands and seals as of the date above first stated.

LESSOR:
DAKOTA/BLACKHAWK, LLC, a Colorado limited liability company
By:	/s/ Roger Pomanville
		Roger Pomanville, Manager
By:	/s/ Wendell Gene Pickett
		Wendell Gene Pickett, Manager
LESSEE:
JACOBS ENTERTAINMENT, INC., a Delaware corporation
And/Or Assigns
By:	/s/ Stephen R. Roark
Printed Name: Stephen R. Roark
Title:  President/Chief Financial Officer

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EXHIBIT “A”

OPTION PURCHASE AGREEMENT

This Option Purchase Agreement (“Agreement”) is entered into this           day of September 2005 to be effective on the Effective Date (defined in Section 19, below) by and between Dakota\Blackhawk, LLC, a Colorado limited liability company (hereafter collectively, the “Dakota Group”) and Jacobs Entertainment, Inc., a Delaware corporation and/or assigns (hereafter “JEI”) (sometimes Dakota Group and JEI are referred to singularly as a “Party” and collectively as the “Parties”).

RECITALS:

WHEREAS, Dakota Group is the owner of approximately 2.2258 acres of undeveloped land situated in Gilpin County, Colorado, (containing 96,956 square feet), the legal description of which is attached hereto as Exhibit “A” and incorporated herein by reference as if set out word for word (the “Property”);

WHEREAS, 40,788 square feet of the Property is situated in the Gaming District of Gilpin County, Colorado as established by The Colorado Limited Gaming Act, C.R.S. 12-47.1-105 and the ordinances adopted by the City of Black Hawk, Colorado;

WHEREAS, JEI desires to purchase from Dakota Group an exclusive, non-revocable option to acquire the Property (the “Option”);

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration (including the consideration paid pursuant to Section 25, below) the receipt and sufficiency of same is hereby acknowledged and confirmed by the Parties, it is mutually agreed by the Parties as follows:

AGREEMENT

1.Grant of Exclusive Option.  For the consideration expressed in Sections 3 and 25 below, Dakota Group hereby grants to JEI the exclusive, non-revocable right and option (the “Option”) to purchase the Property at the price of $13,000,000.00 (the “Purchase Price”) under and pursuant to the terms set forth in that certain “Real Estate Sales Contract” attached hereto as Exhibit “B” and incorporated herein by reference as if set out word for word (the “Real Estate Sales Contract”).

2.Initial Option Period.  The Option shall commence on the Effective Date and continue until 11:59 p.m. on the date which is one (1) calendar year from the Effective Date (the “Initial Option Period”), unless same is extended pursuant to the provisions of Section 4, below.

3.Consideration.  The Option is granted in partial consideration of:  (a) the payment by JEI to Escrow Agent (defined in Section 5, below) for the conditional benefit of Dakota Group of the sum of $250,000.00, on or before the Effective Date (the “Initial Deposit”) and (b) the payment to Dakota Group of the sum of $250,000.00, no later than the date which is one hundred eighty

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(180) calendar days from the Effective Date (collectively, the amounts identified in Section 3(a) and (b) above, the “Initial Option Fee”).  JEI shall also pay to Dakota Group of the sum of $100.00 pursuant to Section 25, below (the “Independent Agreement Consideration”).  The Initial Deposit shall be deposited by the Escrow Agent in an interest bearing account of JEI’s election and all interest accruing thereon shall belong to JEI.    All references in this Agreement to the “Total Option Fee” shall include: (i) the Initial Option Fee; (ii) any Extension Fee paid pursuant to Section 4, below; and (iii) all interest amounts accruing on the Initial Option Fee and the Extension Fee.

4.Extension Right. Notwithstanding anything in this Agreement to the contrary, JEI, at its sole election, shall have the right to extend the Initial Option Period (the “Extension Right”), for an additional time period of one (1) calendar year (the “Extension Period”) upon the payment by JEI of the additional sum of $500,000.00 to Dakota Group (the “Extension Fee”). The Extension Period shall be computed by excluding the expiration date of the Initial Option Period and counting the last day of the Extension Period (expiring at 11:59 p.m., local time).  JEI shall have the option to exercise the Extension Right at any time prior to the expiration of the Initial Option Period.

5.Escrow Agent.  The term “Escrow Agent” as used in this Agreement shall mean Gilpin Title, LLC of Golden, Colorado.  The Escrow Agent shall hold the Initial Deposit pursuant to the terms of this Agreement.

6.Exercise of Option.

(a)Exercise Notice.  JEI may exercise the Option at any time during the Initial Option Period or the Extension Period (if the Extension Right is exercised) by delivery of a written or electronic notice to Dakota Group as to such election (the “Exercise Notice”).  Within ten (10) days of the delivery of the Exercise Notice to Dakota Group, Dakota Group and JEI shall execute the Real Estate Sales Contract and cause a fully executed original of same to be delivered to Escrow Agent (and a fully executed copy of same shall be delivered to each Party).  Delivery of the Exercise Notice shall be effected in accordance with the notice provisions of Section 22, below.  If JEI fails to execute the Real Estate Sales Contract within the ten (10) days provided and if either the Initial Option Period or the Extension Period (if the Extension Right is exercised) has run, then the Option shall be deemed waived and JEI shall no longer have the right to purchase the Property.

(b)Exercise Condition.  JEI may not exercise this Option if it is in default for failure to pay the Initial Option Fee when due or for failure to pay the Extension Fee when due and same has not been cured within ten (10) days after receipt of written notice from Dakota Group that any such amount has not been received.

(c)Release of Option Fees Upon Exercise of Option.   Escrow Agent shall release to the Dakota Group, on demand (without the necessity of the consent of JEI),the Initial Option Fee upon the first to occur of:  (i) the exercise of the Option pursuant to this Agreement or (ii) upon the expiration of the 60^th day from the Effective Date, in the event JEI has not elected to terminate this Agreement pursuant to Sections 9 and 14, below).

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7.Application To Purchase Price.   If the Option is exercised pursuant to this Agreement, then fifty percent (50%) of the Initial Option Fee and fifty percent (50%) of the Extension Fee (if paid), shall be applied to the Purchase Price at the Closing of the Real Estate Sales Contract (and otherwise administered pursuant to the terms of such instrument).

8.Recording of Options.  JEI shall have the right to file a “Memorandum of Option” with the Office of the Clerk and Recorder or other appropriate public record custodian having jurisdictional authority over the Property in the State of Colorado as to the existence of this Option or any extension of same.  The form of Memorandum of Option which JEI is authorized to file of record is attached hereto as Exhibit “C” and incorporated herein by reference as if set out word for word.

9.Inspection Period; Inspection Rights.

(a)Inspection Rights.  During the term of this Agreement, JEI shall have the right to conduct an inspection and examination of the Property (the “Inspection Period”).  During the Inspection Period, JEI, or JEI’s authorized agentsor representatives, shall be entitled (and permitted) to enter upon the Property for the purpose of inspecting, examining and making tests upon and/or conducting an evaluation of the Property (including, but not limited to, those inspections described in Section 10, below).

(b)Termination Right.  If JEI, in JEI’s sole discretion, is dissatisfied with the results of JEI’s inspection of the Property (for any reason or no reason), JEI may, by written or electronic notice delivered to Dakota Group or Escrow Agent prior to the expiration of the 60^th day from the Effective Date (the “Refund Inspection Period”),  terminate this Agreement and upon such event, the Initial Deposit, as well as all interest accrued thereon, shall be returned to JEI (by Escrow Agent) on demand (without the necessity of the consent of Dakota Group), and neither Dakota Group nor JEI shall have any further obligations hereunder except as provided in Section 9(d). If JEI does not terminate this Agreement by delivery of such notice prior to the expiration of the Refund Inspection Period, JEI’s shall still have the right to terminate this Agreement during the Inspection Period but shall not be entitled to receive a refund of the Total Option Fee, except as set out in Section 9 (c), below.

(c)Refund Right Beyond Refund Inspection Period.  Notwithstanding anything herein to the contrary, JEI shall be entitled to receive a refund of the Total Option Fee under the following conditions:

(i)the refusal by Dakota Group to close under the Real Estate Sales Contract upon the proper exercise of the Option by JEI; or

(ii)the failure or inability of Dakota Group to deliver fee simple title to the Property, free and clear of all mortgages, liens, claims, encumbrances, easements, encroachments and judgments as provided in the Deed to be delivered at Closing and as otherwise required pursuant to the Real Estate Sales Contract; or

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(iii)pursuant to Section 5.1(c) of the Real Estate Sales Contract.

(d)Indemnity Obligation.  In the event JEI fails to consummate the closing of the purchase of the Property (other than for Dakota Group’s breach of this Agreement), JEI agrees to indemnify and hold Dakota Group harmless from all costs and expenses actually paid by Dakota Group (supported by verified evidence of same) which arise from damages to the Real Property in connection with JEI’s inspection of the Property.  JEI agrees to indemnify and hold Dakota Group harmless from damages arising out of injuries sustained by third parties in connection with JEI’s inspection of the Property. The obligations of JEI under this Section 9 (d) shall survive the termination of this Agreement for a period of three (3) months.

10.Environmental Inspection.  The inspection and examination of the Property in relation to the environmental condition of the Property shall be governed by the following:

(a)Examination Authority.  JEI shall have the right to conduct a “Phase I”, “Phase II” and/or a “Phase III” environmental site assessment (collectively or singularly as the context requires, the “Environmental Survey”) of the Property.,   If an Environmental Survey is conducted, then JEI shall cause a copy of the written report setting forth the findings obtained in that Environmental Survey to be delivered to Dakota Group.

(b)Remediation/Termination.  If, as a result of the Environmental Survey, or by any other means, JEI or Dakota Group becomes aware of the existence of Hazardous Substances (as hereinafter defined in Section 10(c), below), or other environmental contamination, on or within the Property, then JEI shall have the right to terminate this Agreement. If JEI terminates this Agreement prior to the expiration of the Refund Inspection Period pursuant to this Section 10, then the Total Option Fee shall be returned to JEI on demand (without the necessity of the consent of Dakota Group) and the Parties shall have no further obligations under this Agreement, except for those obligations that expressly survive termination of this Agreement.

(c)“Hazardous Substances.” For purposes of this Agreement, the term “HazardousSubstances” shall mean and include all hazardous and toxic substances, waste or other materials, any pollutants or contaminants as defined in Section 101 (14) of the Comprehensive Environmental Response Compensation and Liability Act, as amended, 42 U.S.C. Section 9301 (14) (including, without limitation, asbestos and raw materials which include hazardous constituents), or other similar substances, or materials which are included under or regulated by any local, state, or federal law, rule, or regulation pertaining to environmental regulation, contamination or clean-up, including, without limitation, “CERCLA”, “RCRA”, or state superlien or environmental clean-up statutes, as may be amended, (all such laws, rules and regulations being referred to collectively as “Environmental Laws”).

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11.Document Inspection.

(a)Dakota Group Obligation.  To facilitate JEI’s inspection of the Property, Dakota Group shall provide to JEI, at Dakota Group’s sole cost and expense, within three (3) days of the Effective Date, the following:

(i)True, correct and complete copies of all leases relating to the Property, if any, and any amendments thereto.  Additionally, Dakota Group will provide JEI access to Dakota Group’s records regarding expense and income items in order to enable JEI to complete an audit of such leases;

(ii)A true, correct and complete schedule (the “Operating Schedule”) reflecting, with respect to the Property, for the twelve (12) month period preceding the month of execution of this Agreement (including any interim reports): (i) all operating expenses and capital expenditures of the Property; and (ii) the aggregate rent collected from tenants of the Property during such period, if any;

(iii)A true, correct and complete inventory of all personal property located upon the Property;

(iv)A true, correct and complete copy of all service and other agreements, as well as any amendments thereto, pertaining to the Property on which Dakota Group is obligated (the “Third Party Agreements”), showing: (i) the names of the parties to each agreement; (ii) the service rendered or to be rendered under each agreement; (iii) the compensation payable by Dakota Group under each agreement; and (iv) the term and expiration date of each agreement;

(v)True, correct and complete copies of all certificates of occupancy, licenses and permits required by law and issued by all governmental authorities having jurisdiction, if any, concerning the Property;

(vi)True, correct and complete copies of all engineering, soils, historical preservation and other professional reports in the possession, custody or control of Dakota Group and which relate to the Property;

(vii)True, correct and complete copies of all utility bills for the Property for the previous twelve (12) months;

(viii)True, correct and complete copies of instruments, evidencing any actual or threatened litigation relating to or with respect to the Property;

(ix)True, correct and complete copies of all ad valorem and personal property tax statements as well as all related assessment notices (including valuation assessment documents) covering the Property for the current tax year (if available);

(x)A true, correct and complete report for the Property of any prepaid rent by tenants;

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(xi)True, correct and complete copies of any Environmental Site Assessments or other environmental reports with regard to the Property which are in Dakota Group’s possession, custody or control;

(xii)True, correct and complete copies of all warranties and guaranties relating to the Property;

(xiii)True, correct and complete copies of all leasing or other commission agreements with third parties with respect to the Property, with a summary of unpaid commissions, if any;

(xiv)True, correct and complete topographic, construction, engineering and architectural plans and specifications with respect to the Property;

(xv)True, correct and complete copies of appraisals, surveys and plats of the Property;

(xvi)Access to all maintenance and other records which pertain to the Property;

(xvii)True, correct and complete copies of all bids and estimates received by Dakota Group or its agents during the twelve (12) month period prior to the Effective Date for work to be performed at or for the benefit of the Property, which exceeds in each instance, the sum of $500.00;

(xviii)True, correct and complete copies of all documents and instruments evidencing rights of ingress and egress to land from the Property, whether recorded in the public records of Gilpin County, Colorado or otherwise;

(xix)True, correct and complete copies of all agreements with owners or tenants of any property adjacent to the Property (and which pertain in any manner to the Property); and

(xx)All documents and instruments relating in any manner to any pending, threatened or anticipated condemnation or eminent domain proceeding or actions which affect or relate to the Property including, but not limited to, that condemnation proceeding referenced in Section 15(b)(iii), below.

(b)Return of Materials.  JEI agrees that if for any reason the Closing is not consummated, JEI will promptly return to Dakota Group all materials furnished to JEI pursuant to this Section 11.

(c)Third Party Agreements.  Commencing upon the Effective Date, Dakota Group will not enter into any Third Party Agreements (or modify same) without the prior written consent of JEI.

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12.Survey.

(a)Dakota Group Obligations.  Dakota Group, at Dakota Group’s sole cost and expense, shall provide to JEI within five (5) days after the Effective Date, a current survey dated within the sixty (60) day time period prior to the Effective Date (hereinafter referred to as the “Survey”), of the Property prepared by a licensed surveyor or professional engineer, which Survey:  (i) shall be in form and content sufficient to delete the standard survey exception from the Owner Policy; (ii) shall be accompanied by a metes and bounds description of the Property which description shall tie the Property to the adjacent property boundaries setting forth the acreage and square feet within the Property; (iii) shall locate, and identify by volume and page reference, if applicable, all existing improvements, fences, waterways, lakes, ponds, encumbrances, encroachments, conflicts, protrusions, uses, highways, streets, roads, easements, alleys and rights-of-way, upon or adjacent to the Property, which are visible on the ground or listed in the Commitment; (iv) shall show the location of the “100-year frequency flood plain” on the Property, if applicable, or, if inapplicable, shall certify that such flood plain does not affect the Property; (v) shall set forth the number of gross acres and square feet contained in the Property; (vi) shall identify and establish the square footage and location of the portion of the Property situated within the Gaming District of Gilpin County, Colorado as established by the Colorado Limited Gaming Act, C.R.S. 12-47.1-105 and the ordinances adopted by the City of Black Hawk, Colorado; and (vii) shall meet or exceed in all aspects the “Minimum Standard Detail Requirements for Land Title Surveys” jointly established and adopted by the American Land Title Association, the American Congress on Surveying and Mapping and the National Society of Professional Surveyors in 1999, as amended from time to time.

(b)Certification.  The Survey shall further contain a certificate by the surveyor or engineer, addressed to Dakota Group, JEI, the Title Company and any lender of JEI (designated by JEI) in the form and substance set out on Exhibit “D” attached hereto and incorporated herein, as if set out word for word.

13.Title.  Within fifteen (15) days after the Effective Date,  Dakota Group, at its sole cost and expense, shall cause to be delivered to JEI a Commitment for Title Insurance, Colorado standard form (hereinafter referred to as the “Commitment”), together with true, correct, complete and legible copies of all instruments and documents referred to therein as exceptions to title covering the Property, in the amount of the Purchase Price, in favor of JEI, pursuant to which the Title Company agrees, subject to the provisions thereof, to issue at the Closing of the Real Estate Sales Contract an Owner Policy of Title Insurance (hereinafter referred to as the “Owner Policy”).

14.Termination.

(a)Refund Inspection Period.  At any time prior to the expiration of the Refund Inspection Period, JEI shall be entitled, for any reason, to terminate this Agreement by giving a written or electronic notice of same to either Dakota Group or the Escrow Agent (the “Refund Inspection Period Termination Notice”).  Upon delivery of the Refund Inspection Period Termination Notice to either Dakota Group or Escrow Agent: (i) this Agreement shall become automatically null and void and of no effect without the necessity of further action or consent of either Party; and (ii) the Escrow

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Agent shall be deemed authorized and instructed by the Parties to return the Initial Deposit (and all interest accrued thereon) to JEI, free and clear of all liens, claims, encumbrances and charges, minus a reasonable escrow fee to be agreed upon by JEI and the Escrow Agent.

(b)Post-Refund Inspection Period Termination.  At any time after the expiration of the Refund Inspection Period and prior to the Closing of the Real Estate Sales Contract, JEI shall have the right, for any reason, to terminate this Agreement by giving a written or electronic notice to either Dakota Group or Escrow Agent (the “Post-Refund Inspection Period Termination Notice”). Upon delivery of the Post-Refund Inspection Period Termination Notice to either Dakota Group or Escrow Agent, this Agreement shall become automatically null and void and of no effect without the necessity of further action or consent of either Party. Provided, however, upon the issuance of a Post-Refund Inspection Period Termination Notice, the Initial Option Fee and any Extension Fee, if paid, shall be deemed non-refundable to JEI.

(c)Refund Exception.  Notwithstanding the immediately preceding Section 14(b), the Total Option Fee shall be refundable to JEI after the expiration of the Inspection Period pursuant to the provisions of Section 9(c), above.

(d)Expiration of Option.  Upon the expiration of the Initial Option Period (or the Extension Period, if the Extension Right is exercised), without the Refund Inspection Period Termination Notice or the Post-Refund Inspection Period Termination Notice or the Exercise Notice having been given by JEI under this Agreement, then:  (i) this Agreement shall automatically terminate without the necessity of further action or consent of either Party; and (ii) the Escrow Agent shall record the quitclaim deed in accordance with Section 18, below.

15.Dakota Group Representations, Warranties and Covenants.

(a)Dakota GroupCovenants.  In addition to any other agreements or covenants set out in this Agreement, Dakota Group further agrees to the following:

(i)Access.  During the term of this Agreement (including but not limited to the Inspection Period), Dakota Group agrees to provide JEI with reasonable access to the Property from time to time in the discretion of JEI, in order for JEI to inspect the Property.

(ii)Cooperation. Dakota Group agrees to undertake all reasonable efforts to cooperate with JEI in connection with any matter involving JEI’s inspection of the Property.

(iii)No Further Encumbrance; Standstill Obligation.  Dakota Group agrees that, commencing on the Effective Date, it will not:  (i)  cause or allow the Property to be encumbered by any claim, lien (other than liens of record existing as of the Effective Date or any refinancing or extension thereof in an amount not to exceed the current amount) or contaminated by any Hazardous Substances; or (ii) negotiate to enter

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into or enter into a back-up contract for the sale of all or part of the Property; or (iii) negotiate to enter into or enter into an agreement for an option to purchase all or part of the Property, unless and until this Agreement expires or is otherwise terminated.

(b)Dakota Group Representations and Warranties. Dakota Group represents and warrants to JEI as of the Effective Date (and restates and reaffirms each and every item below as of the Closing Date of the Real Estate Sales Contract) the following:

(i)Subject to the provisions of the Deed to be delivered at Closing, Dakota Group has good, indefeasible, and fee simple title to the Property, free and clear of all mortgages, liens, claims, encumbrances, leases, tenancies, security interest, covenants, conditions restrictions, rights-of-way, easements, judgments or other matters affecting title other than those shown on the Commitment and otherwise permitted herein.

(ii)This Agreement has been duly authorized and executed by Dakota Group and is a valid and binding obligation of, and is enforceable, in accordance with its terms, against Dakota Group.  The documents delivered to JEI at Closing will be duly authorized and executed by Dakota Group and will be a valid and binding obligation of, and will be enforceable in accordance with their terms, against Dakota Group.

(iii)There is no pending or threatened condemnation or similar proceeding affecting the Property or any portion thereof, or pending public improvements, liens, or special assessments, in, about or outside the Property which will in any manner affect the Property or affect access to the Property or affect JEI’s use of the Property (as a gaming facility, hotel or otherwise). Provided, however, Dakota Group shall receive all compensation relating to the pending condemnation of street (the “Bobtail Street Condemnation Area”) and sidewalk (the “Sidewalk Easement Condemnation Area”) described and depicted on Exhibit “E” attached hereto and incorporated herein as if set out word for word.  Seller further represents and warrants that the Bobtail Street Condemnation Area is comprised of five hundred seven square feet (507 sq. ft.), does not constitute part of the Property and is not situated within the Gaming District of Gilpin County, Colorado.  Seller further represents and warrants that the Sidewalk Easement Condemnation Area is comprised of three thousand two hundred eighty square feet (3,280 sq. ft.), none of which is situated within the Gaming District of Gilpin County, Colorado but all of which is included in the description of the Property.

(iv)Except as provided in Subsection (iii) above, there is no pending or threatened legal action of any kind or character whatsoever affecting the Property or any portion thereof which will in any manner affect JEI upon the consummation of the Closing, nor is any such action presently contemplated.

(v)Dakota Group has complied with all applicable laws, ordinances, regulations, statutes, rules and restrictions pertaining to and affecting the Property, and Dakota Group’s performance of this Agreement will not result in any breach of, or constitute any default under, or result in the imposition of, any lien or encumbrance upon the Property under any agreement or other instrument to which Dakota Group is a party or by which Dakota Group or the Property might be bound.

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(vi)Subject to the Lease provided for below, Dakota Group will operate and manage the Property in substantially the same manner it has been operated and managed prior to the execution of this Agreement and will maintain the physical condition of the Property in the same or better condition as it presently exists to the date of Closing, reasonable wear and tear excepted.

(vii)All documents delivered pursuant to Section 11 are the most recent documents in existence in connection with the operation and maintenance of the Property.  The balance of such statements for the preceding thirty-six (36) months shall be made available to JEI within five (5) days of JEI’s request.

(viii)No action has been taken with respect to work performed or delivery of material which would give rise to a lien on the Property and at Closing, there will be no claim in favor of any person or entity which is or could become a lien on the Property, arising out of the furnishing of labor or materials at Dakota Group’s request; there will be no unpaid assessments against the Property, except for property taxes assessed but not due and payable at the time of Closing; and there will be no claim in favor of any person or entity (including the present management company) for any unpaid commissions or fees for leasing of the Property.  In the event of any such claims at Closing, Dakota Group shall, at JEI’s option:  (aa) establish with the Title Company an escrow of funds in an amount and upon conditions reasonably acceptable to Dakota Group and JEI, or (bb) provide a bond in favor of JEI or Title Company (or Title Company’s underwriter) in such amount, upon such conditions and for such purposes as may be satisfactory to JEI, Dakota Group and Title Company, in either case for the purpose of providing for such claims and/or inducing the Title Company to insure JEI’s title to the Property free and clear of such claims.

(ix)Dakota Group agrees that benefits or compensation accrued prior to Closing, and due or claimed to be due either before or after the Closing of the Real Estate Sales Contract, to employees or former employees of Dakota Group shall constitute obligations of Dakota Group only, and Dakota Group agrees to indemnify, defend and hold JEI harmless from all such obligations and claims.

(x)Dakota Group will not borrow any money or do, or fail to do, any other act or thing which would cause the Property to become pledged or otherwise utilized as collateral or in any way stand as security for any indebtedness or obligation (excepting encumbrances existing of record as of the Effective Date or any refinancing or extension thereof in an amount not to exceed the current amount).

(xi)All due and owing ad valorem taxes and personal property taxes, together with all assessments or other charges for utilities, roads,  the widening of roads, sidewalks or any other public infrastructure or any other fees imposed by any governmental authority with respect to the Property which are currently due and payable, have been paid in full.

(xii)To the current knowledge of Dakota Group, no Hazardous Substances (as defined in Section 10, above) are located on or about the Property.

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(xiii)The portion of the Property depicted on Exhibit “F” attached hereto and incorporated herein as if set out word for word is situated within the Gaming District of Gilpin County, Colorado.

(xiv)To the current knowledge of Dakota Group, there are no pending assessments or other charges for utilities, roads, widening of roads, sidewalks or any other public infrastructure imposed by any governmental authority with respect to the Property which will become due and owing after the Closing of the Real Estate Sales Contract.

(c)Continuing Effect.  The representations, warranties and covenants of Dakota Group contained in this Agreement or in any document delivered to JEI pursuant to the terms of this Agreement (whether in this Section 15 or elsewhere in this Agreement) shall be true and correct in all material respects and not in default at the time of Closing of the Real Estate Sales Contract, just as though they were made at such time, Dakota Group shall deliver to JEI, at Closing of the Real Estate Sales Contract, an affidavit to that effect.

(d)Survival.  The provisions of this Section 15, shall expressly survive the exercise of the Option and the Closing of the Real Estate Sales Contract and shall not merge with the Deed or any conveyance thereof for a period of one year from the date of Closing.

16.Condemnation.   During the period from the Effective Date of this Agreement to the Closing of the Real Estate Sales Contract, all risk of loss from condemnation or eminent domain, shall be borne by Dakota Group except as set out in Section 15(b)(iii).  If any condemnation proceedings are instituted or threatened, between the Effective Date and the Closing of the Real Estate Sales Contract, JEI shall have a period of twenty (20) calendar days (regardless of whether the Refund Inspection Period has expired) to elect to:  (a) terminate this Agreement and upon such event Dakota Group shall within seven (7) days of JEI’s issuance of such notice, refund the Total Option Fee to JEI and thereafter the Parties shall have no further obligations to each other; or (b) proceed under this Agreement (and upon the exercise of the Option, to proceed under the Real Estate Sales Contract), in which event Dakota Group shall, at the Closing, assign to JEI its entire right, title and interest in and to any condemnation or eminent domain award.  Notwithstanding any other language in this Section 16 to the contrary, if the condemnation or eminent domain is for less than 5% of the total land area of the Property, JEI shall not be entitled to terminate this Agreement and receive a refund of the Total Option Fee (unless JEI’s notice of termination described above is delivered to Dakota Group prior to the expiration of the Refund Inspection Period).  The parties recognize that the property which the City of Blackhawk (“City”) needs for Bobtail Street has been excluded from the description of the Property.  Notwithstanding this Section 16 or any other provision of this Agreement, if the City condemns a sidewalk easement on the lands shown in Exhibit E, Dakota Group shall be entitled to retain all compensation paid for said easement and the amount of land condemned thereby shall not be counted in the 5% described above in this Section 16.

17.Risk of Loss.  In the event of material loss or damage to the Property prior to the Closing of the Real Estate Sales Contract (and while this Agreement is in full force and effect),

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which results in a diminution in the value of the Property (in Purchaser’s reasonable determination) (each, a “Casualty Event”) and Seller cannot restore the Property to its original condition and value within thirty (30) days thereafter, to Purchaser’s satisfaction, JEI shall be entitled, within thirty (30) days of the occurrence of such Casualty Event, to terminate this Agreement (and if the Option has been exercised, to terminate the Real Estate Sales Contract) by giving a Refund Inspection Period Termination Notice or a Post-Refund Inspection Period Termination Notice to Dakota Group .  Within seven (7) days of issuance of the applicable termination notice described in the immediately preceding sentence, Dakota Group shall refund the Total Option Fee to JEI.  In the event JEI elects not to terminate this Agreement, JEI shall be entitled, on exercise of the Option, to the rights set out in Section 9.1 of the Real Estate Sales Contract.  The provisions of this Section 17 shall expressly survive the exercise of the Option.

18.Quitclaim Deed.  Concurrently with the execution of this Agreement, JEI agrees to execute and acknowledge a quitclaim deed quitclaiming its interest in the Property, and to deliver the quitclaim deed to the Escrow Agent, who shall hold such quitclaim deed in accordance with this provision.  On termination of this Agreement (without the exercise of the Option pursuant to Section 6) or upon termination of the Real Estate Sales Contract without Closing (except as a result of a breach thereof by Dakota Group),  Escrow Agent shall cause the quitclaim deed to be recorded in the Office of the Clerk and Recorder, Gilpin County, Colorado. Dakota Group shall be responsible for all reasonable costs of Escrow Agent for its performance in accordance with this Section 18.

19.Effective Date. This Agreement (or a counterpart hereof) must be executed by the Parties and a fully executed copy hereof (or executed counterparts) deposited with the Escrow Agent not later than five (5) days after execution hereof by the latter of the Parties (the confirmed date of receipt by Escrow Agent of a fully executed original of this Agreement being herein referred to as the “Effective Date”), or this Agreement shall become null, void and of no effect whatsoever.

20.Successors and Assigns.  This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their respective heirs, executors, personal representatives, successors and assigns.  Dakota Group may not assign this Agreement without the prior written consent of JEI except that Dakota Group may assign this Agreement to a related entity without the consent of JEI.  JEI may assign this Agreement if such assignment is effected to an entity organized as a corporation, limited liability company, limited partnership, limited liability partnership, limited liability limited partnership, partnership or joint venture, the controlling ownership and/or management of which resides in JEI so long as such assignee assumes, in writing in an instrument delivered promptly to Dakota Group, all obligations of JEI under this Agreement.

21.Counterparts.  This Agreement may be executed in any number of identical counterparts, any or all of which may contain the signatures of less than all of the Parties, and all of which shall be construed together as a single instrument.

22.Notices.  All notices, demands, requests, and other communications under this Agreement shall be in writing or electronic format and shall be deemed properly served and delivered when: (a) delivered by hand to the Party to whose attention it is directed; or (b) posted, if sent by registered or certified mail, return receipt requested, postage pre-paid addressed; or (c)

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actually received by the addressee thereof, after being sent by overnight delivery (such as Federal Express); or (d) sent to the addressee by confirmed telecopier, facsimile, electronic transmission (email) or similar transmission, as follows (or at such changed address as the Parties may from time to time specify in writing):

If to Dakota Group:
	Dakota/Blackhawk, LLC
	1700 Kylie Drive, Suite 240
	Longmont, Colorado 80501
	Attn: Wendell Pickett and Roger Pomainville
	303-772-8348
	303-772-8565 (facsimile)
With A Required Copy To:
	Christopher C. O’Dell
	O’Dell & Fell, LLC
	1600 Jackson Street
	Suite 250
	Golden, Colorado 80401
	(303) 436-9200
	(303) 436-9700 (facsimile)
If to JEI:
	Jacobs Entertainment, Inc.
	240 Main Street
	Black Hawk, Colorado 80224
	Attention: Stephen R. Roark, President
	(303) 582-1117
	(303) 582-0239 (facsimile)
With A Required Copy To:
	Jones & Keller, P.C.
	1625 Broadway, 16th Floor
	Denver, Colorado 80202
	Attention:	Samuel E. Wing, Esq.
		R. Steven Jones, Esq.
	(303) 573-1600
	(303) 893-6506 (facsimile)

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23.Entire Agreement.  The Parties agree that all the terms and conditions of this Agreement are contained herein and declare that no promises, representations, guarantees, warranties or agreements other than those expressly herein contained have been made or relied upon by either of the Parties hereto.  This Agreement represents the complete understanding between the Parties hereto as the subject matter hereof, and supersedes all prior written or oral negotiations, statements, or agreements between the Parties hereto as to the Property or this Agreement, the condition thereof, or any other matter whatsoever, made or furnished by any real estate broker, agent, employee or other person representing or purporting to represent either Party hereto.

24.Governing Law.  This Agreement shall be construed in accordance with the laws of the State of Colorado.

25.Independent Consideration.  Upon execution of this Agreement by the Parties, JEI shall pay to Dakota Group the sum of One Hundred and No/100 Dollars ($100.00) as independent agreement consideration for Dakota Group’s execution, delivery and agreement to be bound by all of the provisions of this Agreement (the “Independent Agreement Consideration”).  The Independent Agreement Consideration shall be non-refundable to JEI and not applicable to the Purchase Price at the Closing of the Real Estate Sales Contract.

26.Significance of Headings.  All paragraph headings set forth in this Agreement are for purposes of identification and are intended for convenience only.

27.Exhibits.  All exhibits to this Agreement, if any, shall bear the initials of each Party hereto, and when so initiated, shall be conclusively deemed to be an Exhibit hereto, whether or not physically attached to this Agreement.

28.Advice of Counsel.  Each of the Parties hereto represent that they have had the opportunity to seek the advice and counsel of their own attorneys; that they are relying upon their own judgment, belief, and knowledge with respect to the nature and extent of this Agreement; and that no representation or statement made by any other party has influenced them in executing or induced them to execute this Agreement.

29.Further Acts.  Each Party hereto agrees to perform, without delay, any and all such further and additional acts and execute and deliver any and all such further and additional instruments and documents as may be reasonably necessary in order to carry out the provisions and effectuate the intent of this Agreement.

30.Authority.  Each Party hereto represents and warrants that it has full authority to execute this Agreement and bind to this Agreement its respective partners, trustees, beneficiaries, remaindermen, directors, officers, employees, agents, advisors, attorneys, successors, assigns and personal representatives.

31.Breach.  Should any Party breach any part of this Agreement and litigation ensue, the Parties agree that the prevailing Party shall be entitled to its reasonable attorneys’ fees and costs in prosecuting or defending its claim.

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32.Construction.  This Agreement is the result of negotiations between the Parties, neither of whom has acted under any duress or compulsion, whether legal, economic or otherwise.  Accordingly, the terms and provisions hereof shall be construed in accordance with their usual and customary meanings.  The Parties hereby waive the application of any rule of law which otherwise would be applicable in connection with the construction of this Agreement that ambiguous or conflicting terms or provisions should be construed against the Party who (or whose attorney) prepared the executed Agreement or any earlier draft of the same.

33.Lease of Property.  Effective upon execution of this Agreement by the Parties and continuing until the first to occur of:  (a) the expiration or earlier termination of this Agreement or (b) the Closing or termination of the Real Estate Sales Contract, Dakota Group hereby leases to JEI for the sum of One Dollar and No/100 ($1.00) the Property (the “Lease”).  The Lease shall be evidenced by a written lease agreement setting out such terms as may be satisfactory to JEI, in its sole discretion, including, but not limited to:  (a) the right of JEI to erect a fence around the perimeter of the Property; (b) the right of JEI to the exclusive possession of the Property; and (c) the right of JEI to record a Memorandum of Lease in the public records of Gilpin County, Colorado.  The Lease to be executed by JEI and Dakota Group is attached to this Agreement as Exhibit “G” and incorporated herein as if set out word for word.  Prior to the commencement date of the Lease, Dakota Group shall be solely responsible for the proper and complete termination of all rights of tenancy to the Property vested with any third party as of the Effective Date.

34.Date Computation.  If any date of significance hereunder falls upon a Saturday, Sunday or recognized Federal holiday, such date will be deemed moved forward to the next day which is not a Saturday, Sunday or recognized Federal holiday.  The terms “working day” shall mean days elapsed exclusive of Saturday, Sunday or recognized Federal holidays.

35.Dispute Resolution/Mediation/Arbitration.

(a)Informal Resolution.  The Parties shall attempt amicably to resolve any controversy, dispute or difference arising out of this Agreement.

(b)Mediation Predicate.

(i)In the event the Parties are unable to resolve such dispute, the Parties shall submit same to mediation.

(ii)Each Party covenants and agrees that, within seven (7) days after receipt of the other Party’s written request for mediation, it will participate in at least two (2) hours with a mediator for each issue brought forward by any Party.  Any mediation proceeding shall be conducted in Denver, Colorado.  The fees of the mediator shall be borne equally by all Parties to the dispute, unless otherwise agreed by them in writing and all other court fees (including attorneys’ fees) and expenses incurred by any Party shall be borne solely by the Party incurring same; provided, however, should any Party fail or refuse to follow the terms of this paragraph in pursuit of mediation, then such Party shall be fully liable for the fees of the mediator and all costs, fees (including reasonable attorneys’ fees) and expenses incurred by both Parties in the other Party’s pursuit of such

20

mediation.  An agreement by the Parties to settle any issues of such dispute shall be regarded as a contract which provisions are conclusive as to those issues of the dispute.

(c)Arbitration.

(i)After satisfaction of the mediation predicate set out in Section 35(b), above), upon demand of either Party, (whether made before or after the institution of any judicial proceeding) any controversy or claim whatsoever arising out of or relating to this Agreement, or the breach thereof, shall be settled by binding arbitration in Denver, Colorado in accordance with the rules of the American Arbitration Association (“AAA”) and judgment upon the award rendered by the arbitrator(s) may be entered by any court having jurisdiction thereof.  THE PARTIES UNDERSTAND THAT BY AGREEING TO BINDING ARBITRATION FOR THE RESOLUTION OF ANY DISPUTES THEY ARE WAIVING THEIR RESPECTIVE RIGHT TO A JURY TRIAL.

(ii)Any dispute submitted for arbitration shall be referred to a panel of three (3) arbitrators.  The Party submitting (“Submitting Party”) the intention to arbitrate (the “Submission”) shall nominate one arbitrator.  Within thirty (30) days of receipt of the Submission, the Party receiving the Submission (“Answering Party”) shall nominate one arbitrator.  If the Answering Party fails to timely nominate an arbitrator, then the second arbitrator shall be appointed by the AAA in accordance with the industry applicable AAA Rules (the “Rules”).  If the arbitrator chosen by the Submitting Party and the arbitrator chosen by or selected for the Answering Party can agree upon a neutral arbitrator within fifteen (15) days of the choice or selection of the Answering Party’s arbitrator, then such individual shall serve as the third arbitrator.  If no such agreement is reached, a third neutral arbitrator shall be appointed by the AAA in accordance with the Rules.  The Parties agree that they shall consent to an expedited proceeding under the Rules, to the full extent the AAA can accommodate such a request.

(iii)The ruling of the arbitrators shall be binding and conclusive upon all Parties hereto and any other person with an interest in the matter.

(iv)Except as to either Party’s right to seek injunctive relief under applicable law, the arbitration provision set forth herein shall be a complete defense to any suit, action or other proceeding instituted in any court regarding any controversy or claim (including, without limitation, whether any controversy or claim is subject to arbitration) arising out of or relating to this Agreement, or the breach thereof (whether, in any case, involving: (x) a Party hereto, (y) their beneficiaries, successors, assigns and subcontractors, or (z) such Party’s or successor’s directors, officers, partners, members, managers, assigns or subcontractors, representatives or agents); provided, however, that: (aa) any of the parties to the arbitration may request a Colorado state court in Denver County, Colorado, to provide interim injunctive relief in aid of arbitration hereunder or to prevent a violation of this Agreement pending arbitration hereunder (and any such request shall not be deemed a waiver of the obligations to arbitrate set forth in this Section 35); (bb) any ruling on the award rendered by the arbitrators may be entered as a final judgment in state or federal court having jurisdiction over the Parties (and each of the Parties hereto irrevocably submits to the jurisdiction of such court for such purposes); and (cc) application may be made by a Party to any court of competent jurisdiction

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wherever situated for enforcement of any such final judgment and the entry of whatever orders are necessary for such enforcement.  In any proceeding with respect hereto, all direct, reasonable costs and expenses (including, without limitation, AAA administration fees and arbitrator fees) incurred by the Parties to the proceeding shall, at the conclusion of the proceeding, be paid by the Parties incurring same.

(d)Injunctive Relief.  Nothing in this Section 35 shall prevent or prohibit a Party’s right to seek injunctive relief under applicable law.

36.Recitals.  The terms, definitions and provisions of the Recitals set out above are expressly incorporated herein by reference as if set out word for word.

37.Defined/Capitalized Terms.  Any capitalized terms which are not defined in this Agreement shall have the meaning ascribed to such term in the Real Estate Sales Contract.

38.Survival.  The provisions of Sections 7, 13, 15, 16, 17, 20, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 and 38 of this Agreement shall survive the exercise of the Option and the Closing of the Real Estate Sales Contract and remain in full force and effect after Closing as between the Parties hereto except to the extent limited herein and in the Real Estate Sales Contract.  Provided, further, nothing in this Section 38 shall construed or applied to limit or negate the survival of other provisions in this Agreement which are specified to expressly survive the exercise of the Option and the Closing of the Real Estate Sales Contract but which may not be listed in this Section 38.

IN WITNESS WHEREOF, the Parties have duly executed this Agreement on the 12^th day of September 2005.

DAKOTA GROUP:
DAKOTA/BLACKHAWK, LLC, a Colorado limited liability company
By:	/s/ Roger Pomanville
		Roger Pomanville, Manager
By:	/s/ Wendell G. Prichett
		Wendell G. Prichett, Manager
JEI:
JACOBS ENTERTAINMENT, INC.,
And/Or Assigns
By:	/s/ Stephen R. Roark
Printed Name: Stephen R. Roark
Title: President/Chief Financial Officer

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ACCEPTANCE BY ESCROW AGENT

The undersigned title company, as Escrow Agent, hereby acknowledges receipt of a fully executed original (or executed original counterparts) of the foregoing Agreement and the sum of $250,000.00 as the Initial Deposit referred to therein, and accepts the obligations of the Escrow Agent as set forth therein.  The Effective Date of the Agreement is the date identified below.

GILPIN TITLE, LLC
By:		/s/ Mari O’Brien
Name:			Mari O’Brien
Title:	Commercial Escrow Officer
Date:					September 13, 2005
				“Effective Date”

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EX-10.18

EXHIBIT 10.18

Execution Version

Thoroughbred Horsemen’s Agreement

between Colonial Downs, L.P.,

Stansley Racing Corp. and

The Virginia Horsemen’s Benevolent

and Protective Association, Inc.

as of January 1, 2005

TABLE OF CONTENTS

			Page
1.	Effective Date and Term of Agreement		2
2.	Exclusive Representation		2
3.	Accounts		3
	A.	Thoroughbred Partners’ Account	3
	B.	Horsemen’s Account	4
	C.	Availability of Information on Accounts	4
	D.	Distribution of Interest and Other Earnings on Accounts	4
4.	Administration of Accounts		5
	A.	Amounts To Be Deposited	5
	B.	Transfers from the Thoroughbred Partners’ Account to the Horsemen’s Account and Colonial Downs’ Account	5
	C.	Signal Sales	5
	D.	Account Wagering	6
	E.	Virginia Derby	6
	F.	Virginia Turf Festival Stakes Races	6
	G.	National Thoroughbred Racing Association (“NTRA”) Dues	7
	H.	Stakes Race Purses	8
	I.	Administrative Fee	8
	J.	Other Legalized Wagering	8
5.	Purse Mechanics		9
	A.	Purse Schedules and Condition Books	9
	B.	Funding of Purses	9
	C.	Overpayment of Purses	10
	D.	Underpayment of Purses	10
	E.	Purse Notices	11
	F.	Collection of Nomination, Starter and Similar Fees	11
6.	Number of Days of, and Dates and Average Daily Purses for, Live Thoroughbred Racing		12
7.	Races and Awards for Virginia-Bred, Virginia-Owned and Virginia-Sired Horses		13
8.	Satellite Wagering Facility Expansion		13
	A.	Licensing and Opening of New SWFs in Henry County and Scott County	14
	B.	Distribution of Funds from the Henry County SWF and the Scott County SWF	15

	C.	Chesapeake SWF	16
	D.	SWF Referenda in Northern Virginia	17
	E.	Additional SWFs in the Central-Southside Virginia Region	18
	F.	Funding of Virginia Turf Festival	19
	G.	Incorporation of Terms in SWF Licenses	20
9.	Stalls and Track Facilities		20
	A.	Availability of Stalls and Track Facilities Before, During and After Race Meetings	20
	B.	Vendors	21
	C.	Stall Applications	21
	D.	Racetrack Kitchen	23
	E.	VHBPA Accommodations	23
10.	Racing Committee		23
11.	Representations and Warranties		24
	A.	VHBPA	24
	B.	Colonial Downs	25
12.	Racing Officials		26
13.	Governmental Approval		26
14.	Authorization for Out-of-State Simulcasting		26
15.	Copies of Documents; Database		27
16.	Horsemen’s Backstretch Improvements and Programs		27
17.	Right to Terminate		28
18.	Indemnification		29
19.	Mediation; Arbitration		29
	A.	Attempt to Resolve Disputes	29
	B.	Administration	29
	C.	Notice to Arbitrate	30
	D.	Selection of Arbitrator(s)	30
	E.	Pre-Hearing Conference	30
	F.	Discovery	30
	G.	Additional Conference	32
	H.	Arbitration Hearing	32
	I.	Arbitration Award	33
	J.	Default	33
	K.	Costs	33

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20.	Contribution Adjustments		34
	A.	Changes in Applicable Law	34
	B.	Changes in MVRC Management Fee	35
	C.	Termination of Management Fee	36
	D.	Duration	36
21.	Consents, Approvals, Agreements or Assurances		36
22.	Counterparts		36
23.	Notices		37
24.	Waivers		38
25.	Applicable Law; Venue		38
26.	Headings		38
27.	Severability		38
28.	Entire Agreement; Modification		39
29.	Conditions Precedent to Effectiveness of this Agreement		39
Exhibit A		Form of Trust Agreement
Exhibit B		Annual Transfers of Funds from Thoroughbred Partners’ Account to Horsemen’s Account
Exhibit C		Anticipated Development Schedule
Exhibit D		Central Southside Virginia Region

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THOROUGHBRED HORSEMEN’S AGREEMENT

THIS AGREEMENT is entered into as of this 1^st day of January 2005 by and among COLONIAL DOWNS, L.P., a Virginia limited partnership, STANSLEY RACING CORP., a Virginia corporation (collectively, “Colonial Downs”), and the VIRGINIA HORSEMEN’S BENEVOLENT AND PROTECTIVE ASSOCIATION, INC., a Virginia not-for-profit corporation (the “VHBPA”).

WHEREAS, Colonial Downs owns and operates in New Kent County, Virginia, the facility known as the Colonial Downs racetrack (the “Racetrack”) and six satellite wagering facilities located in Brunswick, Chesapeake, Hampton, Richmond (Broad Street), Richmond (Hull Street), and Vinton, Virginia (the “SWFs”);

WHEREAS, the VHBPA is a trade organization composed of owners, trainers, owner-trainers, and owner-breeders of thoroughbred race horses (its “Members”);

WHEREAS, the VHBPA provides benevolence programs and other services for its Members and their employees and other participants in thoroughbred horse racing who are and will be engaged in live racing at the Racetrack (such racing a “Race Meeting”);

WHEREAS, the Maryland-Virginia Racing Circuit, Inc. (“MVRC”), a subsidiary of Maryland Jockey Club, manages the Racetrack and SWFs pursuant to an Amended and Restated Management and Consulting Agreement, effective January 15, 1999, as amended (the “Management and Consulting Agreement”);

WHEREAS, the parties hereto desire to continue and enhance a close and understanding relationship among owners and trainers of thoroughbred race horses (the “Horsemen”), including VHBPA Members, the VHBPA, Colonial Downs, and the public;

WHEREAS, the parties have entered into the Thoroughbred Horsemen’s Agreement, dated as of December 23, 2002, as amended by a First Amendment thereto, dated as of January 1, 2004 (as so amended, the “Existing Agreement”), portions of which expired on midnight on December 31, 2004 and other portions which continue to remain in effect; and

WHEREAS, the parties desire to expand the network of SWFs throughout the Commonwealth of Virginia beyond the six existing SWFs and the currently statutorily authorized ten SWFs to support more days of live quality thoroughbred racing at the Racetrack, including the promotion and development of a Virginia Turf Festival; and

WHEREAS, the parties agree that a goal of achieving $200,000,000 of total thoroughbred handle (which is approximately 50 days of live thoroughbred racing at current purse levels) within three years from the effective date of this Agreement is reasonable and desire to set forth certain actions intended to lead to the achievement of this goal to which they are committed.

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties desiring to be legally bound agree as follows:

1.Effective Date and Term of Agreement.  Upon the satisfaction or waiver of all conditions set forth in Section 29 hereof, this Agreement shall become effective as of 12:01 a.m. on January 1, 2005, and shall remain in effect through midnight on December 31, 2007 (the “Term”), unless otherwise terminated as provided herein, with the exception of Subsections 4.B. and F., Section 8, and Section 20, which shall continue in effect as stated therein.

2.Exclusive Representation.  During the Term of this Agreement, the VHBPA shall be the exclusive representative of its Members with respect to the matters set forth herein.  The VHBPA hereby warrants and represents that it is the Horsemen’s organization representing a

2

majority of the Horsemen racing at the Racetrack, and Colonial Downs hereby recognizes it as such.

3.Accounts.

A.Thoroughbred Partners’ Account.  Colonial Downs and the VHBPA currently maintain an account at the Middleburg, Virginia branch of BB&T Bank, N.A. (the “Thoroughbred Partners’ Account” or the “Account”).  The parties agree that the financial institution(s) at which the Thoroughbred Partners’ Account is maintained may be changed at any time by agreement of the parties.  Colonial Downs and the VHBPA agree that all funds maintained in the Thoroughbred Partners’ Account are funds that are to be maintained in trust on behalf of and for the benefit of Horsemen, less those funds to be distributed to Colonial Downs, as provided herein, and distributed according to regulations promulgated by the Virginia Racing Commission (the “Commission”) from time to time or by agreement between the parties to this Agreement.  In furtherance of such purpose, the parties hereto have executed the trust agreement attached as Exhibit A and have had the Thoroughbred Partners’ Account designated a trust account by the financial institution at which the Thoroughbred Partners’ Account is maintained.  The parties shall take similar steps to have the Thoroughbred Partners’ Account designated as a trust account by any other financial institution(s) to which the Account is moved.  In addition, either party may elect upon written notice to the other party to have a third-party trustee, acceptable to both parties, appointed as trustee of the Account.  All interest and other earnings whatsoever on the amounts paid or deposited into the Thoroughbred Partners’ Account shall accrue solely to the benefit of the Thoroughbred Partners’ Account.  All funds paid or deposited into the Thoroughbred Partners’ Account (i) shall be invested in an interest-bearing account that

3

provides market rates of return, or government or bank securities, and (ii) shall be used for purses and for such other purposes as the parties may agree and the Commission may approve.

B.Horsemen’s Account.  Monies payable to Horsemen as purses under this Agreement shall be deposited from the Thoroughbred Partners’ Account into a separate account (the “Horsemen’s Account”) as needed to pay purses.  The amounts to be transferred from the Thoroughbred Partners’ Account to the Horsemen’s Account are set forth herein.  The transfer of funds from the Thoroughbred Partners’ Account to the Horsemen’s Account shall be made, and the appropriate portions of pursemoney shall be made available to the earners thereof, within seventy-two (72) hours (dark days and Sundays excluded) after the result of the race in which such money was earned has been declared official; provided, that in the event of any dispute as to the result of a race due to a drug test or other regulatory inquiry, the purse money shall not be made available until final resolution of the dispute by the stewards, the Commission or the courts, as the case may be.  No portion of such money payable as purses to any earner thereof (other than jockey and gate fees) shall be deducted by Colonial Downs unless requested in writing by the person to whom such monies are payable or his duly authorized representative or as required by order of the stewards or a court.

C.Availability of Information on Accounts.  The Thoroughbred Partners’ Account and the Horsemen’s Account and the investment or deposit schedules of Colonial Downs with respect to such accounts during any Race Meeting shall be subject to examination at any reasonable time by the President of the VHBPA or his or her designee.

D.Distribution of Interest and Other Earnings on Accounts.  Interest and any other earnings on the Thoroughbred Partners’ Account and Horsemen’s Account shall be distributed fifty percent (50%) thereof to each of (a) Colonial Downs, to help defray the costs of

4

maintaining such accounts, including, but not limited to, the Horsemen’s bookkeeper and any third-party trustee fees; and (b) the VHBPA for the benefit of Horsemen in its sole and absolute discretion.

4.Administration of Accounts.

A.Amounts To Be Deposited.  Colonial Downs shall deposit into the Thoroughbred Partners’ Account the amounts specified in paragraph 13 of § 59.1-369 of the Code of Virginia and shall deposit into the Horsemen’s Account the amounts specified for purses in Subsections D(1) and G(1) of § 59.1-392 of the Code of Virginia.

B.Transfers from the Thoroughbred Partners’ Account to the Horsemen’s Account and Colonial Downs’ Account.  With respect to all deposits to the Thoroughbred Partners’ Account derived from handle at all satellite wagering facilities, the parties agree that transfer of funds from the Thoroughbred Partners’ Account to the Horsemen’s Account shall be made as set forth in Exhibit B hereto, subject to the terms and conditions set forth in Section 8 hereof, and shall continue for the term of Colonial Downs’ licenses for such facilities. The balance of all deposits to the Thoroughbred Partners’ Account derived from handle at all satellite wagering facilities after giving effect to the foregoing sentence shall be transferred to an account designated by Colonial Downs.

C.Signal Sales.  For 2005, 2006, and 2007 Colonial Downs shall deposit into an account designated and exclusively controlled by the VHBPA fifty percent (50%) of all revenues it receives from the sale of its live thoroughbred race signal to entities outside Virginia less twenty-one percent (21%) of such amount to cover Colonial Downs’ direct operational costs associated with that sale.  Revenues from signal sales shall be based on information provided by

5

Colonial Downs to the VHBPA using accounting practices generally accepted in the horse racing industry.

D.Account Wagering.  Neither Colonial Downs nor the VHBPA shall enter into an agreement, without the prior written consent of the other, which consent shall not be unreasonably withheld, delayed or conditioned, regarding telephone account or other electronic media wagering systems pursuant to which Colonial Downs or the VHBPA would receive any fee from any advance deposit account wagering licensee or any other telephone or other electronic media account wagering entities for the right to accept wagers from account holders located in Virginia on thoroughbred races simulcast from within or outside of Virginia.  The foregoing sentence shall not apply to Colonial Downs’ existing and future agreements for the sale of its live thoroughbred racing signals to simulcast venues to which the VHBPA’s consent is governed by Section 14 of this Agreement.

E.Virginia Derby and the Colonial Turf Cup.  Colonial Downs and the VHBPA agree that the purse for the Virginia Derby for 2005 shall be $750,000, which shall consist of $600,000 contributed from the Thoroughbred Partners’ Account and $150,000 contributed by Colonial Downs or its affiliates.  The purse for the Colonial Turf Cup for 2005 shall be $500,000, all of which shall be contributed from the Thoroughbred Partners’ Account.  Any funds generated by sponsorship(s) or promotional fees paid to Colonial Downs with respect to the Virginia Derby, from whatever source derived, shall be paid in their entirety to the Thoroughbred Partners’ Account in addition to the amounts specified in Subsection A of this Section , unless the parties agree otherwise

F.Virginia Turf Festival Stakes Races.  Colonial Downs desires to continue to develop a premier event for turf course racing in order to distinguish itself as the Mid-Atlantic

6

center for thoroughbred turf racing.  To achieve this goal, Colonial Downs desires to continue to structure a series of stakes races in conjunction with the Virginia Derby in order to develop more fully the Virginia Turf Festival.  The Virginia Turf Festival shall consist of high quality races.  For 2005, total stake purses for the Virginia Turf Festival shall be $1,700,000, which shall include the Virginia Derby ($750,000), the Colonial Turf Cup ($500,000), the All Along Breeder’s Cup Stakes ($200,000), the Virginia Oaks ($200,000), the Zeke Ferguson Memorial ($50,000), and such other races as the parties agree.  For 2006 and 2007, total stake purses for the Virginia Turf Festival shall increase by $750,000 to $2,450,000, which shall include the Virginia Derby ($1,000,000 with $150,000 contributed by Colonial Downs or its affiliates in 2006, and no contribution from Colonial Downs or its affiliates in 2007), the Colonial Turf Cup ($1,000,000), the All Along Breeder’s Cup Stakes ($200,000), the Virginia Oaks ($200,000), and the Zeke Ferguson Memorial ($50,000); provided that forty-one and one-half percent (41.5%) of additional purse money provided by the Richmond (Hull Street SWF), the SWFs in Chesapeake (for combined handle in excess of $22,347,000), the new SWFs in the Central-Southside Region (including, but not limited to, the Vinton SWF, the Henry County SWF, and the Scott County SWF), and any Northern Virginia SWFs equals or exceeds $750,000 in calendar year 2006 and $900,000 in calendar year 2007. For 2006 and 2007, the first $750,000 and $900,000, respectively, of such additional purse money shall be used to fund the increase in purses for the Virginia Derby and the Colonial Turf Cup.  For 2006 and 2007, purse money contributions in excess of $750,000 and $900,000, respectively, as calculated and referred to above, shall be used to fund overnight purses.

G.National Thoroughbred Racing Association (“NTRA”) Dues.  The VHBPA may, in its discretion, designate a portion of the funds deposited into the Thoroughbred

7

Partners’ Account to be paid as the VHBPA’s dues payable to the NTRA.  If so designated, those dues shall be paid from funds available in the Thoroughbred Partners’ Account.

H.Stakes Race Purses.  The percentage of the purse monies available under Subsections A through F of this Section, excluding promotional fees and sponsorships, to be paid to Horsemen participating in stakes races held at the Racetrack shall be limited to twenty percent (20%) of the total purses paid unless the VHBPA in its sole and absolute discretion consents to a higher percentage.  Such consent shall be granted by the VHBPA as necessary to assist Colonial Downs in its attempts to maintain and improve the graded status of the Virginia Derby and is hereby granted to develop the Virginia Turf Festival as set forth in Sections 4.F. and 6 hereof.

I.Administrative Fee.The administrative fee paid to the VHBPA for services rendered to Horsemen as the majority Horsemen’s group shall be as provided in Subsection S of § 59.1-392 of the Code of Virginia.  The parties shall agree on advance payments of the administrative fee between live thoroughbred Race Meetings at the Racetrack in recognition of the VHBPA’s year-round service to Horsemen, obligations with respect to Horsemen’s interests before the Commission, and the VHBPA’s efforts to assist Colonial Downs on legislative issues.

J.Other Legalized Wagering.  Except as otherwise specifically provided herein, in the event that wagers other than on thoroughbred horse racing, including, but not limited to, the sale of lottery tickets and/or participation in other wagering enterprises at the Racetrack and/or the SWFs (but excluding any use of the Racetrack or SWFs for charitable gaming that does not result in net revenue for Colonial Downs above fair market rent for the facilities), are authorized by legislative action and a portion of the proceeds is provided by that legislation for thoroughbred racing, the parties shall be bound by the allocations in such

8

legislation.  In the event the allocation of revenues is not addressed by such legislative action, the parties shall negotiate in good faith a written agreement governing the allocation between them of the revenues to be received for thoroughbred racing from that legislative action.

5.Purse Mechanics.

A.Purse Schedules and Condition Books.  Colonial Downs shall use its reasonable judgment to estimate attendance, pari-mutuel handle and breakage for thoroughbred racing. Using that information and after consultation with a designated representative of the VHBPA, Colonial Downs shall establish a tentative average daily overnight purse schedule and a tentative stakes purse schedule for each Race Meeting in accordance with the terms of this Agreement.  Colonial Downs shall exercise reasonable care to avoid significant underpayments or overpayments of purses at all Race Meetings.  Colonial Downs shall send to the VHBPA its first condition book and proposed purse schedules for each Race Meeting before they are sent to the printer.

B.Funding of Purses.

(1)Colonial Downs shall pre-fund to the Thoroughbred Partners’ Account the sum needed in 2005, and up to $1.7 million of the sums needed each year in 2006, and 2007, to pay the purse amounts for the days of live thoroughbred racing, as determined in Section 6 below, if there is a temporary shortfall in that Account.  The amount of such pre-funding shall bear interest at the prime rate (as announced from time to time in the Eastern edition of the Wall Street Journal) plus 0.25%.  Any funds provided pursuant to this Subsection, and interest accruing thereon prior to October 15 of any year, shall be repaid to Colonial Downs from funds accruing to the Thoroughbred Partners’ Account for the remainder of the calendar year in which such funds are provided on a “first dollar in first dollar out” basis and, if there is

9

any pre-funded sum that has not yet been repaid by the end of that calendar year, from funds accruing to the Thoroughbred Partners’ Account commencing on January 1 of the following calendar year on a “first dollar in first dollar out” basis.  Any interest on any funds provided pursuant to this Subsection by Colonial Downs that accrues on or after October 15^th of any given year shall be borne by Colonial Downs.

(2)The VHBPA and Colonial Downs agree to use all reasonable efforts, including recommendations to the Virginia Racing Commission for race days and purses and the use of portions of increased revenue resulting from the opening of SWFs in Richmond (Hull Street), Vinton, and other locations in 2005 and thereafter, to reduce and eliminate temporary shortfalls as described above.

C.Overpayment of Purses.  Colonial Downs and the VHBPA shall cooperate to the fullest extent possible to avoid overpayment of purses to Horsemen as of the end of any year during the Term of this Agreement.  If Colonial Downs makes an overpayment in excess of the amount computed under Section 4 hereof, the overpayment shall be repaid to Colonial Downs from funds accruing to the Thoroughbred Partners’ Account commencing on January 1 of the following calendar year on a “first dollar in first dollar out” basis.

D.Underpayment of Purses.  During any Race Meeting, Colonial Downs shall increase purses as reasonable and appropriate based upon deposits to the Horsemen’s Account pursuant to Subsections D(1) and G(1) of § 59.1-392 of the Code of Virginia to minimize the possibility of underpayment of purses to Horsemen.  Colonial Downs shall use its reasonable best efforts to help assure that there are no underpayments of purses at any Race Meeting based upon deposits to the Horsemen’s Account pursuant to Subsections D(1) and G(1) of § 59.1-392 of the Code of Virginia.

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E.Purse Notices.  The pari-mutuel handle, pari-mutuel handle commission, and purse distribution figures, as well as the percentage figures that represent the relationship between purses and the total of pari-mutuel income and breakage shall be posted on the bulletin board in the Racing Secretary’s office each day of a Race Meeting.

F.Collection of Nomination, Starter and Similar Fees.  Colonial Downs shall use its commercially reasonable efforts to collect promptly all nomination, starter and similar fees that are, or prior to 2002 were, incurred by participants.  If such fees attributable to the 2002, 2003, 2004, 2005, 2006 and 2007 Race Meetings remain unpaid six months after the conclusion of the relevant Race Meeting, then Colonial Downs shall be entitled to assign the accounts receivable for such fees to the VHBPA for collection and to be reimbursed from the Thoroughbred Partners’ Account for the aggregate amount of such fees; provided, however, that fees arising from nominations or entries which the parties agree, acting reasonably and in good faith, were accepted by the Racing Secretary for promotional or marketing purposes shall not be included in the amounts for which reimbursement is sought and shall not be assigned to the VHBPA.  Anything contained in this Subsection F to the contrary notwithstanding, Colonial Downs shall not be entitled to reimbursement for any fee for which Colonial Downs has not met the following requirements: (i) Colonial Downs shall have invoiced the debtor at least three times between the close of the Race Meeting during which the debt was incurred and the end of the calendar year in which that Race Meeting was conducted, and (ii) Colonial Downs shall have furnished written notice to the VHBPA of the debtor’s name, address, and the amount owed by that debtor within ninety (90) days of the close of the Race Meeting at which the debt was incurred.

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6.Number of Days of, and Dates and Average Daily Purses for, Live Thoroughbred Racing.  Not less than thirty (30) days prior to the deadline for submission to the Commission, Colonial Downs and the VHBPA shall make reasonable efforts to agree upon the number of days of, and the dates and average daily purses for, live thoroughbred racing at the Racetrack for the following calendar year, and shall then present such agreed upon schedule and average daily purses to the Commission for approval.  Such schedule shall take into account the average daily purses for the Virginia Turf Festival and the amount that shall be applied to reduce the need for Colonial Downs’ funding pursuant to Subsection 5.B. hereof.   If the parties are unable to agree upon a particular number of days of, dates for and/or average daily purses for live thoroughbred racing for any such calendar year, Colonial Downs shall submit to the Commission its requested number of days of, dates for and/or average daily purses for live thoroughbred racing for that calendar year, and the VHBPA shall also convey to the Commission its requested number of days of, dates for and/or average daily purses for live thoroughbred racing for that calendar year.  For 2005, Colonial Downs and the VHBPA submitted a request to the Commission for forty (40) days of thoroughbred racing, with average daily purses of at least $200,000 per day, to be conducted from June 17 to August 9, 2005 at the Racetrack.  Such request was approved by the Commission.  For 2006, Colonial Downs and the VHBPA agree to submit a request to the Commission for at least forty-two (42) days of thoroughbred racing, with average daily purses of at least $200,000 per day, including the Virginia Turf Festival, provided that on or before November 15, 2005, purse projections for the twelve months of calendar 2006 support such a request.  Similarly, if on or before November 15, 2006, purse projections for the twelve months of calendar 2007 support it, Colonial Downs and the VHBPA shall request fifty (50) days of thoroughbred racing in 2007 with average daily purses of at least $200,000, including the

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Virginia Turf Festival.  A Turf Festival Planning Committee made up of representatives from Colonial Downs, the VHBPA, the MVRC, and the Virginia Breeders Fund shall assist the parties in formulating the details of the 2006 and 2007 race dates request to be submitted to the Commission for its approval (such request to be consistent with the terms and provisions of Section 4.F. and this Section) and shall consider what improvements, if any, may be necessary to the Racetrack’s facilities to support and promote the Virginia Turf Festival.

7.Races and Awards for Virginia-Bred, Virginia-Owned and Virginia-Sired Horses.  Colonial Downs shall include in its condition book opportunities to race for Virginia-bred, Virginia-owned and Virginia-sired thoroughbred horses, including those that typically race for lower purses as well as those that typically race for higher purses.  To the extent reasonably possible, in filling races, Colonial Downs shall give preference to Virginia-bred, Virginia-owned,  and Virginia-sired horses that are stabled at the Racetrack or elsewhere in Virginia.  Awards from the Virginia Breeders Fund for Virginia-bred, Virginia-owned and Virginia-sired horses shall continue to be distributed according to guidelines approved by the Commission.

8.Satellite Wagering Facility Expansion.  Colonial Downs and the VHBPA agree that a greater dollar volume in annual handle is necessary to increase the number of days of quality thoroughbred racing in Virginia, and that increased handle will most likely occur by opening additional SWFs beyond the six existing SWFs.  The parties further agree that a goal of achieving $200,000,000 of total thoroughbred handle (which is approximately 50 days of live thoroughbred racing at current purse levels) within three years from the effective date of this Agreement is reasonable and desire to set forth certain actions intended to lead to the achievement of this goal to which they are committed.  Accordingly, the parties agree:

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A.Licensing and Opening of New SWFs in Henry County and Scott County.  Colonial Downs shall pursue simultaneously the opening of new SWFs in Henry County and Scott County as set forth herein, either one of which may open before the other.

(1)Colonial Downs shall open in 2005 a new SWF in each of Henry County and Scott County, subject to Force Majeure Events (as defined herein).  Upon approval of this Agreement by the Commission, Colonial Downs shall seek to secure sites and address any concerns relating to compliance with all municipal laws and regulations (including zoning compliance).  Upon securing sites and satisfying all applicable municipal laws and regulations, Colonial Downs shall apply expeditiously to the Commission for owner’s and operator’s licenses for the two new SWFs.  Upon issuance of the licenses, Colonial Downs shall immediately commence build out or construction of the new SWFs and prosecute completion using all commercially reasonable means.  It is anticipated that the new SWFs will open no later than four to six months after the Commission issues Colonial Downs licenses to own and operate each new SWF, subject to Force Majeure Events.  An anticipated development schedule is set forth in Exhibit C hereto.

(2)“Force Majeure Events” shall mean:  (a) acts of God (including flood, landslide, earthquake, hurricane, or tornado); (b) delay caused by acts or neglect of the Commission or the Commonwealth in issuing required permits or other administrative approvals regarding Colonial Downs’ proposed SWF; (c) acts of war or terrorism; (d) strikes or labor disputes affecting the proposed SWF; (e) any legal action initiated by third parties that challenges any permit, approval, license, or similar governmental action that is necessary for the renovation, construction, or operation of an SWF or any such action initiated by Colonial Downs to overturn a ruling denying any permit, approval, license, or similar necessary governmental

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action; (f) materially adverse weather conditions at the site not reasonably anticipated; (g) fire or other unavoidable casualties at the site; (h) Colonial Downs’ inability to obtain materials or the unavailability of specified materials where there are no reasonable substitutes available or no alternative methods or means available of obtaining such materials on a timely basis; (i) construction delays caused by subsurface or otherwise concealed physical conditions at the site differing materially from those indicated in the plans and specifications, or from those originally encountered, which were not ascertainable by Colonial Downs prior to the grant of the licenses; and (j) delays caused solely by the failure of any governmental agency, department, or organization to timely issue building permits or other construction-related permits that could not be secured prior to the date of the licenses or to timely perform inspections that cannot be completed prior to construction on matters necessary for the proper execution and completion of the work necessary to build or complete the SWF, provided that Colonial Downs has taken all actions reasonably available to it, including the filing and aggressive prosecution of legal action, to compel such agencies, departments, or organizations to issue such permits and to timely perform such inspections.

(3)The deadlines specified in this Subsection A shall be suspended for each day that a delay specified in this Subsection A(2) occurs and continues, provided that Colonial Downs exercises all reasonable diligence during such time to overcome the delay.

B.Distribution of Funds from the Henry County SWF and the Scott County SWF.  Colonial Downs and the VHBPA agree to distribute funds from the Thoroughbred Partners’ Account in such a fashion as set forth in Exhibit B hereto with respect to the Henry County SWF and the Scott County SWF.  If Colonial Downs is unsuccessful in 2005 in opening the second Chesapeake SWF referred to below, other than as a result of Force Majeure Events,

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then the Richmond (Hull Street) SWF, the Vinton SWF, the Henry County SWF, and the Scott County SWF shall be treated as “All Other SWFs” for purposes of the distribution of funds from the Thoroughbred Partners’ Account as set forth in Exhibit B hereto until the second Chesapeake SWF opens.  Once the second Chesapeake SWF opens, the effective contribution rates for the Richmond (Hull Street) SWF, the Vinton SWF, the Henry County SWF, the Scott County SWF, the existing Chesapeake SWF, and the second Chesapeake SWF shall be as set forth in Exhibit B hereto and shall continue for the term of Colonial Downs’ licenses for such facilities.

C.Chesapeake SWF.  Pursuant to Section 8 of the Existing Agreement, Colonial Downs is obligated to relocate the existing Chesapeake SWF to a location closer to Virginia Beach, subject to Force Majeure Events, on or before December 31, 2005.  The VHBPA and Colonial Downs agree that Colonial Downs will satisfy this obligation by opening an additional Chesapeake SWF before December 31, 2005 (the “Second Chesapeake SWF”).  Colonial Downs has applied to the Commission for owner’s and operator’s licenses for the Second Chesapeake SWF.  Upon issuance of the licenses, Colonial Downs shall immediately commence build out or construction of the Second Chesapeake SWF and prosecute completion using all commercially reasonable means.  It is anticipated that the Second Chesapeake SWF will open no later than four to six months after the Commission issues Colonial Downs licenses to own and operate the Second Chesapeake SWF.  If Colonial Downs opens a Second Chesapeake SWF in 2005, Colonial Downs and the VHBPA agree to distribute funds from the Thoroughbred Partners’ Account in such a fashion as set forth in Exhibit B hereto with respect to the existing Chesapeake Facility and the Second Chesapeake SWF.  If Colonial Downs is unsuccessful in opening the Second Chesapeake SWF in 2005 (other than as a result of Force Majeure events), no handle generated at the existing Chesapeake SWF shall be included in the calculation of the

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$22,375,000 threshold set forth on Exhibit B until such time as the Second Chesapeake SWF opens for business.  The effective contribution rates for the existing Chesapeake Facility and the Second Chesapeake SWF set forth in Exhibit B hereto shall continue for the term of Colonial Downs’ licenses for such facilities.

D.SWF Referenda in Northern Virginia.  In 2005 Colonial Downs and the VHBPA shall organize an industry task force to explore strategies for a successful statutory referendum in Northern Virginia with the goal of conducting at least one Northern Virginia statutory referendum by December 31, 2007. For purposes of this Agreement Northern Virginia is defined as the counties of Loudoun, Prince William, Fairfax, Arlington, and Fauquier, the cities of Manassas, Manassas Park, Fairfax City, Falls Church, and Alexandria and the towns with population of 5,000 or more located within the foregoing counties.

(1)Upon winning a referendum in Northern Virginia, Colonial Downs shall use its commercially reasonable efforts to apply expeditiously for licenses to own and operate an SWF in the locality in which the referendum was won; provided, however, if more than one referendum is won in adjacent localities or in localities in which two SWFs would compete with each other, Colonial Downs shall be obligated to apply for licenses in only one such locality.  Upon the grant of the licenses, Colonial Downs shall use its commercially reasonable efforts to open the licensed facility expeditiously.

(2)Colonial Downs and the VHBPA agree to distribute funds from the Thoroughbred Partners’ Account in such a fashion as set forth in Exhibit B hereto for any SWF opened by Colonial Downs in Northern Virginia, as defined above, during the three-year period commencing on the effective date of this Agreement.

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E.Additional SWFs in the Central-Southside Virginia Region.  Colonial Downs shall conduct two referenda during the period from January 1, 2005 to December 31, 2006, and one referendum during the period from January 1, 2007 to December 31, 2007 in the Central-Southside Virginia region as set forth in Exhibit D hereto (the “Central-Southside Virginia Region”); provided however, upon thoroughbred handle (live plus SWF) equaling or exceeding $200,000,000, Colonial Downs’ obligations to conduct additional referenda in the Central-Southside Virginia Region shall automatically terminate.  Colonial Downs’ obligation to conduct the foregoing referenda in the time periods specified shall be temporarily suspended, but not terminated, for each year in which there are no statutorily authorized SWFs available for initial licensing.

(1)If Colonial Downs conducts and wins such a referendum it shall proceed in the manner described in Section 8.D (1) hereof with respect to such referendum.  Upon the opening of any SWF in Central-Southside Virginia Region, Colonial Downs and the VHBPA agree to distribute funds from the Thoroughbred Partners’ Account in such a fashion as set forth in Exhibit B hereto for any SWF in the Central-Southside Virginia Region for which a license application has been made within the eight-year period commencing on the effective date of this Agreement or, if later, the date on which all conditions set forth in Section 29 are satisfied or waived.

(2)On or before December 1, 2006, and on or before each December 1 thereafter, the parties shall determine if Colonial Downs has conducted the minimum number of referenda required by this agreement.  In the event Colonial Downs fails to conduct the three Central-Southside referenda in the time periods specified above, the contribution rate for thoroughbred handle to the payment of purses set forth in Exhibit B hereto shall be suspended for

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all SWFs operating in the Central-Southside Virginia Region and for the Richmond (Hull Street) SWF, the existing Chesapeake SWF, and the Second Chesapeake SWF, and the purse contribution rate shall be that specified in Exhibit B hereto for “All Other SWFs” until such time as Colonial Downs conducts the number of referenda specified in this Subsection E regardless of the time periods specified above (e.g. conducting an additional referendum in 2007 after conducting only one in the period from January 1, 2005 to December 31, 2006).  Upon Colonial Downs conducting the specified number of referenda, the purse contribution rates shall be reinstated to the rates set forth in Exhibit B hereto for SWFs located in Central-Southside Virginia Region, the Richmond (Hull Street) SWF, the existing Chesapeake SWF, and the Second Chesapeake SWF. No adjustment (either higher or lower) to the purse contribution rate shall be retroactive.

F.Funding of Virginia Turf Festival.  The amount of purse funds devoted to the Virginia Turf Festival shall increase by an amount equal to between thirty-three percent (33%) and fifty percent (50%) of additional purse money provided by the Richmond (Hull Street) SWF, the SWFs in Chesapeake (for combined handle in excess of $22,375,000), new SWFs in the Central-Southside Virginia Region, including, but not limited to, the Vinton SWF, the Henry County SWF, and the Scott County SWF, and any Northern Virginia SWFs.  Such funding of the Virginia Turf Festival shall continue for the term of Colonial Downs’ licenses for the foregoing facilities.  For 2006 and 2007, the parties have agreed to the allocation of such additional purse funds to the Virginia Turf Festival and overnight purses as set forth in Section 4.F.  Such allocation shall be applicable only for 2006 and 2007, unless the parties otherwise agree.  The allocation of days for the Virginia Turf Festival and purses per day shall be based on the goal of maintaining an average purse per day for the Virginia Turf Festival within the top

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five percent (5%) of purses per day at thoroughbred racetracks nationally.  Colonial Downs may supplement the purses for the Virginia Turf Festival from its own funds, in its sole discretion, to achieve this purse per day result.  For 2006 and 2007, the parties have agreed to seek a Virginia Turf Festival on the terms set forth in Sections 4.F. and 6.  Thereafter, upon the Virginia Turf Festival growing to ten (10) days under the foregoing criteria, following discussions with the Turf Festival Planning Committee (established pursuant to Section 6 hereof), Colonial Downs may separate the Virginia Turf Festival from the summer thoroughbred meet, in which event the Virginia Derby may cease to be included in the Virginia Turf Festival, in Colonial Downs’ discretion, and remain a part of the summer meet.  Funding for the Virginia Turf Festival shall remain at the levels set forth herein, however, in such event.

G.Incorporation of Terms in SWF Licenses.  Colonial Downs and the VHBPA agree that in order for any and all owner’s and operator’s licenses for the additional SWFs referenced herein (including but not limited to the new SWFs in Henry and Scott Counties, the Second Chesapeake SWF, and SWFs in Northern Virginia) to be effective for purposes of this Agreement, such licenses shall contain or incorporate the provisions of this Agreement relating to adjustments to contributions from the Thoroughbred Partners’ Account to the Horsemen’s Account and Section 20 hereof.  The parties agree to use their best efforts to have the SWF licenses issued by the Commission contain or incorporate such provisions.

9.Stalls and Track Facilities.

A.Availability of Stalls and Track Facilities Before, During and After Race Meetings.  Colonial Downs shall make available at least one thousand (1,000) stalls to Horsemen during each Race Meeting.  Access to the racing strip, barns, track kitchen facilities, dormitories, and related backside facilities at the Racetrack (collectively, the “Backside Facilities”) necessary

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for training purposes shall be made available by Colonial Downs without charge (i) prior to each live Race Meeting, to Horsemen who have horses training for that live Race Meeting, and (ii) following each live Race Meeting, to Horsemen who have raced at the Racetrack during that Race Meeting.  The Backside Facilities shall be made available by Colonial Downs prior to and following each Race Meeting for an aggregate total of 20 days, the exact number of days before and number of days after each Race Meeting to be agreed upon each year by Colonial Downs and the VHBPA.  Notwithstanding the foregoing, such periods may be shortened if the Backside Facilities are then needed for a live standardbred race meeting, and Colonial Downs shall provide advance notice to the Horsemen in any such event.  During the aforesaid periods, Colonial Downs shall, at its own expense, make water and electricity available to each barn in use and keep the racing surfaces properly harrowed and watered.

B.Vendors.  Except as expressly provided elsewhere in this Agreement, Colonial Downs shall not impose upon Horsemen any exclusive arrangement concerning farriers, feedmen, tack supplies, or any other suppliers or providers of services customarily used by owners and trainers; provided, however, that if Colonial Downs permits the use of bedding material other than straw, it may require the use of an exclusive supplier in order to facilitate removal of such used material.  Notwithstanding the foregoing, Colonial Downs reserves the right to impose reasonable non-discriminatory requirements for security, safety and environmental reasons.  Colonial Downs shall use its reasonable best efforts to keep unlicensed persons in the above categories off its premises.

C.Stall Applications.  Not less than seventy-five (75) days prior to each Race Meeting, Colonial Downs shall publish and distribute stall applications to horsemen.  Colonial Downs shall use its commercially reasonable efforts to ensure that: (i) the stall application

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contains notice of the cut-off date for the submission of stall applications; (ii) the stall application contains in bold face type any rules of entry preference for Virginia-bred, Virginia-sired, Virginia-owned, or Virginia-stabled horses; (iii) the stall application provides on the front cover that no dogs will be allowed in the stable area, that no children will be allowed to stay in the backstretch dormitories, and that the other rules applicable to the backside anticipated by Colonial Downs to be enforced at each Race Meeting will be posted at the Track and will be mailed upon request to trainers and others; and (iv) each completed application contains the name, permanent address, telephone number, and electronic mail (e-mail) address of the owner and trainer of each horse expected to be stabled on the grounds of the Racetrack during that Race Meeting.   Colonial Downs shall, in the exercise of its sole business judgment, determine the terms for and approve or disapprove applications for stalls, but to the extent reasonably possible, preference shall be given to stall applications for Virginia-bred horses, Virginia-owned horses, and Virginia-sired horses.  Colonial Downs may consider, among other things, the following criteria in allocating stalls to Horsemen for use during Race Meetings:

(1)The overall quality of the horses listed on the stall application;

(2)The quality of the racetrack(s) where the horses listed on the stall applications have previously raced;

(3)The number of starts a trainer listed on the application has made at past Colonial Downs Race Meetings, where applicable;

(4)The financial and professional integrity of the trainer listed on the stall application;

(5)The total number of stalls requested by a trainer in relation to the number of available stalls; and

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(6)The best interests of Colonial Downs and thoroughbred racing.

Each Horsemen accepting a stall at the Racetrack shall be required to use his or her best efforts to run his or her horses at the Racetrack during the Race Meeting consistent with the horses’ physical condition and fitness, and race conditions.

D.Racetrack Kitchen.  Colonial Downs shall provide a Racetrack kitchen for use by Horsemen and others, with the terms, conditions and provisions thereof to be mutually agreed upon on an annual basis by the VHBPA and Colonial Downs.  Joint approval of Colonial Downs and the VHBPA shall be required concerning, but not limited to, management of the facility, cleanliness of the facility, palatability and cost of food, adequacy of hours of operation, and adequacy of premises insurance coverage.

E.VHBPA Accommodations. Colonial Downs shall provide a suitable location on the backstretch for construction of a permanent building by the VHBPA, to be used during the Race Meetings for a classroom facility, an office for the chaplaincy program, a counseling office, a chapel, recreation, and a secure office and storage facility for the VHBPA.  Colonial Downs shall furnish electrical service, telephone hook-up, and television race simulcasting for the building.  The VHBPA shall save and hold harmless and shall indemnify Colonial Downs against any expenses, costs, claims, or demands, including attorney’s fees, arising out of the construction and use of the building, electrical service, telephone hook-up, and television race simulcasting. Colonial Downs shall also provide the VHBPA a grandstand suite, free of charge except for food service, for use by its members and guests on each race day (except for the Virginia Derby) in 2005, 2006, and 2007, unless the parties agree otherwise.

10.Racing Committee.  Colonial Downs and the VHBPA have organized and shall maintain a joint committee to be known as the “Racing Committee.”  The VHBPA and Colonial

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Downs shall each continue to appoint not more than four (4) representatives to the Racing Committee.  The Racing Committee (i) shall meet at the request of either Colonial Downs or the VHBPA on at least five (5) days notice to the other party, and (ii) may consider such matters as the stable area, barns, tack rooms, dormitories, promotion, publicity, track conditions (bad weather closing), racing-related programs, reserved seats and passes for Horsemen, number of races, purse schedules, track kitchen, other matters related to attendance, pari-mutuel handle or the quality of racing, and health benefit programs, death benefits, drug and alcohol abuse programs, and any other program that will aid and assist the racing industry in Virginia in hiring, retaining and caring for its personnel at the highest level.

11.Representations and Warranties.

A.VHBPA.  In addition to the representations and warranties contained elsewhere in this Agreement, the VHBPA warrants, represents to and covenants with Colonial Downs that during the Term of this Agreement:

(1)This Agreement has been approved by the Board of Directors of the VHBPA;

(2)This Agreement is valid and enforceable against the VHBPA according to its terms;

(3)Except as provided in Section 14 below, the VHBPA and its officials shall not acquiesce or actively participate in any attempt to delay, interrupt, or bring about the temporary or permanent cessation or suspension of racing or other activities at the Racetrack, including simulcasting, or activities at the SWFs at any time during the Term of this Agreement;

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(4)Each VHBPA official shall utilize commercially reasonable powers of persuasion and shall take all reasonable action within his or her power, including all commercially reasonable legal means at his or her disposal, to ensure that all VHBPA Members, their employees, other related personnel, and other backside personnel comply with the terms of this Agreement;

(5)This Agreement shall be made available for review and copying by Members of the VHBPA and all other licensed owners, trainers, employees and backside personnel at the VHBPA office; and

(6)The VHBPA shall use its reasonable best efforts to ensure that the backside area of the Racetrack is maintained in a safe, clean, and orderly condition when in use.

B.Colonial Downs.  In addition to the representations and warranties contained elsewhere in this Agreement, Colonial Downs warrants, represents to and covenants with the VHBPA that during the Term of this Agreement:

(1)This Agreement has been approved by its General Partner;

(2)This Agreement is valid and enforceable against Colonial Downs according to its terms;

(3)Colonial Downs shall use its reasonable best efforts to ensure that the backside area of the Racetrack is maintained in a safe, clean and orderly condition when in use; and

(4)Colonial Downs shall use its reasonable best efforts to assist the VHBPA in developing health and welfare programs for backstretch personnel; provided that, this Section imposes no obligation on either party to fund any such program.

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12.Racing Officials.  Colonial Downs shall send to the President of the VHBPA a written list of the persons whom Colonial Downs has requested the Commission to approve as racing officials for each Race Meeting at the same time it submits that list to the Commission in accordance with the Commission’s regulations.

13.Governmental Approval.  Nothing contained in this Agreement shall be construed as requiring either party to perform any term when such performance is contrary to law or requires prior governmental approval; provided, however, both parties shall use their best efforts to obtain governmental approval if such is required.

14.Authorization for Out-of-State Simulcasting.  During the Term of this Agreement, the VHBPA as the authorized representative of the Horsemen for interstate simulcasting purposes, hereby consents and authorizes Colonial Downs to negotiate and contract with simulcast and receiving facilities, including off-track wagering facilities outside the Commonwealth of Virginia, for (i) the conduct of off-track wagering at the Racetrack and the SWFs, and (ii) off-track wagering on live thoroughbred races emanating from the Racetrack, pursuant to the Interstate Horse Racing Act of 1978, P.L. 95-515 (the “Interstate Horse Racing Act”).  This Agreement constitutes the contract required by Section 3004(a) of the Interstate Horse Racing Act.  Colonial Downs shall consider the best interests of live racing when simulcasting.  To the extent required by law, out-of-state simulcasting for all of Colonial Downs’ races at the Racetrack shall be subject to the consent of the VHBPA, which consent shall not be unreasonably withheld, delayed or conditioned.  In the event consent is withheld, the VHBPA shall set forth its reasons for withholding its consent within a reasonable time after notice from Colonial Downs in advance of the intended simulcast.

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15.Copies of Documents; Database.  Colonial Downs shall send a copy of its stall application form, stakes purse program, and condition book for each Race Meeting to the VHBPA on or before the first day they are distributed to Horsemen. Additionally, Colonial Downs shall provide the VHBPA copies of all filings, if any, it makes with the U. S. Securities and Exchange Commission promptly after such filings are made.  Colonial Downs shall share and coordinate all information and data on Horsemen racing at the track with the VHBPA.  The parties shall work jointly to develop and maintain an effective database of Horsemen racing in Virginia.  Not later than thirty (30) days following the close of each Race Meeting, Colonial Downs shall provide the VHBPA a list of all owners and trainers who participated in that Race Meeting, including addresses, telephone numbers, and e-mail addresses to the extent collected by Colonial Downs pursuant to Subsection 9.C. and otherwise.

16.Horsemen’s Backstretch Improvements and Programs.  Colonial Downs and the VHBPA agree to expend for the benefit of Horsemen certain funds during calendar years 2005, 2006 and 2007 for the improvement of backstretch working and living conditions and for educational, recreational, and counseling programs.  Colonial Downs shall provide $75,000 in 2005 and $50,000 in 2006 and 2007 (subject to adjustment as provided in Subsection 20.B. hereof) to be used solely for capital improvements and to be provided no later than June 1^st of each year.   In addition, the VHBPA and Colonial Downs shall use their best efforts to ensure that at least $175,000 is provided annually from the legitimate breakage deposited into the Racing Benevolence Fund pursuant to § 59.1-392(T)(2) of the Code of Virginia for the foregoing improvements and programs.  Regarding the latter Fund, the VHBPA and Colonial Downs agree to use their best efforts to obtain any necessary authorization to use part of the legitimate breakage for such improvements and programs.  All of the above funds shall be deposited into

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the Backstretch Improvement Escrow Account, which shall be established at a financial institution mutually acceptable to both Colonial Downs and the VHBPA, and shall be expended as mutually agreed by Colonial Downs and the VHBPA and subject to Commission approval pursuant to Section 30 hereof.  To the extent funds are available, the improvements and programs shall include the following: (1) training and educational programs such as the Groom Elite Program, which is a formal program developed in cooperation with Texas A & M University to train grooms in equine science concepts and practices; (2) chaplaincy and counseling, including health and drug abuse programs; (3) participation in the national Kids To The Cup program to encourage young people to learn about the horse industry by participation in backstretch activities; (4) after-work recreational programs for backstretch personnel, such as picnics, evening television and videos, etc.; (5) expansion and improvement to dormitory facilities to better serve the health needs of backstretch personnel; (6) implementation of a plan to eliminate from all barns the water runoff problem that in the past has resulted in standing water, which plan shall include appropriate landscaping and pesticide spraying and installation of gutters; (7) structural modification to the Receiving Barn to improve ventilation; and (8) construction of the office/classroom facility, identified in Section 9.E. above.  At the conclusion of each Race Meeting, the VHBPA shall within sixty (60) days provide Colonial Downs with an accounting of all expenditures made from the Backstretch Improvement Escrow Account.

17.Right to Terminate.  Either party may terminate this Agreement upon the other party’s failure to substantially perform as required under this Agreement and such failure continues for thirty (30) days following the date written notice of default detailing the perceived failure to perform is sent to and received by the allegedly defaulting party in accordance with Section 23 below.  Such termination shall not constitute an election of remedy, nor shall it

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constitute a waiver of a party’s other remedies at law or in equity.  Additionally, Colonial Downs may terminate this Agreement upon written notice to the VHBPA if the Racetrack and all the SWFs are closed for ninety (90) continuous days.

18.Indemnification.  The VHBPA shall indemnify and save harmless Colonial Downs, its agents, representatives, employees, officers, directors and stockholders, their respective successors and assigns, and all persons acting by, through, under, or in concert with any of them, from and against any and all demands, liabilities, loss, costs, damages, or expenses of whatever nature or kind, including fees of attorneys and all other expenses, arising out of or in any way related to or occasioned by Colonial Downs’ performance under Subsection 4.I. hereof (Administrative Fee).

19.Mediation; Arbitration.

A.Attempt to Resolve Disputes.  In the event of any disputes or differences arising out of this Agreement, which the parties have been unable to resolve after reasonable efforts to do so, either party may refer the dispute or difference to a mediator mutually acceptable to the parties.  In the event such mediation is unsuccessful, or the parties are unable to agree on a mediator, either party may refer the dispute or difference for final settlement to arbitration in accordance with the following procedures.

B.Administration.  The arbitration shall be administered by the American Arbitration Association (“AAA”), or its successor, pursuant to the expedited procedures (irrespective of the amount in controversy) of the AAA’s then-prevailing Commercial Arbitration Rules (the “Rules”), subject to the limitations and modifications set forth herein.  The laws of the Commonwealth of Virginia will govern all matters arising under the arbitration

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without giving effect to the choice of law principles thereunder.  The arbitration will be held in Virginia unless the parties otherwise agree.

C.Notice to Arbitrate.  Notice of a demand for arbitration pursuant to this procedure (the “Notice to Arbitrate”) shall be made in writing and delivered to all other affected parties as provided in Section 23 hereof.  The Notice to Arbitrate shall be accompanied by a short and plain statement of the party’s claim(s), the grounds for same and the relief sought.  Within ten (10) days of receipt of the Notice to Arbitrate, the other party shall set forth in writing and deliver to all other affected parties as provided in Section 23 hereof, an answer setting forth its response to the claim for relief, as well as any affirmative defenses and counterclaims.

D.Selection of Arbitrator(s).  The arbitration shall be before one neutral arbitrator (the “Arbitrator”) to be selected in accordance with the Rules (as modified herein).  In the event the parties cannot agree upon an Arbitrator within ten (10) business days from receipt of the Notice to Arbitrate, each party shall select one Arbitrator.  The Arbitrators so selected shall select a third arbitrator at the Pre-Hearing Conference (as defined herein), who shall be the chairperson of the three member panel.

E.Pre-Hearing Conference.  The Arbitrator(s), within ten (10) days of his, her or their appointment, shall conduct a pre-hearing conference (the “Pre-Hearing Conference”).  The parties shall be prepared to discuss discovery matters, schedule the Additional Conference and Arbitration Hearing (as defined herein), decide procedural matters and address all other questions that may be presented.

F.Discovery.  The parties shall have the right to conduct and enforce pre-hearing discovery in accordance with the Federal Rules of Civil Procedure then in effect for the

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Eastern District of Virginia (Richmond Division), including any Local Rules (collectively, the “Court Rules”), subject to the following:

(1)The parties shall make the voluntary disclosures described in the Court Rules (except those applicable to expert witnesses) within fifteen (15) days after the appointment of the Arbitrator(s).  The identity and report of each expert witness, as well as all other disclosures described in the Court Rules, shall be disclosed to the other parties no later than thirty (30) days after the appointment of the Arbitrator(s).

(2)Each party may serve a request for production of tangible and documentary evidence.  Responses to a request for production shall be due fifteen (15) days after receipt.

(3)Each party may serve no more than one set of interrogatories limited to no more than thirty (30) questions, including subparts.  Answers to interrogatories shall be due fifteen (15) days after receipt.

(4)Each party may depose up to, but no more than, three (3) witnesses; provided, however, that each party is limited to no more than a total of eighteen (18) hours of deposition time in the aggregate.

(5)All discovery must be completed within forty-five (45) days after appointment of the Arbitrator(s) (the “Discovery Deadline”).

(6)The Arbitrator(s), for good cause shown, upon motion and three (3) days’ notice to all parties, may extend any of the discovery deadlines set forth herein for a period not to exceed fourteen (14) days.

(7)The Arbitrator(s) shall have the right and authority to decide any and all discovery disputes.  The Arbitrator(s) shall be empowered to issue subpoenas and any and

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all process and orders permitted under the Rules to compel cooperation in discovery and otherwise enforce the discovery rights and obligations of the parties.

G.Additional Conference.  Within ten (10) days after the Discovery Deadline, the Arbitrator(s) shall hold an additional conference (the “Additional Conference”) to set dates for the exchange of witness and exhibit lists, deposition testimony designations, testimony summaries and arbitration briefs; determine the length of the Arbitration Hearing; and address any and all other questions that may be presented.

H.Arbitration Hearing.  The arbitration hearing (the “Arbitration Hearing”) shall commence within twenty (20) days after the date of the Additional Conference, unless otherwise agreed by the parties.  For good cause shown, the Arbitrator(s) may grant no more than one (1) continuance per party of a duration not to exceed ten (10) days each; provided, however, no party shall be entitled to any other continuances.  Unless otherwise agreed by the parties or ordered by the Arbitrator(s) for good cause shown, the Arbitration Hearing shall continue from day-to-day for such period of time (not to exceed five (5) days) as may be set by the Arbitrator(s).  Each party shall have equal time for presentation and rebuttal, unless otherwise agreed by the parties.  The parties may present evidence, at their option, in the form of testimony (live and/or by deposition), documents and other tangible evidence, or testimony summaries, or any combination thereof.  The Arbitrator(s), upon timely request by a party or if otherwise required by law, shall require witnesses to testify under oath administered by any duly qualified person.  Any party, at its own cost and three (3) days’ notice to all other parties, may arrange for a stenographic record of the proceedings.  Such record shall be made available for inspection and copying by all other parties and the Arbitrator(s).

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I.Arbitration Award.  Notwithstanding the foregoing, it is the parties’ intent that the arbitration shall be completed and resolved within one hundred and twenty (120) days of the commencement of such proceeding.  The Arbitrator(s) shall issue and deliver to each party a written and signed award (the “Arbitration Award”) within thirty (30) days of the closing of the record.   The Arbitration Award shall contain the factual and legal bases for such award.  The Arbitration Award, in addition to the relief granted therein, may award attorneys’ fees and costs to the prevailing party as the Arbitrator(s) may determine in light of all of the circumstances.  The Arbitration Award shall be final and binding upon the parties in accordance with its terms and Section 8.01-577 et seq.  of the Code of Virginia.

J.Default.  If a party fails to proceed with arbitration or defaults in his obligation to arbitrate, such default shall not prevent the other party from proceeding with such arbitration and the party who fails to proceed with such arbitration shall be bound by the arbitration.

K.Costs.  The costs of the arbitration incurred by the parties for hearing reporting fees, rental of a hearing room and all AAA fees, costs and services charges and of the arbitrator shall be paid by Colonial Downs, except that hearing postponement or cancellation fees or charges by the AAA or the arbitrator(s) shall be borne exclusively by the canceling or postponing party.  Conversely, with respect to all other matters, unless the arbitrator(s) otherwise so determines and provides in the arbitration award, each party shall bear its own costs and expenses incurred by that party in connection with the arbitration, including without limitation each party’s own travel expenses, hearing witness expenses and attorney’s fees.

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20.Contribution Adjustments.

A.Changes in Applicable Law.  The parties have negotiated the relevant transfers from the Thoroughbred Partners’ Account to the Horsemen’s Account (the “Purse Amounts”) from expected handle at the Richmond (Hull Street) SWF, the Vinton SWF, the existing Chesapeake SWF, the Second Chesapeake SWF, and future SWFs located in Henry and Scott Counties, and Northern Virginia based upon those statutes, regulations, administrative proceedings, common law and other accepted sources of rules and regulations applicable to the parties that are in effect as of the date hereof (collectively, “Applicable Law”).  Under Applicable Law, certain allocations of rights and entitlements have been made to Colonial Downs (such as uncashed tickets) and the VHBPA (such as a portion of breakage), and the parties do not intend to alter such existing rights and entitlements by this Agreement generally or by application of this Section 20, in particular, to future events.  Nonetheless, in the event there is a change in Applicable Law or a ruling or action of the Commission that alters contributions to the Thoroughbred Partners’ Account or transfers to the Horsemen’s Account, or otherwise inures to the benefit or detriment of the VHBPA or its successors in the form of purses, operating funds or awards, then the parties agree that the Purse Amounts shall be adjusted to restore the parties to the economic terms set forth in this Agreement.  By way of example and not limitation, if Applicable Law is changed to provide that a percentage of breakage or uncashed tickets is applied to increase purses for thoroughbred racing, then the Purse Amounts shall be adjusted downward such that in any fiscal year the amount contributed to purses pursuant to the terms hereof shall be reduced by an amount equal to the contribution to purses from breakage.   By way of further example, if the percentage of handle paid to the Commonwealth of Virginia as a pari-mutuel tax increases, there shall be no change in the Purse Amounts under this Agreement

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unless such increased pari-mutuel tax is used to supplement purses or is used for the exclusive activities of the representative horsemen group or groups for Horsemen racing at Colonial Downs.

B.Changes in MVRC Management Fee.  The parties have also negotiated the relevant transfers from the Thoroughbred Partners’ Account to the Horsemen’s Account from expected handle at the Richmond (Hull Street) SWF, the Vinton SWF, the existing Chesapeake SWF, the Second Chesapeake SWF, and future SWFs located in Henry and Scott Counties, and Northern Virginia based upon an amendment to the Management and Consulting Agreement reducing MVRC’s management fee to 1.5% of handle wagered at Richmond (Hull Street), Vinton, and SWFs located in Henry and Scott Counties.  If that management fee is further reduced pursuant to Section 4.1.4 of the Management and Consulting Agreement, then one-half of the amount of that reduction attributable to handle at Richmond (Hull Street), Vinton, and SWFs located in the Henry and Scott Counties (collectively, the “New Handle) shall be contributed by Colonial Downs to the Thoroughbred Partners’ Account (such that the effective rate of contribution attributable to the New Handle is increased by .375%) and such amount shall be added to the annual transfer of funds from the Thoroughbred Partners’ Account to the Horsemen’s Account regarding Richmond (Hull Street), Vinton, and all SWFs located in Henry and Scott Counties, as set forth in Exhibit B hereto.  Such payments shall commence upon the effective date of the management fee reduction and shall terminate upon the termination of such reduction in the management fee pursuant to Section 4.1.4 of the Management and Consulting Agreement.  Similarly, if the management fee in the Management and Consulting Agreement currently applicable to handle at SWFs, other than those identified above, is reduced at any time, then Colonial Downs shall annually provide $100,000 for capital improvements to the

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Racetrack’s backstretch pursuant to Section 16 hereof effective in the first full calendar year after the reduction in the management fee goes into effect.  Such obligation shall be reduced to $50,000 per year if the management fee reduction is terminated pursuant to Section 4.1.4 of the Management and Consulting Agreement.

C.Termination of Management Fee.  If the above-referenced management fees are reduced to zero or otherwise eliminated completely then the annual transfer of funds from the Thoroughbred Partners’ Account to the Horsemen’s Account for all SWFs, wherever located within Virginia, shall be subject to good faith negotiations between the parties, or their successors or assigns, as to the appropriate sharing between them of the benefits of that reduction or elimination.

D.Duration.  The terms and provisions of this Section 20 shall remain in full force and effect for as long as the licenses for the Richmond (Hull Street) SWF, the Vinton SWF, the existing Chesapeake SWF, the Second Chesapeake SWF, or the SWFs located in Henry and Scott Counties remain in effect.

21.Consents, Approvals, Agreements or Assurances.  Wherever this Agreement requires the consent, approval, agreement, or assurance of Colonial Downs and/or the VHBPA, (i) a request for such consent, approval, agreement, or assurance from one party shall be responded to by the other party in a timely and businesslike manner, and (ii) such consent, approval, agreement, or assurance shall not be unreasonably withheld, delayed or conditioned unless otherwise specifically provided in this Agreement.

22.Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

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23.Notices.  All notices, requests, demands or other communications as may be required by this Agreement shall be in writing, shall be signed by an authorized representative of the party providing the communication, shall be sent to each of the persons listed below, may be sent by certified mail, return receipt requested, or by telephone facsimile, and shall be deemed to have been given or made when received by personal delivery or otherwise.  A courtesy hard copy of any communication that is sent by telephone facsimile also shall be sent by certified mail, return receipt requested.  The current addresses of persons to whom communications are to be sent are as follows:

Colonial Downs:	Mr. Jeffrey P. Jacobs
	Colonial Downs, L.P.
	10515 Colonial Downs Parkway
	New Kent, VA 23124
	Mr. Ian M. Stewart, President
	Colonial Downs, L.P.
	10515 Colonial Downs Parkway
	New Kent, VA 23124
Copy to:	James L. Weinberg, Esq.
	Hirschler Fleischer
	The Federal Reserve Bank Building
	P.O. Box 500
	701 E. Byrd Street, 15th floor
	Richmond, VA 23219
	Mr. John E. Mooney, President
	Maryland-Virginia Racing Circuit, Inc.
	10515 Colonial Downs Parkway
	New Kent, VA 23124
	H. Lane Kneedler, Esq.
	Reed Smith LLP
	901 East Byrd Street, Suite 1700
	Richmond, VA 23219-4069

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VHBPA:	Ms. Althea D. Richards, President
	Virginia Horsemen’s Benevolent and
	Protective Association, Inc.
	P.O. Box 273
	Millwood, VA 22646
Copy to:	Frank Petramalo, Jr., Esq.
	VHBPA
	38-C Garrett Street
	Warrenton, VA 20186

24.Waivers.  No waiver by a party to this Agreement of any breach of this Agreement or any of its terms shall be effective unless, and only to the extent, such waiver is in writing signed by the party providing or making such waiver and delivered to the other party as provided in Section 23 above.  No waiver of any breach shall be deemed to be a waiver of any other or any subsequent breach.

25.Applicable Law; Venue.  This Agreement is being executed and delivered in the Commonwealth of Virginia and shall be construed and enforced in accordance with the law of Virginia without regard to its conflict of laws rules and provisions.  In all court proceedings brought in connection with this Agreement, the parties hereto irrevocably consent to exclusive personal jurisdiction by, and venue in, the Circuit Court for the City of Richmond, Virginia, or the United States District Court for the Eastern District of Virginia, Richmond Division.

26.Headings.  Any headings preceding the text of the several sections, subsections, paragraphs and subparagraphs hereof are inserted solely for convenience of reference and shall not constitute a part of this Agreement, nor shall they affect its meaning, construction, or effect.

27.Severability.  If any provision of this Agreement is declared invalid by any tribunal, or becomes invalid or inoperative by operation of law, the remaining provisions of this Agreement shall not be affected thereby and shall remain in full force and effect.

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28.Entire Agreement; Modification.  This Agreement contains the entire Agreement between the parties and supersedes all prior agreements (including the Existing Agreement) and understandings, both written and oral, between the parties with respect to the subject matter of this Agreement; provided, however, this Agreement shall not alter the allocation of funds to the Horsemen’s Account from the New Richmond SWF and SWFs in Central-Southside Virginia Region pursuant to the Existing Agreement.  This Agreement shall be binding upon and inure to the benefit of each party hereto, its legal representatives and successors, including, but not limited to, any successor group to the VHBPA that is the recognized majority thoroughbred horsemen’s group.  No modification, variation or amendment of this Agreement or of any attachment or exhibit to this Agreement shall be effective unless such modification, variation or amendment is in writing and has been signed by the parties to this Agreement.  This Agreement may be assigned by Colonial Downs in its sole discretion, subject to applicable law.

29.Conditions Precedent to Effectiveness of this Agreement.  The parties acknowledge that this Agreement and the expenditures from the Racing Benevolence Fund detailed in Section 16 above are subject to the approval of the Commission.  If this Agreement in its entirety and such expenditures are not approved by the Commission, this Agreement shall be null and void.

Upon satisfaction or waiver of the foregoing conditions, this Agreement shall be effective as of January 1, 2005, regardless of the date of the satisfaction or waiver of such conditions.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first stated above.

VIRGINIA HORSEMEN’S		COLONIAL DOWNS, L.P.
BENEVOLENT AND PROTECTIVE
ASSOCIATION, INC.		By:		Stansley Racing Corp., its General Partner
By:	/s/ Althea D. Richards			By:	/s/ Ian M. Stewart
	Althea D. Richards, President				Ian M. Stewart, President
		STANSLEY RACING CORP.
		By:	/s/ Ian M. Stewart
			Ian M. Stewart, President

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EXHIBIT A

FORM OF

TRUST AGREEMENT

THIS TRUST AGREEMENT is entered into this            day of                   , 200      , by and between COLONIAL DOWNS, L.P., a Virginia limited partnership (the “Trustee”), and the VIRGINIA HORSEMEN’S BENEVOLENT AND PROTECTIVE ASSOCIATION, INC., a not-for-profit corporation (the “VHBPA”), on behalf of the thoroughbred horsemen engaging in thoroughbred racing at Colonial Downs’ racetrack (the “Track”) (collectively, the “Beneficiaries”).

W I T N E S S E T H:

WHEREAS, pursuant to prior agreements that have expired and an Agreement, dated as of November       , 2002 (the “Horsemen’s Agreement”), relating to live thoroughbred racing at Colonial Downs, among other matters, the Trustee has and will make deposits into an account currently maintained at BB&T Bank, N.A., Middleburg branch (the “Thoroughbred Partners’ Account”) a portion of which will be used to fund purses and related payments to the Beneficiaries participating in racing at the Track during the 2003 thoroughbred racing season and other years governed by the Horsemen’s Agreement;

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.The Account.  The Trustee shall maintain the Thoroughbred Partners’ Account at a financial institution mutually acceptable to the parties and that is insured by an agency of the United States government.

2.Deposits.  The Trustee shall deposit all funds required by the Horsemen’s Agreement into the Thoroughbred Partners’ Account.  The funds so deposited into the Thoroughbred Partners’ Account, exclusive of interest earned thereon and amounts payable to Colonial Downs therefrom, are hereinafter referred to as the “Trust Account Funds.”  Except as provided in Section 5.B. of the Horsemen’s Agreement, no other funds shall be deposited into the Thoroughbred Partners’ Account, and the Trustee shall not commingle any other funds with the Trust Account Funds.

3.Withdrawals.  The VHBPA, on behalf of the Beneficiaries, grants the Trustee the authority to withdraw funds from the Thoroughbred Partners’ Account to make payments required to be made pursuant to the terms and provisions of the Horsemen’s Agreement, including, without limitation, to provide for the payment of purses and related awards to the Beneficiaries.

A-1

4.Title to Funds in the Account.  The Trustee shall hold only legal title to the Trust Account Funds and shall not have any equitable or beneficial interest in such Funds.  Accordingly, the Trust Account Funds are excluded from the Trustee’s estate for purposes of 11 U.S.C. § 541(d), as amended.

5.Interest.  The Trustee understands and accepts that interest, if any, earned on the Funds will be reported under its employer identification number, that such reporting is done as a matter of convenience for the administration of the Thoroughbred Partners’ Account and that the receipt of such interest does not affect the beneficial and equitable title that the parties have to such interest and is not in derogation of the rights and entitlements of the parties as set forth herein and in the Horsemen’s Agreement.

6.Trustee’s Duties.  The duties of the Trustee under this Agreement shall be limited to the safekeeping and disbursement of the Trust Account Funds and documents under the terms and conditions of this Agreement.  The Trustee shall be entitled to rely on and may assume the genuineness and authenticity of any signatures purported to be made by the parties hereto, their lawful representatives, and successors or assigns.  Upon election of either party hereto, an independent third party may be appointed trustee of the Thoroughbred Partners’ Account and the Trustee hereunder may be relieved of its duties as trustee but shall be bound by the other provisions of this Agreement.

7.Limitation on Liability.  The Trustee shall not be liable for any claims, damages, liabilities, losses, costs, or expenses arising from the Trustee’s acts or omissions with respect to the Trust Account Funds or its performance hereunder, unless such actions or omissions result from the Trustee’s negligence or willful misconduct.

8.Reimbursement of Expenses.  The Trustee shall be reimbursed in the form of one-half of the interest accruing on the Trust Account Funds for all costs and expenses reasonably incurred by it in connection with the administration of the Account, including payment of any trustee fees to a third-party trustee.

9.Termination.  This Agreement shall terminate on the date on which all payments under the Horsemen’s Agreement have been made and the Horsemen’s Agreement is no longer in effect.

10.Notices.  All notices, approvals, and other communications authorized or required to be given between the parties hereto shall be validly given or made if in writing and sent in accordance with the terms and conditions of the Horsemen’s Agreement.

11.Governing Law.  This Agreement shall be governed, construed, and enforced in accordance with the laws of the Commonwealth of Virginia, without regard to any conflicts of law, rules or provisions thereof.

12.Miscellaneous.  Any action, suit, or proceeding in respect of or arising out of this Agreement may be prosecuted as to any party hereto in Richmond, Virginia.  Each party hereto consents to the exercise of jurisdiction over its person by any court situated in Richmond,

A-2

Virginia and having jurisdiction over the subject matter of any such action, suit, or proceeding.  The invalidity or unenforceability of any provision of this Agreement in any particular respect shall not affect the validity and enforceability of any other provision of this Agreement or of the same provision in any other respect.  This Agreement and the Horsemen’s Agreement set forth the entire understanding of the parties to this Agreement with respect to the operation of the trust for the Thoroughbred Partners’ Account and may not be amended except by a written instrument executed by all parties hereto.  Other than the Horsemen’s Agreement, any previous agreements or understandings among the parties hereto regarding the subject matter hereof are merged into and superseded by this Agreement.  All of the covenants, stipulations, terms, and conditions of this Agreement shall extend to and be binding upon the respective successors and assigns of the parties hereto, but this Agreement shall not be assigned by the Trustee without the prior written consent of the Beneficiaries.

This Agreement or any amendment hereto may be executed in two or more counterparts, each of which shall constitute an original, and all of which together shall constitute one and the same Agreement.

VIRGINIA HORSEMEN’S		COLONIAL DOWNS, L.P.
BENEVOLENT AND PROTECTIVE
ASSOCIATION, INC.		By:	Stansley Racing Corp., its General Partner
By:			By:
	Althea D. Richards, President			Ian M. Stewart, President

A-3

EXHIBIT B

Annual Transfers of Funds from Thoroughbred

Partners’ Account to Horsemen’s Account

All SWFs located in the Central-Southside Virginia Region (including, but not limited to, the town of Vinton and Scott and Henry Counties)	4.5% of all thoroughbred handle in a calendar year at each such facility for ten years from the opening date of each such facility. After ten years from opening date, for each calendar year: 5% of the first $75,000,000 of thoroughbred handle at each such facility; plus 6% of thoroughbred handle in excess of $75,000,000 up to $150,000,000 at each such facility; and plus 7% of thoroughbred handle in excess of $150,000,000 at each such facility.
The Richmond (Hull St.) SWF	4% of the first $15,000,000 of thoroughbred handle in a calendar year at such facility; plus 5% of thoroughbred handle in excess of $15,000,000 up to $20,000,000 in a calendar year at such facility; plus 6% of thoroughbred handle in excess of $20,000,000 up to $25,000,000 in a calendar year at such facility; and plus 7% of thoroughbred handle in excess of $25,000,000 in a calendar year at such facility.
The existing Chesapeake SWF and the Second Chesapeake SWF	4.5% of all thoroughbred handle in a calendar year in excess of the aggregate sum of $22,375,000 of the combined thoroughbred handle from the two facilities.
Northern Virginia SWF	0% of all thoroughbred handle wagered at each such facility for the first 12 months of operation and thereafter as provided for “All Other SWFs” described below.
All Other SWFs (including the aggregate thoroughbred handle of the two Chesapeake SWFs up to $22,375,000)	5% of the first $75,000,000 of aggregate thoroughbred handle from such facilities; plus 6% of aggregate thoroughbred handle in excess of $75,000,000 up to $150,000,000 from such facilities; plus 7% of thoroughbred handle in excess of $150,000,000 from such facilities less the amounts the VHBPA is authorized to deduct from the Thoroughbred Partners’ Account pursuant to the Agreement (including but not limited to NTRA dues, an administrative fee, and repayment of advances (including interest) made by Colonial Downs to the Thoroughbred Partners’ Account).

B-1

EXHIBIT C

Anticipated Development Schedule

Action Item		Time Period
1.	Identify and bring under contract potential SWF site.	4 to 6 weeks from approval of Agreement.
2.	Meeting with local government officials and neighbors; confirmation of zoning compliance.	3 to 6 weeks from having site under contract.
3.	Application to the Virginia Racing Commission.	1 to 2 weeks from satisfaction of Item 2.
4.	Action by the Virginia Racing Commission on application after filing.	6 to 12 weeks.
5.	Application for permits to commence construction or renovation after grant of licenses.	Within 1 week after grant of licenses.
6.	Construction or renovation period.	3 to 6 months.
7.	Total time from identifying a site to opening.	7 to 13 months.

C-1

EXHIBIT D

Central-Southside Virginia Region

Counties

1.Albemarle

2.Allegheny

3.Amherst

4.Augusta

5.Bath

6.Bedford County

7.Bland

8.Botetourt

9.Buchanan

10.Campbell

11.Carroll

12.Craig

13.Dickenson

14.Floyd

15.Franklin County

16.Giles

17.Grayson

18.Greene

19.Halifax

20.Henry

21.Highland

22.Lee

23.Montgomery

24.Nelson

25.Patrick

26.Pittsylvania

27.Pulaski

28.Roanoke County

29.Rockbridge

30.Russell

31.Scott

32.Smyth

33.Tazewell

34.Washington

35.Wise

36.Wythe

Cities

1.Bedford City

2.Bristol

3.Buena Vista

4.Charlottesville

5.Covington

6.Danville

7.Franklin City

8.Galax

9.Lexington

10.Lynchburg

11.Martinsville

12.Norton

13.Radford

14.Roanoke City

15.Salem

16.South Boston

17.Staunton

18.Waynesboro

Towns (Population Greater Than 5,000)

1.Vinton

2.Abingdon

3.Blacksburg

4.Big Stone Gap

5.Farmville

6.Marion

7.Pulaski

8.South Boston

9.Wytheville

D-1

EX-10.19

EXHIBIT 10.19

SHOPPING CENTER LEASE

THIS AGREEMENT OF LEASE, made this 28^th day of February, 2005, by and between Jay F. Wilks, Trustee under indenture dated December 20, 1976 by and between Herbert Cashvan and Marvin Simon, as Settlors and Jay F. Wilks, as Trustee (hereinafter called “Landlord”), whose mailing address is 3400 Building, Suite 200, 397 Little Neck Road, Virginia Beach, Virginia 23452, and telephone number is (757) 340-3535, and Colonial Downs L.P., a Virginia Limited Partnership (hereinafter called “Tenant”), whose mailing address is:  10515 Colonial Downs Parkway, New Kent, Virginia, 23124 and telephone number is 804-966-7223.

W I T N E S S E T H:

1.Demised Premises. Landlord hereby leases and demises to Tenant and Tenant hereby takes and leases from Landlord that certain store building (the “Demised Premises”) which is deemed to be 16,875 rentable square feet of which 10,000 s.f. shall be leased (“Leased Space”) and the remaining 6,875 s.f. shall be reserved by Tenant for expansion (“Expansion Space”), outlined in red on EXHIBIT A attached hereto, in Indian River Shopping Center (the “Shopping Center”) having a street address of 4301 Indian River Road, Chesapeake, VA. The exact s.f. will be adjusted to actual following completion of a dimensioned floor plan that is prepared by Tenant and approval by Landlord. The Leased Space shall also include the use, without additional charge, of a 10 foot by 40 foot area behind the Demised Premises for the location of satellite dishes serving the Demised Premises. The “Leased Space,” “Expansion Space,” and the 10 foot by 40 foot satellite dish area shall be constructed and/or improved by Tenant in accordance with the specifications to be agreed upon prior to the end of the Feasibility Period (defined herein) at Tenant’s expense. Tenant is taking the “Leased Space and “Expansion Space” in an “as is” condition.

2.Term. Except as otherwise provided in paragraph 58 below, the term of this lease shall commence on the earlier to occur of (i) October 1, 2005 or (ii) the date Tenant opens for business, and shall end on September 30, 2015.

3.Purpose. The Demised Premises shall be used for the purpose of conducting therein to operate a satellite wagering facility in the Demised Premises. Tenant covenants and agrees that at all times during the term hereof Tenant will actively conduct such a business in the Demised Premises, and keep the Demised Premises open for business not less than eight (8) hours per day, Monday through Saturday) of the Shopping Center, which hours shall be established by Tenant.

4.Definition of “Term” and “Lease Year”. Except where the context clearly requires otherwise, the word “term,” whenever used in this lease with reference to the term hereof, shall be construed to include any renewal term, as well as the original term. The words “Lease Year,” as used in this lease, shall be construed to mean each twelve (12) month period elapsing after (i) the commencement of the term, if the term begins on the first day of a month, or (ii) the first day of the month following the commencement of the term if the term does not begin on the first day of a month; provided, however, that the period of the term, if any, beginning after the commencement of the last full twelve (12) month Lease Year of this lease shall be deemed to be a “Lease Year” even though it comprises less than twelve (12) months.

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5.Base Rent. Landlord reserves, and Tenant covenants to pay to Landlord, without prior demand being made therefore, as rent for the Demised Premises, the following minimum base rent (the “Base Rent”) payable in equal monthly installments as follows:

Years 1 – 5:	$7.00 psf	$5,833.34 per month	$70,000.00 per year
Years 6 – 10:	$8.00 psf	$6,666.67 per month	$80,000.00 per year

In addition, Tenant shall pay Landlord, as rent for the Expansion Space, from the date of commencement of the term hereof until and including September 30, 2006, the amount of $1,719.00. Thereafter, if Tenant elects to retain the Expansion Space, Tenant shall so advise Landlord in writing on or before October 1, 2006, whereupon such space shall, ipso facto, be deemed part of the Leased Space and the Base Rent shall be increased as follows:

10/1/06 – end of Lease year 5       $7.00 psf    $9,843.75 per month         $118,125.00 per year

Lease year 6 to Lease year 10       $8.00 psf    $11,250.00 per month        $135,000.00 per year

In the event Tenant does not elect to retain the Expansion Space as aforesaid, the Base Rent shall remain as set forth above and Tenant shall vacate and relinquish the Expansion Space to Landlord who shall thereupon have the right to lease the same to another tenant.

Each monthly installment of rent and all other sums due Landlord by Tenant hereunder shall be paid to Palms Associates on behalf of Landlord on the first day of each month during the term at Suite 200, 3400 Building, 397 Little Neck Road, Virginia Beach, Virginia 23452 or at such other place as shall be designated in writing, from time to time, by Landlord.

6.Additional Charges. Tenant shall pay additional charges as follows:

CAM, Taxes and Insurance. Tenant shall pay its actual pro-rata share of common area maintenance charges (“CAM”) and insurance for the Leased Space, provided, however, that such amount shall not exceed $2.00 (CAP) per s.f. during the first year of the Lease. After that, as a component of such CAP, CAM Charges shall not exceed $.50 per s.f., such amount to increase at the rate of CPI, while Insurance and Taxes shall not be subject to the CAP. The current CAM charges are currently estimated at $1.50 per square foot. . It is understood that additional charges apply to the “Leased Space only at inception and to the Expansion Space if and when it becomes part of the Lease.

7.Percentage Rent - INTENTIONALLY DELETED

8.Gross Sales – INTENTIONALLY DELETED

9.Statement of Gross Sales and Payment of Percentage Rent – INTENTIONALLY DELETED

10.Tenant’s Records - INTENTIONALLY DELETED

11.Late Payments. Tenant covenants and agrees to pay a Late Fee monthly, equal to the greater of One Hundred Dollars ($100.00) or ten percent ( 10%) of all rents and all other sums due under this lease from the time said rents or sums accrue if they are not received by Landlord within five (5) days after due, Landlord expressly reserving all other rights and remedies provided herein and/or by law in respect thereto. Tenant further agrees to pay (or to reimburse Landlord promptly if Landlord elects to pay) any and all costs and expenses incurred by Landlord in connection with the collection of delinquent rents and/or the enforcement of any of the provisions of this lease , including reasonable attorneys’ fees. Tenant

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further covenants and agrees to pay Landlord a “bad check” or “returned check” charge in the amount of Twenty-Five Dollars ($25.00) for each check of Tenant dishonored by Tenant’s bank.

12.Real Estate Taxes, Common Areas and Insurance

(a)Tenant acknowledges that the parcel of land on which the Demised Premises is located is a tax parcel (“Landlord’s Parcel”) separate from the remainder of the Shopping Center. Tenant agrees to pay to Landlord, as additional rent contemporaneously with the payment of monthly installments of Base Rent an amount equal to one twelfth of the annual real estate taxes assessed against Landlord’s Parcel, from time to time, including any special assessment, provided, however, in the event Tenant does not elect to retain the Expansion Space, then from and after October 1, 2006, Tenant shall only be required to pay Landlord, on a monthly basis, an amount equal to one twelfth of 59.5% (this is meant to be pro rata; Landlord shall provide Tenant evidence of how this was calculated) of the annual real estate taxes assessed against the Landlord’s Parcel, from time to time, including any special assessment.

(b)Tenant agrees to, and shall, pay to Landlord, before any fine, penalty, interest or cost is added thereto for the non-payment thereof, any tax that may be levied, assessed or imposed, by way of license or otherwise, upon the rent reserved herein and/or this lease and/or the Demised Premises by any governmental authority acting under any present or future law, statute, ordinance or the like.

(c)Tenant agrees to pay to Landlord, monthly as Additional Rent, a common area maintenance charge based upon the gross square foot floor area of the Demised Premises as Tenant’s Proportionate Share of the cost of maintaining the Common Areas of the Shopping Center (hereinafter called “Common Area Charge”). The Common Area Charge relates to the total cost and expense incurred by Landlord in operating and maintaining the Common Areas, including, without limitation, gardening and landscaping of the Shopping Center, landscape watering and sprinklers, parking lot pavement repairs and maintenance and parking lot striping, sidewalk repairs and maintenance, trash and rubbish and garbage removal in the event Landlord provides dumpsters, roof repairs and maintenance, parking lot lighting, Shopping Center signage repair and maintenance, snow removal, storm water management fees and fees imposed by any governmental body having jurisdictionand all costs, charges, and expenses incurred by Landlord in connection with any charge of any company providing electricity service, including, without limitation to, maintenance, repair, installation, and service costs associated therewith. The Common Area Charge shall also include , the cost of personnel to direct parking and to police the common facilities and other general Common Area repairs. In addition, the Common Area Charge shall also include Tenant payments for water and sewerage charges, if the same is not individually metered by Landlord, and the lighting of Tenant’s signage, if the same is connected with the parking lot light meter or is paid by Landlord. Landlord will submeter water for very high usage tenants.

(d)Landlord shall obtain and keep in force during the term of this lease a policy or policies of insurance, covering loss or damage to the Shopping Center, the Common Areas and the building of which the Demised Premises comprise a part, in an amount not less than eighty percent (80%) of the replacement costs thereof, providing protection against all perils included within the classifications of fire, extended coverage, vandalism (exclusive of glass and doors), special extended perils (all risk), together with public liability insurance with established limits of coverage deemed appropriate by Landlord for personal injury or injuries. Tenant agrees to pay to Landlord, as Additional Rent, Tenant’s Proportionate Share of Landlord’s insurance premium.

(e)Landlord shall estimate Tenant’s Proportionate Share of real estate taxes, Common Area Charges and insurance premiums on the basis of periods of twelve (12) months, commencing and ending on such dates as may be designated by Landlord, one-twelfth (1/12th) of which shall be paid monthly by Tenant as Additional Rent. Landlord may revise its estimate of such costs at any time. Tenant, upon notice, shall adjust its monthly installments during the remainder of the period to reflect such revised

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estimate. After the end of each designated twelve (12) month period, Landlord shall furnish Tenant a statement of the actual costs for the period, and there shall be an adjustment between Landlord and Tenant, with a payment to Landlord or a credit to Tenant, as the case may be, to the end that Landlord shall receive the entire amount of Tenant’s Proportionate Share for such period. Tenant, at its own cost and expense, has the right to audit the books and records of Landlord regarding these charges; provided, however, if the actual charges are more than 5% less than those billed to Tenant, Landlord shall pay for such audit.

13.Trade Fixtures. Tenant agrees, at its own cost and expense, to fixture the Demised Premises with new trade fixtures. All trade fixtures installed in the Demised Premises by Tenant shall remain Tenant’s property; provided, however, that nothing herein shall be deemed to affect Landlord’s remedy of distraint. Tenant agrees to repair (or to reimburse Landlord for the cost of repairing) any damage to the Demised Premises occasioned by the installation or removal of said trade fixtures.

14.Acceptance of Premises. Tenant hereby agrees to accept the Demised Premises from Landlord as they are found by Tenant on the date hereof and shall have no legal or equitable remedy based either upon a claim that Landlord failed to deliver possession in accordance with this lease or based on a claim that the size, location, layout, dimensions or construction of the Demised Premises or the parking lots or other Common Areas were not completed and/or furnished in accordance with the terms of this lease.

15.Common Areas. Tenant, its customers, employees and invitees shall have the right to use and enjoy free of charge, in common with Landlord, other tenants and their customers, employees and invitees, the parking areas, approaches, sidewalks, entrances, exits and roadways (hereinafter collectively called the “Common Areas”) which Landlord agrees to provide for the reasonable operation of the Shopping Center. It is expressly understood that the Common Areas are intended primarily for the use by customers of the stores in the Shopping Center, and Tenant accordingly agrees that its employees will not use the Common Areas for the parking or storage of any automobile, truck or any other vehicle owned or used by any of its employees, except as may be approved in writing by Landlord. Tenant further agrees that Landlord reserves the right, in its sole discretion, to designate specific parking area(s) for the use by the employees and/or customers of Tenant and if so designated, Tenant shall instruct its employees and/or customers, as the case may be, to park in any such designated areas. In order to assist Landlord in the enforcement of the provisions of this paragraph, Tenant agrees that within ten (10) days after being requested so to do, Tenant will furnish Landlord a written statement containing the license plate numbers of all employees, agents, and representatives employed by Tenant in or about the Demised Premises. Tenant shall not park, or permit to be parked, any delivery vehicles in the Common Areas intended for the use by customers of the stores in the Shopping Center, nor permit merchandise delivery from such Common Areas if delivery access and loading and unloading zones are provided by Landlord. Landlord covenants that, at all times during the term hereof, it will maintain the Common Areas in a good condition of repair and adequately lighted and paved, and that, except as otherwise provided in paragraph 33 below, there will be at least the minimum number of parking spaces sufficient to satisfy governmental requirements and in no event shall the number of parking spaces at the Shopping Center existing as of the date of this lease be reduced by more than twenty (20) spaces during the term or any extension thereof. Anything in this paragraph to the contrary notwithstanding, Landlord expressly reserves the right, from time to time, (i) to construct other buildings and/or enlarge existing buildings on or over the Common Areas so long as the number of parking spaces is not reduced by more than twenty (20) spaces, and (ii) increase, reduce, modify or alter the dimensions and locations of roadways, parking lots, sidewalks and buildings provided such changes, additions or reductions do not unreasonably interfere with Tenant’s use of the Demised Premises or reduce the number of parking spaces at the Shopping Center by more than twenty (20) spaces. Notwithstanding anything to the contrary contained herein, Tenant shall have the exclusive use of the parking (with the right to mark it for such purpose) on the side and in the back of theBuilding as outlined on Exhibit A.

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16.Utility Deregulation.

(a)Landlord Control Selection.Landlord has advised Tenant that presently Virginia Power (“Electric Service Provider”) is the utility company selected by Landlord to provide electricity service for the Demised Premises. Notwithstanding the foregoing, if permitted by Law, Landlord shall have the right that any time and from time to time during the Term to either contract for service from a different company or companies providing electricity service (each such company shall hereinafter be referred to as an “Alternate Service Provider”) or continue to contract for service from the Electric Service Provider. In such an event, there shall be no interruption in the electric service to the Demised Premises as a result of or during such change in provider.

(b)Tenant shall Give Landlord Access. Tenant shall cooperate with Landlord, the Electric Service Provider, and any Alternate Service Provider at all times and, as reasonable necessary, shall allow Landlord, Electric Service Provider, and any Alternate Service Provider reasonable access to all electric lines, feeders, risers, wiring, and any other machinery within the Demised Premises.

(c)Landlord Not Responsible for Interruption of Service. Except if caused by Landlord’s negligence or willful misconduct, Landlord shall in no way be liable or responsible for any loss, damage, or expense that Tenant may sustain or incur by reason of any change, failure, interference, disruption, or defect in the supply or character of the electric energy furnished to the Premises, or if the quantity or character of the electric energy supplied by the Electric Service Provider or any Alternate Service Provider is no longer available or suitable for Tenant’s requirements, and no such change, failure, defect, unavailability, or unsuitability shall constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of rent, or relieve Tenant from any of its obligations under the Lease.

17.Landlord’s Repairs and Right of Entry. Landlord shall be responsible for cleaning and maintaining the Common Areas in a manner similar to other Shopping Centers in the area of the same quality and size. In addition, Landlord shall be responsible for maintenance and repair of the structure of the building, including the roof, walls, and foundations. Landlord covenants that it will, with reasonable dispatch after being notified in writing by Tenant of the need therefore, make such repairs to the Common Areas and outside utility lines and to the exterior of the Demised Premises (including the gutters, downspouts and outside walls and parking, sidewalks and grass surfaces on the Property, but excepting all glass and doors), as may be necessary to keep the same in a good condition and repair; provided, however, that if the need for such repair is occasioned by the casualty resulting from negligence or willful act of Tenant, or any of its agents, employees, or contractors, such repairs shall be made by Landlord, but the cost of such repairs shall be charged to and be promptly paid for by Tenant subject to Tenant being given credit for any money Landlord actually receives in respect to such damage from its insurance. Anything in the foregoing to the contrary notwithstanding, Landlord shall have no liability whatsoever for damage or injury to person or property occasioned by its failure to make any such repair (e.g., injury damage to property resulting from leaks caused by a defect in the roof, outside walls, gutters and/or downspouts) unless, within a reasonable time after being notified in writing by Tenant of the need therefore, Landlord shall have failed to make such repair and such failure shall not have been due to any cause beyond Landlord’s control, including, without limitation, strikes and/or inability to obtain materials and/or equipment at reasonable prices. Landlord, its agents, employees and contractors, shall have the right after giving Tenant 24 hours notice except in the case of an emergency, from time to time, to enter and use insofar as may be necessary the Demised Premises for the purpose of making any of the aforesaid repairs. Tenant shall not be entitled to any reduction in rent or to any claim for damages by reason of any inconvenience, annoyance, and/or injury to business arising out of any repairs made by Landlord pursuant to this paragraph. Tenant will permit Landlord or its representatives (i) to enter the Demised Premises during the last six months of the term for the purpose of exhibiting the Demised Premises to prospective tenants.

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18.Tenant’s Repairs. Tenant covenants that it will, at all times during the term hereof and at its own cost and expense, keep the Demised Premises (including, without limitation,  the interior and rooftop heating and air conditioning system, the floors, the finish and related work to be added by Tenant to the exterior walls, toilets, sprinkler system, signage, interior pipes, plumbing, wires and conduits, and electric lines, windows, doors, glass, fixtures and equipment) in a good condition of repair and in good working order (making such repairs and replacements as may be necessary), unless the need therefore is occasioned by fire or other casualty covered by Landlord’s fire and extended coverage insurance policy (exclusive of any damage to glass or doors), in which event such repair and replacement shall be an expense of Landlord to the extent of such coverage. Tenant agrees to be responsible and liable for any freezing in pipes and/or within plumbing fixtures within and serving the Demised Premises and shall pay for the repair of any damage caused thereby. In this regard, Tenant shall keep the Demised Premises at a sufficient temperature to prevent such freezing. Tenant understands and agrees that Tenant (not Landlord) shall be responsible for any condensation in or around the duct work used by heating and/or air conditioning.

19.Tenant’s Care of Sidewalks, etc. Tenant covenants and agrees that it will, at all times during the term hereof, keep the Demised Premises and the sidewalk immediately adjoining the Demised Premises clean and free from obstruction, rubbish, dirt, snow and ice. Tenant shall place all trash, rubbish and garbage in a proper closed receptacle at the rear entrance of the Demised Premises and shall pay all costs incident to the removal thereof.

20.Tenant’s Failure to Repair and Remove Debris, etc Tenant agrees that if it fails to perform any obligation placed upon it by either paragraph 17 or paragraph 18 of this lease, Landlord, in addition to other remedies provided by law and/or this lease, after giving Tenant five (5) days written notice may correct (or have corrected) the default at the cost and expense of Tenant.

21.Miscellaneous Covenants of Tenant. Tenant covenants that: it will comply with all Federal, State and/or municipal laws, ordinances and regulations relating to its business conducted in the Demised Premises; it will promptly pay for all electricity, gas, water and other utilities consumed on, and all sewage disposal charges assessed against, the Demised Premises and all required meter deposits and connection fees relating to such utilities; it will promptly pay for lighting the portion of the marquee in front of the Demised Premises if used for Tenant’s signage; it will not use the name of the Shopping Center for any purpose other than as the address of its business to be conducted in the Demised Premises; it will not use, or permit to be used, the Demised Premises for any illegal or purpose; it will conduct its business in such manner as will be in keeping with the character and reputation of the Shopping Center; it will comply with the Rules and Regulations pertaining to the Shopping Center attached hereto, as the same may be amended from time to time by Landlord; ; ; it will not use the sidewalks of the Shopping Center for business purposes; it will not without the prior written consent of Landlord: (i) make any alteration to any structural portion of the Demised Premises, (ii) use or permit to be used any advertising medium or device such as a phonograph, radio or public address system which can be heard outside of the Demised Premises, and (iii) hold a fire, bankruptcy, going-out-of-business or auction sale; and it will permit Landlord or its representatives to enter the Demised Premises during the last twelve (12) months of the term for the purpose of exhibiting the Demised Premises to prospective tenants, and to place a “For Rent” sign in a front show window during such period of time.

22.Insects and Rodents. Tenant covenants that it will, at its own expense, take such steps as shall be necessary to keep the Demised Premises free of termites, roaches, rodents, insects and other pests and that it will save Landlord harmless from any damage caused thereby, unless such termites, etc. are coming from another space in the Shopping Center.

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23.Damage by Vandals. If the doors,  window frames, or glass Demised Premises are damaged by persons breaking, or attempting to break, into the Demised Premises, or by vandals, Tenant covenants to repair immediately at its own expense any and all such damage; provided, however, that any such damage to the roof and or exterior walls of the Demised Premises shall be repaired by the Landlord.

24.Fire Hazard. Tenant covenants that, without the prior written consent of Landlord, it will not do anything which will increase the rate of fire insurance on the building of which the Demised Premises constitute a part, and that if such consent is given, Tenant will pay Landlord the amount of the increase in the cost of such insurance, as and when the premiums become due.

25.Care of Roof. Tenant agrees that it will not (directly or by sufferance) place any debris on the roof of the building of which the Demised Premises constitute a part, or cut, drive nails into or otherwise mutilate the roof, that it will keep the roof free of all debris and that it will keep the gutters and downspouts free of Tenant’s or its Agents’ trash; provided, however, Tenant may place and install heating and air conditioning equipment on the roof if necessary Tenant understands that roof is under warranty and that Tenant will not do any action which would violate this warranty.

26.Condition on Termination. Tenant covenants that it will, upon the expiration or earlier termination of this lease, (a) deliver up to Landlord, peaceably and quietly, the Demised Premises in good condition as improved by Tenant, ordinary wear and tear and damage by casualty within the coverage of a standard fire insurance policy with extended coverage excepted, and (b) remove its trade fixtures and/or signs from the Demised Premises (unless it is then in default hereunder, in which event it will not be permitted to effect such removal) and to repair promptly any damage caused by such removal. Tenant further covenants that, in the event it does not retain the Expansion Space as part of the Demised Premises, then on or before October 1, 2006, Tenant will (c) deliver up to the Landlord, peaceably and quietly, the Expansion Space as improved by Tenant in the good condition , ordinary wear and tear and damage by casualty within the coverage of a standard fire insurance policy with extended coverage excepted, (d) remove its trade fixtures and/or signs from the Expansion Space and to repair promptly any damage caused by such removal and (e) make available for use by the Expansion Space the HVAC system and electrical and plumbing facilities to be installed by Tenant as specified in Exhibit “B” attached hereto.

27.Improvements to Become Landlord’s. Tenant agrees that all additions and other improvements installed in the Demised Premises by it, including, without limitation, all electric wiring, electric fixtures, air conditioning systems, screens, screen doors, awnings, awning frames and floor coverings (including carpeting but excepting rugs) shall immediately become the property of Landlord, and shall not be removed by Tenant at the expiration or earlier termination of this lease, unless requested to do so by Landlord, in which event Tenant agrees to do so and to repair promptly any damage caused by any such removal.

28.Tenant’s Liability Insurance. Tenant agrees that it will hold Landlord and any agent of Landlord harmless from any and all injury or damage to person or property in, on or about the Demised Premises and the portion of sidewalk immediately adjoining the Demised Premises, including, without limitation, all costs, expenses, claims or suits arising in connection therewith; provided, however, that this clause shall not apply to injury or damage caused by Landlord’s own negligence or willful act or Landlord’s failure to make any repair (which Landlord has herein agreed to make) within a reasonable time after Tenant’s written notice of the need therefore. Tenant will, at all times during the term hereof, at its own cost and expense, carry with a company or companies, satisfactory to Landlord, public liability insurance on the Demised Premises and adjoining Common Areas, with limits of not less than Two Million Dollars ($2,000,000.00) (provided that Tenant’s coverage shall be no greater than at its other satellite wagering facilities) for injury or death to one person and One Million Dollars ($1,000,000.00) for injury or death to more than one person in any one accident and property damage of One Hundred Thousand Dollars ($100,000.00), which insurance shall be written or endorsed so as to protect Landlord, any agent of

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Landlord and Tenant, as their respective interests may appear. Said policy or policies shall contain a provision insuring Tenant against all liability which Tenant might have under this hold harmless provision, except Landlord’s negligence or willful act Tenant covenants that certificates of all such insurance policies shall be delivered to Landlord promptly upon request . If Tenant fails to provide such insurance within five (5) days after receiving written notice from Landlord, Landlord may, but shall not be required to, obtain such insurance and collect the cost thereof as a part of the rent herein reserved.

29.Possession. In the event Landlord tenders to Tenant possession of the Demised Premises prior to the commencement of the term hereof, Tenant agrees to diligently prosecute, perform and complete any construction, fixturing or other activity that it may conduct in a manner which will not interfere with the construction, development or operation of the Shopping Center. Tenant shall, prior to accepting such possession of the Demised Premises, deposit with Landlord policies or certificates of insurance evidencing compliance with paragraph 28 hereof.

30.Mechanic’s Liens. Tenant shall not permit any mechanic’s, materialman’s or similar lien to be filed against any portion of the Demised Premises for any labor performed or material furnished in connection with any work performed or caused to be performed by Tenant.

31.Security Deposit. INTENTIONALLY DELETED

32.Damage by Fire or Other Casualty. In the event the Demised Premises, or any part thereof, shall be damaged by fire or other casualty during the term, Landlord agrees that it will restore the Demised Premises, with reasonable dispatch, to substantially the same condition they were in prior to such damage, and if the Demised Premises are rendered wholly or partially untenantable as a result of such damage, the Base Rent and all Additional Rent payable hereunder shall be equitably abated (according to the loss of use) during the period intervening between the date of such damage and the date the Demised Premises are restored. Anything in the foregoing to the contrary notwithstanding, if such damage occurs during the last two (2) years of the term, and if such damage exceeds fifty percent (50%) of the then insurable value of the Demised Premises, either Landlord or Tenant may terminate this lease as of the date of such damage, by giving to the other written notice of its intention so to do within thirty (30) days after the date such damage occurs; provided, however, that if this lease gives Tenant an option to extend the term (other than automatic renewal as set forth in paragraph 2) and Tenant extends the term of this lease for at least two (2) years by exercising such option within thirty (30) days after the time such fire or other casualty occurs, neither Landlord nor Tenant shall have the right to terminate this lease. If this lease is so terminated, the rental payable hereunder shall be abated as of the date of such damage, and Tenant shall remove all of its property from the Demised Premises within thirty (30) days after the notice of termination is given.

33.Condemnation. In the event any portion of the Demised Premises, or 20 % of either the total parking or the reserved parking, shall be taken by the exercise of the power of eminent domain (or sold to the holder of such power, pursuant to a threatened taking), this lease may, at the option of Tenant, be terminated by written notice given to Landlord within sixty (60) days after the date such taking or sale occurs. If this lease is not so terminated, Landlord covenants that it will, at its own expense, promptly after the lapse of said sixty (60) days, repair such damage and do such work as may be required to repair and rebuild the Demised Premises, with the view to restoring the Demised Premises as nearly as practicable to the condition they were in immediately prior to such taking or sale; provided, however, that whether or not this lease is so terminated, the Base Rent payable hereunder shall be equitably abated (according to the loss of use) from the date of such taking or sale. Tenant shall have no right in or to the proceeds of any award made in any such condemnation (or proceeds derived from any sale in lieu thereof), except with respect to any award based on Tenant’s improvements to the Demised Premises, provided such retention does not result in a reduction of the amount paid to the Landlord, in which event Tenant shall not be entitled to the amount of the reduction.

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34.No Representations by Landlord or Agents. Tenant agrees that neither Landlord nor any agent of Landlord has made any representation, express or implied, with respect to Federal, State or municipal laws or ordinances applicable to the Demised Premises or the property of which the Demised Premises constitute a part (including, without limitation, laws or ordinances relating to zoning or fire walls), and Tenant shall not have the right to terminate this lease, nor shall it be entitled to any abatement of rent payable hereunder or any claim for damages, in the event the Demised Premises cannot be used by Tenant, in whole or in part, for the purpose for which Tenant intends to use the same, except as otherwise provided herein.

35.Assignment, Subletting, Mortgaging, Etc. Tenant shall not, without the prior written consent of Landlord, which consent will not be unreasonably withheld, conditioned or delayed, assign this Lease, or sublet all or any part of the Demised Premises. Notwithstanding Landlord’s consent, no assignment or subletting shall release Tenant from liability for the payment of rent or other sums due, or the performance of any other obligations, hereunder. In the event Tenant is a corporation, partnership, or other legal entity, the sale, transfer or encumbrance of 50% or more of the corporate stock or partnership or other ownership interest shall be deemed an assignment or encumbrance as the case may be, in violation of the provisions of this paragraph.

36.Occupancy. INTENTIONALLY DELETED

37.Subordination. This lease is subject and subordinate to all ground or underlying leases (if any) and to all mortgages or deeds of trust which may now or hereafter affect such leases, the Demised Premises, or the land on which the Demised Premises are situated, and to all renewals, modifications and extensions thereof; provided, however that Landlord shall obtain from any ground lessor or lender to which this provision applies the right of Tenant to non-disturbance so long as Tenant is not in default under the Lease in a form reasonably satisfactory to Tenant and its lenders.

38.Waiver of Subrogation. All fire insurance, extended coverage, and policies relating to other casualties carried by any party to this lease covering the Demised Premises and/or the contents thereof, shall expressly waive any right on the part of the insurer against any other party to this lease, which right, to the extent not prohibited or violative of any such policy, is hereby expressly waived. Landlord and Tenant each agree that policies will include such waiver clause or endorsement so long as the same shall be obtainable without extra cost, or if extra cost shall be charged therefore, so long as the party or parties in whose favor such waiver clause or endorsement runs pays such extra cost. If extra cost shall be chargeable therefore, each party shall advise the other of the amount of the extra cost, and the other party, at its election, may pay the same, but shall not be obligated so to do (C.D. needs to confirm that this is acceptable to its insurance carrier).

39.Default and Remedies. In the event Tenant shall default in the payment of any installment of rent herein reserved, or in the event Tenant shall default in the performance of any of the terms, covenants, conditions or provisions herein contained binding upon Tenant and such default shall not be remedied within five (5) days in the case of a monetary default, and thirty (30) days in the case of a non-monetary default during which time Tenant is diligently pursuing the cure if it cannot be cured within thirty (30) days, after written notice thereof shall have been given by Landlord to Tenant, or in the event Tenant shall be adjudicated a bankrupt or shall become insolvent or shall make a general assignment for the benefit of its creditors, or in the event a receiver shall be appointed for Tenant or a substantial part of its property and such receiver is not removed within ninety (90) days after appointment, Landlord shall have the right (in addition to all other rights and remedies provided by law), to reenter and take possession of the Demised Premises, peaceably or by force, to terminate this lease and to remove any property therein, without liability for damage to, and without obligation to store, such property. In the event of such termination, Landlord may (but shall be under no obligation to) relet the Demised Premises, or any part thereof, from time to time, in the name of Landlord or Tenant, without further notice, for such term or terms, on such conditions, and

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for such uses and purposes, as Landlord, in its sole and absolute discretion, may determine, and may collect and receive all rents derived therefrom and apply the same, after deduction of all appropriate expenses (including, without limitation, attorneys fees and other costs of collection) to the payment of the rent payable hereunder, Tenant remaining liable for any deficiency. Landlord shall not be responsible or liable for any failure to so relet the Demised Premises or any part thereof, or of any failure to collect any rent connected therewith. The failure of Tenant to keep the business open for a certain minimum hours as required under Paragraph 3 shall not constitute a default.

40. Tenant shall have the right to self-help hereunder in the event that Landlord does not cure an event which can be cured within ten (10) days after written notice from Tenant, or does not begin and diligently pursue completion within ten (10) days following notice of matters which will require more than ten (10) days to cure. In the event Tenant exercise its right of self-help, Tenant shall have the right to offset the costs of such self-help against rent

41.Estoppel Certificate. Within ten (10) days after written request of Landlord, Tenant shall certify by a duly executed and acknowledged written instrument to any mortgagee or purchaser, or proposed purchaser, or any other person, firm or corporation specified by Landlord, as to the validity and force and effect of this lease, as to the existence of any default on the part of any party thereunder, as to the existence of any offsets, counterclaims, or defenses thereto on the part of Tenant, and as to any other matters as may be reasonably requested by Landlord, all without charge and as frequently as Landlord deems necessary. Tenant’s failure or refusal to deliver such statement within such time shall be conclusive upon Tenant (i) that this lease is in full force and effect, without modification except as may be represented by Landlord, (ii) that there are no uncured defaults in Landlord’s performance or obligations hereunder, and (iii) that not more than one month’s installment of Base Rent has been paid in advance of the due date.

42.Notices. Any notice herein provided for to be given to Landlord shall be deemed to be given if and when deposited in United States registered or certified mail, postage prepaid, addressed to Landlord at Suite 200, 3400 Building, 397 Little Neck Road, Virginia Beach, VA 23452, and any notice herein provided for to be given to Tenant shall be deemed to be given if and when deposited in United States registered or certified mail, postage pre-paid, addressed to Tenant, Attention: President, at 10515 Colonial Downs Parkway, New Kent, Virginia, 23124, with a copy to James Weinberg, Esq., Hirschler-Fleischer, Federal Reserve Bank Building, 701 East Byrd, Richmond, Virginia, 23219

43.Quiet Enjoyment. Subject to the terms, covenants and conditions set forth in this lease, Landlord covenants that Tenant shall have and enjoy quiet and peaceable possession of the Demised Premises during the term hereof.

44.Short Form Lease. The parties hereto agree that a short form of lease, of even date herewith, describing the Demised Premises, setting forth the term and referring to this lease, shall, at the request of either party, be promptly executed and recorded (at the cost of the requesting party).

45.Entire Agreement. This lease contains the entire agreement between the parties hereto, and cannot be altered or modified in any way except in writing signed by the parties hereto.

46.No Waivers. Any failure of either party hereto to insist upon strict observance of any covenant, provision or condition of this lease in any one or more instances shall not constitute or be deemed a waiver, at that time or thereafter, of such or any other covenant, provision or condition of this lease.

47.Pronouns. Every pronoun used in this lease shall be construed to be of such number and gender as the context shall require.

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48.Marginal Headings. The headings appearing on the margin of this lease are intended only for convenience of reference, and are not to be considered in construing this instrument.

49.Successors and Assigns. This lease and all the terms, covenants, conditions and provisions herein contained, shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective heirs, personal representatives, successors and (if and when assigned in accordance with the provisions hereof) assigns. The undersigned hereby guarantees prompt and faithful performance of all obligations of tenant hereunder, including the payment of all rents and other amounts due hereunder.

50.Exculpation. Anything herein to the contrary notwithstanding, in the event of the default by Landlord in the performance of any of its obligations hereunder, Tenant expressly covenants and agrees to look solely to Landlord’s equity in the Shopping Center for the payment of all amounts due Tenant as a result of any such default by Landlord, and Tenant shall not seek any personal money judgment against Landlord or any of its trustees or beneficiaries or any of their respective heirs, personal representatives, successors or assigns.

51.Signage. The erection, display and design of all signage is subject to approval by Landlord. Tenant shall submit to Landlord a plan and description and specifications of any signage desired to be installed by Tenant. All signage must conform to the sign criteria set forth on EXHIBIT C attached hereto. Tenant shall keep all signs installed (with the consent of Landlord) on the exterior of the Building of which the Demised Premises constitute a part, freshly painted, in good repair and operating condition at all times. In addition, Tenant shall be entitled to the space formerly occupiedby the Village Thrift store on the existing pole sign located near Indian River Road.

52.Maintenance. On or before occupancy, Tenant shall furnish evidence to Landlord that Tenant has contracted for, and is having performed, preventive maintenance on all HVAC equipment in the Demised Premises, on at least a quarterly basis. In the event Tenant shall not have contracted for and/or provided evidence that such HVAC preventive maintenance is being and will be provided in a manner satisfactory to Landlord, Landlord shall have the right to so contract for said preventive maintenance to the HVAC equipment and charge 100% of the cost to do so as Additional Rent hereunder. Landlord shall have the right to have any unscheduled remedial HVAC preventive maintenance performed deemed necessary to keep said equipment in operating condition and Tenant agrees to pay 100% of the charges arising therefrom as Additional Rent hereunder.

53.Waiver of Homestead Exemption. Tenant waives the benefit of the homestead exemption as to this lease.

54.Waste and Nuisance. Tenant agrees not to suffer, permit or commit any waste, nor to allow, suffer or permit any odors, vapors, steam, water, vibrations, noise, loud music or other undesirable effects to emanate from the Demised Premises into other portions of the building of which the Demised Premises comprise a part or into the Common Areas, or otherwise to allow, suffer or permit the Demised Premises or any use thereof to constitute a nuisance or unreasonably to interfere with the safety, comfort or enjoyment of the Shopping Center by Landlord or any other occupants of the Shopping Center or their customers, invitees or any others lawfully in or upon the Shopping Center. Upon written notice by Landlord to Tenant that any of the aforesaid is occurring, Tenant agrees forthwith to cease and discontinue the same and within five ( (5) days thereafter to make such changes in the Demised Premises and/or install or remove such apparatus or equipment therein or therefrom as may be required by Tenant for the purpose of obviating any such condition; and if any such condition is not so remedied, then Landlord may, at its option, either: (i) enter upon the Demised Premises and cure such condition in any manner Landlord shall deem necessary and add the cost and expense incurred by Landlord therefore, together with all damages, including attorney’s fees, sustained by Landlord, to the next installment of the Base Rent due and Tenant agrees to pay such amount, as Additional Rent hereunder, or (ii) treat such failure on the part of Tenant to remedy such

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condition as an “Event of Default” within the meaning of Paragraph 39 of this lease. Tenant hereby further agrees to indemnify and save Landlord harmless of and from all fines, claims, demands, actions, proceedings, judgments and damages (including attorneys’ fees) of any kind or nature by anyone whomsoever arising or growing out of any breach or non-performance by Tenant of the covenants contained in this paragraph.

55.Holding Over. Any holding over by Tenant after the expiration of the term with the written consent of Landlord shall be construed to create a tenancy from month to month at the same Base Rent reserved during the last lease year of the term, prorated on a monthly basis, and which tenancy shall otherwise be subject to the terms and conditions set forth in this lease. Any holding over by Tenant after the expiration of the term without the written consent of Landlord shall also be construed to create a tenancy from month to month, subject to the terms and conditions set forth in this lease, except that the Base Rent shall be 150% the Base Rent reserved during the last lease year of the term, prorated on a monthly basis. Tenant agrees to indemnify and save Landlord harmless from and against any and all costs, losses, damages, liabilities and/or expenses incurred by Landlord as a result of a delay by Tenant in surrendering possession of the Demised Premises at the expiration or earlier termination of the term, including, without limitation, any claims made by any succeeding tenant due to such delay in surrendering possession.

56.Merchants Association. Tenant is hereby invited to join, and maintain during the term hereof, membership in any merchants association organized for the Shopping Center and to pay all dues and assessments charged by such association.

57.Protection of Exclusive. Tenant shall not sell any merchandise in the Demised Premises which would be in violation of any exclusive use provision in any of the other leases in the Shopping Center, provided , that this provision shall not prevent Tenant from selling merchandise which it sells at any of its other satellite wagering facilities in Virginia.

58.Brokerage.In accordance with the regulations of the Virginia Real Estate Board, Tenant is hereby informed that The Katsias Company represents the Landlord in this transaction and will be paid a commission as per a separate agreement Pursuant to Virginia Real Estate Board regulation Section 6.3, The Katsias Company, makes the following disclosures:

1.In the above transaction, The Katsias Company represents:

oA.the Tenant exclusively;

ýB.the Landlord exclusively;

oC.the Tenant and Landlord jointly and such dual agency is expressly consented to by the parties by their execution hereof.

2.In the above transaction, The Katsias Company shall receive compensation from:

oA.the Tenant exclusively;

ýB.the Landlord exclusively;

oC.the Tenant and Landlord jointly and such dual agency is expressly consented to by the parties by their execution hereof. The Landlord and Tenant acknowledge, agree with, and consent to the representation and compensation disclosed above.

59.Option. Providing that the Tenant is not in default upon the expiration of the term set forth in Section 2 of the lease, Tenant shall have the right at its election, 180 days prior to ending of the term of the Lease which is about to expire, to extend this lease for three (3) additional five (5) year terms (‘Option”), commencing upon the expiration of the original term on the same terms and conditions as herein set forth, except that the rent payable shall increase as follows:

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If Expansion Space Retained by Tenant:

Option 1: Years 11-15 $9.00 psf	$12,656.25 per month	$151,875.00 per year
Option 2: Years 16-20 $10.00 psf	$14,062.50 per month	$168,750.00 per year
Option 3: Years 21-25 $12.00 psf	$18,675.00 per month	$224,100.00 per year

If Expansion Space Not Retained by Tenant:

Option 1: Years 11-15 $9.00 psf	$7,500.00 per month	$90,000.00 per year
Option 2: Years 16-20 $10.00 psf	$8,333.34 per month	$100,000.00 per year
Option 3: Years 21-25 $12.00 psf	$10,000.00 per month	$120,000.00 per year

60.Broker’s Commission. The parties acknowledge that Tenant has been represented by Thalhimer Cushman and Wakefield representing Tenant and The Katsias Company representing the Landlord and both will be paid by the Landlord as per a separate agreement. Otherwise neither has been represented by a real estate broker and each agrees to indemnify the other against any claims for brokerage commissions by third party brokers and/or agents made though such party.

61.Contingency. The Lease shall be subject to (A) a sixty day due diligence period for Tenant after signing the Lease during which Tenant may terminate the Lease in its sole discretion with no further liability; and (B) Review and approval of the Virginia Racing Commission, which must be obtained no later than April 30, 2005. Upon payment by Tenant of a non-refundable fee of $5,583 per month, such deadline my be extended monthly until July 31, 2005. If such approvals are not or cannot be obtained within such time frame, Tenant or Landlordmay terminate the Lease with no further liability, unless Tenant agrees to be bound by the terms of the lease absent such approval. Landlord shall turn the Demised Premises over to Tenant fifteen (15) days after the Virginia Racing Commission approves the application for a license. In such an event, Fixed Rent shall commence no later than October 1, 2005.

LANDLORD:  Jay F. Wilks, Trustee under indenture dated December 20, 1976 by and between Herbert Cashman and Marvin Simon, as Settlers and Jay F. Wilks, as Trustee

By:	/s/ Jay I. Wilks
	Jay F. Wilks, Trustee

TENANT:	Colonial Downs L.P., a Virginia Limited Partnership
	By:	Stansley Racing, its General Partner
		By:	/s/ Ian M. Stewart
			Ian M. Stewart
		Its:	President

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RULES AND REGULATIONS

1.All trash must be kept in a fully enclosed container, or if requested by Landlord, in a Dumpster or similar container furnished and serviced at Tenant’s expense.

2.Tenant shall keep lights on in show windows, under marquee and under canopy from dusk until 9:00 p.m. Tenant shall also keep lighted signs on from dusk until 11:00 p.m.

3.Tenant agrees to handle all deliveries and refuse through the rear entrance (if one) of the Demised Premises.

4.No sign shall be permanently affixed to the plate glass of the store front window without prior written consent of Landlord.

5.Except during Shopping Center promotions, without the prior written approval of the Landlord, no sign shall be placed in, or visible through, any show window advising the public of a fire, bankruptcy, going-out-of-business or auction sale.

6.Tenant shall keep store lobbies and windows clean at all times and wash them weekly.

7.Tenant shall keep store floors free of trash, chewing gum and other debris, and shall scrub and wax all vinyl or linoleum flooring at least weekly.

8.No merchandise, vending machines, or telephones shall be located on the sidewalks or other Common Areas without the prior written approval of Landlord.

9.Tenant shall not change the locks on the front or rear doors of the premises without providing Landlord with a copy of the new key.

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EXHIBIT B

TENANT IMPROVEMENTS / UTILITIES

* Prior to the end of the Feasibility Period , Tenant will deliver to Landlord specific plans addressing the separation of “Expansion Space,” “Leased Space,” and the 10 foot by 40 foot satellite dish space, including utilities, HVAC, and all build-out, which plans are subject to Landlord’s approval, which approval shall not be unreasonably withheld, conditioned, or delayed.

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EXHIBIT C

SIGN CRITERIA FOR INDIAN RIVER SHOPPING CENTER & SHOPPES

The following specifications shall be controlling for all signs. In such event that this Exhibit C is in dispute with City sign ordinances, the local jurisdictional codes shall prevail.

Prior to sign purchase and sign installation, the Tenant shall submit to Landlord three copies of drawings or renderings of its proposed sign. Each of these copies shall be reviewed and approved in writing by Landlord prior to Tenant purchasing or installing said sign. Two (2) copies of the approved drawings shall be returned to Tenant and/or its sign contractor. Landlord assumes no liability for purchases or sign installation that is in place prior to Landlord’s written approval.

The installation of a sign and the cost incurred shall be the responsibility of the Tenant. Sign construction is to be completed in compliance with the following instructions, limitations, and criteria (C.D. needs to confirm this criteria):

1.Tenant shall be required to identify the Demised Premises by a sign that shall consist of channel letters on raceway or individual channel letters and shall be internally illuminated. If a raceway is used, its color shall match the surface upon which it is mounted.

2.Sign drawings shall clearly show sign colors, graphics and frame color as well as construction and attachment details.

3.The wording of signs shall be limited to Tenant’s trade name only. Logos will be permitted.

4.All signs shall have concealed attachment devices, clips, wiring, transformers, lamps, tubes and ballast.

5.The height of the sign letters shall not be less than 12 inches, nor exceed 30 inches. The sign letter shall be no greater than 6 inches in depth.

6.The length of same sign shall be no greater than 80% of the linear distance of the storefront upon which the sign will be mounted.

7.No part of same sign shall hang above or below Tenant’s sign area.

8.Tenant is also responsible for restoring to its original condition the area upon which the sign is erected at the end of its tenancy.

9.The following types of signs are prohibited:

a.Any sign which violates the local City sign codes.

b.Paper signs, decals and/or stickers utilized as signs.

c.Signs of a temporary character or purpose.

d.Flashing signs, moving messages signs, externally lighted, digital reader signs and changeable letter signs.

e.Signs extended at right angles to the storefront.

Tenant acknowledges that it is Landlord’s intention to develop and maintain a first-class appearance for the Shopping Center. The Shopping Center Sign Criteria is an extension of such intention and Tenant will put forth its best efforts to uphold and maintain the standards of the Shopping Center.

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GUARANTY OF LEASE

THE UNDERSIGNED, for a valuable consideration, the receipt whereof is hereby acknowledged, and in further consideration of the execution and delivery of that certain lease, dated                          , 2005, by and between Jay F. Wilks, Trustee under indenture dated December 20, 1976 by and between Herbert Cashman and Marvin Simon, as Settlors and Jay F. Wilks, as Trustee as Landlord, and Colonial Downs L.P., a Virginia Limited Partnership, as Tenant, for premises having an address of 4301 Indian River Road, Chesapeake, VA at the request of the undersigned, which request is hereby made, hereby jointly and severally unconditionally guarantee the prompt, full and faithful payment by Tenant of all rent and performance by Tenant of all other terms, conditions, agreements, covenants and obligations on Tenant’s part to be performed as provided in said lease; and the undersigned hereby covenants and agrees that, in the event of Tenant’s default or defaults, the undersigned will, upon ten (10) days’ prior written notice from Landlord of Tenant’s default, at one time or from time to time, as the circumstances may require, perform and fulfill any and all agreements, covenants and obligations of Tenant in said lease contained, cure such defaults at their own cost and expense and pay to Landlord all damages which Landlord may sustain or have sustained by virtue thereof.

THE UNDERSIGNED hereby waives exhausting of recourse against Tenant; waives the benefit of homestead exemption; and consents to any modification of this lease and to any assignment of this lease and to any sublease of the demised premises, in whole or in part, that Tenant or its assignees or sublessees may make, and agrees that its liability hereunder shall not be affected or released thereby.

This guaranty shall be construed in accordance with, and governed by, the laws of the Commonwealth of Virginia.

IN WITNESS WHEREOF, Jacobs Entertainment, Inc. is named Guarantor this      day of March, 2005.

	By:
STATE OF
CITY/COUNTY OF                                                   , to wit:

The foregoing instrument was acknowledged before me this         day of                          , 20             by                                                       

	Notary Public
My commission expires:

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EX-10.20

EXHIBIT 10.20

[Execution Copy]

ASSET PURCHASE AGREEMENT

BETWEEN

LAROSE TRUCK PLAZA & CASINO, L.L.C.,

MIDWAY RECREATION, L.L.C.

JOE F. PENN, JR.

MELISSA PENN

AND

GAMECO HOLDINGS, INC.

DATED:  November 2, 2005

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STATE OF LOUISIANA

PARISH OF LAFOURCHE

ASSET PURCHASE AGREEMENT

BE IT KNOWN, that before the undersigned Notaries Public, and in the presence of the undersigned competent witnesses, personally came and appeared:

LAROSE TRUCK PLAZA & CASINO, LLC, a Louisiana limited liability company (“Larose” and sometimes referred to herein as “Device Owner”), domiciled and having its principal place of business in the Parish of Lafourche and whose mailing address is declared to be P.O. Box 99, Larose, Louisiana 70373, herein represented by its duly authorized agent Joe F. Penn, Jr.;

MIDWAY RECREATION, L.L.C., a Louisiana limited liability company (“Midway”), domiciled and having its principal place of business in the Parish of Lafourche and whose mailing address is declared to be P.O. Box 99, Larose, Louisiana 70373, herein represented by its duly authorized agent Joe F. Penn, Jr.;

JOE F. PENN, JR., a Louisiana resident, whose mailing address is declared to be 4411 Cherokee Rose Drive, Zachary, Louisiana 70791;

MELISSA PENN, a Louisiana resident, whose mailing address is declared to be 4411 Cherokee Rose Drive, Zachary, Louisiana 70791 (Joe F. Penn, Jr. and Melissa Penn are collectively, “Penn”);

(Larose, Midway and Penn shall collectively be referred to herein as “Sellers” and each individually as “Seller”);

and

GAMECO HOLDINGS, INC, a Delaware corporation (the “Purchaser”), domiciled and having a place of business in the County of New Kent, State of Virginia and whose mailing address is declared to be 1869 Mills Highway, Breaux Bridge, Louisiana 70517, herein represented by its duly authorized agent Jeffrey P. Jacobs,

each of whom did execute this Asset Purchase Agreement (“Agreement”), to be effective as of this 2nd day of November, 2005 (the “Agreement Date”).

INTRODUCTION

A.Sellers own the assets of a truck stop located at 1825 Hwy 308, Lockport, Louisiana 70374 (the “Truck Stop”).

B.The Truck Stop, inter alia, provides retail motor and diesel fuels, convenience store and restaurant operations for sale to or use by the general public as well as video draw poker devices for play by the general public.

C.Buyer, for itself and its designees, desires to purchase and Sellers desire to sell the Truck Stop.

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NOW, THEREFORE, in consideration of the promises, obligations, representations and warranties contained herein, the receipt and sufficiency of which are hereby acknowledged, and upon the terms and subject to the conditions hereinafter set forth, the parties agree as follows:

Section 1.Definitions and Related Matters.

1.1Definitions. For the purposes of this Agreement, the following terms have the meanings set forth below (such meanings to be applicable to both the singular and plural forms of the terms defined):

“Acquired Assets” shall mean all assets, accounts receivable arising or accruing after the Closing Date, privileges, rights, real property, Devices, Intellectual Property Rights, licenses, interests and claims (whether personal, tangible or intangible) of every type and description owned by Sellers (subject only to the leases identified on Schedule 6.9(a) and the Permitted Encumbrances) and used in the operation of the Business, other than the Excluded Assets. Acquired Assets, include, but are not limited to, each of the following:

(a)fee simple title (subject to Permitted Encumbrances hereinafter defined) in and to certain improved real property located at 11825 Hwy 308, Lockport, Louisiana 70374 (the “Real Property”), consisting of approximately                                    (                  ) acres, more or less, together with all improvements, buildings, structures, issues, profits and rents, fixtures and all rights pursuant to any leases, recorded or unrecorded, respecting all or any part of the Real Property; together with, to the extent legally transferable, all approvals, authorizations, consents, licenses, permits, privileges, rights, variances and waivers relating to the Real Property from any Governmental Body having jurisdiction over the Real Property, if any, including, but not by way of limitation, those with respect to building, effluent control, environmental protection, fire, foundation, pollution control, use, utilities and zoning heretofore held by or granted to Sellers; together with any and all easements, rights and privileges appurtenant thereto, including all right, title and interest of the Sellers in and to any land lying in the bed of any street, road or avenue currently adjoining, lying across or adjacent to or to be opened or proposed in front of or adjoining the Real Property, and all riparian rights; all of the foregoing being collectively referred to as the Premises (the “Premises”) and being further described in Exhibit A;

(b)all machinery, equipment, display cases, refrigerators, coolers, sinks, ovens, stoves, telephones, cash registers, furniture and other equipment, chattels and fixtures used in or supporting the Business, including, but not limited to, those items identified on Schedule 1.1(b);

(c)all inventories of any kind related to or purchased for the operation of the Business, including, but not limited to, those items identified on Schedule 1.1(c);

(d)all Intellectual Property Rights, subject to the qualifications in Section 6.10, used in or for the benefit of the Business;

(e)accurate, certified copies of all books and records relating to the Business, including, without limitation: (i) lists of all known potential or past customers and suppliers; (ii) records with respect to all equipment, including warranties and service agreements, inventory and machinery; (iii) any and all business plans and/or models; (iv) all financial records and reports; (v) all employee records; and (vi) all other books and records used by Sellers in the operation of the Business;

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(f)all approvals, authorizations, consents, licenses, permits, registrations, certificates, privileges, rights, variances and waivers relating to or necessary for the operation of the Business from any Governmental Body having jurisdiction over the Business, to the extent the same are transferable;

(g)all fixtures and improvements located on the Premises;

(h)all goodwill of the Business;

(i)those Contracts identified on Schedule 6.9(b), under terms and conditions contained in Schedule 6.9(b); and

(j)the Listed Devices, together with any and all parts, spare parts, paper readers or other equipment used therein or in support thereof.

“Affiliate” of any particular Person means any other Person directly or indirectly controlling, controlled by or under common control with such particular Person. The term “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of securities, by contract or otherwise.

“Annualized EBITDA” shall mean the sum of all monthly EBITDA (as defined below) arising from the operation of the Facility, calculated for the twelve (12) full calendar months prior to the month in which the Closing shall occur, after making appropriate adjustments for any non-recurring transactions.

 “Assumed Contracts” shall mean the contracts specifically identified in Schedule 6.9(b).

“Business” shall mean all of the operations and business of the Truck Stop located at 1825 Hwy 308, Lockport, Louisiana 70374, including, but not limited to, its gaming operations, convenience store, restaurant facility and its motor and diesel fuel sales.

“Business Day” means any day other than a Saturday, Sunday or public holiday under the laws of the State of Louisiana or any other day on which banking institutions are obligated to close in Baton Rouge, Louisiana.

“Capital Expenditures” means all expenditures for any capital or fixed assets or improvements, or for replacements, substitutions or additions thereto, which have a useful life of more than one (1) year (including expenditures with respect to Capitalized Lease Obligations but excluding expenditures which are fully expensed in the period incurred in accordance with GAAP consistently applied).

“Capitalized Lease” means a lease under which the obligations of the lessee should, in accordance with GAAP consistently applied, be included in determining total liabilities as shown on the liability side of a balance sheet of the lessee.

“Capitalized Lease Obligations” means the amount of the liability reflecting the aggregate discounted amount of future payments under all Capitalized Leases calculated in accordance with GAAP consistently applied and Statement of Financial Accounting Standards No. 13.

 “Closing” has the meaning set forth in Section 2.2.

“Closing Certificate” has the meaning set forth in Section 7.1(c).

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“Closing Date” has the meaning set forth in Section 2.2.

“Closing Reports” shall mean (i) the “coin-in”, prize and pay-out sheets generated by the Business; (ii) the fuel sales reports of the Business; and (iii) the financial reports of the Business setting forth the income, expenses, assets, liabilities and cashflow of the Business monthly, from January 1, 2004 through the Closing Date.

“Code” means the Internal Revenue Code of 1986, as amended, and any reference to any particular Code section shall be interpreted to include any revision of or successor to that section regardless of how numbered or classified.

“Contract” has the meaning set forth in Section 6.9(a).

“Deposit” shall mean the sum of Fifty Thousand and no/100 Dollars ($50,000.00).

 “Devices” shall mean “Video Draw Poker Devices” as defined in the Video Draw Poker Devices Control Law, Louisiana Revised Statutes, Title 27:301 et seq., as amended from time to time.

“EBITDA” shall mean for any one (1) calendar month period the sum of: (i) net income, plus (ii) interest expenses, plus (iii) the aggregate amount of federal, state and local taxes on or measured by income (whether or not payable during that period), and plus (iv) depreciation and amortization, all as shall be computed by the Purchaser’s accountants which computation shall be made strictly in accordance with GAAP, consistently applied, and verified by an accountant chosen by the Sellers. Notwithstanding the past practices of the Sellers, when calculating EBITDA hereunder, the parties agree to use the accrual method of accounting, including, but not limited to, accruing for all licenses, permits, any gaming licenses and occupational fees, insurance costs, vacation benefits and real property taxes. In addition, the Purchaser and the Sellers will mutually agree on the treatment in the calculation of Annualized EBITDA of those expenses currently being deducted by any of the Sellers but which the parties agree will not continue after the Closing.

 “Environmental and Safety Requirements” means all federal, state, parish and local statutes, regulations, rules, ordinances and similar provisions having the force or effect of law, all licenses, permits, authorizations, approvals, covenants or criteria having the force or effect of law, all guidelines having the force or effect of law, all judicial and administrative orders and determinations, all contractual obligations and all common law and equitable doctrines (including, without limitation, injunctive relief and tort doctrines such as negligence, nuisance, trespass and strict liability), in each case concerning public health and safety, worker health and safety and pollution or protection of the environment (including, without limitation, all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control or cleanup of any hazardous or otherwise regulated materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated biphenyls, noise or radiation), each as amended and as now or hereafter in effect, including, by way of illustration and not limitation, the Occupational Safety and Health Act of 1970, 29 U.S.C. §§ 651, et seq., the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. §§9601, et seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. §§ 6901, et seq., the Clean Air Act, 42 U.S.C. §§ 7401, et seq., the Solid Waste Disposal Act, 42 U.S.C. §§ 6901, et seq., the Clean Water Act, 33 U.S.C. §§1251, et seq., and the

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Toxic Substances Control Act, 15 U.S.C. §§ 2601, et seq., and any similar or corresponding state, local, municipal and/or parish ordinance, rule, regulation, law or act, (or any successor legislation thereto).

“ERISA” shall mean the Employee Retirement Income Security Act of 1974 (or any successor legislation thereto), as amended from time to time and any regulations promulgated thereunder.

“Escrow Agent” shall mean Lawyer’s Title of Baton Rouge, having an address at 8352 Bluebonnet Boulevard, Baton Rouge, Louisiana 70810-2825.

“Escrow Hold Back” shall equal Fifty Thousand and no/100 Dollars ($50,000.00).

“Establishment License” shall mean a Type V license to operate Devices at a qualified truck stop facility as defined in the Video Draw Poker Devices Control Law, Louisiana Revised Statutes, Title 27:301 et seq., and in Chapter 42 of the Louisiana Administrative Code, both as amended from time to time, for the Premises.

“Excluded Assets” shall mean the following:

(a)The original copies of all books and records of the Sellers and related to the Truck Stop;

(b)Rights of the Sellers pursuant to or under this Agreement;

(c)Any federal, state or local tax refunds or tax credits of the Sellers;

(d)Any leases, not necessary to or used in the operation of the Business, by Sellers of any personal property other than the Assumed Contracts;

(e)All notes, bonds, guarantees or other evidence of indebtedness of any Person held by the Sellers;

(f)All cash, cash equivalents, investments and all deposits of the Sellers, excepting there from, all cash, cash equivalents, investments and all deposits arising from or related to the Business on or after the Closing Date which shall be the property of the Purchaser;

(g)Any and all insurance policies of the Sellers or any of their Affiliates and all rights to any refunds in connection therewith; provided, however, the Purchaser shall have no responsibility for any loss of prepaid premiums or other costs, expenses or charges arising from or associated with the foregoing;

(h)The license held by the Sellers, or any Affiliates, and necessary for the ownership of the Devices (commonly referred to as a “Device Owners License”);

(i)All accounts receivable, and all rights, claims or security interests arising out of or in connection therewith, relating to the Business and arising or existing at any time prior to the Closing Date (collectively, the “Sellers’ Accounts Receivable”);

(j)All rights, claims and causes of action relating to any of the property included in the preceding description of Excluded Assets.

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“GAAP” means United States generally accepted accounting principles as promulgated by the Financial Accounting Standards Board, as in effect from time to time.

“Governmental Body” means any federal, state, parish, municipal or other governmental or quasi-governmental agency, department, board, commission, bureau or other like entity or instrumentality.

“Indebtedness” means at a particular time, any indebtedness in any form, nature or type whatsoever, including but not limited to: (i) any indebtedness for borrowed money or issued in substitution for or exchange of indebtedness for borrowed money; (ii) any indebtedness evidenced by any note, bond, debenture or other debt instrument; (iii) any indebtedness for the deferred purchase price of property or services with respect to which a Person is liable, contingently or otherwise, as obligor or otherwise; (iv) any commitment by which a Person assures a creditor against loss (including, without limitation, contingent reimbursement obligations with respect to letters of credit); (v) any obligations for which a Person is obligated pursuant to a guarantee; (vi) any obligations under Capitalized Leases with respect to which a Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, or with respect to which obligations a Person assures a creditor against loss; (vii) any indebtedness secured by a Lien on a Person’s assets; and (viii) net obligations under hedging arrangements (including, without limitation, derivatives) designed to protect a Person against fluctuations in interest rates, currency exchange rates, commodity prices or other financial transactions.

“Intellectual Property Rights” means all (i) patents, patent applications, patent disclosures and inventions, (ii) trademarks, service marks, trade dress, trade names, logos and business names and registrations and applications for registration thereof, together with all of the goodwill associated therewith, (iii) copyrights (registered or unregistered) and copyrightable works and registrations and applications for registration thereof, (iv) mask works and registrations and applications for registration thereof, (v) computer software, data, databases and documentation thereof, (vi) trade secrets and other confidential information (including, without limitation, ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), know-how, manufacturing and production processes and techniques, research and development information, drawings, specifications, designs, plans, proposals, technical data, copyrightable works, financial and marketing plans and customer and supplier lists and other information), (vii) other intellectual property rights and (viii) copies and tangible embodiments thereof (in whatever form or medium).

“Investment” as applied to any Person means (i) any direct or indirect ownership, purchase or other acquisition by such Person of any notes, obligations, instruments, stock, securities or ownership interests (including partnership interests, membership interests and joint venture interests) of any other Person and (ii) any capital contribution by such Person to any other Person.

“Knowledge” or any derivation thereof whether or not capitalized, shall mean, actual knowledge of a condition or set of facts as has been obtained from any source, including, regardless of any common law or statutory definition of the foregoing, information which would cause a reasonable person to inquire further.

“Lien” means any mortgage, deed of trust, pledge, security interest, encumbrance, lien, claims, charge or other restriction of any kind whatsoever (including any conditional sale or other title retention agreement or lease in the nature thereof), any sale of receivables with recourse against the Business, any filing of or agreement to file a financing statement as debtor under the Uniform Commercial Code or any

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similar statute other than to reflect ownership by a third party of property leased to the Sellers for use in the Business under a lease which is not in the nature of a conditional sale or title retention agreement.

“Liquor and Gaming Laws of the State of Louisiana” shall mean the laws promulgated in the Louisiana Revised Statutes Title 27:1 et seq., and Title 26:1 et seq., as amended from time to time and the Louisiana Administrative Code provisions interpreting the same.

“Listed Devices” shall mean those Devices listed on Schedule 1.1(Listed Devices).

“Material Adverse Effect” or “Material Adverse Change” means any matter or matters which would, alone or in the aggregate, have an adverse effect on (i) the financial condition, operating results, assets, liabilities, operations, condition (financial or otherwise), business or prospects of the Sellers, the Business or any Affiliate of the Sellers, (ii) the ability of the Sellers or the Business to perform any of their obligations related to the operations of the Business (each, a “Material Adverse Effect”), or (iii) the ability of the Premises to qualify as a truck stop facility under the Liquor and Gaming Laws of the State of Louisiana. Material Adverse Effect or Material Adverse Change specifically includes, but is not limited to: (a) any violation by the Sellers or the Business, in any form and for any reason, of the Liquor and Gaming Laws of the State of Louisiana; or (ii) the revocation or suspension, for any period of time, of any liquor or gaming license issued by the State of Louisiana to the Sellers or the Business and used in the operations of the Business, or (iii) the ability of the Premises to qualify as a truck stop facility under the Liquor and Gaming Laws of the State of Louisiana.

“Permitted Encumbrances” means:

(a)real estate and ad valorem taxes not yet due and payable;

(b)interests or title of a lessor or lessee under any lease identified in Schedule 6.9(b); and

(c)to the extent existing on the Closing Date hereof, matters which are described on Schedule 1.1(Permitted Encumbrances), and approved of in writing by the Purchaser prior to the Closing.

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, a governmental entity or any department, agency or political subdivision thereof and any other entity.

“Purchase Price” shall mean Six Million and no/100 Dollars ($6,000,000.00).

“Purchaser” means Gameco Holdings, Inc., a Delaware corporation, its successors, assigns and/or designees, in its sole discretion.

 “Settlement Statement” shall mean a statement, signed by the Sellers and the Purchaser and to be received by the Escrow Agent at least twenty-four (24) hours prior to the Closing, identifying all funds to be received by the Escrow Agent as of the Closing and further identifying how and to whom all such funds are to be paid by the Escrow Agent, such that all Acquired Assets are transferred to the Purchaser free and clear of any and all Liens whatsoever, except Permitted Encumbrances.

“Survey” shall have the meaning given it in Section 3.4.

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“Tax” or “Taxes” means any federal, state, county, parish, local, foreign or other income, gross receipts, ad valorem, franchise, profits, sales or use, transfer, registration, excise, utility, gaming, environmental, communications, real or personal property, capital stock, membership interest, license, payroll, wage or other withholding, employment, social security, severance, stamp, occupation, alternative or add-on minimum, estimated and other taxes or fees of any kind whatsoever (including deficiencies, penalties, additions to tax or fees, and interest attributable thereto) whether disputed or not.

“Tax Return” means any return, information report or filing with respect to Taxes, including any schedules attached thereto and including any amendment thereof.

“Title Company” shall mean Lawyer’s Title of Baton Rouge having an address at 8352 Bluebonnet Boulevard, Baton Rouge, Louisiana 70810-2825.

“Title Evidence” shall mean the Title Policy and the Survey, as defined in Sections 3.3 and 3.4, respectively.

1.2Accounting Principles. The classification, character and amount of all assets, liabilities, capital accounts and reserves and of all items of income and expense to be determined, and any consolidation or other accounting computation to be made, and the interpretation of any definition containing any financial term, pursuant to this Agreement shall be determined and made in accordance with GAAP consistently applied.

1.3Other Interpretive Matters. In this Agreement, unless a clear contrary intention appears:  (a) the singular number includes the plural number and vice versa; (b) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement and reference to a Person in a particular capacity excludes such Person in any other capacity; (c) reference to any gender includes each other gender; (d) reference to any agreement (including this Agreement and the Schedules and Exhibits hereto), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof (and without giving effect to any amendment or modification that would not be permitted in accordance with the terms hereof); (e) reference to any applicable law means such applicable law as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder and reference to any particular provision of any applicable law shall be interpreted to include any revision of or successor to that provision regardless of how numbered or classified; (f) reference to any Article, Section or Exhibit means such Article or Section hereof or such Exhibit hereto; (g) “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision hereof; and (h) ”including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding such term.

Section 2.Purchase of Assets and Closing.

2.1Purchase and Sale of the Acquired Assets .

(a)At the Closing, subject to the terms and conditions contained in this Agreement, the Sellers, as applicable, shall sell, assign, set-over, convey, deliver and transfer to the Purchaser, or its designee, free and clear of any and all Liens and Indebtedness whatsoever, excepting only Permitted

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Encumbrances, and the Purchaser shall purchase from the Sellers, as applicable, all of their rights, title and interests in and to the Acquired Assets for the Purchase Price.

(b)Within ten (10) days following the execution of this Agreement by all parties hereto, the Purchaser shall deliver the Deposit to the Escrow Agent. The Deposit shall be applied as a credit toward the Purchase Price by the Escrow Agent at the Closing. In the event Purchaser shall terminate this Agreement for any reason in the Purchaser’s sole discretion prior to the Closing Date, other than a default by the Purchaser, upon notice to the Escrow Agent and the Sellers of the Purchaser’s election to terminate this Agreement, the Escrow Agent shall release the Deposit to the Purchaser. Should the Purchaser breach any provisions of this Agreement and not otherwise cure such breach pursuant to the terms and conditions hereof, the Deposit shall be forfeited by the Purchaser to the Sellers as the full and final measure of their liquidated damages hereunder, and not as a penalty, and, with the exception of the Purchaser’s indemnity set forth in Section 3.1(b) below, thereafter this Agreement shall be null and void and of no further force and effect.

(c)The Closing of the purchase and sale of the Acquired Assets shall take place at the offices of the Title Company or at such other place as may be mutually agreeable to the Sellers and the Purchaser. At the Closing, upon payment of the Purchase Price, the Sellers, as applicable, shall deliver to the Purchaser the Acquired Assets, together with such bills of sale, powers of assignment, certificates, deed(s) and other documents and instruments of conveyance as shall be reasonably satisfactory to the Purchaser and its counsel to transfer record ownership of the Acquired Assets, including, but not limited to, those items identified in Section 10 below.

(d)Sellers each acknowledge and agree that Purchaser may pay the entire Purchase Price to any one of the Sellers as directed by all of the Sellers at the Closing and that payment of the Purchase Price pursuant to the directions of the Sellers shall satisfy any and all of the Purchaser’s obligations for payment of the Purchase Price hereunder to each of the Sellers. Notwithstanding the foregoing, the parties agree that ten percent (10%) of the Purchase Price, allocated equally between the Sellers is the monetary consideration paid for the “covenant not to do” as contained in Section 11.21. The parties acknowledge and agree that this allocation is a reasonable allocation given the entities’ and their relative abilities and experience in the gaming industry. The parties each further acknowledge and agree that payment of the Purchase Price to the Sellers as outlined on the Settlement Statement is appropriate consideration and reasonably related to the value of the interests each party is transferring under this Agreement.

2.2Closing.

(a)The sale and transfer of the Acquired Assets from the Sellers, as applicable, to the Purchaser (“Closing”), pursuant to the terms and subject to the conditions hereof shall take place on a date determined by the Purchaser which date shall not be later than December 19, 2005 (“Closing Date”).

(b)It shall be a condition of the Closing that the Annualized EBITDA as of the Closing Date shall be not less than One Million Three Hundred Thousand and no/100 Dollars ($1,300,000.00).

2.3Release of Sellers’ Interest and Claims against the Business and the Acquired Assets. Sellers agree, concurrently with the Closing, to release all of their interests in and to and any claims against any of the Business or the Acquired Assets. Sellers shall deliver to the Escrow Agent a fully executed assignment, termination and/or modification agreement, to be effective as of and only upon the

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Closing, in form and substance reasonably acceptable to the Purchaser, terminating all interests and claims of the Sellers in the Business to the Acquired Assets as of the Closing Date. Nothing contained in the foregoing is intended to nor shall it operate to release any claims or causes of action the Sellers’ or any one of them may have arising out of or under this Agreement.

2.4Non-Assumption of Liabilities by Purchaser. Except for the Assumed Obligations (as hereinafter defined), the Purchaser does not assume and shall not be liable for any of the Indebtedness, debts, obligations, expenses, claims, liabilities or commitments, of any nature whatsoever (collectively “Obligations”) of the Sellers, whether arising prior to, on or after the Closing, including, but not limited to, Obligations arising from or related to the Acquired Assets and/or the Business. The Sellers agree, individually, that all Obligations, other than Obligations under the Assumed Contracts that accrue after the transfer of the Acquired Assets (collectively, the “Assumed Obligations”), shall remain the obligations of the Sellers, as applicable. The Sellers, jointly and severally, do hereby indemnify, defend and hold Purchaser harmless from and against any and all claims, losses, expenses, damages or liabilities asserted against or suffered by Purchaser arising out of or resulting from the Obligations (other than the Assumed Obligations).

2.5Release of Funds.

(a)Upon completion of the transfers and deliveries described in Sections 2.1, 2.2, 2.3 and 2.4 above and the discharge of all Liens and Indebtedness, the Escrow Agent shall release, pursuant to the Settlement Statement, any and all funds then on deposit hereunder. Any fees charged by the Escrow Agent for its services hereunder shall be borne solely by the Purchaser.

(b)Notwithstanding the foregoing, the parties agree that this Agreement and the Closing Date shall be subject to the issuance to or receipt by the Purchaser of the Consents (as defined on Schedule 6.13 below). If the Consents have not been received or issued as of the Closing Date, the Closing Date shall be extended from day to day for no more than thirty (30) Business Days until the third (3^rd) day following the date each such Consent is received, satisfied or waived. In such an event, the Sellers shall continue to operate the Business and the gaming and other operations thereof in accordance with the requirements of this Agreement. Notwithstanding the foregoing, nothing contained in this paragraph shall delay the Closing for more than thirty (30) Business Days. After the expiration of such thirty (30) days period, any party may upon written notice terminate this Agreement, and with the exception of the Purchaser’s indemnity under Section 3.1(b) below, thereafter this Agreement shall be null and void and of no further force and effect.

Section 3.Due Diligence. Beginning on the Agreement Date and continuing to and including December 10, 2005 (the “Due Diligence Period”), Purchaser shall have the right to perform the following due diligence pursuant to the terms and conditions hereof.

3.1General Testing and Inspections.

(a)During the Due Diligence Period, Purchaser shall have the right to conduct such engineering, environmental, general business and feasibility studies, inspections, testing, audits and/or reviews of the Acquired Assets, the Premises and the Business and its assets, liabilities, operations (including gaming operations and records), financial performance and affairs as Purchaser deems necessary, including soil tests, borings, drainage tests and similar tests on any land or improvement owned by the Sellers and used in the Business, and audits and reviews of all of the Business’s or Sellers’

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financial and business records, operations, documents and instruments, including a financial and tax audit of the Business. Such studies shall be conducted by Purchaser and its agents at the Purchaser’s sole cost and expense.

(b)Subject to reasonable advance notice, the Sellers agree to allow Purchaser and/or its agents access to all assets, records, documents and instruments of the Business or the Acquired Assets to conduct such studies, tests, inspections, reviews and audits, provided such access shall not unreasonably interfere with the activities of the Sellers. Purchaser shall save, defend, indemnify and hold the Sellers harmless from and against all claims, lawsuits, judgments, losses, liabilities or expenses of any kind or nature which may be asserted against or incurred by the Sellers as the result of the examination, tests, inspections, reviews, audits or studies of the Acquired Assets, the Premises or the Business by the Purchaser or any of its manager’s, members, employees, agents, contractors or designees (excluding the discovery of any preexisting condition on the Premises and any consequential damages arising from the foregoing). Notwithstanding anything contained herein to the contrary, Purchaser’s indemnity obligations set forth in this Section 3.1(b) shall survive any termination of this Agreement.

3.2Zoning. Prior to Closing, Purchaser shall have confirmed that the Premises and the current and intended uses thereof will be in compliance, as of the Closing Date, with all applicable building and zoning codes and any restrictions unique thereto.

3.3Title Commitment; Defects.

(a)Within twenty (20) days following the Agreement Date, the Purchaser shall cause the Title Company to issue and deliver its commitment (the “Commitment”) for issuance of an ALTA Owners Policy (Form B - revised 10-17-70) of title insurance covering the Premises in the full amount of the Purchase Price, which Commitment shall show marketable, fee simple title to the Premises to be vested in the Sellers, subject only to the Permitted Encumbrances. Copies of the Commitment together with copies of each document affecting title to the Premises referenced therein, except for monetary encumbrances which are to be released at Closing, shall be delivered to Purchaser and the Sellers.

(b)Purchaser shall notify Sellers of Purchaser’s disapproval of any matter contained in the Title Evidence within five (5) days after Purchaser’s receipt of all of the Title Evidence and copies of the documents referred to in the Title Evidence as exceptions or exclusions from coverage. If the Title Evidence is not satisfactory to Purchaser (collectively, “Defects”), those Defects shall, as a condition to Purchaser’s obligations under this Agreement, be cured or removed from the Title Evidence at or prior to the Closing. If Sellers elect not to or are otherwise unable to cure and remove all Defects at or prior to the Closing Date (or any extension thereof), this Agreement may be terminated, at Purchaser’s sole election, by written notice given to Sellers within five (5) days after expiration of the period allowed for cure and the Deposit shall be promptly released by the Escrow Agent to the Purchaser, or Purchaser may, at Purchaser’s sole election, waive such uncured Defects and proceed to close this transaction with no diminution of the Purchase Price.

(c)Notwithstanding any provision of this Section 3.3 to the contrary, Sellers shall have the obligation, on or prior to the Closing Date, to secure releases, discharges or satisfactions, or otherwise cure at no cost to Purchaser, any Defect which is a Lien for the payment of money only (except real estate and ad valorem taxes and assessments which shall be prorated in accordance with Section 10), including, without limitation, all mortgages, any Lien or encumbrance which may be released or discharged by the

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payment of a definite sum of money or any exception to title which arose as the result of the act or violation of Sellers or anyone claiming by, from, through or under Sellers.

(d)It shall be a condition precedent to Purchaser’s obligation to consummate the transaction contemplated hereby that the Title Company will, upon filing the instruments for conveyance of record, issue its ALTA Owner’s Fee Policy (Form B revised 10-17-70) of title insurance (the “Title Policy”) in the full amount of the Purchase Price, at standard rates, insuring Purchaser in fee simple title to the Premises subject only to the Permitted Encumbrances, and without the exception for certain of the standard printed exceptions (encroachments, overlaps, boundary line dispute, or any other matters which would be disclosed by an accurate survey or inspection of the Premises, easements or claims of easements not shown by the public records, or any lien or right to a lien for services, labor or materials furnished to the Premises, imposed by law, and not shown by the public records), unless and except to the extent that any such matters included in the so-called standard printed exceptions have been approved or waived by Purchaser. The Title Policy shall also affirmatively insure:  (i) Purchaser’s right to use any appurtenant easements in accordance with their terms and conditions; (ii) contiguity of the parcels described in Exhibit A (if more than one parcel); (iii) that the Premises have the benefit of full and free ingress and egress, both pedestrian and vehicular, directly to and from a public highway; and (iv) such other and additional endorsements or conditions as the Purchaser may require. Sellers agree to execute and deliver to the Title Company such affidavits and instruments as may be reasonably required to permit the Title Company to issue Purchaser’s Title Evidence in the form required by this subsection and to provide a copy of such affidavits and instruments to Purchaser. The cost and expense of such Owner’s Policy shall be borne solely by the Purchaser.

3.4  Survey. Within ten (10) days of the Agreement Date, Sellers shall deliver to the Purchaser any surveys of the Premises in Sellers’ possession, together with a copy of any reports, documents, notices, citations or records of any type or form in the possession of the Sellers relating to or identifying: (i) a physical deficiency in the Premises; (ii) an adverse effect on the Premises, including, but not limited to, any records, notices or citations relating to or concerning any aspect of the environmental condition of the Premises; or (iii) a change in the current, zoning, accessibility, physical characteristics, insurability, damage, condemnation, takings of or to any portion of the Premises. Following the Agreement Date, Purchaser shall have the right, at its sole election, to cause a registered surveyor or professional engineer to prepare a survey (the “Survey”) in form sufficient to enable the Title Company to delete from the Title Policy the so-called standard exception for matters disclosed by an accurate Survey. A perimeter legal description of the Premises as prepared by such surveyor or engineer shall be used to describe the Premises in the Deed and in Exhibit A. The cost and expense of such Survey shall be borne by the Purchaser. A copy of the Survey shall be furnished to the Sellers. In the event the Survey discloses any encroachments, overlaps, boundary line disputes or any other matter affecting the Premises or which violates any law, rule or regulation or is otherwise unacceptable to the Purchaser, such matter(s) shall be considered to be a Defect(s) and the relative rights and obligations of the parties with respect thereto shall be governed by the provisions of Section 3.3 hereof.

3.5Environmental Matters.

Purchaser, at its sole election, may cause an environmental evaluation and/or consulting firm (the “Consultant”) selected by Purchaser to conduct an environmental inspection and audit of the Premises (the “Audit”), including, without limitation, a Phase I, II or III site assessment study. The cost and expense of such Audit shall be borne by the Purchaser. To the extent environmental audits for the Premises have been previously obtained by Sellers; Sellers, as applicable, shall deliver copies of same to

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Purchaser within fifteen (15) days of the Agreement Date. Purchaser and Sellers shall cooperate in an attempt to achieve the result that the Audit is performed as soon as practicable and is completed no later than the expiration of the Due Diligence Period. In addition to providing any information reasonably requested by the Consultant, Sellers shall cooperate with Purchaser and the Consultant throughout the course of the Audit and shall cooperate in any other way reasonably requested by Purchaser or the Consultant.

3.6Other Records and Documents.

(a)In addition to the foregoing and to the extent the below-listed documents are in the possession of the Sellers, the Sellers agree to deliver to the Purchaser, within fifteen (15) days of the Agreement Date, a full and accurate list and reasonably complete details concerning each item described below and a copy of each document to the extent such copies are in the possession or control of the Sellers:

(i)copies of any and all certificates of title, liens, encumbrances, deeds of trust, mortgages, judgments, rights-of-way, easements, covenants, conditions or restrictions, other exceptions or matters of record relating to or affecting any real or personal property used in the Business;

(ii)copies of all certificates of occupancy, zoning variances, licenses, permits, authorizations and approvals relating to the Premises or the Business from any Governmental Body having jurisdiction over the Premises or the Business, together with any other notices and agreements related thereto, including, but not limited to, any and all gaming and liquor licenses and permits and renewals of the same or applications therefore;

(iii)to the extent not already required above, copies of any and all environmental permits, notices, demands, action letters, reports, assessments, audits, directives from any Governmental Body, documentation of any environmental matter related to the Premises; identification of which portion of the Premises has ever been or is now being used for the storage, generation, treatment, manufacture, disposal or release of any “hazardous substance” as defined by the Comprehensive Environmental Response Compensation and Liability Act, identification of all waste disposal sites and the location of all underground storage tanks or lines, whether in use or abandoned; a summary of all environmental testing done by the Sellers; and identification of any event of non-compliance with an Environmental and Safety Requirement;

(iv)copies of all real estate, personal property, fuel and ad valorem taxes, assessments, general and special, bills and returns, gaming and liquor license fees and renewals and any and all notices of violations, delinquencies and/or assessments of the same received by the Sellers within twenty-four (24) months preceding the Agreement Date;

(v)copies of any and all leases affecting the Premises or the Business in any manner;

(vi)copies of all fuel sales reports whether maintained for the Business’s sole use or submitted to any federal, state or local governmental agency (and will continue to provide Purchaser this information within fifteen (15) days of the end of each calendar month during the term of this Agreement);

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(vii)copies of monthly financial statements, including an income and balance sheet statement for each of the twenty-four (24) months preceding the Agreement Date, showing the financial condition of every aspect of the Business (and will continue to provide Purchaser this information within fifteen (15) days of the end of each calendar month during the term of this Agreement);

(viii)copies of any and all Contracts (as defined hereinafter) affecting the Premises or the Business in any manner; and

(ix)any other documents and information reasonably requested by the Purchaser.

Section 4.Termination. Notwithstanding anything contained in this Agreement to the contrary and in addition to any other rights of termination of the Purchaser under this Agreement, if at any time prior to the Closing Date, any of the studies, Title Evidence, Survey, audits, inspections, testing, reviews or other activities performed pursuant to Sections 3.1, 3.2, 3.3, 3.4, 3.5 or 3.6, or any other information (including information related to the Purchaser’s financing), however gathered or obtained, shall reveal information or conditions unacceptable to the Purchaser, in its sole discretion, then Purchaser shall have the option to terminate this Agreement. Upon receipt of such notice, this Agreement shall terminate and thereafter be null and void and of no further force and effect, and the Escrow Agent shall promptly return to the Purchaser then deposit.

Section 5.Sellers’ Accounts Receivable. Following the Closing, Buyer shall use its reasonable commercial efforts to collect the Sellers’ Accounts Receivables. Seller agrees to maintain accurate records of each such Account Receivable and the balance remaining on the same and to provide such reasonable documentation as may be requested from time to time by the Purchaser or any obligor under the same. Seller agrees to forebear taking any legal action, including the filing of any claim, to collect any Accounts Receivable following the Closing Date. Purchaser shall, within the first ten (10) days of each calendar month, remit to Seller all amounts collected on any Seller’s Accounts Receivable during the immediately preceding calendar month. During any calendar month, should an obligor under any of the Seller’s Accounts Receivable also have an account with the Purchaser, the Purchaser shall apply any sums collected from such obligor first against such obligor’s Seller’s Accounts Receivable until paid in full and then against the amounts owed the Purchaser. Notwithstanding anything contained herein to the contrary, in no event, whatsoever, shall the Purchaser have any liability for any of the Sellers’ Account Receivable that are uncollected or determined to be uncollectible, nor shall the Purchaser be obligated to expend any funds in furtherance of such collection efforts. On and after the first (1st) anniversary of the Closing Date, Purchaser shall have no further obligations to collect any sums under any of the Sellers’ Accounts Receivable.

Section 6.Representations and Warranties of the Sellers. As a material inducement to the Purchaser to enter into this Agreement and purchase the Acquired Assets hereunder, the Sellers each hereby, jointly and severally, represent and warrant to the Purchaser as follows:

6.1Organization, Power and Licenses.

(a)Larose is duly formed, validly existing and in full force and effect under the laws of the State of Louisiana and is qualified to do business in Louisiana and every other jurisdiction in which its ownership of property or the conduct of business requires it to qualify. Larose possesses all requisite

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power and authority, and all licenses, permits and authorizations necessary, to own and operate its properties, to carry on its businesses as now conducted and to carry out the transactions contemplated by this Agreement. Larose is not in violation of any of the provisions of its Articles of Organization or Operating Agreements.

(b)Each Penn is a Louisiana resident, of the age of majority and of sound mind. Together, Penn is the owner of one hundred percent (100%) of all outstanding and issued membership interests of Larose and no other person has any Investment in Larose, nor any right, by option, warrant, right of first refusal or by law or in equity to acquire the same.

(c)Sellers, as applicable, own one hundred percent (100%) of all rights, title and interests in and to the Acquired Assets, free and clear of any Liens or Indebtedness, excepting only the Permitted Encumbrances, with full, valid, unencumbered power and authority to convey the same, excluding only those assets identified on Schedule 6.9(a). There are no preemptive rights, warrants, options, or rights of first refusal with respect to the transfer of the Acquired Assets hereunder. The Acquired Assets are all of the assets used in or necessary to the operation of the Business.

(d)Any individuals who have any spousal or dower rights in any of the Acquired Assets, the Premises or the Business, under any federal, state or local law have joined in the execution of this Agreement and have consented to the transfers contemplated herein and upon such transfers shall have waived any and all interests, rights or titles they may have in and to the Acquired Assets or the Business.

6.2Affiliates; Subsidiaries; Investments. There are no Affiliates or other Persons in which the Sellers own, of record or beneficially, any direct or indirect equity, Investment or other interest or any right (contingent or otherwise) to acquire the same, or in which the Sellers otherwise participate, which would have or has any interest in the Business or the Acquired Assets.

6.3Authorization; No Breach. The execution, delivery and performance of this Agreement and all other agreements, instruments and transactions contemplated hereby and thereby to which any Seller is a party have been duly authorized by all requisite organizational approvals. This Agreement and all other agreements and instruments contemplated hereby to which any Seller is a party each constitutes a valid and binding obligation of the Sellers, as applicable, enforceable in accordance with its terms. Assuming the payment of all Liens by the Sellers at the Closing, the execution and delivery by the Sellers of this Agreement and all other agreements and instruments contemplated hereby to which the Sellers are a party, the offering and sale of the Acquired Assets hereunder and the fulfillment of and compliance with the respective terms hereof by the Sellers, does not and shall not: (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii) constitute a default under, (iii) result in the creation of any Lien upon the Acquired Assets pursuant to, (iv) give any third party the right to modify, terminate or accelerate any obligation under, (v) result in a violation of, or (vi) require any authorization, consent, approval, exemption or other action by or notice or declaration to, or filing with, any court or Governmental Body pursuant to, the Articles of Organization or Operating Agreements of the applicable Sellers or any law, statute, rule or regulation to which the Sellers are subject or any agreement, instrument, order, judgment or decree to which the Sellers or their assets are subject, other than: (a) appropriate notifications to the Louisiana State Police and Louisiana gaming authorities of the consummations of the transfers contemplated by this Agreement; and (b) appropriate licensure and/or findings of suitability of the transferee of the Listed Devices by the Louisiana Gaming Control Board.

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6.4Closing Reports and Absence of Liabilities.

(a)The Closing Reports, certified by Penn and attached hereto as Schedule 6.4(a), are: (i) true, accurate and complete; (ii) contain the same information as has been actually filed with the Louisiana State Police and any other Governmental Body; (iii) are reflected in the books and records of the Sellers; and (iv) fairly and accurately present the financial condition of the Business as of the dates thereof. After giving effect to the transactions to occur at the Closing, neither the Business nor the Sellers will have any liabilities or Indebtedness, including, but not limited to, income tax liabilities, contingent or otherwise, other than as described on Schedule 6.4(a). The Closing Reports shall be updated on the Closing Date and shall be true, accurate and complete and consistent with any and all filings with any federal, state or local authorities or agencies as of the most recent reporting date prior to the Closing Date.

(b)Except as described on Schedule 6.4(b), none of the Sellers has:

(i)any liabilities or Indebtedness (whether accrued, absolute, contingent, unliquidated or otherwise, whether due or to become due, whether known or unknown, and regardless of when asserted) which will remain a Lien upon the Business or the Acquired Assets following the Closing hereof, nor which will become a liability, Indebtedness or obligation of the Purchaser on or after the Closing, other than the Assumed Contracts;

(ii)made any Capital Expenditures for which liability, in any form, will remain after the Closing Date; or

(iii)issued: (a) any notes, bonds or other debt securities which will remain or become an obligation of the Acquired Assets, the Business or the Purchaser on or after the Closing Date, or (b) any shareholder/owner interests or other equity securities, membership interests or any securities convertible, exchangeable or exercisable into any ownership interests in the Business or Acquired Assets; or

(iv)sold, assigned or transferred any of the Business’s Intellectual Property Rights or other intangible assets, or disclosed any of the Business’s proprietary confidential information to any Person; or

(v)made any loans or advances to, guarantees for the benefit of, or any Investments in the Business or the Acquired Assets, that will not have been completely repaid and/or terminated as of the Closing Date; or

(vi)knowledge of, or have caused the Business or any Acquired Asset to suffer any, damage, destruction or casualty loss which has had or may in the future have a Material Adverse Effect on the Business, whether or not covered by insurance; or

(vii)as relates to the Business, borrowed any amount of, incurred or become subject to, any liabilities, except current liabilities consisting solely of accounts payable and trade payables incurred in the ordinary course of business and liabilities under leases identified elsewhere in this Agreement; or

(viii)discharged or satisfied any Lien or paid any obligation or liability, other than current liabilities paid in the ordinary course of business; or

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(ix)mortgaged or pledged any of its properties or assets or subjected them to any Lien, except Permitted Encumbrances; or

(x)sold, assigned or transferred any of its tangible assets, except in the ordinary course of business, or cancelled any debts or claims; or

(xi)suffered any extraordinary losses or waived any rights of value, whether or not in the ordinary course of business or consistent with past practice; or

(xii)made any commitments for Capital Expenditures that have not expired as of the Agreement Date; or

(xiii)agreed to do any of the foregoing.

6.5No Adverse Change. From the Agreement Date to and through the Closing Date, there has not been nor shall there be any adverse change in the operating results, operations, condition (financial or otherwise), prospects, employee relations or customer or supplier relations of the Business or the Acquired Assets, as applicable. From the Agreement Date to and through the Closing Date, Sellers shall promptly give Purchaser notice of any adverse change in the operating results, operations, condition (financial or otherwise), prospects, employee relations or customer or supplier relations of the Business or the Acquired Assets, as applicable.

6.6Absence of Undisclosed Liabilities. No Seller nor any Affiliate has any obligation or liability (whether accrued, absolute, contingent, unliquidated or otherwise, whether due or to become due and regardless of when asserted) related or attaching to or affecting in any manner the Business or the Acquired Assets and arising out of transactions entered into at or prior to the Closing, or any action or inaction at or prior to the Closing, or any state of facts existing at or prior to the Closing, other than (a) liabilities set forth on the Closing Reports, and (b) other liabilities and obligations expressly disclosed on Schedule 6.6.

6.7Business Property. The Sellers, as applicable, have good, valid and one hundred percent (100%) complete title to all of the Acquired Assets, free and clear of any Lien other than Permitted Encumbrances, and have full power and authority to convey and transfer the same free and clear of any and all claims by any Person whatsoever. The Acquired Assets constitute all of the assets and real property and improvements used by any of the Sellers in or necessary for the operation of the Business as of the Closing Date.

6.8Tax Matters. The Purchaser shall have no liability for or exposure to any Taxes arising from the operation(s) of the Business prior to the Closing Date. All necessary and required Tax Returns have been timely filed and are correct in all material respects as to the amount of tax owed and have been prepared in compliance with all applicable laws and regulations in all respects; the Sellers have paid all Taxes due and owing by any of them (whether or not such Taxes are required to be shown on a Tax Return) and have withheld and paid over to the appropriate taxing authority all Taxes which it or they are required to withhold from amounts paid or owing to any employee, member, creditor or other third party; no Seller has waived any statute of limitations with respect to any Taxes or agreed to any extension of time with respect to any material Tax assessment or deficiency; as of the Agreement Date, no foreign, federal, state, parish or local tax audits or administrative or judicial proceedings are pending or being conducted with respect to the Business or any of the Acquired Assets; no information related to Tax

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matters has been requested by any foreign, federal, state or local taxing authority and no written notice indicating an intent to open an audit or other review has been received by Sellers from any foreign, federal, state, parish or local taxing authority.

6.9Contracts and Commitments.

(a)Except as listed on Schedule 6.9(a), there are no agreements, contracts, leases, licenses, commitments or instruments (including any and all amendments thereto) (collectively, the “Contracts”) to which the Business is a party or by which the Business or any of the Acquired Assets are bound or subject. There are no commitments or agreements with any third-party or Governmental Body affecting the Business or the Acquired Assets which are not listed on Schedule 6.9(a). Except as otherwise expressly noted on Schedule 6.9(a), each agreement listed on Schedule 6.9(a) is in full force and effect and constitutes a legal, valid and binding obligation of Business, assignable to the Purchaser hereunder, upon Purchaser’s written consent to assume the same. Except as otherwise expressly noted on Schedule 6.9(a), no such Contract is in default or breach (with or without the giving of notice or the passage of time or both) and no other party is in default or breach of any such Contracts and the Sellers under each such Contract are or will be as of the Closing Date timely in their payments of any and all sums or any performance obligations under each such Contract.

(b)Sellers agree to execute and deliver on the Closing Date such documents and instruments as are necessary and reasonably acceptable to the Purchaser and Purchaser’s counsel to completely transfer, set-over and assign to the Purchaser those contracts and only those contracts listed on Schedule 6.9(b).

6.10Intellectual Property Rights.

(a)Schedule 6.10 contains a complete and accurate list of all Intellectual Property Rights, if any, owned or used by Sellers in the Business, other than rights under licenses of any original equipment manufacturers (“OEM”), i.e Windows, etc., or off-the-shelf software, such as word processing programs, etc.; provided, however, all of the Sellers’ ownership rights, if any, in and to any of the foregoing, shall constitute Acquired Assets and shall be transferred to the Purchaser hereunder.

(b)The Sellers own all right, title and interest in and to all of the Intellectual Property Rights listed on Schedule 6.10, free and clear of all Liens and there have been no claims made against Sellers asserting the invalidity, misuse or unenforceability of any of such Intellectual Property Rights.

(c)All Intellectual Property Rights used in or for the Business, whether listed or not listed on Schedule 6.10, shall be considered Acquired Assets hereunder and shall be transferred to the Purchaser for the Purchaser Price on the Closing Date. Sellers agree to execute and deliver on the Closing Date such documents and instruments as are necessary and acceptable to the Purchaser and Purchaser’s counsel to completely transfer, set-over and assign each and every Intellectual Property Right to the Purchaser.

6.11Litigation, etc.

(a)Except as set forth on Schedule 6.11, there are no actions, suits, proceedings, orders, investigations or claims pending or, to the Sellers’ knowledge, threatened against or affecting the Sellers, the Business, the Acquired Assets or pending or threatened by the Sellers against any third party, at law or in equity, and affecting in any manner the Business or the Acquired Assets or the prospects thereof,

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before or by any federal, foreign, state, parish or local court, or Governmental Body (including any actions, suits, proceedings or investigations with respect to or threatening the transactions contemplated by this Agreement); nor has there been any such actions, suits, proceedings, orders, investigations or claims pending against or affecting the Business or the Acquired Assets during the two (2) years preceding the Agreement Date. None of the Sellers, or any of their Affiliates involved in the operation of the Business, are subject to any arbitration proceedings or any governmental investigations or inquiries (including inquiries as to the qualification to hold or receive any license or permit, including, but not limited to, the right to have Devices or sell liquor and sell or store petroleum products or byproducts); and, to the Sellers’ knowledge, there is no basis for any of the foregoing. None of the Sellers nor any of their Affiliates is subject to any judgment, order or decree of any court or other governmental agency, and has not received any written opinion or memorandum from legal counsel to the effect that it or they are exposed, from a legal standpoint, to any liability which may involve or be related, in any manner, to the Business or the Acquired Assets.

(b)The Sellers do, jointly and severally, hereby indemnify, defend and hold harmless the Purchaser, and its owners, shareholders, members, directors, managers, officers, employees, agents, successors and assigns, from and against any and all expenses, claims, fees, fines, damages or losses, including reasonable attorney’s fees, which the Purchaser may suffer as a result of any litigation matter, claim, investigation or choses in action existing or accruing as of the Closing Date (whether or not set forth on Schedule 6.11) or arising or filed at anytime and related, in any manner, to the operation of the Business or ownership of the Acquired Assets by the Sellers (each, a “Litigation Matter”). Purchaser shall have the right, at its sole election, to participate in the defense of any Litigation Matter, including, but not limited to, requiring the defense to be conducted by legal counsel of its choice.

6.12Brokerage. There are no claims for brokerage commissions, finders’ fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement binding upon Sellers.

6.13Required Consents. Except as listed on Schedule 6.13 (the “Consents”), no consents, approvals or other like permission are required or necessary from any Governmental Body or from any third party for the consummation of the transactions contemplated by this Agreement.

6.14Insurance.

(a)All assets, properties and risks of the Business or the Acquired Assets are, and for the period of their operation and/ownership by the Sellers have been, covered by valid and currently effective insurance policies or binders of insurance (including general liability and property insurance) issued in favor of the Sellers, in each case with responsible insurance companies, in such types and amounts and covering such risks as are consistent with customary practices and standards of companies engaged in businesses and operations similar to those of the Business and such coverage shall continue through midnight of the Closing Date. All refunds or costs associated with the cancellation of such policies shall be the sole asset of and responsibility of the Sellers.

(b)In the event that any of the Acquired Assets or any portion of the Business is damaged or otherwise the subject of a casualty or condemnation on or prior to the Closing Date, and the reduction in the fair market value of the Acquired Assets or the Business as a result of the casualty or condemnation reasonably exceeds Two Hundred Fifty Thousand and no/100 Dollars ($250,000.00), then either the Purchaser or Sellers shall have, in their sole, independent discretion, the right to terminate this

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Agreement. If the reduction in the fair market value as a result of any casualty or condemnation is less than Two Hundred Fifty Thousand and no/100 Dollars ($250,000.00), only the Purchaser shall have the right to elect to terminate this Agreement. If following a condemnation or casualty that occurs on or prior to the Closing Date, neither party elects to terminate this Agreement, then Purchaser shall proceed to close without any reduction in the Purchase Price and any and all insurance proceeds and the right to contest or make a claim for the same shall become the property of the Purchaser after the Closing Date and no Seller shall have any right, title or interest in or to the same and each does hereby relinquish any and all interest therein; provided, however, each of the foregoing shall fully cooperate in assigning and securing any and all insurance proceeds on behalf of the Purchaser. In the event Purchaser or Sellers shall elect to terminate this Agreement pursuant to this Section 6.14(b) with the exception of the Purchaser’s indemnity set forth at Section 3.1(b), this Agreement shall thereafter be null and void and of no further force and effect and no party hereto shall have any further obligation or liability hereunder, and the Escrow Agent shall promptly thereafter return the Deposit to the Purchaser.

6.15Transactions with Affiliates. Except as disclosed on Schedule 6.15 or as otherwise provided for herein, the Business has no outstanding contracts, agreements, loans, obligations, debts or other legally binding arrangement with the Sellers or any of their Affiliates that will survive the Closing.

6.16Employees, Officer and Directors.

(a)No Seller, on behalf of the Business, has ever maintained or contributed to, any employee benefit plan (as defined in Section 3(3) of ERISA) or any bonus, incentive, retirement, deferred compensation, retiree medical or life insurance, supplemental retirement, severance or other benefit plans, programs or arrangements, or any employment, termination, severance or other contracts or agreements, and, except as set forth on Schedule 6.16(a), there exists no employee benefit plan for which the Sellers could incur liability on behalf of the Business under Section 4069 of ERISA in the event such plan has been or were to be terminated. Any employee of the Business may be terminated without cause at any time for any lawful reason without obligation on the part of the Sellers to make any payment therefore.

(b)The Sellers, as appropriate, agree to terminate and dismiss, for any lawful reason, without creating any financial or other obligation to the Business or the Purchaser any employee or agent of the Business, as may be requested by the Purchaser, which termination shall be effective not later than midnight on the Closing Date.

(c)Notwithstanding the foregoing, nothing contained in this Agreement shall prohibit the Purchaser, or its designee, from entering into an employment relationship under such terms and conditions as are acceptable to the Purchaser, with any employee, manager or agent of the Business.

6.17Labor Matters. Except as set forth in Schedule 6.17, the Sellers employ all personnel working at the Premises or in the Business and none of the foregoing is a party to any collective bargaining or other labor union contract applicable to persons employed for the benefit of the Business, no collective bargaining agreement is being negotiated by the Sellers and none of the Sellers has knowledge of any activities or proceedings (a) involving any unorganized employees of the Business seeking to certify a collective bargaining unit or (b) of any labor union to organize any of the employees of the Business. There is no labor dispute, strike or work stoppage against the Sellers affecting or threatening to affect the Business pending or threatened which may interfere with the operation of the Premises or the Business.

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6.18Compliance with Laws.

(a)To each of the Sellers’ or their Affiliates knowledge, each Seller and the Business is now and at all times has been in material compliance (provided the lack of any compliance will not have or have had a Material Adverse Effect on the Business or the Acquired Assets) with all applicable federal, state and local statutes, ordinances, rules, regulations, permits, consents, licenses, orders or other authorizations governing or related to the Acquired Assets or the Business and the Business’s liquor and gaming related activities, including, but not limited to, the Liquor and Gaming Laws of the State of Louisiana, as amended, and the rules and regulations promulgated thereunder, and no Seller nor any Affiliates thereof, have received any notice, demand, complaint or order from any Governmental Body asserting that a license of or related to the Business should be revoked, suspended, not issued or issued with qualifications, or that they or the Business are not in full compliance with the same. Larose, both as of the Agreement Date and the Closing Date, has a validly issued Device Owner’s License permitting the ownership and operation of Devices at the Premises and such Device Owner’s License is not currently subject to any investigation or notice of investigation, suspension or revocation from any state, federal, local or parish agency or authority. Purchaser acknowledges that the Louisiana State Police have not yet issued an Establishment License to Larose and/or Midway, as applicable, and that at present there is still pending an investigation by the Louisiana State Police as part of the issuance of an Establishment License for the operation of Devices at the Truck Stop.

(b)Except as set forth in Section 6.18(a), to each of the Sellers’ or their Affiliates’ knowledge, there is no investigation or review of the Acquired Assets or the Business now underway or threatened by any Governmental Body, including, without limitation, any investigation or review by any gaming authority, nor has any of the foregoing indicated an intention to conduct the same.

6.19Environmental and Safety Matters. Except as set forth on Schedule 6.19, with respect to the Business, the Premises and the Acquired Assets:

(a)the Sellers and their Affiliates, as applicable, have complied and are in material compliance, in all respects (provided the lack of any compliance will not have or have had a Material Adverse Effect on the Business or the Acquired Assets), with all Environmental and Safety Requirements;

(b)without limiting the generality of the foregoing, each of the Sellers and any of their Affiliates have obtained and complied with, and are in material compliance, in all respects (provided the lack of any compliance will not have or have had a Material Adverse Effect on the Business or the Acquired Assets), with all permits, licenses and other authorizations that may be required pursuant to Environmental and Safety Requirements for the occupation of the Premises and the operation of the Business, including, but not limited to, the sale and storage of fuel and fuel oil and the disposal of the Business’s waste water, a list of all such permits, licenses and other authorizations is set forth on Schedule 6.19(b);

(c)none of the Sellers nor any of their Affiliates have received any written or oral notice, report or other information or has any knowledge regarding any actual or alleged violation of Environmental and Safety Requirements, including any investigatory, remedial or corrective obligations, relating to the Business, the Premises or any Acquired Asset arising under Environmental and Safety Requirements;

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(d)to each of the Seller’s knowledge, none of the following exists at the Premises:  (i) asbestos-containing material in any form or condition; (ii) materials or equipment containing polychlorinated biphenyls; or (iii) landfills, surface impoundments (i.e. ground disposals areas, covered or uncovered, in which trash or any other materials are stored or disposed of) or similar disposal areas;

(e)none of the Sellers nor any of their Affiliates have caused, will not knowingly cause, and there has not occurred during the time the Sellers have owned or operated the Premises, any of the Acquired Assets or the Business, the release of any “hazardous substance” on the Premises in violation of any Environmental and Safety Requirements;

(f)none of the Sellers or any of their Affiliates has, either expressly or by operation of law, assumed or undertaken any liability, including any obligation for corrective or remedial action, of any other Person relating to Environmental and Safety Requirements; and

(g)to each of the Seller’s knowledge, Schedule 6.19(g) is a full, complete and accurate list of all Underground Storage and Aboveground Storage Tanks (UST’s and AST’s, respectively) on the Premises, each of which is now and has at all times prior hereto been operated and maintained in full compliance with all applicable Environmental and Safety Requirements.

6.20Governmental Authorizations. Any registration, declaration or filing with, or consent, approval, license, permit or other authorization or order by, any Governmental Body, domestic or foreign, that is required in connection with the valid execution, delivery, acceptance and performance by the Sellers under this Agreement or the consummation by the Sellers of any transaction contemplated hereby or as otherwise necessary for the operation of the Business has been or will be completed, made or obtained on or before the Closing Date, except any such filings or approvals that may be required of the transfer contemplated hereunder by the Louisiana State Police and the Louisiana Gaming Control Board.

6.21Premises. To the best of the Sellers’ knowledge, information and belief, there is not now pending nor threatened: (a) any litigation or proceeding to take all or any portion of the Premises by eminent domain or other condemnation proceeding; (b) any street widening or changes in any highway or traffic lanes or patterns in the immediate vicinity of the Premises; or (c) other change or modification by a Governmental Body which would adversely affect the Premises, the Business or any of the Acquired Assets. Further, to the best of the Sellers’ knowledge, information and belief, (i) the Premises are connected to and serviced by adequate water, gas, sewage disposal and electric facilities; (ii) all material systems of the Premises, including, but not limited to, heating, ventilation, air conditioning, electrical, plumbing, roof, fuel pumps and lines, etc., are in good operating condition, subject to reasonable and ordinary wear and tear; and (iii) the Premises and all improvements located thereon are in full compliance with current building and zoning laws. Sellers have no information or knowledge that any portion of the Premises are being condemned or otherwise taken for use as part of any street widening process.

6.22Disclosure. To the best of the Sellers’ knowledge, information and belief, neither this Agreement, nor any of the exhibits, schedules, attachments, written statements, documents, certificates, reports or other items prepared or supplied to the Purchaser by or on behalf of the Sellers or any of their Affiliates with respect to the transactions contemplated hereby contain any untrue statement of a material fact or omit a material fact necessary to make each statement contained herein or therein not misleading.

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6.23Operations.

(a)The Business and the Acquired Assets, including, but not limited to, the fuel and gaming activities conducted therein, have been and shall be, at all times from and after the Agreement Date through the Closing, operated pursuant to sound business practices as are necessary to preserve, protect,  and provide maintenance for the Business and the Acquired Assets and in no event following the Agreement Date, shall the amount of the Business’s inventory for any item of inventory, including, but not limited to fuel, food or convenience items, be less than the average amount of inventory for that item at any time during the twelve (12) month period preceding the Closing Date. All of the Acquired Assets, both as of the Agreement Date and as of the Closing Date, shall be in good operating condition and repair, reasonable wear and tear excepted.

(b)All Devices currently placed in the Premises are owned by Larose. There is no separate agreement with any third party to operate the Listed Devices or manage any portion of the Business. Larose, for itself and any Affiliates, agrees, as a part of the Closing, to timely request a coordinated transfer of the Devices from the Louisiana gaming regulatory authorities and to cooperate in the transfer of said Devices and to timely provide all documentation and information as shall be necessary to ensure the orderly and proper transfer of Devices at the Premises, including ensuring that there is no period of time during such a transfer when at least forty (40) Devices are not legally operating on the Premises and available for play by the general public. Concurrently herewith, Larose, for itself and for its Affiliates, agrees to execute a purchase agreement with Southern Trading Corporation, a Louisiana corporation, or any other designee of the Purchaser who is also a holder of a valid Louisiana device owner’s license, under which all of Larose’s interest in the Listed Devices shall be transferred to Southern Trading Corporation, or such designee, for a total consideration equal to One Dollar ($1.00) per Listed Device; provided, however, in no event shall the total consideration paid for the Listed Devices and the acquired Assets exceed the Purchase Price. It is the purpose of this Agreement and the intent of the Purchaser and Sellers that the total monetary consideration to be paid by the Purchaser and the acquirer of the Listed Devices for all of the Acquired Assets, including the Listed Devices, shall equal, but not exceed, the Purchase Price.

(c)The amount and type of fuel sales at the Premises, at all times for the last twelve (12) months, have been sufficient to qualify the Premises, pursuant to the Liquor and Gaming Laws of the State of Louisiana, as a truck stop facility approved to operate not less than fifty (50) Devices. None of the Sellers has any knowledge of any information that would lead any party to reasonably anticipate any change in the foreseeable future in the level and type of fuel sales at the Premises. Not more than one (1) percent of all fuel sales at the Premises during any twelve (12) month period were made to the Sellers or any Affiliate of the foregoing.

6.24Certain Payments. No officer, director, employee or agent of the Business, the Sellers or any of their Affiliates, nor any other person acting with or on behalf of the Business has directly or indirectly (a) offered, agreed to make or made any contribution, gift, bribe, rebate, payoff, influence payment, kickback or other payment to any Person, private or public, regardless of form, whether in money, property or services (i) to obtain favorable treatment in securing business, permits or licenses, (ii) to pay for favorable treatment for business, permits or licenses secured, (iii) to obtain any special concessions or for special concessions already obtained or (iv) in violation of any legal requirement or (b) established or maintained any fund or asset related to the Business, the Acquired Assets or their operations.

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6.25Interest in Competitors, Suppliers and Customers. Except as set forth on Schedule 6.25, none of the Sellers nor any Affiliates of the foregoing, have any ownership interest in any competitor, supplier or customer of the Business.

6.26No-Shop. Sellers, for themselves and for any Affiliates, agree that until the termination or expiration of this Agreement, neither they nor any of their Affiliates shall enter into any agreements nor have discussions with any third parties for the sale of the Acquired Assets nor grant any rights of first refusal or options to acquire the same in any form whatsoever. Sellers acknowledge for themselves and for their Affiliates during the term of this Agreement, Purchaser shall have the sole and exclusive right to purchase the Acquired Assets.

6.27Representations and Warranties of the Purchaser. As a material inducement to the Sellers to enter into this Agreement and sell the Acquired Assets hereunder, the Purchaser represents and warrants to each of the Sellers as follows:

(a)Purchaser is duly formed, validly existing and in good standing under the laws of the State of Delaware. Purchaser possesses all requisite power and authority, and all licenses, permits and authorizations necessary, to own and operate its properties, to carry on its businesses as now conducted and presently proposed to be conducted and to carry out the transactions contemplated by this Agreement. Purchaser is not in violation of any of the provisions of its Articles of Incorporation or By-Laws.

(b)The execution, delivery and performance of this Agreement and all other agreements, instruments and transactions contemplated hereby and thereby to which the Purchaser is a party have been duly authorized by all requisite company approvals. This Agreement and all other agreements and instruments contemplated hereby to which the Purchaser is a party each constitutes a valid and binding obligation of the Purchaser enforceable in accordance with its terms. The execution and delivery by the Purchaser of this Agreement and all other agreements and instruments contemplated hereby to which the Purchaser is a party, the purchase of the Acquired Assets hereunder and the fulfillment of and compliance with the respective terms hereof by the Purchaser, does not and shall not: (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii) constitute a default under, (iii) result in a violation of, the Articles of Incorporation or By-Laws of the Purchaser, or any law, statute, rule or regulation to which the Purchaser is subject.

Section 7.Conditions Precedent.

7.1Conditions to the Purchaser’s Obligations. The obligation of the Purchaser to purchase the Acquired Assets shall be expressly subject to the satisfaction and fulfillment, at or before the Closing, of each of the following conditions precedent and any other such conditions stated elsewhere in this Agreement.

(a)Prohibition. There shall have been no lawsuit, judgment, order, suit, complaint or preliminary or permanent injunction entered, pending or threatened in any action or proceeding before any United States federal, state, parish or local court, or any foreign court, of competent jurisdiction or Governmental Body threatening or enjoining, in whole or in part, the Business’s current operations, making illegal or prohibiting the consummation of the transactions hereunder, including the transfer of the Acquired Assets and the operation of Devices on the Premises.

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(b)Related Agreements. To be effective as of the Closing Date: (i) Larose shall have executed a purchase agreement between Larose and Southern Trading Corporation, or any other properly licensed designee of the Purchaser, transferring to Southern Trading Corporation, or such other designee, all of the Listed Devices; (ii) Purchaser and Penn shall have entered into the Independent Contractor Agreement set forth in Exhibit E; and (iii) Purchaser, Penn and the third parties referred to therein shall have entered into the Right of First Refusal Agreement set forth in Exhibit F.

(c)Representations True. The representations and warranties of the Sellers set forth in this Agreement and the exhibits, schedules, attachments, written statements, documents, certificates, Closing Reports, financial statements or other items prepared or supplied to the Purchaser by or on behalf of the Sellers, shall be true and correct in all respects on the Closing Date with the same effect as though all such items had been made on and as of such date, and the Sellers shall each deliver to the Purchaser a certificate certified by an officer of the Sellers, and Penn, individually, certifying such or identifying any changes as of the Closing Date (the “Closing Certificate”).

(d)Good Standing Certificate. The Purchaser shall have received a good standing certificate for each of the applicable Sellers dated within fifteen (15) days prior to the Closing Date.

(e)Condition of Assets. The Acquired Assets shall be in good physical and operating condition, excepting normal wear and tear only, as existed on the Agreement Date. No damage or casualty shall have occurred to the Acquired Assets, Devices or operations of the Business prior to the Closing Date.

(f)Legal Opinion. Purchaser shall have received a legal opinion, substantially in the form of Exhibit G attached hereto, from legal counsel for the Sellers.

(g)No Adverse Change. As of the Closing Date, there shall be no adverse change in the operating results, operations, condition (financial or otherwise), employee relations or customer or supplier relations of the Business or the Acquired Assets, as applicable.

(h)Additional Documents. The Purchaser shall have received from the Sellers, as appropriate, each of the instruments and other documents referred to elsewhere in this Agreement.

(i)Assumed Contract Consents. The Purchaser shall have received the consent(s) of the lessors under the leases and/or contracts identified on Schedule 6.9(b).

(j)Title Policy. The Title Company shall be unconditionally prepared to issue the Title Policy in the name of the Purchaser or its designee, in the amount of the Purchase Price.

(k)Financing. The Purchaser shall have received the funds from any financing for the contemplated purchase of the Acquired Assets.

(l)Larose or Midway, as applicable, shall have been issued an Establishment License by the Louisiana State Police and/or Gaming Control Board.

7.2Conditions to the Sellers’ Obligations. The obligation of the Sellers to sell the Acquired Assets to the Purchaser shall be subject to the satisfaction and fulfillment, at or before the Closing, of the following conditions precedent:

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(a)There shall have been no lawsuit, judgment, order, suit, complaint or preliminary or permanent injunction entered, pending or threatened in any action or proceeding before any United States federal, state, Parish or local court, or any foreign court, of competent jurisdiction or Governmental Body (which has jurisdiction over the enforcement of any applicable laws) making illegal or prohibiting the consummation of the transactions hereunder, including the transfer of the Acquired Assets or the operation of Devices on the Premises;

(b)Purchaser has timely delivered or caused to be delivered the Purchase Price, plus or minus any applicable prorations hereunder, to the Escrow Agent;

(c)Purchaser shall have performed all obligations and complied with all agreements and covenants required hereunder to be performed by Purchaser on or before the Closing Date;

(d)Purchaser’s representations and warranties contained herein and in any documents furnished to the Sellers on or prior to the Closing Date shall be true and correct in all respects as of the Closing Date;

(e)The Title Company has confirmed to Sellers that the Title Company is unconditionally prepared to disburse the Purchase Price (plus or minus all applicable prorations and less the Escrow Hold Back) to the Sellers or its designees subject only to the performance by the Sellers of their respective obligations under this Agreement;

(f)Sellers shall have received the Agreements referred to in Section 7.1(b).

(g)The Sellers shall have received the consent(s) of the lessors under the leases and/or contracts identified on Schedule 6.9(b).

(h)Except for the consents under item (g) above, if any of the foregoing conditions are not satisfied on or prior to the Closing Date for a reason other than a default under this Agreement by the Sellers, Sellers shall give the Purchaser written notice of the foregoing conditions not satisfied and Purchaser shall have thirty (30) Business Days during which to cure the same. In the event the Purchaser is unable to cure the conditions within such period, the Sellers may terminate this Agreement and the Escrow Agent shall promptly release the Deposit to the Seller. Acceptance by any of the Sellers of any portion of the Purchase Price shall be evidence of the waiver by each of the Sellers of the foregoing conditions precedent.

Section 8.Omitted.

Section 9.Non-Solicitation.

9.1Notwithstanding anything contained in this Agreement to the contrary, each of the Sellers, for themselves and their Affiliates, agrees for a period of three (3) years following the Closing and as partial consideration for the Purchase Price, that neither they, nor their Affiliates, shall employ, solicit for employment or induce to leave their employment or other relationship, any employee, customer, vendor or supplier of the Purchaser, its Affiliates or the Business, nor any employee who may be permanently hired by the Purchaser or Southern Trading Corporation.

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9.2Nothing contained in this Section is intended or shall it be construed as prohibiting any party from running “help wanted” ads or other general solicitations for employees or from hiring respondents to such general solicitations, regardless of whether such respondents are or have been employed by one of the parties to this Agreement.

Section 10.Deed, Adjustments and Prorations, Closing.

10.1Deed.Subject to Purchaser’s review and acceptance of Title Evidence, Sellers shall convey the Premises to Purchaser by an Act of Cash Sale (the “Deed”), attached hereto as Exhibit H, conveying good, marketable and indefeasible fee simple title to the Premises subject only to the following:

(a)Zoning laws;

(b)Current real estate and ad valorem taxes and assessments, if any, not yet due and payable; and

(c)Permitted Encumbrances.

Such Deed shall contain a legal description of the Premises which is based upon and consistent with the Survey and approved of by the Purchaser.

10.2Taxes and Assessments: Closing Costs.

(a)Real estate and ad valorem taxes, general and special and assessments (collectively “Real Estate Taxes”),  utilities, costs, charges and expenses generated by the operations of the Acquired Assets and other similar charges, as well as revenues generated by the Acquired Assets, shall be prorated between the Sellers and the Purchaser as of the Closing Date, such that credits, charges, costs, expenses and revenues up to noon local time on the Closing Date and all days preceding the Closing Date shall be allocated to Sellers, as applicable, and credits, charges, costs, expenses and revenues after noon local time on the Closing Date shall be allocated to Purchaser. The Purchase Price shall be adjusted at the Closing to reflect the prorations, in accordance with the Settlement Statement.

(b)The parties agree that, in accordance with Louisiana law, all revenue from the Listed Devices shall be collected during the last normally scheduled “drop” or collection prior to or on the Closing Date and that the proration of all revenue generated from each Listed Device shall be calculated from the time of the foregoing “drop” and adjusted for the balance of the Closing Date until noon local time by using the print out of all coin-in and prizes paid as generated by each Listed Device from the time of the drop to noon local time on the Closing Date.

(c)If the actual amount of Real Estate Taxes is not known on the Closing Date, Real Estate Taxes shall be prorated on the basis of the rate shown for the Premises on the last available tax duplicate; provided, that there shall be deducted therefrom all applicable credits. Sellers represent and warrant that there are no special assessments with regard to the Premises. Upon receipt of the final tax duplicate for the period encompassing the Closing Date, the parties shall adjust, outside of the escrow, the proration of Real Estate Taxes based upon the actual tax duplicate.

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(d)If any errors or omissions are made regarding adjustments and prorations as aforesaid, the parties shall make the appropriate corrections promptly upon the discovery thereof. Any corrected adjustment or proration shall be paid in cash to the party entitled thereto.

(e)Sellers shall not assign any policies of liability or property damage insurance covering the Premises. No insurance premiums shall be prorated. Purchaser shall pay for recording fees. Purchaser shall pay any Louisiana transfer taxes and conveyance fees associated with the conveyance of the Real Property. Escrow fees shall be paid by the Purchaser. Each party shall pay its own attorneys’ fees and all expenses incurred by it other than expenses specifically addressed elsewhere in this Agreement. All revenues and expenses arising from the operation of the Acquired Assets and the Business (collectively, the “Operating Charges”) accruing, earned or incurred on or prior to the Closing Date shall be the sole responsibility of the Sellers (regardless of when an invoice is issued or payment for such charges and expenses is due), including but not limited, to any salaries, utilities, Taxes or other costs. All Operating Charges arising from the operation of the Acquired Assets and the Business and incurred after the Closing Date shall be the sole responsibility of the Purchaser. The parties shall make a reasonable proration of the Operating Charges at Closing based upon the most recent invoice for each Operating Charges and shall adjust such proration upon receipt of the final invoice encompassing the Closing Date for each such Operating Charges.

(f)Closing. This transaction shall be closed through an escrow that is to be held by the Title Company, in accordance with the general provisions of the usual form of escrow agreement then in use by such Title Company for transactions similar to this with such special provisions inserted as may be required to conform with this Agreement. Each party shall execute and deliver on a timely basis all escrow instructions, deeds, funds, the Settlement Statement and other documents reasonably necessary to accomplish Closing. In addition to, and not in limitation of, the foregoing:

(i)On or before the Closing Date, Sellers shall execute, deliver or cause to be delivered to the Title Company all of the items listed below:

(a)The Deed;

(b)Any other instruments then required pursuant to any other sections of this Agreement;

(c)Mechanics Lien Affidavit required by the Title Company; and

(d)Each Seller’s affidavit of non-foreign status, as contemplated by Section 1445 of the Code attached hereto as Exhibit D.

(ii)On or before the Closing Date, Purchaser shall deliver or cause to be delivered to Title Company the Purchase Price, subject to the prorations and credits as herein provided, and execute and deliver to the Sellers an assumption agreement in form and substance reasonably satisfactory to Sellers and their counsel under which the Purchaser, or its designee, assumes and agrees to perform all obligations under the Assumed Contracts that accrue after the Closing Date.

(iii)The transactions provided for in this Agreement shall be completed by the Title Company on the Closing Date by doing each of the following:

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(a)by filing the Deed for record in the Deed Records of Lafourche Parish, Louisiana;

(b)by causing the issuance of the Title Policy, subject only to the Permitted Encumbrances, and forwarding the Title Policy to Purchaser with a copy to Sellers;

(c)by prorating taxes, assessments and other amounts, in accordance with this Agreement and the Settlement Statement with respect to the Premises, and paying and charging Purchaser or Sellers for those costs and expenses to be paid by Sellers or Purchaser pursuant hereto;

(d)by delivering to Purchaser: (i) the Seller’s/Owner’s Affidavit and Indemnity, fully executed by the applicable Sellers, and attached hereto as Exhibit I; and (ii) the FIRPTA Affidavit attached hereto as Exhibit D;  and

(e)by preparing and forwarding to Purchaser and Sellers four (4) signed copies of the Settlement Statement setting forth all receipts and disbursements provided for herein.

In addition to the obligations required to be performed hereunder by Sellers at the Closing, Sellers agree to perform such other acts, and/or to execute and deliver to Purchaser such further instruments, documents and other materials, as are reasonably requested by Purchaser at or subsequent to Closing in order to effect the consummation of the transaction contemplated herein and to vest title to the Premises and the Acquired Assets in Purchaser, including, without limitation, the assignment of all rights of Sellers in and to any easements for the benefit of the Premises; provided, however, that the foregoing instruments and other materials, if any, shall not enlarge the scope of Sellers’ obligations hereunder.

(g)In the event the Title Company is unable to simultaneously perform all instructions set forth in Section 10(f)(iii)(a) through (e) on the Closing Date, the Title Company shall so notify Sellers and Purchaser, and shall retain, unless otherwise instructed by the party depositing the same, all documents and funds deposited with the Title Company until receipt by the Title Company of written instructions executed by Sellers and Purchaser or by a Court of competent jurisdiction.

(h)If the Purchaser (i) disapproves any condition referred to in this Agreement within the applicable time period and in the manner set forth in the Agreement, or (ii) is otherwise allowed to terminate this Agreement and cancel the Escrow, without thereby committing an act of default under this Agreement or the Escrow and does so, all obligations of the parties under this Agreement shall, except as otherwise set forth, terminate and none of the parties hereto shall have any further obligation to the other under this Agreement. In such event, Escrow Agent shall return all funds (after deducting its charges, if its charges are to be borne by the party depositing such funds) and documents then in Escrow to the party depositing same and each party shall promptly return all documents in the possession of such party to the other party.

(i)Possession.At noon local time on the Closing Date, subject in all events to the payment by the Purchaser of the Purchase Price, Sellers shall cease operation of the Acquired Assets and

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shall deliver possession thereof to the Purchaser, and all risk of loss with respect thereto shall pass to the Purchaser or its designee.

(j)Inventory Count. The Sellers and Purchaser agree that at 7:00 a.m. local time on the Closing Date, a representative from each of them (the “Representatives”) shall meet at the Truck Stop and shall jointly perform the following functions:

(i)count any food stuffs and convenience items held by the Sellers for sale to the general public;

(ii)shall jointly verify the amount of motor and diesel fuels remaining in any underground storage tanks;

(iii)shall jointly verify the amount of all currency contained in the Listed Devices as of 7:00 a.m. local time on the Closing Date;

(iv)shall jointly verify the amount of all currency kept in the safe located in the casino; and

(v)shall further cooperate to turn over, at noon local time, subject in all events to the payment of the Purchase Price by the Purchaser, all keys, passwords, accounts, and copies of all records, documents, instruments and any other items necessary for the immediate and complete operation of the Acquired Assets.

(k)Inventory Adjustment.

(i)Purchaser agrees to pay to the Sellers, on the Closing Date: (i) a good faith, reasonable estimate (the “Estimate”) of the actual cost of those items remaining on the Premises and described in Section 10(j)(i) and (ii) above; provided, however, each such item must be in good, usable, saleable condition; (ii) the dollar value of the of currency remaining in the safe located in the casino; and (iii) the dollar value of the currency contained in the Listed Devices as verified under Section 10(j)(iii) above, less any and all unclaimed payouts, Taxes or fees, which currency shall remain in the safe and the Listed Devices following the Closing and shall become the property of the Purchaser.

(ii)Within sixty (60) Business Days of the Closing Date, the parties shall adjust the Estimate made in Section 10(k)(i) above, if necessary, to equal the actual verifiable cost incurred by any Seller of those items remaining on the Premises as of 7:00 a.m. local time on the Closing Date and described in Section 10(j)(i) and (ii) above. Seller must be able to provide Purchaser with verification, in a form reasonably acceptable to Purchaser, of a Seller’s actual, incurred cost for the items in Section 10(j)(i) and (ii) which remained on the Premises on the Closing Date. Any Seller shall only be entitled to be reimbursed for their actual cost of such items without premium or interest. Any items, determined by the Purchaser as not being in good, usable, saleable condition or for which the actual verifiable cost cannot be demonstrated to the Purchaser’s satisfaction, shall be removed by Sellers, within five (5) Business Days of such determination, at their sole cost and expense.

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(l)Escrow Hold Back. From and after the Closing Date, Escrow Agent shall withhold the Escrow Hold Back from the Sellers’ proceeds hereunder and shall hold such funds in escrow. In the event: (i) the Purchaser shall receive any invoice, bill or letter demanding payment for any Operating Charges that accrued or relate to any period of time on or prior to the Closing Date; or (ii) any account receivable transferred hereunder is not collected in full by the thirtieth day (30) prior to the Hold Back Expiration Date (as hereinafter defined), Purchaser shall send evidence of such Operating Charges to the Escrow Agent and to the Sellers (“Hold Back Notice”).

(i)Sellers shall have ten (10) Business Days following their receipt of the Hold Back Notice to serve, in writing to both the Escrow Agent and the Purchaser, any objections they may have to the same. If no objection is timely served by the Sellers, Escrow Agent is herewith authorized, without further action by any party, to promptly pay such Operating Charges out of the Escrow Hold Back.

(a)If Sellers shall timely object to any payment out of the Escrow Hold Back and the basis for an objection is that the Operating Charges that are the subject of the Hold Back Notice arose after the Closing Date, then the Escrow Agent shall hold such amount as is identified in the Hold Back Notice until such time as it receives written instructions from all parties to disburse the same; or

(b)If Sellers shall timely object to any payment out of the Escrow Hold Back and the basis for an objection is anything other than an objection based upon Section 10(i)(i)(a) above, the Escrow Agent shall hold the funds identified in the Hold Back Notice for an additional thirty (30) calendar days, after which it shall disburse such funds as directed by the Purchaser.

(ii)Promptly after that date which is one hundred twenty (120) days after the Closing Date (“Hold Back Expiration Date”), Escrow Agent shall release any funds then remaining in the Escrow Hold Back to the Sellers, unless such funds have been the subject of a Hold Back Notice and subsequent objection in which event such funds shall remain in escrow until the Escrow Agent has received written instructions from both the Purchaser and the Sellers.

Section 11.Miscellaneous.

11.1Expenses. Unless specifically allocated by this Agreement, each of the parties shall be obligated to pay its own expenses (including all fees and expenses of legal counsel, environmental consultants and accountants).

11.2Sellers’ Resignation. Sellers shall and shall cause their owners, shareholders, members, managers, officers, employees and agents to, resign, effective as of the Closing Date, any positions they may hold within the Business, including, but not limited to, the positions of agent or employee.

11.3Update to Schedules and Exhibits. The Sellers, as appropriate, shall promptly notify the Purchaser, prior to the Closing Date, of any changes or modifications to the information contained on the schedules or exhibits attached to this Agreement or in any document, record or instrument supplied to the Purchaser or any of its agents as a part of the transactions contemplated herein and provide in written form an amended schedule, exhibit, document, record or instrument, as the case may be. Notwithstanding anything contained herein to the contrary, Sellers shall update the attached Schedules within thirty (30) days of the Agreement Date. Notwithstanding the foregoing, upon receipt of any change or modification

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to any schedule or exhibit or in any record, document or instrument described above which shall have or identify a Material Adverse Effect, Purchaser shall have the right, in its sole discretion, to terminate this Agreement and upon such termination the Escrow Agent shall promptly release the Deposit to the Purchaser.

11.4Remedies.

(a)In the event of any actual or alleged default by any party hereto (the “Defaulting Party”), the non-defaulting party (the “Non-Defaulting Party”) shall provide written notice to the Defaulting Party (“Default Notice”) specifying the default; setting forth the Non-Defaulting Party’s claim that the matter constitutes a default; and identifying the steps or actions that the Non-Defaulting Party believes should be taken in order to cure the alleged default. The Defaulting Party shall have a period of seven (7) days, or such additional time as may be reasonably required, to cure the alleged default (the “Cure Period”). The Defaulting Party shall have no liability for any actual or alleged default that is cured within the Cure Period.

(b)Each of the parties hereto shall have all rights and remedies set forth in this Agreement and any other documents or instruments relating to the consummation of the transactions contemplated under this Agreement, and all rights and remedies which such parties have been granted at any time under any other agreement or contract and all of the rights which such parties have under any law. No remedy hereunder or thereunder conferred is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereunder or now or hereafter existing at law or in equity or by statute or otherwise. The Sellers and Purchaser having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law.

11.5Amendments and Waivers. No oral modification hereof shall be binding upon the parties; all modifications and amendments shall be in writing and signed by the parties. Failure by any party to insist upon or enforce any of its respective rights, benefits or remedies shall not constitute a waiver thereof. Any party hereto may waive the benefit of any provision or condition for such party’s benefit contained in this Agreement; provided, however, such a waiver must be specifically expressed in writing.

11.6Survival of Agreement. All covenants, representations and warranties contained in this Agreement or made in writing by any party in connection herewith shall survive the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.

11.7Successors and Assigns. All covenants and agreements contained in this Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective heirs, personal representatives, executors, administrators, successors and assigns of the parties hereto whether or not so expressed; provided that none of the Sellers shall be permitted to assign their rights or obligations under this Agreement. Except as otherwise expressly provided herein, nothing expressed in or implied from this Agreement is intended to give, or shall be construed to give, any Person, other than the parties hereto and their permitted successors and assigns, any benefit or legal or equitable right, remedy or claim under or by virtue of this Agreement or any such other document.

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11.8Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.

11.9Counterparts. This Agreement may be executed in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same Agreement.

11.10Descriptive Headings; Interpretation. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a substantive part of this Agreement.

11.11Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Louisiana, without regard to principles of conflict of laws.

11.12Notices. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given (a) when delivered personally to the recipient, (b) one (1) Business Day after being sent to the recipient by reputable overnight courier service (charges prepaid), (c) three (3) Business Days after posting in the United States mail having been mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid, or (d) when sent via facsimile if a copy is delivered personally, couriered or mailed to the recipient as set forth above. Such notices, demands and other communications shall be sent to the parties at the addresses indicated below:

If to any of the Sellers, to:

Larose Truck Plaza and Casino, L.L.C.

c/o Joe F. Penn, Jr.

4411 Cherokee Rose Drive

Zachary, Louisiana 70791

Facsimile:

with a required copy to:

David M. Culpepper, Esq.

David M. Culpepper, L.L.C.

400 Poydras Street, Suite 1710

New Orleans, Louisiana 70130

Facsimile: 504-680-6080

If to the Purchaser, to:

Gameco Holdings, Inc.

c/o Colonial Downs

1869 Mills Highway

Breaux Bridge, Louisiana 70517

Attn: Stan Guidroz

Facsimile: 337-507-2282

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with a required copy to:

Hahn Loeser & Parks LLP

3300 BP Tower

200 Public Square

Cleveland, Ohio 44114

Attn: Stanley R. Gorom III, Esq.

Facsimile: 216-274-2460

or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party.

11.13Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. The parties intend that each representation, warranty and covenant contained herein shall have independent significance. If any party has breached any representation, warranty or covenant contained herein in any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) which such party has not breached shall not detract from or mitigate the fact that such party is in breach of the first representation, warranty or covenant.

11.14Complete Agreement. This Agreement, those documents expressly referred to herein, and the other documents of even date herewith, or dated as of the Closing Date, delivered or executed in connection with the transactions contemplated hereby embody the complete agreement and understanding among the parties and supersede any prior agreements or representations by or among the parties, written or oral, including the Letter of Intent dated October 3, 2005, and executed by the parties prior to the Agreement Date, which may have related to the subject matter hereof in any way.

11.15Indemnification.

(a)In consideration of the Purchaser’s execution and delivery of this Agreement and purchase of the Acquired Assets hereunder, and in addition to all of each of Sellers’ other obligations under this Agreement and in addition to all other rights and remedies available at law or in equity, each of the Sellers agree, jointly and severally, to defend, protect and indemnify the Purchaser and all of its officers, directors, shareholders, members, managers, partners, Affiliates, employees, agents, representatives, successors and assigns (including those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Purchaser Indemnitees”), and save and hold each of them harmless from and against, and pay on behalf of or reimburse such party on demand as and when incurred, any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities, damages and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), including reasonable attorneys’ fees and disbursements, interest and penalties and all amounts paid in investigation, defense or settlement of any of the foregoing and claims relating to any of the foregoing (the “Purchaser Liabilities”), incurred by the Purchaser Indemnitees or any one of them as a result of, arising out of, or relating to: (a) the breach by any Seller of any representation, warranty, covenant, obligation or term contained herein; (b) any claim, debt, cause of action, expense, obligation or liability arising or related to the period of time prior to the

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Closing Date and related in any manner to the operation of the Business and/or the Acquired Assets by the Sellers; or (c) any breach or default by any Seller arising out of the execution, delivery, performance or enforcement of this Agreement and any other instrument, document or agreement executed pursuant hereto, except to the extent any such Purchaser Liabilities are caused by the particular Purchaser Indemnitee’s own acts or omissions.

(b)In consideration of each Sellers’ execution and delivery of this Agreement and sale of the Acquired Assets hereunder, and in addition to all of the Purchaser’s other obligations under this Agreement and in addition to all other rights and remedies available at law or in equity,  the Purchaser agrees to defend, protect and indemnify each Seller and all of their officers, directors, shareholders, members, partners, Affiliates, employees, managers, agents, representatives, successors and assigns (including those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Seller Indemnitees”), and save and hold each of them harmless from and against, and pay on behalf of or reimburse such party on demand as and when incurred, any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities, damages and expenses in connection therewith (irrespective of whether any such Seller Indemnitee is a party to the action for which indemnification hereunder is sought), including reasonable attorneys’ fees and disbursements, interest and penalties and all amounts paid in investigation, defense or settlement of any of the foregoing and claims relating to any of the foregoing (the “Seller Liabilities”), incurred by the Seller Indemnitees or any of them as a result of, arising out of, or relating to: (a) the breach by the Purchaser of any representation, warranty, covenant, obligation or term contained herein; or (b) any claim, debt, cause of action, expense or liability arising after the Closing Date and related in any manner to the operation of the Business and/or the Acquired Assets by the Purchaser; or (c) any breach or default by the Purchaser arising out of the execution, delivery, performance or enforcement of this Agreement and any other instrument, document or agreement executed pursuant hereto, except to the extent any such Seller Liabilities are caused by the particular Seller Indemnitee’s own acts or omissions.

11.16Prevailing Party Fees. In the event of a default of any condition or obligation of this Agreement on the part of any party hereto which results in any legal proceeding, the non-prevailing party shall pay to the prevailing party of the litigation all reasonable costs and expenses of the legal proceeding and any appeal therefrom, including reasonable attorney’s fees.

11.17Incorporation. Any and all Schedules, Exhibits or other documents referred to herein or attached hereto are incorporated herein as if fully rewritten in this Agreement.

11.18Tax Treatment Election.

(a)The parties agree that this Agreement is for the purchase and sale of assets and that Purchase Price shall be allocated among the Acquired Assets in accordance with Section 1060 of the Code. Purchaser and Sellers agree that as a condition to the Closing they shall, by mutual agreement, allocate the value of the Acquired Assets pursuant to the Code. Not less than ten (10) days prior to the Closing, the Purchaser and Sellers, as applicable, shall complete and sign three (3) copies of form 8594, and each agrees to act in accordance with the allocation contained therein in the course of any Tax audit, tax review, the filing and preparation of any Tax Returns or tax litigation. Neither Purchaser nor Sellers shall assert that the allocation as agreed upon was not separately bargained for at arm’s length and in good faith.

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(b)If the parties fail to reach a mutually agreeable determination with respect to the values to be utilized in the completion of Exhibit C within five (5) days prior to the Closing, the disputed item(s) shall be submitted to a certified public accountant employed by PricewaterhouseCoopers in New Orleans, Louisiana (the “Independent Accountant”) for resolution. The Independent Accountant’s determination shall be made using GAAP and shall be final and binding on both parties. The costs and expenses of the Independent Accountant will be split equally between the Purchaser and the Sellers. The Closing Date shall be extended day to day until the third (3rd) day following the Independent Accountant’s determination of the foregoing.

11.19Additional Instruments and Information. All parties agree and do hereby obligate themselves to promptly execute any additional documents and instruments and take any other actions necessary and proper for the complete and expeditious implementation and satisfaction of the provisions and intent of this Agreement. In addition, Sellers agree that during and subsequent to the sale transaction, Sellers shall have a continuing duty to supply such information and documentation and to perform such acts as may be required by any Governmental Body or under the Liquor and Gaming Laws of the State of Louisiana.

11.20Monthly Financial Statements. Sellers agree to provide, from and after the Agreement Date through the Closing Date, within fifteen (15) days following the close of each calendar month, financial statements, including a statement of income and expenses and a balance sheet prepared in manner consistent with the internal accounting and reporting practices used by the Sellers beginning on and after January 1, 2005, reflecting the operations and results of the Business for the prior month.

11.21Future Development.

(a)In further consideration of the purchase of the Acquired Assets and the Business, each of the Sellers (“Selling Parties”) obligate themselves and their Affiliates not to directly or indirectly, within a fifteen (15) mile radius (“Exclusion Zone”) of the Truck Stop commencing on the Closing Date and continuing thereafter uninterrupted for a period of five (5) years: (i) own, manage, operate, control, be employed by, participate in or be connected with any aspect of a video poker truck stop facility or other business which derives any portion of its revenues from legal or illegal gaming, whether as a sole proprietor, owner, partner, stockholder, member, director, officer, employee, agent, consultant, joint venturer, contractor, investor or other participant; or (ii) be otherwise involved or connected in any manner with the ownership, management, operation, promotion, advertisement, solicitation of customers, marketing or sales efforts or control of any enterprise that carries on or engages in a business directly or indirectly in competition with the gaming, fueling (diesel and motor fuel), restaurant or convenience-store activities of the Business.

(b)The foregoing restriction is an obligation not to do an act or take an action. The Selling Parties, each for themselves and their Affiliates, acknowledge that the foregoing obligation not to do an act is a material inducement for the Purchaser to enter into this Agreement and is a necessary, reasonable and appropriate restriction.

(c)Given the unique and competitive nature of the video poker industry and the operation of truck stop facilities, the parties hereto acknowledge and agree that the restrictions contained in this Section 11.21 are reasonable and necessary to protect the Business from competition for which it otherwise has little or no ability to defend itself. The parties hereto further acknowledge and agree that

37

the restrictions contained herein do not impose a burden upon one party which is not commensurate with the risk to any other party.

(d)If a court of competent jurisdiction determines that the restrictions contained herein are too restrictive to be enforced, in whole or in part, this provision shall not be invalid, and all parties agree that the court shall modify the restrictions contained herein to the extent necessary to permit their enforcement.

(e)In the event of a breach or threatened breach of the provisions of this section, the Purchaser shall be entitled to an injunction restraining each of the Selling Parties from competing against the Purchaser or from rendering any services to any person, firm, corporation, association, partnership or other entity that is competing against the Purchaser. Nothing contained in this section shall be construed as prohibiting the Purchaser from pursuing any other remedies available for a breach or threatened breach of the restrictions contained in this section, including the recovery of damages from the any of the Selling Parties.

(f)Ten Percent (10%) of the Purchase Price is specifically allocated as payment to the foregoing entities and individuals as consideration for their obligations and covenants under this Section 11.21.

(g)Notwithstanding the foregoing, Seller’s are currently and shall remain the owners and operators of that certain truck stop facility commonly referred to as Hollywood Truck Plaza & Casino (“Hollywood Truck Stop”) located in Bayou Vista, Louisiana. Seller’s continued ownership and operation of the Hollywood Truck Stop shall not be a violation of the foregoing “obligation not to do” and shall be the sole exception thereto.

11.22Time of the Essence. TIME IS OF THE ESSENCE WITH RESPECT TO EACH PROVISION OF THIS AGREEMENT. The parties acknowledge and agree that the preceding sentence is a central, indispensable element of this Agreement.

11.23Force Majure. Any time period or obligation to timely perform imposed upon any party hereunder shall be extended as necessary when performance of such obligation(s) is rendered impossible or unreasonably difficult as a result of any acts of God, war, labor strikes or unrest, weather, acts of terrorism, general disruptions to the economy or day-to-day operations of the government of the Parish of Lafourche, the State of Louisiana or the United States of America which make conducting business unreasonably difficult or impossible.

11.24SUBMISSION TO JURISDICTION AND VENUE, CONSENT TO SERVICE OF PROCESS, ETC. TO THE FULLEST EXTENT PERMITTED BY LAW, EACH OF THE PURCHASER AND EACH OF THE SELLING PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY:

(A)AGREES THAT ANY ACTION, SUIT OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THIS AGREEMENT, THE TRANSFER CONTEMPLATED HEREIN OR ANY STATEMENT, COURSE OF CONDUCT, ACT, OMISSION OR EVENT IN CONNECTION WITH ANY OF THE FOREGOING (COLLECTIVELY, “RELATED LITIGATION”) TO WHICH EITHER IS OR MAY BE A PARTY MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN BATON ROUGE, LOUISIANA,

38

AND SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND AGREES NOT TO BRING ANY RELATED LITIGATION IN ANY OTHER FORUM;

(B)ACKNOWLEDGES THAT SUCH COURTS WILL BE THE MOST CONVENIENT FORUM FOR ANY RELATED LITIGATION, WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY RELATED LITIGATION BROUGHT IN ANY SUCH COURT, WAIVES ANY CLAIM THAT ANY RELATED LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, AND WAIVES ANY RIGHT TO OBJECT, WITH RESPECT TO ANY RELATED LITIGATION, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER IT; AND

(C)CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY RELATED LITIGATION BY REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO IT AT THE ADDRESS FOR NOTICES DESCRIBED IN THIS AGREEMENT, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW).

11.25JURY WAIVER  TO THE FULLEST EXTENT PERMITTED BY LAW, EACH OF THE PURCHASER AND EACH OF THE SELLING PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES THEIR RIGHT TO A TRIAL BY JURY OF ANY AND ALL CLAIMS, CAUSES OF ACTION OR SUITS ARISING FROM OR RELATED TO THE SUBJECT MATTER OF THIS AGREEMENT.

11.26Use of storage building located on the Premises. For not more than six (6) calendar months following the Closing Date, Purchaser shall permit the Seller, without charge, to store any of the sellers’ video draw poker devices in the separate storage building located on the Premises; provided, however, in no event shall the Purchaser have any obligation to maintain the security of such building or the contents thereof during such six (6) month period and all risk of damage, theft or loss to any of the Sellers’ property stored on the Premises shall remain solely with the Sellers.

[The remainder of this page is left intentionally blank.]

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THUS DONE AND PASSED on the 9^th day of November, 2005, at the City of Lockport, State of Louisiana, the undersigned party having affixed its signature in the presence of me, Notary, and the undersigned competent witnesses, after due reading of the whole.

WITNESSES:		SELLERS:
		LAROSE TRUCK PLAZA & CASINO, L.L.C., a Louisiana limited liability company
/s/ Stan Guidor		By:	/s/ Joe F. Penn, Jr.
Printed Name:  Stan Guidor		Joe F. Penn, Jr., Authorized Officer
/s/ Charlene Hancock
Printed Name: Charlene Hancock
	/s/ Sheila P. St. Pierre
	NOTARY PUBLIC
THUS DONE AND PASSED on the 9th day of November, 2005, at the City of Lockport, State of Louisiana, the undersigned party having affixed its signature in the presence of me, Notary, and the undersigned competent witnesses, after due reading of the whole.
WITNESSES:		SELLERS:
		MIDWAY RECREATION, L.L.C., a Louisiana limited liability company
/s/ Stan Guidor		By:		/s/ Joe F. Penn, Jr.
Printed Name:  Stan Guidor		Joe F. Penn, Jr., Authorized Officer
/s/ Charlene Hancock
Printed Name: Charlene Hancock
	/s/ Sheila P. St. Pierre
	NOTARY PUBLIC

40

THUS DONE AND PASSED on the 9^th day of November, 2005, at the City of Lockport, State of Louisiana, the undersigned party having affixed its signature in the presence of me, Notary, and the undersigned competent witnesses, after due reading of the whole.

WITNESSES:			SELLERS:
/s/ Stan Guidor			/s/ Joe F. Penn, Jr.,
Printed Name:	/s/ Stan Guidor		Joe F. Penn, Jr., Individually and as the spouse of
			Melissa Penn
/s/ Charlene Hancock
Printed Name:  Charlene Hancock
		/s/ Sheila P. St. Pierre
		NOTARY PUBLIC

THUS DONE AND PASSED on the 9^th day of November, 2005, at the City of Lockport, State of Louisiana, the undersigned party having affixed its signature in the presence of me, Notary, and the undersigned competent witnesses, after due reading of the whole.

WITNESSES:			SELLERS:
/s/ Stan Guidor			/s/ Melissa Penn
Printed Name:	/s/ Stan Guidor		Melissa Penn, Individually and as the spouse of Joe F.
			Penn
/s/ Charlene Hancock
Printed Name:  Charlene Hancock
		/s/ Sheila P. St. Pierre
		NOTARY PUBLIC

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THUS DONE AND PASSED on the ___ day of November, 2005, at the City of West Palm Beach, State of Florida, the undersigned party having affixed its signature in the presence of me, Notary, and the undersigned competent witnesses, after due reading of the whole.

WITNESSES:			PURCHASER:
			Gameco Holdings, Inc., a Delaware corporation
/s/ Thomas Che			By:	/s/ Jeffrey P. Jacobs
Printed Name:	Thomas Che		Jeffrey P. Jacobs, CEO
/s/ Jay Christianson
Printed Name:  Jay Christianson
		/s/ Chrissy A. DeNitto
		NOTARY PUBLIC

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LIST OF SCHEDULES AND EXHIBITS

1.	Schedule 1.1(b)	- Machinery/Equipment/Fixtures
2.	Schedule 1.1(c)	- Inventories
3.	Schedule 1.1(Listed Devices)	- Listed Devices
4.	Schedule 1.1(Permitted Encumbrances)	- Permitted Encumbrances
5.	Schedule 6.4(a)	- Closing Report
6.	Schedule 6.4(b)	- Exceptions
7.	Schedule 6.6	- Undisclosed Liabilities
8.	Schedule 6.9(a)	- Contracts
9.	Schedule 6.9(b)	- Assumed Contracts
10.	Schedule 6.10	- Intellectual Property Rights
11.	Schedule 6.11	- Litigation
12.	Schedule 6.13	- Required Consents
13.	Schedule 6.15	- Transactions with Affiliates
14.	Schedule 6.16(a)	- Employee and Officer - Employment Contracts
15.	Schedule 6.17	- Labor Matters
16.	Schedule 6.19	- Environmental and Safety Matters
17.	Schedule 6.19(b)	- List of Permits
18.	Schedule 6.19(g)	- UST’s and AST’s
19.	Schedule 6.25	- Interest in Competitors, Suppliers and Customers
20.	EXHIBIT A	- Legal Description - Premises
21.	EXHIBIT B	- Omitted
22.	EXHIBIT C	- Form 8594
23.	EXHIBIT D	- Certification of Non-foreign Status
24.	EXHIBIT E	- Independent Contractor Agreement
25.	EXHIBIT F	- Right of First Refusal Agreement
26.	EXHIBIT G	- Legal Opinion
27.	EXHIBIT H	- Deed
28.	EXHIBIT I	- Seller’s/Owner’s Affidavit and Indemnity

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SCHEDULE 1.1(b)

[Machinery/Equipment/Fixtures]

List being prepared, to be attached within twenty (20) days of the Agreement Date.

44

SCHEDULE 1.1(c)

[Inventories]

List being prepared, to be attached within twenty (20) days of the Agreement Date.

45

SCHEDULE 1.1 - Listed Devices

[Listed Devices]

List being prepared, to be attached within twenty (20) days of the Agreement Date.

46

SCHEDULE 1.1 - Permitted Encumbrances

[Permitted Encumbrances]

To be determined and approved of by Purchaser prior to the Closing.

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SCHEDULE 6.4

[Closing Report]

To be attached within twenty (20) days following the Agreement Date.

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SCHEDULE 6.6

[Undisclosed Liabilities]

None.

49

SCHEDULE 6.9(a)

[Contracts]

None.

50

SCHEDULE 6.9(b)

[Assumed Contracts]

None.

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SCHEDULE 6.10

[Intellectual Property Rights]

1. “Larose Truck Plaza & Casino” name and trademark and any variation of same.

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SCHEDULE 6.11

[Litigation]

None.

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SCHEDULE 6.13

[Required Consents]

1.The issuance of appropriate permits from the LaFourche Parish Health Department.

2.The issuance of a state and parish liquor license/permit to sell alcoholic beverages on the Premises by the Purchaser.

3.The receipt of funds from the Purchaser’s financing source.

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SCHEDULE 6.15

[Transactions with Affiliates]

None.

55

SCHEDULE 6.16(a)

[Employee and Officer - Employment Contracts]

None.

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SCHEDULE 6.17

[Labor Matters]

None.

57

SCHEDULE 6.19

[Environmental and Safety Matters]

None.

58

SCHEDULE 6.19(b)

[List of Permits]

1.	Gaming Establishment License
2.	Parish Retail License
3.	Parish Device License
4.	Sales Tax Certificate
5.	Department of Health
6.	UST Registration
7.	Outside Beer License
8.	Beer & Liquor License
9.	Tobacco License

List being prepared, to be attached within twenty (20) days of the Agreement Date.

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SCHEDULE 6.19(g)

[UST’s and AST’s]

1.See the following registration documents for all Underground Storage Tanks. List being prepared, to be attached within twenty (20) days of the Agreement Date.

2.There are no Above-Ground Storage Tanks on the Premises.

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SCHEDULE 6.25

[Interest in Competitors, Suppliers and Customers]

None.

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EXHIBIT A

[Legal Description of the Premises]

62

EXHIBIT B

[Management Agreements]

No Management Agreements.

63

EXHIBIT C

[IRS Form 8594]

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EXHIBIT D

TRANSFEROR’S CERTIFICATION OF NONFOREIGN STATUS

To inform Gameco Holdings, Inc., a Delaware corporation (“Transferee”), that withholding of tax under Section 1445 of the Internal Revenue Code of 1954, as amended (“Code”), will not be required upon the transfer of certain real property to the Transferee by Larose Truck Plaza & Casino, L.L.C., each a Louisiana limited liability company (“Transferor”), the undersigned hereby certifies the following:

1.The Transferor is not a foreign person, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Code and the Income Tax Regulations promulgated hereunder),

2.The Transferor’s U.S. employer identification number is                         and

3.The Transferor’s office address is:

1825 Highway 308

Lockport, Louisiana  70374

The Transferor understands that this Certification may be disclosed to the Internal Revenue Service by the Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.

The Transferor understands that the Transferee is relying on this Certification in determining whether withholding is required upon said transfer.

Under penalty of perjury, I declare that I have examined this Certificate and, to the best of my knowledge and belief, it is true, correct, and complete, and I further declare that I have authority to sign this document on behalf of the Transferor.

Date of this            day of                                              , 2005.

TRANSFEROR:

By:
	Joe F. Penn, Jr., Authorized Officer

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EXHIBIT E

STATE OF LOUISIANA

PARISH OF ST. MARY’S

INDEPENDENT CONTRACTOR AGREEMENT

BE IT KNOWN, that before the undersigned Notaries Public, in the State of Louisiana, and in the presence of the undersigned competent witnesses, personally came and appeared:

JOE F. PENN, JR., a Louisiana resident (“Contractor”), whose mailing address is declared to be 4411 Cherokee Rose Drive, Zachary, Louisiana 70791;

and

GAMECO HOLDINGS, INC., a Delaware corporation (“Gameco”), domiciled and having a place of business in the Parish of St. Martin, State of Louisiana and whose mailing address is declared to be 1869 Mills Hwy, Breaux Bridge, Louisiana 70517, herein represented by its duly authorized agent Jeffrey P. Jacobs,

both of whom did execute this Independent Contractor Agreement (“Agreement”), to be effective as of this     day of                               , 2005 (the “Agreement Date”).

RECITALS

A.Gameco, on the Agreement Date, has or anticipates purchasing the assets of a business known as the Larose Truck Plaza & Casino, L.L.C., and 1825 Hwy 308, Lockport, Louisiana 70375 (the “Business”);

B.Contractor has special skills, training, experience, knowledge and ability to perform advisory and consulting services with respect to the Business and Gameco desires Contractor to provide such services; and

C.Contractor seeks to be retained by Gameco and Gameco seeks to retain Contractor under the terms and subject to the conditions set forth below.

NOW, THEREFORE, in consideration of the mutual promises and agreements hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.Incorporation. The foregoing recitals are incorporated herein as if fully rewritten herein.

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2.Independent Contractor. At all times during the Term (as hereinafter defined) of this Agreement, Contractor shall perform the duties and responsibilities identified in this Agreement as an independent contractor and not as an agent, employee, member, joint venturer or partner of Gameco. Gameco shall not withhold any federal, state or local taxes, social security, unemployment compensation or other payments from the Payments (as hereinafter defined) paid to Contractor. Contractor shall pay all federal, state and local income taxes, social security contributions and all other taxes and charges levied or assessed with respect to the Payments received by Contractor pursuant to this Agreement. Gameco and Contractor agree that Gameco shall not provide Contractor with a paid vacation period, or with medical, life or any other benefits, except as expressly provided in this Agreement. Contractor agrees to abide by all applicable federal, state and local laws, ordinances, rules and regulations in performing the duties and responsibilities required of him hereunder. Contractor shall be obligated to pay any and all costs and expenses that Contractor deems necessary or appropriate to fulfill his obligations hereunder.

3.Term and Termination. This Agreement shall be deemed to have commenced on the Agreement Date and shall continue thereafter until December 31, 2007, unless terminated prior to such date as hereinafter provided (the “Term”). Notwithstanding the foregoing, this Agreement may terminate immediately, at Gameco’s reasonable discretion, upon the occurrence of any of the following events (each a “Termination”):  (i) Contractor being convicted of a felony or act of moral turpitude; (ii) Contractor breaches or defaults under any of the terms and conditions of Section 6 of this Agreement; or (iii) Gameco is directed to disassociate itself from any relationship or contact with Contractor by any state gaming authority. A Termination under Sections 3(i), (ii) or (iii) shall constitute a Termination for “Cause”. Gameco and Contractor acknowledge and agree that no provision contained in this Agreement offers, guarantees or otherwise obligates Gameco to retain Contractor following the end of the Term or the Termination of this Agreement. Following the Termination of this Agreement for Cause, Gameco shall pay Contractor the Payments accruing prior to the effective date of the Termination as outlined below. Contractor acknowledges and agrees that no other compensation, of any nature or type, shall be payable hereunder following the Termination of this Agreement for Cause.

4.Duties and Responsibilities of Contractor. Commencing on and after the Agreement Date and continuing for the remainder of the Term, Contractor shall be available to the officers, agents and employees of Gameco on an “as-needed and when-needed” basis with reasonable advance notice and shall be physically at the Business with reasonable advance notice and at reasonable times. Contractor agrees to conduct himself, at all times while rendering services hereunder, in a professional manner and shall use his best efforts to make recommendations hereunder for the purpose of benefiting the financial success of the Business.

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Except as identified in Section 6(i) below, Contractor agrees not to accept any engagement during the Term that would place him in a position of conflict of interest with respect to the financial success of the Business. Nothing contained in this Agreement is intended to, nor shall it be construed as granting Contractor any exclusive rights to provide the services and duties described herein.

5.Compensation. So long this Agreement has not been terminated for cause, Gameco will make the following payments to Contractor as and for full and complete consideration and payment for any and all services rendered or obligations under this Agreement whether rendered on or after the Agreement Date (collectively, the “Payments”): Seventy-Five Thousand and 00/100 Dollars ($75,000.00) to be paid on the second day of the calendar months of January and July in each of 2006 and 2007. The death, illness or physical or mental incapacity of Contractor shall in no way relieve, excuse or diminish the obligations of Gameco to make the Payments to Contractor as set forth herein, and Contractor’s rights to receive the Payments shall inure to his heirs, administrators, executors, successors or assigns. The Payments shall be the subject of a separate guarantee by Gameco. Should Gameco sell or otherwise transfer all or substantially all of its ownership interests in the Business to Jacobs Entertainment, Inc. (“JEI”), such guarantee of the Payments hereunder shall also transfer concurrently therewith to JEI.

6.Business’s Proprietary Interest in Trade Secrets AND Non-Compete.

a.Contractor acknowledges that he may have access to and become familiar with the Business’s records, documents, files, policies, business plans, strategies, customers, suppliers, products, marketing processes and plans, financial information, employees, officers, agents, unique data and the like regarding the Business and its operations (collectively referred to herein as “Trade Secrets”). Contractor acknowledges that the Trade Secrets are special, valuable and unique assets of Gameco and that Gameco would suffer great loss and damage if, during or after the Term, Contractor were to disclose, reveal, divulge or make available, either directly or indirectly, to any person, firm, partnership, corporation, association or any other third-party, the Trade Secrets. Accordingly, Contractor agrees that the Trade Secrets, in their entirety or any portion thereof, shall not be disclosed, revealed, divulged, or made available to any person, firm, partnership, corporation, association or any other third-party, either directly or indirectly, during or after the Term, unless Contractor is authorized to do so in writing by Gameco, which authorization, if given, may be revoked by Gameco at any time in its sole discretion. Contractor agrees that, upon termination of this Agreement for any reason, Contractor shall immediately return to Gameco all Trade Secrets previously held by, retained or under the control of Contractor (including, but not limited to, any analyses, compilations, studies or documents prepared

68

during the review of Trade Secrets by Contractor or his agents), and Contractor agrees not to make and/or retain any copies of any Trade Secrets.

b.In consideration of the fees, payments, promises and benefits accruing hereunder, Contractor agrees for a period of five (5) years following the Agreement Date (the “Non-Compete Period”) not to, directly or indirectly, own (in any form in whole or in part), operate, manage, control, be employed by, participate in, provide advice, financial aid or other assistance, in any form, to any aspect of a business, or conduct, carry on or engage in any activity, any of which is directly or indirectly competitive with any aspect of the Business within a fifteen (15) mile radius of the Business. In addition to the foregoing, Contractor agrees, during the Non-Compete Period, not to induce any of Gameco’s employees to leave their employment, nor to employ either directly or indirectly any of Gameco’s employees. Further, Contractor agrees he shall not solicit any customers, suppliers, sponsors, advertisers or licensees/ors of Gameco for the purpose of inducing, directly or indirectly, the termination such entity or individual’s relationship with Gameco.

c.The parties hereto further stipulate that, as between them, all of the items referred to in Section 6 are important, material and confidential and gravely affect the effective and successful conduct of the Business, its goodwill and reputation. Any breach of the terms and provisions of Section 6 hereof shall constitute a material and irreparable breach of this Agreement and will subject the Business to immeasurable loss of revenue, business opportunities and goodwill. The parties further acknowledge that the provisions of Section 6 are each supported by new and valuable consideration.

d.In the event that any provision of Section 6 shall be found by a court of competent jurisdiction to be invalid or unenforceable as against public policy, such court shall exercise its discretion in reforming such provision to the end that the Contractor shall be subject to non-disclosure, non-competition and non-interference covenants to the fullest extent permissible under the circumstances and enforceable by Gameco.

e.The parties acknowledge that Gameco will suffer material and irreparable damage if the Contractor violates any of the covenants contained in Section 6. It is hereby agreed that in the event of such breach or an apparent danger of such breach by the Contractor, Gameco shall be entitled, in addition to such other remedies available to it, to an immediate injunction to restrain the violation of any or all such provisions by the Contractor. In the event that Gameco shall institute any action or proceeding to enforce the provisions of Section 6, the Contractor hereby agrees, in advance, to waive the claim or defense that there is an adequate remedy at law; the Contractor shall not urge, or be heard to urge, in any such action or proceeding, the claim or defense that

69

such remedy at law exists.

f.The covenants and promises made by the Contractor in favor of Gameco under Section 6 are being executed and delivered by the Contractor in consideration of Gameco’s obligations hereunder, including, without limitation, the Payments.

g.Contractor has carefully considered the obligations and restrictions contained in this Agreement and has had adequate time and opportunity to consult with his own legal counsel and other advisors regarding the nature and extent of the restrictions upon him, and the rights, remedies and obligations contained in the Agreement. Contractor hereby acknowledges and agrees that such obligations and restrictions: (i) are reasonable in time, territory and scope; (ii) are designed to eliminate competition which otherwise would be unfair to Gameco; (iii) do not stifle the inherent skill and experience of the Contractor; (iv) would not operate as a bar to the Contractor’s sole means of support; (v) are fully required to protect the legitimate interests of Gameco; and (vi) do not confer a benefit upon Gameco disproportionate to the detriment to the Contractor.

h.In the event that Contractor breaches any provision of this Agreement, such violation (i) shall toll the running of the five (5) year period set forth in Section 6 from the date of commencement of such violation until such violation ceases, and (ii) shall relieve Gameco of any obligations to the Contractor under this Agreement.

i.Notwithstanding the foregoing, Contractor is currently and shall remain an owner and operator of that certain truck stop facility commonly referred to as Hollywood Truck Plaza & Casino (“Hollywood Truck Stop”) located in Bayou Vista, Louisiana. Contractor’s continued ownership and operation of the Hollywood Truck Stop shall not be a violation of the terms of this Section 6 and shall be the sole exception thereto.

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7.Notice. Notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered by recognized overnight courier, by facsimile with electronic confirmation of receipt or three (3) days after being mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the last known address of the respective parties, provided that all notices to Gameco shall be directed to the attention of Stan Guidroz, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

8.Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Louisiana without giving effect to the conflicts of law principles thereof. The parties agree that they shall be estopped from raising any defenses or claims regarding venue, including any conflicts of laws provisions to which any party would be otherwise entitled.

9.Validity. The invalidity or unenforceability of any one or more provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

10.Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

11.Entire Agreement. This Agreement and the Asset Purchase Agreement, also between the parties hereto among others, and dated as of even date herewith, constitutes the entire agreement between Contractor and Gameco with respect to the subject matter hereof and no agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by any party that are not set forth expressly in this Agreement or in the foregoing Asset Purchase Agreement . No provisions of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in writing signed by you and such officer as may be specifically designated by Gameco. No waiver by any party at any time of any breach by another party of, or compliance with, any condition or provision of this Agreement to be performed by the other parties shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

12.Indemnification. Contractor shall indemnify, defend and hold harmless Gameco and its officers, members, managers, employees, agents, contractors, successors and assigns from and against any and all damages, liabilities, costs, expenses, claims, and/or judgments, including, without limitation, legal costs and reasonable attorneys’ fees and disbursements (collectively, “Claims”) which any of them may suffer from (i) any negligence or misconduct of Contractor arising from or

71

connected with Contractor’s carrying out of his duties under this Agreement, or (ii) the breach by Contractor of any of his representations, duties, obligations, agreements or duties under this Agreement, including, but not limited to, Contractor’s obligations to withhold and remit any and all payroll taxes and other withholdings.

13.Indemnification. Gameco shall indemnify, defend and hold harmless Contractor and his employees, agents, contractors, successors and assigns from and against any and all damages, liabilities, costs, expenses, claims, and/or judgments, including, without limitation, legal costs and reasonable attorneys’ fees and disbursements (collectively, “Claims”) which any of them may suffer from (i) any negligence or misconduct of Gameco arising from or connected with Gameco’s carrying out of its duties under this Agreement, or (ii) the breach by Gameco of any of its representations, duties, obligations, agreements or duties under this Agreement.

14.Compliance with Law. Both parties hereto agree that if the manner of payment to the Contractor, or payment by Gameco to the Contractor or any other provision of this Agreement, becomes violative of any law, including, but not limited to, federal or state taxation laws, rules or regulations, the parties shall negotiate a revision in the terms of the Agreement such that the purpose for the Agreement and the benefits contemplated to be obtained by each shall be preserved to the greatest extent practicable.

15.Miscellaneous.

(a)Negation of Agency. Nothing herein contained shall be deemed to create an agency, joint venture or partnership relation between the parties hereto and it is acknowledged that the parties hereto have only a relationship of independent contractor.

(b)Construction. The language of this Agreement and of each and every article, paragraph, section, term and/or provision of this Agreement, shall in all cases, for any and all purposes and in any and all circumstances, be construed as a whole according to its meaning and not strictly for or against Gameco or Contractor, without no regard whatsoever to the identity or status of any person or persons who drafted all or any portion of this Agreement.

(c)Headings. The section headings used in this Agreement are intended solely for convenience of reference and shall be given no effect in the construction or interpretation of this Agreement.

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16.SUBMISSION TO JURISDICTION AND VENUE, CONSENT TO SERVICE OF PROCESS, ETC. TO THE FULLEST EXTENT PERMITTED BY LAW, EACH OF THE PURCHASER AND CONTRACTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY:

(A)AGREES THAT ANY ACTION, SUIT OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THIS AGREEMENT, THE TRANSFER CONTEMPLATED HEREIN OR ANY STATEMENT, COURSE OF CONDUCT, ACT, OMISSION OR EVENT IN CONNECTION WITH ANY OF THE FOREGOING (COLLECTIVELY, “RELATED LITIGATION”) TO WHICH EITHER IS OR MAY BE A PARTY MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN BATON ROUGE, LOUISIANA, AND SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND AGREES NOT TO BRING ANY RELATED LITIGATION IN ANY OTHER FORUM;

(B)ACKNOWLEDGES THAT SUCH COURTS WILL BE THE MOST CONVENIENT FORUM FOR ANY RELATED LITIGATION, WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY RELATED LITIGATION BROUGHT IN ANY SUCH COURT, WAIVES ANY CLAIM THAT ANY RELATED LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, AND WAIVES ANY RIGHT TO OBJECT, WITH RESPECT TO ANY RELATED LITIGATION, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER IT; AND

(C)CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY RELATED LITIGATION BY REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO IT AT THE ADDRESS FOR NOTICES DESCRIBED IN THIS AGREEMENT, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW).

17.JURY WAIVER  TO THE FULLEST EXTENT PERMITTED BY LAW, EACH OF THE PURCHASER AND CONTRACTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES THEIR RIGHT TO A TRIAL BY JURY OF ANY AND ALL CLAIMS, CAUSES OF ACTION OR SUITS ARISING FROM OR RELATED TO THE SUBJECT MATTER OF THIS AGREEMENT.

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THUS DONE AND PASSED on the            day of November, 2005, at the City of Lockport, State of Louisiana, the undersigned party having affixed its signature in the presence of me, Notary, and the undersigned competent witnesses, after due reading of the whole.

WITNESSES:	CONTRACTOR:
	By:
Printed Name:	Joe F. Penn, Jr., Individually
Printed Name:
NOTARY PUBLIC

THUS DONE AND PASSED on the      day of November, 2005, at the City of West Palm Beach, State of Florida, the undersigned party having affixed its signature in the presence of me, Notary, and the undersigned competent witnesses, after due reading of the whole.

WITNESSES:		PURCHASER:
		Gameco Holdings, Inc., a Delaware corporation
		By:
Printed Name:		Jeffrey P. Jacobs, CEO
Printed Name:
	NOTARY PUBLIC

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EXHIBIT F

STATE OF LOUISIANA

PARISH OF ST. MARY’S

RIGHT OF FIRST REFUSAL AGREEMENT

BE IT KNOWN, that before the undersigned Notaries Public, in the States of Louisiana and                       , and in the presence of the undersigned competent witnesses:

Hollywood Truck Plaza & Casino, L.L.C, a Louisiana limited liability company (“Hollywood” and sometimes referred to as the “Company”), domiciled and having its principal place of business in the Parish of St. St. Mary’s and whose mailing address is declared to be P.O. Box 58, Berwick, Louisiana 70342, herein represented by its duly authorized agent: Joe F. Penn, Jr.;

JOE F. PENN, JR., a Louisiana resident (“JFPenn”), whose mailing address is declared to be 4411 Cherokee Rose Drive, Zachary, Louisiana 70791;

MELISSA PENN, a Louisiana resident (“MPenn”), whose mailing address is declared to be 4411 Cherokee Rose Drive, Zachary, Louisiana 70791;

WILLIAM J. HAMPTON, a Louisiana resident (“WJHampton”), whose mailing address is declared to be                                                         ;

CYNTHIA M. HAMPTON, a Louisiana resident (“CMHampton”), whose mailing address is declared to be                                                         ;

(Hollywood, JFPenn, MPenn, WJHampton and CMHampton shall collectively be referred to herein as “Sellers” and each individually as “Seller”);

and

GAMECO HOLDINGS, INC., a Delaware corporation (the “Purchaser”), domiciled and having a place of business in the Parish of St. Martin, State of Louisiana and whose mailing address is declared to be 1869 Mills Hwy, Breaux Bridge, Louisiana, herein represented by its duly authorized agent Jeffrey P. Jacobs,

all of whom did execute this Right of First Refusal Agreement (“Agreement”), to be effective as of this     day of                               , 2005 (the “Agreement Date”).

INTRODUCTION

A.Sellers own the assets of a truck stop located at                                                               , Louisiana                 , and commonly referred to as the Hollywood Truck Plaza & Casino (the “Truck Stop”).

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B.The Truck Stop, inter alia, provides retail motor and diesel fuels, convenience store and restaurant operations for sale to or use by the general public as well as video draw poker devices for play by the general public.

NOW, THEREFORE, in consideration of the covenants and agreements contained herein, for Ten Dollars and no/100 Dollars ($10.00) in hand paid by the Purchaser to the Sellers, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Sellers and Purchaser agree as follows:

1.Incorporation.   The foregoing recitals are incorporated by reference herein.

2.Right of First Refusal. Should any one of or all the Sellers, on or before that date which is ten (10) years after the Agreement Date, receive a bona-fide, arm’s length, good faith offer to purchase any of the assets of the Truck Stop (excluding the sale of any asset determined by the Company to no longer be necessary to the operation of the Truck Stop or otherwise sold in the ordinary course of the operation of the Truck Stop (i.e. fuel and inventory) or any of the membership interests in the Company from an unrelated third-party (the “Offer”), Purchaser shall have the right, but not the obligation, to first purchase the Truck Stop or the Company under the same terms and conditions contained in the Offer.

(a)Sellers shall provide Purchaser, within fifteen days (15) of their receipt of any Offer, a copy of the Offer (the “Offer Notice”).

(b)Purchaser shall have thirty (30) Business Days (the “Offer Period”) following its receipt of the Offer Notice to elect, in a writing delivered to the Sellers, to exercise its right to purchase under this Right of First Refusal Agreement. If Purchaser shall fail to make the election described herein within the Offer Period, Sellers may sell the Truck Stop or the Company to the third-party offeror identified in the Offer Notice (“Offeror”), and Purchaser’s rights hereunder shall cease and be of no further force and effect. During the Offer Period, Sellers shall grant Purchaser access to all of the books, records and premises of the Truck Stop or the Company in order to evaluate the Offer and the current performance of the Truck Stop or the Company.

(c) Should the sale to the Offeror fail to be consummated, this Right of First Refusal shall continue to be effective and any other offers to purchase the Truck Stop or the Company shall be subject to this right of first refusal.

(d) Notwithstanding any terms of the Offer, should Purchaser elect to exercise its right to purchase the Truck Stop or the Company under this Right of First Refusal Agreement, Purchaser shall have ninety days (90) to close the purchase of the Truck Stop or the Company under such terms and conditions as are contained in the Offer.

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3. Notices. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given: (a) when delivered personally to the recipient; (b) one (1) Business Day after being sent to the recipient by reputable overnight courier service (charges prepaid); (c) three (3) Business Days after posting in the United States mail having been mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid; or (d) when sent via facsimile if a copy is delivered personally, couriered or mailed to the recipient as set forth above. Such notices, demands and other communications shall be sent to the parties at the addresses indicated below:

If to any of the Sellers, to:

c/o Joe F. Penn, Jr.

4411 Cherokee Rose Drive

Zachary, Louisiana 70791

Facsimile:

with a required copy to:

David M. Culpepper, Esq.

David M. Culpepper, L.L.C.

400 Poydras Street, Suite 1710

New Orleans, Louisiana 70130

Facsimile: 504-680-6080

If to the Purchaser, to:

Gameco Holdings, Inc.

c/o Colonial Downs

1869 Mill Hwy

Breaux Bridge, Louisiana 70517

Attn: Stan Guidroz

Facsimile: 337-507-2282

with a required copy to:

Hahn Loeser & Parks LLP

3300 BP Tower

200 Public Square

Cleveland, Ohio 44114

Attn: Stanley R. Gorom III, Esq.

Facsimile: 216-274-2460

or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party.

4.Each of the Sellers, jointly and severally, represents and warrants to the Purchaser each of the following:

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(a)The consideration paid above has separate economic significance to each Seller, has been received and is good and sufficient consideration for the promises, covenants and representations and warranties contained herein.

(b)Sellers jointly own one hundred percent (100%) of all rights, title and interests in and to the Company and the Company owns one hundred percent (100%) of all rights, title and interests in all the assets of the Truck Stop. There are no preemptive rights, options, warrants or rights of first refusal with respect to the transfer of the Truck Stop or the Company except the right of first refusal granted hereunder.

5.Each party warrants and represents to the others that it, he or she has full right, power and authority to enter into this Agreement and to perform its, his or her obligations hereunder.

6.This Agreement shall be construed in accordance with the laws of the State of Louisiana, without regard to principles of conflicts of laws.

7.This Agreement may be executed in multiple original counterparts, all of which, when taken together, shall constitute one original.

THUS DONE AND PASSED on the        day of                         , 2005, at the City of                             , State of Louisiana, the undersigned party having affixed its signature in the presence of me, Notary, and the undersigned competent witnesses, after due reading of the whole.

WITNESSES:		Hollywood Truck Plaza & Casino, L.L.C., a
		Louisiana limited liability company
Printed Name:		By:
		Its:
Printed Name:
	NOTARY PUBLIC

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THUS DONE AND PASSED on the        day of                         , 2005, at the City of                             , State of Louisiana, the undersigned party having affixed its signature in the presence of me, Notary, and the undersigned competent witnesses, after due reading of the whole.

WITNESSES:		JFPenn:
Printed Name:		Joe F. Penn, Jr.
Printed Name:
	NOTARY PUBLIC

THUS DONE AND PASSED on the        day of                         , 2005, at the City of                             , State of Louisiana, the undersigned party having affixed its signature in the presence of me, Notary, and the undersigned competent witnesses, after due reading of the whole.

WITNESSES:		MPenn:
Printed Name:		Melissa Penn.
Printed Name:
	NOTARY PUBLIC

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THUS DONE AND PASSED on the        day of                         , 2005, at the City of                             , State of Louisiana, the undersigned party having affixed its signature in the presence of me, Notary, and the undersigned competent witnesses, after due reading of the whole.

WITNESSES:		WJHampton:
Printed Name:		William J. Hampton
Printed Name:
	NOTARY PUBLIC

THUS DONE AND PASSED on the        day of                         , 2005, at the City of                             , State of Louisiana, the undersigned party having affixed its signature in the presence of me, Notary, and the undersigned competent witnesses, after due reading of the whole.

WITNESSES:		CMHampton:
Printed Name:		Cynthia M. Hampton
Printed Name:
	NOTARY PUBLIC

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THUS DONE AND PASSED on the        day of                         , 2005, at the City of                             , State of Louisiana, the undersigned party having affixed its signature in the presence of me, Notary, and the undersigned competent witnesses, after due reading of the whole.

WITNESSES:		Gameco Holdings, Inc., a Delaware corporation
		By:
Printed Name:		Jeffrey P. Jacobs, CEO
Printed Name:
	NOTARY PUBLIC

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EXHIBIT G

[Legal Opinion]

[Letterhead]

                                          , 2004

Gameco Holdings, Inc.

10515 Colonial Downs Parkway

New Kent, Virginia 23124

Re:Asset Purchase Agreement, dated as of                                   , 2005

Ladies and Gentlemen:

We have acted as counsel for Larose Truck Plaza & Casino, L.L.C. a Louisiana limited liability company (“Company”), and Joe F. Penn, Jr. (“Penn”) in connection with the transactions contemplated by the Asset Purchase Agreement, dated                                           , 2005 (the “Agreement”), by and among the Company, Penn, and Gameco Holdings, Inc., a Delaware corporation (the “Purchaser”). Capitalized terms used but not defined herein are used as defined in the Agreement.

In rendering the opinions set forth herein, we have examined originals or copies, certified or otherwise identified to our satisfaction, of (i) the Agreement and certain of the other Transaction Documents as listed on Exhibit A (attached hereto and incorporated herein by reference) and referred to collectively as the “Transaction Documents,” (ii) such Company records and other agreements, documents and instruments necessary to give the opinions set forth below and (iii) such certificates or comparable documents of public officials and officers and representatives of the Company, as the case may be, and we have made such inquiries of such officers and representatives and considered such matters of law as we have deemed appropriate.

In all cases, we have assumed the genuineness of signatures on all documents except those of the Company and Penn, the legal competence of each person signing on behalf of each party, the authenticity and completeness of documents submitted to us as originals and the conformity to authentic original documents of documents submitted to us as copies. As to the opinions expressed in Section 4 below, only, we have entirely relied upon certificates of Officers of the Company and Penn, originals of which are attached hereto (the “Certificates”). We have no independent knowledge of any information, circumstances or set of facts that would cause us to question the veracity of the information contained in the Certificates.

Based upon the foregoing, we are of the opinion, as of the date hereof, that:

1.The Company is duly organized, in full force and effect and in good standing under the laws of the State of Louisiana, with all requisite corporate power and authority to own its properties and to conduct business as described in the Agreement. The Company is duly qualified to carry on its business as currently being conducted in each jurisdiction where such qualification is required.

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2.The Agreement has been duly authorized, executed and delivered by the Company and Penn, and the Agreement constitutes the legal, valid and binding obligations of the Company and Penn, enforceable against the Company and Penn in accordance with its terms, subject as to enforceability to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws in effect from time to time relating to or affecting the enforcement of the rights of creditors generally.

3.The execution and delivery by the Company and Penn of the Agreement and the performance of their obligations there under will not, as applicable, (a) result in the violation of any Louisiana corporate or federal or state securities statutes or regulations, or any order or decree known to us to have been issued by any court or governmental authority which is binding upon either the Company or Penn or any of their respective property, or (b) conflict with or result in a breach or violation of any of the terms or provisions of the Company’s Articles of Organization or Operating Agreements or violate, conflict with or result in a breach or termination of, or otherwise give any Person additional rights or compensation under, or the right to terminate or accelerate, or constitute (with notice or lapse of time, or both) a default under the terms of any material agreement or instrument to which the Company or Penn is a party or by which any of the Company’s assets or properties are bound or result in creation of a lien upon any of the properties or assets of the Company, under any agreement of the Company or Penn.

4.No actions, suits, claims or proceedings against the Company or Penn are pending nor are any actions, suits, proceedings or claims threatened, that if adversely determined would, either in any single case or in the aggregate, question the validity of or prevent the consummation of the transactions contemplated by the Agreement or have a Material Adverse Effect on the financial conditions, properties or operations of the Acquired Assets or the Company or Penn.

5.Please note that no title examination of the Company’s assets has been requested of or performed by the undersigned.

6.This opinion letter is given solely to the Purchaser and its designee and may be relied upon only by the Purchaser and its designees and may not be relied upon by any other party or entity, except for the Purchaser’s lender, for any purpose whatsoever. This opinion letter may not be quoted, circulated or published without the prior written consent of the issuer, except among the Purchaser’s officers, agents, lender and representatives and as necessary to enforce the terms of this opinion letter or the Agreement. The opinions stated herein are made as of the date hereof, and we assume no obligation to advise you of any changes to the foregoing.

Very truly yours,

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EXHIBIT H

[Deed]

STATE OF LOUISIANA

PARISH OF LAFOURCHE

ACT OF CASH SALE OF IMMOVABLE PROPERTY

BE IT KNOWN, that, before the undersigned Notary(ies) Public in the State of Louisiana, and in the presence of the undersigned competent witnesses, personally came and appeared:

Larose Truck Plaza & Casino, L.L.C., a limited liability company of the State of Louisiana, domiciled and with its principal place of business in the Parish of Lafourche, with federal tax identification number                                                     , and whose mailing address is declared to be 1825 Highway 308, Lockport, Louisiana 70374, hereinafter referred to as the “Seller”,

who declared that for and in consideration of the sum of                Dollars ($                  ), and other good and valuable consideration, in cash paid, the receipt and sufficiency of which are hereby acknowledged by the Seller, Seller does hereby grant, bargain, sell, convey, transfer, assign, deliver, and set over with full guarantee and with full warranty of title, and with subrogation to all rights and actions of warranty against all previous owners that Seller may otherwise have, unto:

[            ], a              of the State of             , domiciled and with its principal place of business in the             , with federal tax identification number             , and whose mailing address is declared to be 1869 Mills Hwy, Breaux Bridge, Louisiana 70517, hereinafter referred to as “Purchaser”,

purchasing and accepting for itself, its successors and assigns, and acknowledging the delivery and possession thereof, the following described property, with all of its component parts, including all rights, ways, privileges, servitudes and appurtenances thereto belonging, to-wit:

TO HAVE AND TO HOLD the above described property unto the said Purchaser, the Purchaser’s successors and assigns, forever. The Seller declares that all taxes on the property through the year 2004 have been timely paid by the Seller. Taxes for the current year have been pro-rated between Seller and Purchaser as of the date of closing. The Purchaser hereby agrees to pay all future and subsequent taxes.

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The Seller hereby declares that the property herein conveyed has not been heretofore alienated by the said Seller and that as of the Closing there shall be no mortgages, liens or encumbrances of record against the said property.

The Seller declares that in the federal, state or local courts there are no judgments, general or particular, of record against the said property.

The Seller hereby agrees to deliver possession of the above described property to the Purchaser on even date herewith.

All parties signing the within instrument, whether as parties or as witnesses, have declared themselves to be of full legal capacity.

All agreements and stipulations herein and all of the obligations assumed herein shall inure to the benefit of and be binding upon the successors and assigns of the respective parties, and the Purchaser, its successors and assigns shall have and hold the above described property in full ownership forever.

No title examination has been requested of or performed by me, Notary. The title description is provided by the parties, and the Notary appears solely and only for the purpose of notarizing this document.

Both parties agree and obligate themselves to promptly execute any additional acts, documents and/or instruments necessary and proper for the complete and expeditious implementation and satisfaction of the provisions and intent of this Act of Cash Sale.

The parties hereto have participated jointly in the negotiation and drafting of this Act of Cash Sale. In the event any ambiguity or questions of intent or interpretation arise, this Act of Cash Sale shall be construed as if jointly drafted by the parties and no presumption or burden of proof shall arise favoring any of the parties by virtue of authorship of any of the provisions of this Act of Cash Sale.

In the event of a default of any condition or obligation of this Act of Cash Sale on the part of any of the parties hereto which results in the institution of any legal proceeding, the non-prevailing party shall pay to the prevailing party of the litigation all reasonable costs and expenses of the legal proceeding, and any appeal there from, including attorney’s fees.

No change or modification hereof shall be valid or binding unless the same is in writing and signed by the party intended to be bound. No waiver of any provisions of this Act of Cash Sale shall be valid unless the same is in writing and signed by the party against whom such waiver is sought to be enforced; moreover, no valid waiver of any provisions of this Act of Cash Sale at any time shall be deemed a waiver of any other provision of this Act of Cash Sale at such time, nor will it be deemed a valid waiver of such.

No determination by any court, governmental body or otherwise that any provision of this Act of Cash Sale or any amendment hereof is invalid or unenforceable in any instance shall affect the validity or enforceability of (a) any other provision thereof, or (b) that provision in any circumstance not controlled by the determination. Each such provision shall be valid and enforceable to the fullest extent allowed by, and shall be construed wherever possible as being consistent with, applicable law.

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All questions concerning the construction, validity, and interpretation of this Act of Cash Sale and the performance of the obligations imposed hereby shall be governed by the laws of the State of Louisiana.

The parties do not intend, nor shall this Act of Cash Sale be construed as, creating any resolutory conditions, vender’s lien(s), or stipulation pour autri and if any of the foregoing are deemed created by this instrument the same are herewith waived by the parties hereto.

[The remainder of this page is left intentionally blank.]

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THUS DONE AND PASSED on the                day of                                     , 2005, at the City of                               , Parish of                                           , State of                                       , the undersigned party having affixed her signature in the presence of me, Notary, and the undersigned competent witnesses, after due reading of the whole.

WITNESSES:	SELLER:
	By:
	Printed Name:
	Title:
	Date:

NOTARY PUBLIC

THUS DONE AND PASSED on the                day of                                     , 2005, at the City of                               , Parish of                                           , State of                                       , the undersigned party having affixed her signature in the presence of me, Notary, and the undersigned competent witnesses, after due reading of the whole.

WITNESSES:	PURCHASER:
	By:
	Printed Name:
	Title:
	Date:

NOTARY PUBLIC

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EXHIBIT I

[Seller’s/Owner’s Affidavit and Indemnity]

To be prepared by Escrow Agent prior to the Closing Date and approved by Sellers.

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EX-10.21

EXHIBIT 10.21

[Execution Copy]

STATE OF LOUISIANA

PARISH OF CALCASIEU

STOCK PURCHASE AGREEMENT

BE IT KNOWN, that before the undersigned Notaries Public in the States of Louisiana and Florida and in the presence of the undersigned competent witnesses, personally came and appeared:

ROGER L. MILLER and YVONNE LEGER MILLER, husband and wife, residents of the State of Louisiana (collectively, “MILLER”), domiciled in the Parish of Calcasieu and whose mailing address is declared to be 6128 White Oak Drive, Lake Charles, Louisiana 70615;

ROBERT E. CHRISTMAN and LOUISE C. CHRISTMAN, husband and wife, residents of the State of Louisiana (collectively, “CHRISTMAN”), domiciled in the Parish of Calcasieu and whose mailing address is declared to be 809 Henrietta Lane, Lake Charles, Louisiana 70605;

(MILLER and CHRISTMAN are sometimes referred to collectively as  “Sellers” and each is sometimes individually referred to as a “Seller”); and

JALOU II, INC.,  a Louisiana corporation (“Purchaser”), domiciled and having a place of business in the Parish of St. Martin, State of Louisiana and whose mailing address is declared to be 1869 Mills Highway, Breaux Bridge, Louisiana 70517, herein represented by its duly authorized agent Jeffrey P. Jacobs,

each of whom did execute this Agreement on December 12, 2005 (the “Agreement Date”).

WITNESSETH:

WHEREAS, the Purchaser desires to acquire all of the issued and outstanding shares of stock of Fuel Stop 36, Inc., a Louisiana corporation (“Company”);

WHEREAS, the Company owns the assets and operations of a truck stop located at 108 N. Highway 397, Lake Charles, Calcasieu, Louisiana 70616 (the “Truck Stop”);

WHEREAS, the Truck Stop provides, inter alia, retail motor and diesel fuels, convenience store and restaurant operations for sale to or use by the general public as well as video draw poker devices for play by the general public;

WHEREAS, the Tract B-2 Sellers own the Tract B-2 (as hereinafter defined);

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WHEREAS, Sellers own all of the issued and outstanding shares of the Company’s stock and are willing to sell those shares to Purchaser on the terms and conditions set forth herein; and

WHEREAS, the Tract B-2 Sellers are willing to sell Tract B-2 to the Purchaser for the Tract B-2 Purchase Price.

NOW, THEREFORE, for and in consideration of the mutual agreements contained herein and other good and valuable consideration set forth herein, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE I

DEFINITIONS

1.1“Agreement” shall mean this Stock Purchase Agreement.

1.2 “Affiliate” of any particular Person means any other Person directly or indirectly controlling, controlled by or under common control with such particular Person.  The term “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of securities, by contract or otherwise.

1.3“Acquired Assets” shall mean all assets, real property, privileges, rights, intellectual property licenses, interests and claims (whether personal, tangible or intangible) of every type and description owned by any Seller or the Company and used in the operation of the Truck Stop, other than the Excluded Assets.  Acquired Assets specifically includes those items listed on Schedule 1.3.

1.4“Adverse Effects of Hurricane Rita” shall mean those items listed on Schedule 1.4 as having been “repaired” or “unrepaired” as of the Closing Date.  Purchaser shall have the right to apply any insurance proceeds received after the Closing, as a result of any claims made prior to the Closing, first against the reasonable costs to repair of those items on Schedule 1.4 listed as “unrepaired” and then shall disburse any remaining balance to the Sellers for those items listed as “repaired”.

1.5“Business Day” shall mean a day other than a Saturday, Sunday or other day on which the banks in the State of Louisiana are not required or authorized to close.

1.6“Capitalized Lease” means a lease under which the obligations of the lessee should, in accordance with generally accepted accounting principles consistently applied, be included in determining total liabilities as shown on the liability side of a balance sheet of the lessee.

1.7“Closing” shall mean the consummation of the transactions contemplated in this Agreement. 

1.8“Closing Date” shall mean the date on which the Closing occurs.

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1.9“Code” means the Internal Revenue Code of 1986, as amended, and any referenceto any particular Code section shall be interpreted to include any revision of or successor to that section regardless of how numbered or classified.

1.10“Company” shall mean Fuel Stop 36, Inc., a Louisiana corporation with its principal place of business established at 108 N. Highway 397, Lake Charles, Calcasieu, Louisiana 70616 and owned by Sellers.

1.11“Deposit” shall mean the sum of One Hundred Thousand and 00/100 Dollars ($100,000.00).

1.12“Devices” shall mean “Video Draw Poker Devices” as defined in the Video Draw Poker Devices Control Law, Louisiana Revised Statutes, Title 27:301 et seq., as amended from time to time.

1.13“Easement” shall mean that certain easement in form and substance substantially similar to the easement attached hereto as Exhibit A.

1.14“Environmental and Safety Requirements” means all federal, State, parish and local statutes, regulations, rules, ordinances and similar provisions having the force or effect of law, all licenses, permits, authorizations, approvals, covenants or criteria having the force or effect of law, all guidelines having the force or effect of law, all judicial and administrative orders and determinations, all contractual obligations and all common law and equitable doctrines (including, without limitation, injunctive relief and tort doctrines such as negligence, nuisance, trespass and strict liability), in each case concerning public health and safety, worker health and safety and pollution or protection of the environment (including, without limitation, all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control or cleanup of any hazardous or otherwise regulated materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated biphenyls, noise or radiation), each as amended and as now or hereafter in effect (or any successor legislation thereto).

1.15“Escrow Holdback” shall equal the sum of Seventy-Five Thousand Dollars ($75,000).

1.16         “Establishment License” shall mean a Type V license to operate Devices at a qualified truck stop facility as defined in the Video Draw Poker Devices Control Law, Louisiana Revised Statutes, Title 27:301 et seq., and in Chapter 42 of the Louisiana Administrative Code, both as amended from time to time, for the Premises.

1.17“Excluded Assets” shall mean those assets of the Company which are reserved unto Sellers, that shall not be conveyed to Purchaser at the Closing, which are more fully described in Schedule 1.17.

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1.18“Excluded Liabilities” shall mean those liabilities of the Company which shall be assigned and transferred on or before the Closing to the Sellers, which shall not be liabilities or obligations of the Company nor conveyed to Purchaser upon the Closing, which are more fully described in Schedule 1.18.

1.19“Indebtedness” means at a particular time, without duplication, (i) any indebtedness for borrowed money or issued in substitution for or exchange of indebtedness for borrowed money, (ii) any indebtedness evidenced by any note, bond, debenture or other debt instrument, (iii) any indebtedness for the deferred purchase price of property or services with respect to which a Person is liable, contingently or otherwise, as obligor or otherwise (other than trade payables and other current liabilities incurred in the ordinary course of business which are not more than 30 days past due, (iv) any commitment by which a Person insures a creditor against loss (including, without limitation, contingent reimbursement obligations with respect to letters of credit), (v) any obligations for which a Person is obligated pursuant to a guarantee, (vi) any obligations under Capitalized Leases with respect to which a Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, or with respect to which obligations a Person assures a creditor against loss, (vii) any indebtedness secured by a Lien on a Person’s assets and (viii) net obligations under hedging arrangements (including without limitation derivatives) designed to protect a Person against fluctuations in interest rates, currency exchange rates, commodity prices or other financial transactions.

1.20“Investment” as applied to any Person means (i) any direct or indirect ownership, purchase or other acquisition by such Person of any notes, obligations, instruments, stock, securities or ownership interests (including partnership interests, membership interests and joint venture interests) of any other Person and (ii) any capital contribution by such Person to any other Person.

1.21“Knowledge” or any derivation thereof, shall mean, knowledge of a condition or set of facts as has been obtained from any source, including, regardless of any common law or statutory definition of the foregoing, information which would cause a reasonable person to inquire further.  As to any entity, “knowledge” shall include the knowledge of each officer, owner, director or manager thereof.

1.22“Lien” means any mortgage, deed of trust, pledge, security interest, encumbrance, lien, charge or other restriction of any kind whatsoever (including any conditional sale or other title retention agreement or lease in the nature thereof), any sale of receivables with recourse against the Company, any filing of or agreement to file a financing statement as debtor under the Uniform Commercial Code or any similar statute other than to reflect ownership by a third party of property leased to the Company or any Seller for use in the Truck Stop under a lease which is not in the nature of a conditional sale or title retention agreement.

1.23“Listed Devices” shall mean those Devices listed on Schedule 1.23.

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1.24“Person” shall mean an individual, partnership, limited liability company, corporation, trust or unincorporated organization and a government or agency or political subdivision thereof.

1.25“Purchase Price” shall mean a sum equal to FIVE MILLION SIX HUNDRED THOUSAND AND NO/100 ($5,600,000.00) DOLLARS.

1.26“Required Inventory Levels” shall mean that at the Closing there shall exist at the Truck Stop sufficient inventories of fuel, food and convenience store-type items as are appropriate for the nature and scope of the Company’s operations; provided, however, in no event, shall the amount of the Company’s inventory for any item of inventory, including, but not limited to fuel, food or convenience items, be less than the average amount of inventory for that item at any time during the preceding twelve (12) month period.

1.27 “Schedules” shall mean the Schedules attached to and referred to in this Agreement, each of which is incorporated herein as if fully rewritten herein.

1.28“Securities Act” shall mean the Securities Acts of 1933 and 1934, as amended, or any similar federal law then in force.

1.29“Shares” shall mean the one hundred (100) issued and outstanding shares of the Company’s common stock which are all of the outstanding and issued common stock of the Company.

1.30“State” shall mean the State of Louisiana.

1.31“Tax” or “Taxes” means any federal, state, county, parish, local, foreign or other income, gross receipts, ad valorem, franchise, profits, sales or use, transfer, registration, excise, utility, gaming, environmental, communications, real or personal property, capital stock, membership interest, license, payroll, wage or other withholding, employment, social security, severance, stamp, occupation, alternative or add-on minimum, estimated and other taxes or fees of any kind whatsoever (including deficiencies, penalties, additions to tax or fees, and interest attributable thereto) whether disputed or not.

1.32“Tax Return” means any return, information report or filing with respect to Taxes, including any schedules attached thereto and any amendment thereof.

1.33“Title Company” shall mean Lawyers Title Insurance Corporation of Baton Rouge, Louisiana.

1.34“Tract A” shall mean that tract of land identified as “Tract A” on that certain ALTA Survey prepared by C. Mistric Surveyors, Inc., dated                   , a copy of which is included herein as part of Exhibit B.

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1.35“Tract B-2” shall mean that tract of land identified as “Tract B-2” on that certain ALTA Survey prepared by C. Mistric Surveyors, Inc., dated                              , a copy of which is included herein as part of Exhibit B.

1.36“Tract B-2 Purchase Price” shall mean the sum of Three Hundred Thousand and no/100 Dollars ($300,000.00).

1.37“Tract B-2 Sellers” shall mean Christman.

ARTICLE II

PURCHASE AND SALE OF SHARES
AND CERTAIN COVENANTS

2.1Sale of Shares.  Subject to the terms and conditions set forth in this Agreement, on the Closing Date for the Purchase Price, Sellers shall sell, assign, transfer and deliver to Purchaser, and Purchaser shall purchase and acquire from Sellers, free and clear of all Liens and encumbrances whatsoever, the Shares.  The purchase of the Shares specifically includes the purchase of the Company’s goodwill.

2.2Consideration for Obligation Not To Do.  The parties agree that One Hundred Thousand Dollars ($100,000) of the Purchase Price represents the monetary consideration paid to Christman and Miller for the “Obligation Not to do” as contained below.  The parties acknowledge and agree that this allocation is a reasonable allocation given the individuals’ relative abilities and experience in the gaming industry.

2.3Sale of Tract B-2.  Concurrently with the sale of the Shares, the Tract B-2 Sellers shall sell, by execution and delivery of the Act of Cash Sale attached hereto as Exhibit C,  the Tract B-2 to the Purchaser for the Tract B-2 Purchase Price, free and clear of all Liens and encumbrances except those listed on Schedule 2.2.

2.4Closing.  The Closing of the sale of the Shares and the Tract B-2 shall take place on December 16, 2005 and the parties shall meet on December 15, 2005 to execute any and all necessary documents to be effective on December 16, 2005.  The Closing shall take place at the offices of: (a) Joseph A. Delafield (“Delafield”), A Professional Corporation, in Lake Charles, Louisiana, or (b) the Title Company or such other location to which Sellers and Purchaser mutually agree.

2.5Taxes.  Sellers shall be personally responsible for paying, and if necessary shall reimburse the Company for, all Taxes attributable to the Company’s operations and ownership for all periods on or prior to the Closing Date, including but not limited to, penalties and interest, that are unpaid as of the Closing.  Purchaser shall be solely responsible for all Taxes accruing or related to the operations and ownership of the Company after the Closing Date.

2.6Accounts Receivable.  Sellers shall retain all of the Company’s accounts receivable outstanding and/or accrued as of the Closing Date (“Pre-Closing Accounts Receivables”).

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Sellers shall have no interest in nor right to any of the Company’s accounts receivables that accrue or arise after the Closing Date.  The Pre-Closing Accounts Receivables are Excluded Assets and shall not pass with the sale of the Shares.  The Seller’s shall also retain the right, after the Closing Date, to collect any of the Pre-Closing Accounts Receivables.

2.7Trade Payables.  Purchaser shall be responsible for the Company’s trade payables incurred in the ordinary course of business following 7:00 a.m., on the Closing Date.  Sellers shall be responsible for the Company’s trade payables incurred in the ordinary course of business prior to 7:00 a.m., on the Closing Date even if invoices related thereto are not received until after the Closing Date.

2.8Distribution of Certain Assets.  Effective immediately prior to the Closing, Sellers may cause the Company to distribute to them “as is, where is” all of the Excluded Assets.  Sellers shall have a reasonable amount of time after the Closing to physically remove such of the Excluded Assets that remain on the Company’s premises; provided, however, Sellers shall cause such removal only with advance notice to the Purchaser and in such a manner so as to minimize the disruption to the Company’s operations.  Sellers shall be responsible for all risk of damage to, or loss of, any Excluded Assets both before and after their removal from the Company’s premises and any damage to the Company’s assets or operations arising form such move.  Sellers shall be responsible for all Taxes incurred by the Company resulting from the distribution of the Excluded Assets.  If, after the Closing, the Company is required to pay any Taxes related to the distribution of the Excluded Assets, Sellers shall promptly reimburse the Company for the same.

2.9Checking Accounts.  On or prior to the Closing Date, Sellers shall remove all funds from the Company’s operating account, save and except for $100,000.00 which shall remain therein following sale of the Shares.

2.10Due Diligence.  Purchaser shall have the right from and after the Agreement Date through the Closing Date to conduct such inspections, test, surveys, reviews, audits, including soil borings and like tests, of all of the Company’s assets and operations and so much of the Sellers’ assets and records as shall relate to the Company’s operations as the Purchaser, in its sole discretion, shall deem necessary.  Purchaser shall be solely responsible for the costs of all such due diligence and shall hold the Company and the Sellers harmless from any costs, fees or damages they may suffer as a result of Purchaser’s due diligence hereunder, excluding the discovery of any pre-existing conditions.

2.11Deposit.  Within ten (10) days following the Agreement Date, the Purchaser shall deliver the Deposit to the Title Company.  The Deposit shall be applied as a credit toward the Purchase Price by the Title Company at the Closing.  The Deposit shall be non-refundable to the Purchaser, except if the transactions contemplated by this Agreement fail to close as a result of a default by the Sellers.  Should the Purchaser fail to close under this Agreement for any reason other than a default by the Sellers, the Deposit shall be forfeited by the Purchaser to the Sellers as the full and final measure of their liquidated damages hereunder, and not as a penalty, and thereafter this Agreement shall be null and void and of no further force and effect.

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2.12Purchaser’s Right of Termination. Notwithstanding anything contained in this Agreement to the contrary and in addition to any other rights of termination of the Purchaser under this Agreement, if at any time prior to the Closing, any of the studies, inspections, audits, reviews or other activities performed pursuant to Section 2.9, or any other information (including information related to any Permits or the Purchaser’s financing o f the transactions contemplated herein), however gathered or obtained, shall reveal information or conditions unacceptable to the Purchaser, in its sole discretion, then Purchaser shall have the option to terminate this Agreement.  Upon receipt of such notice, this Agreement shall terminate and thereafter be null and void and of no further force and effect.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLERS

Sellers, jointly and severally, represent and warrant to Purchaser that:

3.1Corporate Organization and Capitalization.

(a)The Company is duly formed, validly existing and in good standing under the laws of the State of Louisiana and is qualified to do business in every jurisdiction in which its ownership of property or the conduct of business requires it to qualify.  The Company possesses all requisite power and authority, and all licenses, permits and authorizations necessary, to own and operate its properties, to carry on its businesses as now conducted and to carry out the transactions contemplated by this Agreement.  The Company is not in violation of any of the provisions of its Articles of Incorporation or By-Laws.

(b)The Company owns one hundred percent (100%) of all right, title and interest to the Acquired Assets, excepting only Tract B-2, with full, unencumbered power and authority to convey the same.  The Acquired Assets are all of the assets used in or necessary for the operation of the Company and the Truck Stop and all of the Truck Stop’s operations are own one hundred percent (100%) by the Company. 

(c)The Shares constitute one hundred percent (100%) of the issued and outstanding common stock of the Company.  The Sellers collectively own one hundred percent (100%) of the Shares free and clear of any Liens or Indebtedness.  As of the Closing, neither the Company nor any Seller shall have any contractual obligations involving any profit participation features, nor shall it or they have outstanding any rights or options to subscribe for or to purchase any Shares or any securities or Investments convertible into or exchangeable for Shares.  As of the Closing, the Company shall not be subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any Shares.  The Company has only one class of common stock.  Other than the Shares, there are no other Investments in the Company.

(d)Each Seller is now and will be the sole, full legal and beneficial owner of the Shares, as set forth on Schedule 3.1(d), with full and absolute right and power to sell, assign and transfer the same.  After giving effect to the consummation of the transactions contemplated by

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this Agreement, the Purchaser will own the Shares formerly owned by each Seller free and clear of any Lien or Indebtedness and the Purchaser will own one hundred percent (100%) of the any Investment in the Company.

(e)There are no statutory or contractual preemptive rights or rights of first refusal with respect to the transfer of the Shares hereunder.  Neither the Company nor any of the Sellers has violated any applicable federal or state securities laws in connection with the offer or sale of any Shares hereunder. The offer and sale of the Shares hereunder does not require registration under the Securities Act or applicable State or local securities or other laws.

(f)There are no individuals who have any spousal or dower rights in any of the Shares or the Acquired Assets, under any federal, State or local law, including, but not limited to, Louisiana Civil Code Article 2531, who are not parties hereto.

(g)The Company has no Affiliates and no Seller has any Affiliates with any Investment in the Shares, the Company or the Acquired Assets..

(h)The execution, delivery and performance of this Agreement and all other agreements, instruments and transactions contemplated hereby and thereby to which any Seller is a party have been duly authorized by all requisite organizational approvals.  This Agreement and all other agreements and instruments contemplated hereby to which any Seller is a party each constitutes a valid and binding obligation of each Seller, as applicable, enforceable in accordance with its terms.  Assuming the payment of all Liens or Indebtedness by the Sellers, the execution and delivery by each Seller of this Agreement and all other agreements and instruments contemplated hereby to which any Seller is a party, the offering and sale of the Shares hereunder and the fulfillment of and compliance with the respective terms hereof by each Seller, does not and shall not: (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii) constitute a default under, (iii) result in the creation of any Lien or Indebtedness upon the Company or the Acquired Assets pursuant to, (iv) give any third party the right to modify, terminate or accelerate any obligation under, (v) result in a violation of, or (vi) require any authorization, consent, approval, exemption or other action by or notice or declaration to, or filing with, any third-party, any court or administrative or governmental body or agency pursuant to, the Articles of Incorporation or By-laws of the Company, or any law, statute, rule or regulation to which any Seller is subject or any agreement, instrument, order, judgment or decree to which any Seller or their assets are subject, other than: (a) appropriate notifications to the Louisiana State Police and Louisiana gaming authorities of the consummations of the transfers contemplated by this Agreement; and (b) appropriate licensure and/or findings of suitability of the Purchaser by the Louisiana Gaming Control Board.

3.2No Distribution.  No assets of the Company, except: (i) such cash transferred prior to the sale hereunder as shall be necessary to ensure that the Company has not less than $100,000 in cash at the Closing; (ii) the Excluded Assets; and (iii) those assets sold or consumed in the ordinary course of the operations of the Company, have been distributed or otherwise disposed of

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during the six (6) months preceding the Agreement Date and no assets of the Company will be distributed from the Agreement Date to the Closing Date except those identified above.

3.3No Indebtedness.  Neither the Company nor any of the Acquired Assets shall have any Indebtedness or Liens at the time of the transfer of the Shares hereunder except normal reoccurring trade payables.

3.4No Adverse Change.  From January 1, 2005 to and through the Closing Date, save and except for the Adverse Effects of Hurricane Rita, there has not been nor shall there be any adverse change in the operating results, operations, condition (financial or otherwise), prospects, employee relations or customer or supplier relations of the Company or the Acquired Assets.

3.5Permits.  Schedule 3.5 hereto lists all of the permits, rights, privileges and franchises in the name of or held by the Company (hereafter sometime referred to collective as the “Permits”).  Except as set forth on Schedule 3.5, those are all of the Permits required by the Company for the ownership of its properties and for the conduct of its business; all of the Permits are validly issued and in effect; and the execution and delivery of this Agreement, the performance of Sellers of Sellers’ obligation under this Agreement, and consummation by Sellers of the transactions contemplated by this Agreement shall not terminate, rescind or revoke the Permits or give any third party a right to terminate, revoke or rescind the same.

3.6Company Agreements.  The Company is not a party to any contract, lease, employment agreement (other than unwritten employment at-will agreements which the Company can terminate at Closing without any liability), mortgage, security agreement, note, other evidence of Indebtedness or any other agreement of any nature, type, kind or duration (hereafter sometimes referred to individually as a “Company Agreement”) for which the Company will have continuing liability following the Closing.  Schedule 1.14 reflects all Excluded Liabilities which will be assigned and/or transferred to the Sellers, pursuant to instruments approved of by the Purchaser, prior to the Closing Date.   Each of the Sellers does hereby, individually, indemnify, defend and hold the Purchaser and the Company harmless from any claims, loss, fees, expenses or charge, including reasonable attorney’s fees, arising from or related to the Excluded Liabilities.  Sellers, as part of the Closing, shall deliver such release or other documents or instruments, reasonably acceptable to the Purchaser, evidencing the release of the Company and the Acquired Assets from the Excluded Liabilities.

3.7Financial Statements.  Schedule 3.7 contains (a) the unaudited Financial Statements for the Company for the calendar years of 2001 through 2004 and (b) the Company’s 2005 Financial Statements for the months ended September 30, 2005, prepared by the Company’s accountant (collectively, “Financial Statements”) each in accord with generally accepted accounting principles.

(a)The Financial Statements are: (i) true, accurate and complete, in all material respects; (ii) in accordance with the books and records of the Sellers and the Company; and (iii) fair presentations of the financial position and results of operations of the Truck Stop and the

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Company, in conformity with generally accepted accounting principles applied on a consistent basis.

(b)Each of the Sellers, jointly and severally, represent and warrant that the financial condition of the Company from and after the date of the last Financial Statements has only improved and that there has been no adverse change since such date that would otherwise adversely effect the Company, the Acquired Assets or the Financial Statements.

3.8Absence of Certain Developments.  Except as set forth on Schedule 3.8 hereto, from and after July 1, 2004 and continuing until the Closing Date, there has not occurred, nor is there threatened, (a) any adverse change in the financial or other condition of the Company or in its assets, liabilities, properties, business or prospects or the Acquired Assets, and (b) to the best of the Sellers’ knowledge, no Seller is aware of any event or condition that has or might reasonably have an adverse effect on the Company’s financial condition, business, assets or prospects or the Acquired Assets, save and except the Adverse Effects of Hurricane Rita.

3.9Compliance with Law.To the best of Sellers’ knowledge, information and belief, except as set forth on Schedule 3.9 hereto, the Company is not in violation of any laws, ordinances, governmental rules or regulations to which it is subject.

3.10Pending and Threatened Actions.  Except as set forth on Schedule 3.10, there are no actions, suits, proceedings, orders, investigations or claims pending or, to the best of any Seller’s knowledge, threatened against or affecting the Company, the Acquired Assets or pending or threatened by any Seller or the Company against any third party, at law or in equity, and affecting in any manner the Company or the Acquired Assets or the prospects thereof, before or by any federal, foreign, state, parish or local court, governmental department, commission, board, bureau, agency or instrumentality (including any actions, suits, proceedings or investigations with respect to the transactions contemplated by this Agreement).  Neither the Company nor any of the Sellers is subject to any arbitration proceedings or any governmental investigations or inquiries (including inquiries as to the qualification to hold or receive any license or permit, including, but not limited to, the right to have Devices or sell liquor and sell or store petroleum products or by-products); and, to each Seller’s best knowledge information and belief, there is no basis for any of the foregoing.  Neither the Company, nor any Seller is subject to any judgment, order or decree of any court or other governmental agency, and has not received any written opinion or memorandum from legal counsel to the effect that it or they are exposed, from a legal standpoint, to any liability which may involve or be related, in any manner, to the Company or the Acquired Assets and which may have a continuing effect, after the Closing Date, upon the Company or the Acquired Assets or for which the Company or the Acquired Assets may incur any liability in any manner whatsoever.

(a)Each Seller does, jointly and severally, hereby indemnify, defend and hold harmless the Purchaser, its assigns, and the Company from and against any and all expenses, claims, fees, damages or losses, including reasonable attorney’s fees, which the Purchaser or the Company may suffer as a result of any litigation matter, claim or choses in action existing or accruing as of the Closing Date or arising or filed thereafter and related, in any manner, to the

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operation of the Company or ownership of the Shares or Acquired Assets at or prior to the Closing Date (each a “Litigation Matter”).  Purchaser shall have the right, at its sole election, to participate in the defense of any Litigation Matter, including, but not limited to, requiring the defense to be conducted by legal counsel of its choice.

3.11Absence of Undisclosed Liabilities and Indebtedness.  Except as set forth on Schedule 3.11 hereto, the Company does not have any liability or Indebtedness, absolute or contingent, which is not reflected in this Agreement, in the Financial Statements or in other Schedules or Exhibits to this Agreement.

3.12Employees.  Schedule 3.12 lists all of the Company’s employees and each employee’s current salary and benefits, including but not limited to, their accrued vacation days with pay and accrued sick days with pay and the basis of determining the number of vacation days with pay and sick days with pay to which each employee is entitled.  Except as set forth on Schedule 3.12, the Company has no employees, has no employment contract with any of its employees and has no collective bargaining agreements covering any of its employees.  There are no controversies or labor troubles pending (or to the best of any Seller’s knowledge, information and belief threatened) between the Company and any of its employees; to the best of any Seller’s knowledge, information and belief, the Company has complied in all respects with all applicable Federal and state laws and regulations respecting employment and employment practices, terms and conditions of employment, wages and hours and other laws related to employment; and there are no arrears in the payments of wages; withholding or social security taxes, unemployment or workingman’s compensation insurance premiums or other similar obligations.

3.13Employee Benefit Plans.  Schedule 3.13 hereto lists all pension plans, profit-sharing plans, contracts, bonuses, commissions, savings, stock options, former or current employees of the Company or under which the Company has any obligation or liability (“Benefit Arrangements”).  To the best of any Seller’s knowledge, information and belief, the Benefit Arrangements are and have been administered in substantial compliance with their terms and the requirements of applicable law; the Pension Benefit Guaranty Corporation (“PBGC”) has not instigated or threatened to instigate proceedings to terminate any Benefit Agreements; no litigation or investigation is pending or threatened concerning or involving any Benefit Agreements; and no unfunded liability or accumulated funding deficiency exists under or with respect to Benefit Agreements which has not been properly reflected on the Financial Statements.

3.14Title to Assets.  The Company has good and merchantable title to all of its assets and, excluding only Tract B-2, to the Acquired Assets.  Except as set forth on Schedule 3.14, none of the Company’s assets nor the Acquired Assets are subject to any mortgage, pledge, Lien, security interest, lease, encumbrance, Indebtedness or charge except for accrued Taxes not yet due and payable. 

3.15Condition of Tangible Property.Each of theAcquired Assets is in good operating condition and repair, normal wear and tear excepted.

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3.16Brokerage.There are no claims for brokerage commissions or finder’s fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement made by or on behalf of the Company or the Sellers for which the Purchaser or the Company shall have liability following the Closing, and Sellers agree to indemnify and hold Purchaser and the Company harmless against any costs or damages incurred as a result of any such claim.

3.17Environmental Matters.Except as listed on Schedule 3.17 hereto,

(a)The operations of the Company comply in all respects with all Environmental and Safety Requirements except where any noncompliance shall not have an adverse effect on the condition (financial or otherwise), affairs or business operations of the Company or the Acquired Assets;

(b)without limiting the generality of the foregoing, the Company and each Seller have obtained and complied with, and are in compliance, in all respects, with all permits, licenses and other authorizations that may be required pursuant to Environmental and Safety Requirements for the occupation and operation of the Truck Stop, including, but not limited to, the sale and storage of fuel and fuel oil; a list of all such permits, licenses and other authorizations is set forth on Schedule 3.17(b);

(c)neither the Company, nor its current property or operations are subject to any order from or agreement with any governmental authority or third party respecting (i) the failure of the Company to comply with any Environmental and Safety Requirements or any remedial action or (ii) any environmental liabilities and costs arising from a violation or alleged violation of any Environmental and Safety Requirements except for those orders and agreements with which the Company has complied and are listed on Schedule  3.17(c);

(d)neither the Company nor its operations is subject to any judicial or administrative proceeding alleging a violation of any Environmental and Safety Requirement and no Seller has received any notice (whether oral or written) related to the same nor to the best of any the Seller’s knowledge is there any reason or grounds for the same;

(e)none of the current or past operations of the Company is subject of any investigation by any governmental authority evaluating whether any remedial action is needed to respond to a violation or threatened violation of any Environmental and Safety Requirements; and

(f)Schedule 3.17(f) is a full, complete and accurate list of all Underground Storage and Aboveground Storage Tanks (UST’s and AST’s, respectively) on the Acquired Assets, each of which is now and has at all times prior hereto been operated and maintained in full compliance with all applicable Environmental and Safety requirements.

3.18Insurance.  Schedule 3.18 lists all insurance policies and programs owned by the Company, the premiums for each insurance policy and program and the date on which each

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insurance policy and program premium is next due.  Except as set forth on Schedule 3.18, to the best of any Seller’s knowledge, information and belief, each of those insurance policies and programs is in full force and effect, and the insurance premiums for those policies and programs have been paid in full through the Closing Date.  There are no outstanding claims under any insurance policies or program.

3.19Truck Stop Real Property.  To the best of each Sellers’ knowledge, there is not now pending nor threatened: (a) any litigation or proceeding to take all or any portion of the Acquired Assets by eminent domain; (b) any street widening or changes in any highway or traffic lanes or patterns in the immediate vicinity of the Truck Stop; or (c) other change or modification by a state, local or federal authority or agency which would adversely affect the Truck Stop or any of the Acquired Assets.  Further, (i) the Truck Stop is connected to and serviced by adequate water, natural gas, sewage disposal and electric facilities; (ii) all material systems of the Truck Stop, including, but not limited to, heating, ventilation, air conditioning, electrical, sewage, plumbing, etc., are in good operating condition, subject to reasonable and ordinary wear and tear; and (iii) to the knowledge of each Seller, the Truck Stop and all improvements located thereon are in full compliance with current building and zoning laws.  No Seller has any information or knowledge that any portion of the Acquired Assets are being condemned or otherwise taken for use as part of any street or highway widening process.

3.20Continued Operations.  Each of the Sellers’ represents and warrants that the Company shall be able to continue to operate the Truck Stop, without change and without being subject to any Liens, Indebtedness or claims of any nature, on the same basis as it was operated prior to the Closing Date.

3.21Tax Matters.  The Purchaser shall have no liability for or exposure to any Taxes arising from the operation(s) of the Company or the Acquired Assets prior to the Closing Date.  All necessary and required Tax Returns have been timely filed and are correct in all material respects as to the amount of any Tax owed and have been prepared in compliance with all applicable laws and regulations in all respects; the Company has paid all Taxes due and owing by it (whether or not such Taxes are required to be shown on a Tax Return) and have withheld and paid over to the appropriate taxing authority all Taxes which it is required to withhold from amounts paid or owing to any employee, member, creditor or other third party; no Seller has waived any statute of limitations with respect to any Taxes or agreed to any extension of time with respect to any material Tax assessment or deficiency; as of the Agreement Date; no foreign, federal, state, parish or local tax audits or administrative or judicial proceedings are pending or being conducted with respect to the Company or any of the Acquired Assets; no information related to Tax matters has been requested by any foreign, federal, State or local taxing authority and no written notice indicating an intent to open an audit or other review has been received by the Company or any Seller from any foreign, federal, State, parish or local taxing authority.

(a)The Company has not made an election under §341(f) of the Code.  The Company is not liable for the Taxes of another Person (i) under Treas. Reg. § 1.1502-6 (or comparable provisions of state, local or foreign law), (ii) to any Seller’s knowledge, as a transferee or

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successor, or (iii) by contract or indemnity.  The Company is not a party to any tax sharing agreement; and

(b)On the date of its formation and at all times thereafter, the Company has been classified as either a sub-chapter “S” corporation under the Code for (i) federal income tax purposes and (ii) for state and local income tax purposes in Louisiana.

(c)The Company is now a sub-chapter “S” corporation under the Code and was not at any prior time a “C” corporation. 

(d) Not less than twenty (20) days prior to filing any Tax Return for the tax year of 2005 or any part thereof, each such Tax Return shall be submitted to the Purchaser. 

3.22Listed Devices.  The Listed Devices are all of the Devices currently placed in the Truck Stop and each Listed Device is owned by the Company.  Each Seller agrees, as a part of the Closing, to request a coordinated transfer of the Listed Devices from the Louisiana gaming regulatory authorities and to cooperate in the transfer of said Listed Devices and to timely provide all documentation and information as shall be necessary to ensure the orderly and proper transfer of Listed Devices at the Truck Stop, including ensuring that there is no period of time during such a transfer when the Listed Devices are not legally operating at the Truck Stop and available for play by the general public.  Concurrently herewith, each Seller agrees for themselves and to cause the Company to execute a purchase agreement with Southern Trading Company, a Louisiana corporation, or any other designee of the Purchaser, transferring all of Company’s interest in the Listed Devices to Southern Trading Corporation for the total consideration of One Dollar ($1.00) per Device.

(a)The amount and type of fuel sales at the Truck Stop, at all times for the last twenty-four (24) months, have been sufficient to qualify the Truck Stop, pursuant to the Liquor and Gaming Laws of the State of Louisiana, as a truck stop facility approved to operate not less than fifty (50) Devices.  No Seller has any knowledge of any information that would lead any party to reasonably anticipate any change in the foreseeable future in the level and type of fuel sales at the Truck Stop.  Except as set forth on Schedule 3.23, not more than one (1) percent of all fuel sales at the Truck Stop during any one (1) year period were made to any Seller or any Affiliate of the same.

(b)The Company currently has and will as of the Closing have a validly issued Establishment License and a Device Owners License and neither of the foregoing is now nor at the Closing shall be subject to any investigation or condition.

3.23Interest in Competitors, Suppliers and Customers.  Except as set forth on Schedule 3.23, none of the Sellers has any ownership interest in any competitor, supplier or customer of the Company.

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3.24United States Securities Law Compliance.

(a)No Seller has either directly nor indirectly offered the Shares for sale, nor solicited any offer to buy the Shares, by means of any general advertising or by any other form of general solicitation.  No Seller has either directly nor indirectly offered the Shares for sale, nor solicited any offer to buy the Shares, in any other manner that would require the sale of such Shares to be subject to the registration requirements of the Securities Act or any state securities law, rule or regulation.

(c)No Seller is selling the Shares on behalf of the Company in connection with the distribution of such Shares.

(d)Each Seller confirms that he or she did not acquire the Shares with a view to, or for, the resale in connection with any distribution thereof within the meaning of the Securities Act or any state securities law, rule or regulation which would not be exempt from the registration requirements of the Securities Act or any state securities law rule or regulation.

(e)This Agreement has been duly executed and delivered by each Seller and, assuming the due authorization, execution and delivery by the Purchaser, constitutes the legal, valid and binding obligation of each Seller enforceable against each Seller in accordance with its terms.  Each Seller is of the age of majority and of sound mind and under no mental disabilities whatsoever.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PURCHASER

4.1Purchaser represents and warrants to each of the Sellers as follows:. 

(a)The Purchaser is duly formed, validly existing and in good standing under the laws of the State of Delaware and is qualified to do business in every jurisdiction in which its ownership of property or the conduct of business requires it to qualify.  The Purchaser possesses all requisite power and authority, and all licenses, permits and authorizations necessary, to own and operate its properties, to carry on its businesses as now conducted and to carry out the transactions contemplated by this Agreement.  The Purchaser is not in violation of any of the provisions of its Articles of Incorporation or By-Laws.

(b)Purchaser has taken all action necessary for the due authorization, execution, delivery and performance of this Agreement and its respective obligations under this Agreement.  Upon execution and delivery by Purchaser and Sellers, this Agreement shall constitute the valid and legally binding obligation of Purchaser in accordance with its terms.

(c)There are no claims for brokerage commissions of finder’s fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement made by or on behalf of Purchaser that will become a liability of the Seller, and Purchaser agrees to indemnify and hold Sellers harmless against any costs or damages incurred as a result of any such claim.

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(d)Execution and delivery by Purchaser of this Agreement, performance by Purchaser of its respective obligations under this Agreement and consummation by Purchaser of the transactions contemplated by this Agreement do not require Purchaser to obtain any consent, approval or action by, or make any filing with or give any notice to, any Person, except such as have been duly obtained or made, as the case may be, and are in full force and effect, and routine filings with regulatory authorities.

ARTICLE V

CONDITIONS PRECEDENT

5.1Conditions to the Purchaser’s Obligations.  The obligation of the Purchaser to purchase the Shares and the Tract B-2 and to consummate the transactions contemplated in this Agreement shall be expressly subject to the satisfaction and fulfillment, at or before the Closing, of each of the following conditions precedent and any other conditions stated elsewhere in this Agreement.

(a)There shall be no cause of action, order or preliminary or permanent injunction entered, pending or threatened in any action or proceeding before any United States federal or state court or agency, or any foreign court, of competent jurisdiction or governmental authority (which has jurisdiction over the enforcement of any applicable laws) enjoining or threatening, in whole or in part, the Company’s current operations, making illegal or prohibiting the consummation of the transactions hereunder, including the transfer of the Shares or the Acquired Assets and/or the operation of Devices at the Truck Stop.

(b)The representations and warranties of each Seller set forth in this Agreement and the Exhibits, Schedules, attachments, documents, certificates, Financial Statements or other items prepared or supplied to the Purchaser by or on behalf of any Seller or the Company shall be true and correct in all respects on the Closing Date with the same effect as though all such items had been made on and as of such date, and each Seller shall deliver, as a part of the Closing hereunder, to the Purchaser a certificate certifying such or identifying any changes as of the Closing Date.

(c)The Purchaser shall have received a good standing certificate for the Company dated within fifteen (15) days prior to the Closing Date.

(d)The Acquired Assets shall be in good physical and operating condition, excepting normal wear and tear only, as existed on the Agreement Date.  No damage or casualty shall have occurred to the Acquired Assets, Devices or operations of the Company prior to the Closing Date.

(e)Purchaser shall have received a legal opinion, in the form of Exhibit D attached hereto, from legal counsel for the Sellers.

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(f)As of the Closing Date, there shall be no adverse change in the operating results, operations, condition (financial or otherwise), prospects, employee relations or customer or supplier relations of the Company or the Acquired Assets, as applicable. 

(g)The Purchaser shall have received from each Seller as appropriate each of the instruments and other documents referred to elsewhere in this Agreement.

(h)All Managers, Directors and Officers of the Company shall have resigned effective as of midnight on the Closing Date and the Purchaser shall have received from each Manager, Director and Officer the written resignation described above.

(i)Each Seller agrees that on or prior to the Closing Date, they shall, as applicable, have executed a purchase agreement between the Company and Southern Trading Corporation, or any other designee of the Purchaser, transferring to Southern Trading Corporation, or such other designee, all of the Listed Devices as of the Closing Date.

5.2Conditions to the Sellers’ Obligations.  The obligation of each Seller to sell the Shares and the Tract B-2 to the Purchaser shall be subject to the satisfaction and fulfillment, at or before the Closing, of the following conditions precedent:

(a)There shall be no cause of action, order or preliminary or permanent injunction entered, pending or threatened in any action or proceeding before any United States federal or state court or agency, or any foreign court, of competent jurisdiction or governmental authority (which has jurisdiction over the enforcement of any applicable laws) enjoining or threatening, in whole or in part, the Company’s current operations, making illegal or prohibiting the consummation of the transactions hereunder, including the transfer of the Shares, the Acquired Assets and/or the operation of Devices at the Truck Stop;

(b)Purchaser has timely delivered or caused to be delivered the Purchase Price and the Tract B-2 Purchase Price, plus or minus any applicable prorations hereunder, to the Title Company;

(c)Purchaser shall have performed all obligations and complied with all agreements and covenants required hereunder to be performed by Purchaser on or before the Closing Date;

(d)Purchaser’s representations and warranties contained herein and in any documents furnished to the Sellers on or prior to the Closing Date shall be true and correct in all respects as of the Closing Date;

(e)The Title Company has confirmed to Sellers that the Title Company is unconditionally prepared to disburse the Purchase Price and the Tract B-2 Purchase Price (plus or minus all applicable prorations and the Escrow Hold-Back) to the Sellers or their designees subject only to the performance by the Sellers of their respective obligations under this Agreement;

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ARTICLE VI

ACT OF CASH SALE, ADJUSTMENTS AND PRORATIONS, CLOSING.

6.1Act of Cash Sale.  The Tract B-2 Sellers shall convey Tract B-2 to Purchaser by an Act of Cash Sale, attached hereto as Exhibit B, conveying good, marketable and indefeasible fee simple title to Tract B-2 subject only to the encumbrances identified on Schedule 2.2. 

6.2Taxes and Assessments: Closing Costs.

(a)Real estate and ad valorem taxes, general and special and assessments (collectively “Real Estate Taxes”),  utilities and other similar charges, shall be prorated between the Sellers, as applicable, and the Purchaser as of the Closing Date, such that credits, charges and expenses of the Company, up to 7:00 a.m. local time on the Closing Date and all days preceding the Closing Date, shall be allocated to Sellers, as applicable (regardless of when an invoice is issued or payment for such charges and expenses is due), and credits, charges and expenses after 7:00 a.m. local time on the Closing Date shall be allocated to Purchaser.  The Purchase Price shall be adjusted at the Closing to reflect the prorations.

(b)If the actual amount of Real Estate Taxes is not known on the Closing Date, Real Estate Taxes shall be prorated on the basis of the rate shown on the last available tax duplicate.  Each Seller represents and warrants that there are no special assessments with regard to the any real property owned by the Company or Tract B-2.  Upon receipt of the final tax duplicate for the period encompassing the Closing Date, the parties shall adjust, outside of the escrow, the proration of Real Estate Taxes based upon the actual tax duplicate.

(c)If any errors or omissions are made regarding adjustments and prorations as aforesaid, the parties shall make the appropriate corrections promptly upon the discovery thereof. Any corrected adjustment or proration shall be paid in cash to the party entitled thereto. Purchaser shall pay for recording fees and any escrow fees and transfer taxes and conveyance fees associated with the conveyance of any real property hereunder. 

6.3Closing.  This transaction shall be closed through an escrow that is to be held by the Title Company, in accordance with the general provisions of the usual form of escrow agreement then in use by such Title Company for transactions similar to this with such special provisions inserted as may be required to conform with this Agreement.  Each party shall execute and deliver on a timely basis all escrow instructions, acts of cash sale, funds, settlement statements and other documents reasonably necessary to accomplish Closing.  In addition to, and not in limitation of, the foregoing:

(a)On or before the Closing Date, Sellers, as applicable, shall execute, deliver or cause to be delivered to the Title Company all of the items listed below:

i.The Act of Cash Sale;

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ii.The assignment, in blank, of the Shares;

iii.The Share Certificates;

iv.The Company’s corporate records and corporate record book;

v.Any other instruments then required pursuant to any other sections of this Agreement;

vi.Mechanics Lien Affidavit required by the Title Company;

vii.A non-imputation affidavit; and

viii.Affidavit of non-foreign status, as contemplated by Section 1445 of the Code.

(b)On or before the Closing Date, Purchaser shall deliver or cause to be delivered to Title Company the Purchase Price and the Tract B-2 Purchase Price, less the Escrow Hold Back and the Deposit, and subject to the prorations and credits as herein provided.

(c)The transactions provided for in this Agreement shall be completed by the Title Company on the Closing Date by doing each of the following:

i.by filing the Act of Cash Sale for record in the Records of Calcasieu Parish, Louisiana;

ii.by causing the issuance of the Title Policy, subject only to the Permitted Encumbrances, and forwarding the Title Policy to Purchaser;

iii.by prorating taxes, assessments and other amounts, in accordance with this Agreement and the settlement statement, and paying and charging Purchaser and Sellers for those costs and expenses to be paid by Sellers or Purchaser pursuant hereto;

iv.by disbursing, pursuant to the settlement statement, any and all funds then on deposit hereunder and all documents hereunder to the applicable parties; and

v.by preparing and forwarding to Purchaser and the Sellers four (4) signed copies of the settlement statement setting forth all receipts and disbursements provided for herein.

(d)In the event the Title Company is unable to simultaneously perform all instructions set forth in Section 6.3(c) on the Closing Date, the Title Company shall so notify Sellers and Purchaser, and shall retain, unless otherwise instructed by the party depositing the same, all documents and funds deposited with the Title Company until receipt by the Title Company of written instructions executed by Sellers and Purchaser or by a court of competent jurisdiction.

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6.4Possession.  At Noon local time on the Closing Date, Sellers shall cease operation of the Company and the Acquired Assets and shall deliver possession thereof to the Purchaser, and all risk of loss with respect thereto shall pass to the Purchaser or its designee.

6.5Closing Activities.  The Sellers and Purchaser agree that at 7:00 a.m. local time, or such agreeable time thereafter on the Closing Date, a representative from each of them (the “Representatives”) shall meet at the Truck Stop and shall jointly perform the following functions:

(a)Representatives of the Purchaser shall be permitted to fully inspect the Truck Stop to ensure it is in compliance with the obligations and representations and warranties contained herein and that the Acquired Assets, including the Required Inventory Levels, are in place;

i.If less than the Required Inventory Levels are in place, Purchaser shall receive a credit against the Purchase Price for the amount of inventory (at cost not retail) necessary to meet the minimum Required Inventory Levels.

(b)shall further cooperate to turn over all keys, passwords, accounts, and copies of all records, documents, instruments and any other items necessary for the immediate and complete operation of the Truck Stop; and

(c)verify that as of the Closing there is no less than $100,000 in cash left in the Company’s operating account.

6.6Escrow Hold Back.  On the Closing Date, the Title Company shall withhold and pay over to Delafield, who shall act as escrow agent under this Section 6.6 (“Escrow Agent”), the Escrow Hold Back from the Sellers’ proceeds hereunder who shall hold such funds in escrow for the benefit of all parties as outlined herein.  In the event the Purchaser shall receive any invoice, bill or letter demanding payment for any costs, Taxes or any other claims that accrued or relate to any period of time on or prior to the Closing Date (“Escrow Claim”), including, but not limited to, any point liability under the Truck Stop’s frequent player program(s), Purchaser shall send evidence of such Escrow Claim to the Escrow Agent and to the Sellers (“Hold Back Notice”). 

(a)Sellers shall have ten (10) Business Days following their receipt of the Hold Back Notice to serve, in writing to both the Escrow Agent and the Purchaser, any objections they may have to the same.  If no objection is timely served by the Sellers, Escrow Agent is herewith authorized, without further action by any party, to promptly pay such Escrow Claim out of the Escrow Hold Back. 

i.If Sellers shall timely object to any payment out of the Escrow Hold Back and the basis for an objection is that the Operating Costs that are the subject of the Hold Back Notice arose after the Closing Date, then the Escrow Agent shall hold such amount as is identified in the Hold Back Notice until such time as it receives written instructions from all parties to disburse the same; or

ii.If Sellers shall timely object to any payment out of the Escrow Hold Back and the basis for an objection is anything other than an objection based upon Section 6.6(a)(i)

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above, the Escrow Agent shall hold the funds identified in the Hold Back Notice for an additional thirty (30) days, after which it shall disburse such funds at the sole direction of the Purchaser.

(b)Promptly after that date which is three (3) full calendar months after the Closing Date, Escrow Agent shall release any funds then remaining in the Escrow Hold Back to the Sellers.

6.7Sellers’ Release.  Each Seller, on behalf of themselves and their heirs, executors, administrators, personal representatives, Affiliates, agents and the employees, owners, members, shareholders, officers, directors, successors and assigns of the Company prior to the Closing Date, hereby fully releases and discharges Purchaser, any other past or future shareholders, members, officers and directors of the Purchaser and their heirs, executors, administrators, personal representatives, successors and assigns and the Company and the Acquired Assets (the “Released Parties”), from any and all rights, claims, actions, causes of action, demands, damages, costs and expenses, claims for salaries or reimbursements, etc., whatsoever that any of the Sellers or any of the foregoing parties now has or may hereafter have against the Released Parties, directly or indirectly, arising out of or in any way relating to any Seller’s operation or ownership of the Truck Stop, the Acquired Assets or the Company, whether as an officer, director, agent, owner, member, shareholder, employee or otherwise.  In addition to the foregoing, each Seller shall cause its owners, members, shareholders, employees, officers and agents to resign, effective as of the Closing Date, any positions they may hold within the Company, including, but not limited to, the positions of director, officer, manager or agent.  Nothing contained in the foregoing is intended to nor shall it be construed as releasing any claims that any Seller may have arising under this Agreement.

ARTICLE VII

OBLIGATION NOT TO DO

7.1Obligation Not To Do.  For a period of five (5) years after the Closing Date, Sellers neither directly nor indirectly (a) shall own any interest in, manage, be employed by or provide services to or consult with, directly or indirectly in any manner whatsoever, any Person (other than the Company) engaged in gaming or any activities related to the Truck Stop anywhere within the Parish of Calcasieu, (b) shall solicit any current or former customers of the Company concerning gaming or any activities related to the Truck Stop or (c) solicit any current or future employee of the Company to leave the Company’s employment for other employment in gaming or any activities related to the Truck Stop. 

(a)The foregoing restriction is an obligation not to do an act or take an action.  Each Seller, for themselves and their Affiliates, acknowledge that the foregoing obligation not to do an act is a material inducement for the Purchaser to enter into this Agreement and is a necessary, reasonable and appropriate restriction.

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(b)Given the unique and competitive nature of the video poker industry and the operation of truck stop facilities, the parties hereto acknowledge and agree that the restrictions contained in this Section 7.1 are reasonable and necessary to protect the Truck Stop from competition for which it otherwise has little or no ability to defend itself.  The parties hereto further acknowledge and agree that the restrictions contained herein do not impose a burden upon one party which is not commensurate with the risk to any other party.

(c)If a court of competent jurisdiction determines that the restrictions contained herein are too restrictive to be enforced, in whole or in part, this provision shall not be invalid, and all parties agree that the court shall modify the restrictions contained herein to the extent necessary to permit their enforcement.

(d)In the event of a breach or threatened breach of the provisions of this section, the Purchaser shall be entitled to an injunction restraining each of the Sellers from competing against the Purchaser or the Company or from rendering any services to any person, firm, corporation, association, partnership or other entity that is competing against the Purchaser.  Nothing contained in this section shall be construed as prohibiting the Purchaser from pursuing any other remedies available for a breach or threatened breach of the restrictions contained in this section, including the recovery of damages from the any of the Sellers.

ARTICLE VIII

MISCELLANEOUS

8.1Default.If there is a default under this Agreement, a party not in default shall give notice of the default to the party in default, and the party in default shall have seven (7) calendar days from notice in which to cure the default.  If any default cannot reasonably be cured within the seven (7) day period following notice, the party in default shall have such additional time as is reasonably required to cure the default, provided the party in default diligently and continuously pursues all actions necessary to cure the default and further provided that, in no case, shall the party in default have more than fifteen (15) calendar days from notice in which to cure the default.

8.2Specific Performance.Each party shall have the right to enforce this Agreement by specific performance.

8.3Governing Law.This agreement shall be governed by and construed in accordance with the laws of the State.

8.4Jurisdiction and Venue.The exclusive jurisdiction and venue for any disputes arising under this Agreement and any instruments or transactions contemplated by this Agreement shall be the 14^th Judicial District Court, Calcasieu Parish, Louisiana.

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8.5Notices. 

(a)All communications under this Agreement shall be in writing and shall be mailed by first class mail, postage prepaid:

i.if to Sellers, at:

Robert E. Christman and Louise C. Christman

809 Henrietta Lane

Lake Charles, Louisiana 70605

Roger L. Miller and Yvonne Leger Miller

6128 White Oak Drive

Lake Charles, Louisiana 70615

Copy to:

Joseph A. Delafield

A Professional Corporation

3401 Ryan Street, Suite 307

P.O. Box 4272

Lake Charles, LA 70606

Facsimile: (337) 477-4738

ii.if to Purchaser, at:

Gameco Holdings, Inc.

Attn: Stan Guidroz

c/o Jalou

1869 Mills Highway

Breaux Bridge, Louisiana 70517

Facsimile: 337-507-2280

Copy to:

Hahn Loeser & Parks LLP

3300 BP Tower

200 Public Square

Cleveland, Ohio 44114

Attn: Stanley R. Gorom III, Esq.

Facsimile: (216) 274-2460

or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party.

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(b)Any notice so addressed, postage prepaid, and mailed by registered or certified mail shall be deemed to be given on the third Business Day after the date it is mailed.

8.6Survival: Indemnification.

(a)All warranties, representations and covenants made by Purchaser or by Sellers in this Agreement or in any certificate or other instrument delivered by Purchaser or Sellers under this Agreement shall be considered to have been relied upon by Seller or Purchaser, as the case may be, and shall survive delivery by Sellers to Purchaser of the Shares or the payment by Purchaser to Sellers of the Purchase Price or the Tract B-2 Purchase Price, regardless of any investigation made by Sellers or Purchaser or on Sellers’ or Purchaser’s behalf.  All statements on any certificate or other instrument delivered hereunder shall constitute warranties and representations by Sellers or Purchaser, as the case may be.

(b)Sellers, jointly and severally, shall indemnify, defend and hold Purchaser and its shareholders, officers, directors and agents harmless from all damages, losses, claims, obligations, fees, liabilities and expenses, including reasonable counsel fees incurred in litigation or otherwise (“Damages”) assessed, incurred, paid or sustained by or against them with respect to or arising out of, directly or indirectly:

i.the failure of any representation or warranty made by Sellers in this Agreement or in any Schedule, Exhibit or certificate, document or instrument delivered pursuant to this Agreement to be true and correct in all respects as of the Closing Date; and

ii.the failure of Sellers to perform and comply in all material respects with all agreements, obligations and conditions required of Sellers under this Agreement when and as required by this Agreement.

(c)if a suit or administrative proceeding is brought against Purchaser or its parents, subsidiaries or affiliates and/or directors, officers, stockholders, members, partners, agents, servants, employees, successors or assigns or each or any of them (each, an “Indemnified Party”) to recover for or on account of any liability for which Sellers are responsible under this Agreement and/or law or as a result of a breach by any Seller of this Agreement, Sellers shall appear and defend that suit or administrative proceeding at Sellers’ sole cost and expense (including, but not limited to, court costs and attorney fees and expenses) and shall pay any judgment (or settlement in lieu thereof) that may be entered against one or more of the Indemnified Party, as the case may be.  If, in an Indemnified Party’s reasoned opinion, it becomes necessary for the Indemnified Party to defend itself in a suit or administrative proceeding, Sellers shall pay all court costs, attorney fees and expenses and other expenses incurred by the Indemnified Party.

8.7Successors and Assigns.  This Agreement shall inure to the benefit of and be binding upon Sellers and Purchaser and the successors and assigns of each of them.  Sellers shall not assign any or all of their rights or obligations under this Agreement without the prior written consent of Purchaser or its successors and assigns, as the case may be.  Purchaser and its

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successors and assigns shall not assign its rights or obligations under this Agreement without Sellers’ prior written consent except that Purchaser without Sellers’ prior written consent may assign its rights and obligations under this Agreement to any Person who purchases the part of the Shares owned by the Purchaser and except that the Purchaser and its successors and assigns may assign their rights and obligations under this Agreement without Sellers’ prior written consent to any Person that acquires all or substantially all of the Company’s assets.  If, pursuant to the requirements in this Section 8.7, Purchaser assigns its rights and obligations under this Agreement without Sellers’ prior written consent, Purchaser shall not be responsible for any failure of the assignee to satisfy the obligations assigned.  If consent to an assignment is required and if consent is given, the party giving the consent shall specify whether the party or parties assigning his, its or their rights under this Agreement shall or shall not continue to be responsible for any failure of the assignee to satisfy the obligations assumed.

8.8Entire Agreement; Amendment and Waiver.  This Agreement constitutes the entire understanding of the parties hereto and supersedes all prior agreements or understandings with respect to the subject matter hereof between the parties.  This Agreement may not be amended, and the observance of any term of this Agreement may not be waived, without Purchaser’s or Sellers’ prior written consent, as the case may be.  Unless expressly provided otherwise in the Agreement, no act, delay, omission or course of dealing on the part of any party hereto in exercising any right, power or remedy hereunder shall operate as, or be construed as, as a waiver or otherwise prejudice such party’s rights, powers and remedies under this Agreement.

8.9Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original copy, and all of which together shall constitute one agreement binding on the parties hereto.

8.10Additional Instruments and Information.  All parties agree and obligate themselves to promptly execute any additional documents and instruments and take any other actions necessary and proper for the complete and expeditious implementation and satisfaction of the provisions and intent of this Agreement.  In addition, each Seller agrees that during and subsequent to the sale transaction, each Seller shall have a continuing duty to supply such information and documentation and to perform such acts as may be required by any federal, state or local authority or the Liquor and Gaming Laws of the State of Louisiana.

8.11Mutual Negotiation.  Sellers and Purchaser agree they have participated jointly in the negotiation and drafting of this Agreement and, if there is an ambiguity or question of intent or question of interpretation concerning this Agreement, this Agreement shall be construed as having been jointly negotiated and drafted by all parties without the creation of any burden of proof favoring or disfavoring any party that arose from the negotiation and drafting of this Agreement.

8.12Severability.  Each provision of this Agreement shall be considered severable and, and if for any reason any provision which is not essential to the effectuation of the basic purposes of the Agreement is determined to be invalid and contrary to any existing or future law, that invalidity

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shall not impair the operation of, or affect, those provisions of the Agreement that are valid, provided the valid provisions remaining result in an equitable agreement.

8.13Force Majure.  Any time period or obligation to timely perform imposed upon any party hereunder shall be extended as necessary when performance of such obligation(s) is rendered impossible or unreasonably difficult as a result of any acts of God, war, labor strikes or unrest, weather, acts of terrorism, general disruptions to the economy or day-to-day operations of the government of the Parish of Calcasieu, the State of Louisiana or the United States of America which make conducting general business unreasonably difficult or impossible.

8.14Legal Fees.  Following the Closing, in any action by one party to the Agreement against the other party to enforce its rights under this Agreement and/or any instrument contemplated by this Agreement, the losing party shall reimburse the prevailing party for the reasonable and verifiable attorney fees and for the costs and expense incurred by the prevailing party in enforcing its rights and remedies under this Agreement.

8.15Closing Costs.  Except as provided otherwise herein, each party shall be responsible for its own closing costs and fees.

8.16Gender and Plurals.  Whenever required by the context of this Agreement, the masculine gender shall include the feminine and neuter genders, and vice-versa, and the singular shall include the plural and vice-versa.

8.17Paragraph and Section Headings.  The headings of the sections of this Agreement are inserted for convenience only and shall not be deemed to constitute a part thereof.

8.18Resolutory Condition.  Sellers and Purchaser acknowledge and agree that it is not their intent to create a vendor’s lien, mortgage or resolutory condition in this Agreement and that, if one is created, it is hereby released, relinquished, renounced and waived.

8.19Incorporation.  Any and all Schedules, Exhibits or other documents referred to herein or attached hereto are incorporated herein as if fully rewritten in this Agreement.

8.20Employee Contact and Communication.  Purchaser agrees that, with the exception of the Truck Stop’s manager and bookkeeper, the Purchaser will not contact any employee of the Truck Stop without the prior oral permission of any one of the Sellers.  Both parties agree that they will not disclose the Purchase Price to any third-party without the prior consent of the other party, excepting only disclosures: (i) as may be required for the purpose of reporting any Taxes arising as a result hereof; (ii) to any and all governmental authorities, including any and all state gaming or other regulators; and (iii) to any and all agents or employees of any party hereto, including accountants, attorneys, lenders, investment bankers, title agents or other similar parties.

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THUS DONE AND PASSED on the 12^th day of December, 2005, at the City of Lake Charles, State of Louisiana, the undersigned parties having affixed its signature in the presence of me, Notary, and the undersigned competent witnesses, after due reading of the whole.

WITNESSES:	SELLERS:
/s/ Rebecca A. Hughes	/s/ Roger L. Miller, Sr.
	ROGER L. MILLER, SR., Seller
/s/ Brenda Delafield	/s/ Yvonne Leger Miller
	YVONNE LEGER MILLER, Seller
	/s/ Robert E. Christman
	ROBERT E. CHRISTMAN, Seller
	/s/ Louise C. Christman
	LOUISE C. CHRISTMAN, Seller

/s/ Joseph A. Delafield

NOTARY PUBLIC

THUS DONE AND PASSED on the        day of December, 2005, at the City of Lake Charles, State of Louisiana, the undersigned parties having affixed its signature in the presence of me, Notary, and the undersigned competent witnesses, after due reading of the whole.

WITNESSES:	JALOU II, INC:
/s/ Rebecca A. Hughes	By:	/s/ Stan Guidior, Authorized Rep.
	Jeffery P. Jacobs, Authorized Officer
/s/ Brenda Delafield

/s/ Joseph A. Delafield

NOTARY PUBLIC

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SCHEDULES AND EXHIBITS

1.	Schedule 1.3	Acquired Assets
2.	Schedule 1.4	Adverse Effects of Hurricane Rita
3.	Schedule 1.17	Excluded Assets
4.	Schedule 1.18	Excluded Liabilities
5.	Schedule 1.23	Listed Devices
6.	Schedule 2.2	Tract B-2 Permitted Encumbrances
7.	Schedule 3.1(d)	Ownership of Shares
8.	Schedule 3.5	Permits
9.	Schedule 3.7	Financial Statements
10.	Schedule 3.8	Absence of Certain Developments
11.	Schedule 3.9	Compliance with Laws
12.	Schedule 3.10	Pending/Threatened Actions
13.	Schedule 3.11	Undisclosed Liabilities
14.	Schedule 3.12	List of Employees
15.	Schedule 3.13	Employee Benefits
16.	Schedule 3.14	Title to Assets
17.	Schedule 3.17	Environmental Matters
18.	Schedule 3.17(b)	Authorizations
19.	Schedule 3.17(c)	Orders
20.	Schedule 3.17(b)	UST/AST
21.	Schedule 3.18	Insurance
A.		Easement
B.		Tract A and Tract B-2
C.		Act of Cash Sale
D.		Legal Opinion

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EXHIBIT A

[Easement]

 STATE OF LOUISIANA

PARISH OF CALCASIEU

SERVITUDE/EASEMENT

BE IT KNOWN, that, before the undersigned Notary(ies) Public in the State of Louisiana, and in the presence of the undersigned competent witnesses, personally came and appeared:

                      , having an address at                                          (“Grantor”), in favor of FUEL STOP 36, INC.,  a Louisiana limited liability company, having an address at 108 N. Highway 397, Lake Charles, Louisiana 70616 (“Grantee”).

Each of whom did execute this Servitude/Easement (the “Easement”) this       day of                     , 2005 (“Easement Date”).

RECITALS

a.Grantor is the owner of certain real property upon which is situated an access street named “Wright Road” with its eastern most terminus at Opelousas Street in the City of Lake Charles, Parish of Calcasieu, State of Louisiana (the “Roadway”);

b.Grantee is the owner of certain real property located adjacent to the Roadway in the City of Lake Charles, Parish of Calcasieu, State of Louisiana (the “Grantee’s Property”); and

c.The Roadway and the Grantee’s Property are identified on Exhibit A attached hereto and incorporated by this reference herein.

NOW, THEREFORE, in consideration of ten and no/100 dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.Incorporation of recitals.  The foregoing recitals are incorporated herein as if fully rewritten herein.

 2.Grant of access, ingress and egress easement.  Grantor does hereby give, grant, bargain, sell, release and convey to Grantee, its successors and assigns forever, the perpetual non-exclusive right to move pedestrian and vehicular traffic over, on and across the Roadway, including semi-tractor trailers and any other vehicles.

3.Repair of Easement.  Grantor and Grantee shall mutually agree upon the extent, type and nature of any repairs and maintenance needed to the Easement Area on the Roadway (as identified on Exhibit A).  Grantee will be responsible for no more than one-half (1/2) of the costs of all such agreed upon repairs and/or maintenance.

4.Limitation on Grant.  This Easement does not contain and grants to Grantee no rights to the subsurface of any easement area, all such rights and privileges being expressly reserved to the Grantor.

5.Not a Public Dedication.  Nothing contained herein shall be deemed to be a gift or dedication of any portion of any easement area to the general public or for the benefit of the general public or for any public purpose whatsoever, it being the intention of the Grantor that this Easement shall be strictly limited to and for the purposes herein expressed.

6.Successors.  The terms, covenants and provisions of this Easement shall extend to and be binding upon the respective heirs, personal representatives, administrators, executors, beneficiaries, successors and assigns, as applicable, of Grantor and Grantee.  The parties agree that the easements, covenants, conditions and terms hereof are intended to and shall run with the land and shall benefit the Grantee’s Property and burden

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the Grantor’s Property.

7.Representations or Warranties.  Grantor does hereby represent and warrant to the Grantee that it is well seized of the Grantor’s Property and have full, right, title and interest in the same and full right, title and power to grant the easements described herein.

8.Notices.  All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed given: (i) if personally delivered; (ii) three (3) days after being placed in the United States’ mail, certified, return receipt requested; or (iii) one (1) day after being placed for delivery with a nationally recognized overnight courier, in each case addressed to the addresses first above written.

9.Mutual Indemnification.

(a)Grantor does herewith indemnify, defend and hold harmless Grantee from any and all claims, expenses, losses, causes of action or liabilities it may suffer as a result of the use of the Easement Area by Grantor or any of their employees, agents, customers or invitees, including the occupants of the industrial park located to the West of the Easement Area.

(b)Grantee does herewith indemnify, defend and hold harmless Grantor from any and all claims, expenses, losses, causes of action or liabilities they may suffer as a result of the use of the Easement Area by Grantee or any of its employees, agents, customers or invitees.

10.If any portion of this Easement or any provision herein shall be found to be invalid or unenforceable, the remaining provisions shall continue to be fully effective and enforceable and the Grantor do hereby consent to the modification hereof, in any manner as a court may deem necessary, to preserve the grant of easements contained herein.

THUS DONE AND PASSED on the           day of                             , 2005, at the City of                          , Parish of                                     , State of                                    , the undersigned party having affixed her signature in the presence of me, Notary, and the undersigned competent witnesses, after due reading of the whole.

WITNESSES:	GRANTOR:
		By:
			,	President

NOTARY PUBLIC

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THUS DONE AND PASSED on the               day of                          , 2005, at the City of                            , Parish of                                   , State of                        , the undersigned party having affixed her signature in the presence of me, Notary, and the undersigned competent witnesses, after due reading of the whole.

WITNESSES:	GRANTEE:
FUEL STOP 36, INC.
		By:
			,	Manager

NOTARY PUBLIC

This Instrument prepared by and after
recording please return to:

Stanley R. Gorom III, Esq.

Hahn Loeser & Parks LLP

3300 BP Tower

200 Public Square

Cleveland, Ohio 44114

Phone: (216) 274-2461

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EXHIBIT B

[Survey of Tract A and Tract B-2]

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EXHIBIT C

STATE OF LOUISIANA

PARISH OF CALCASIEU

ACT OF CASH SALE OF IMMOVABLE PROPERTY

BE IT KNOWN, that, before the undersigned Notary(ies) Public in the State of Louisiana, and in the presence of the undersigned competent witnesses, personally came and appeared:

ROBERT E. CHRISTMAN, a resident of the State of Louisiana, and whose mailing address is declared to be 108 N. Highway 397, Lake Charles, Louisiana 70616, and

LOUISE C. CHRISTMAN, a resident of the State of Louisiana, and whose mailing address is declared to be 108 N. Highway 397, Lake Charles, Louisiana 70616,

(ROBERT E. CHRISTMAN and LOUISE C. CHRISTMAN are collectively, the “Seller”),

who declared that for and in consideration of the sum of                      Dollars ($                 ), and other good and valuable consideration, in cash paid, the receipt and sufficiency of which are hereby acknowledged by the Seller, Seller does hereby grant, bargain, sell, convey, transfer, assign, deliver, and set over with full guarantee and with full warranty of title, and with subrogation to all rights and actions of warranty against all previous owners that Seller may otherwise have, unto:

FUEL STOP 36, INC., a corporation of the State of Louisiana, domiciled and with its principal place of business in the Parish of Calcasieu, with federal tax identification number                  , and whose mailing address is declared to be                                                       , hereinafter referred to as “Purchaser”,

purchasing and accepting for itself, its successors and assigns, and acknowledging the delivery and possession thereof, the following described property, with all of its component parts, including all rights, ways, privileges, servitudes and appurtenances thereto belonging, to-wit:

COMMENCE AT THE INTERSECTION OF THE WEST RIGHT-OF-WAY LINE OF LA. HWY 397 AND THE NORTH RIGHT-OF-WAY LINE OF THE SOUTHERN PACIFIC RAILROAD THENCE ALONG THE SAID NORTH RIGHT-OF-WAY LINE N88°58’45”W A DISTANCE OF 199.60 FEET TO THE POINT OF BEGINNING; THENCE FROM THE POINT OF BEGINNING CONTINUE ALONG THE NORTH RIGHT-OF-WAY LINE OF THE SOUTHERN PACIFIC RAILROAD N88°58’45”W A DISTANCE OF 399.30 FEET TO A POINT AND CORNER; THENCE N00°58’21”E A DISTANCE OF 260.00 FEET TO A POINT AND CORNER; THENCE S89°01’39”E A DISTANCE OF 10.00 FEET TO A POINT AND CORNER; THENCE N00°58’21”E A DISTANCE OF 43.77 FEET TO A POINT AND CORNER; THENCE S88°58’45”W A DISTANCE OF 225.26 FEET TO A POINT AND CORNER; THENCE ALONG AN ARC OF A CURVE TO THE LEFT 86.39 FEET HAVING A RADIUS OF 55.00 FEET AND A LONG CHORD THAT BEARS N46°01’15”E A DISTANCE OF 77.78 FEET TO A POINT AND CORNER; THENCE N01°01’15”E A DISTANCE OF 286.23 FEET TO THE SOUTH RIGHT-OF-WAY LINE OF WRIGHT RD. AND CORNER; THENCE ALONG SAID SOUTH RIGHT-OF-WAY LINE S88°58’45”E A DISTANCE OF 109.30 FEET TO A POINT AND CORNER; THENCE LEAVING SAID SOUTH RIGHT-OF-WAY LINE S01°01’15”W A DISTANCE OF 645.00 FEET TO THE POINT OF BEGINNING CONTAINING WITHIN SAID BOUNDS 3.647 ACRES MORE OR LESS BEING MORE FULLY SHOWN HEREON.

TO HAVE AND TO HOLD the above described property unto the said Purchaser, the Purchaser’s successors and assigns, forever. The taxes for the above described property shall be prorated as of the date of

34

transfer and the Seller declares that all taxes due and eligible on the property herein sold through the calendar year prior to the date of transfer have been timely paid by the Seller.  Subject to the proration, the Purchaser shall be responsible for remitting the taxes for the calendar year in which the above described property shall transfer and all future taxes as they shall become due and payable.

The Seller hereby declares that the property herein conveyed has not been heretofore alienated by the said Seller and that as of the Closing there shall be no mortgages, liens or encumbrances of record against the said property.

The Seller declares that in the federal, state or local courts there are no judgments, general or particular, of record against the said property.

The Seller hereby agrees to deliver possession of the above described property to the Purchaser on even date herewith.

All parties signing the within instrument, whether as parties or as witnesses, have declared themselves to be of full legal capacity.

All agreements and stipulations herein and all of the obligations assumed herein shall inure to the benefit of and be binding upon the successors and assigns of the respective parties, and the Purchaser, its successors and assigns shall have and hold the above described property in full ownership forever.

No title examination has been requested of or performed by me, Notary.   The title description is provided by the parties, and the Notary appears solely and only for the purpose of notarizing this document.

Both parties agree and obligate themselves to promptly execute any additional acts, documents and/or instruments necessary and proper for the complete and expeditious implementation and satisfaction of the provisions and intent of this Act of Cash Sale.

The parties hereto have participated jointly in the negotiation and drafting of this Act of Cash Sale.  In the event any ambiguity or questions of intent or interpretation arise, this Act of Cash Sale shall be construed as if jointly drafted by the parties and no presumption or burden of proof shall arise favoring any of the parties by virtue of authorship of any of the provisions of this Act of Cash Sale.

In the event of a default of any condition or obligation of this Act of Cash Sale on the part of any of the parties hereto which results in the institution of any legal proceeding, the non-prevailing party shall pay to the prevailing party of the litigation all reasonable costs and expenses of the legal proceeding, and any appeal there from, including attorney’s fees.

No change or modification hereof shall be valid or binding unless the same is in writing and signed by the party intended to be bound.  No waiver of any provisions of this Act of Cash Sale shall be valid unless the same is in writing and signed by the party against whom such waiver is sought to be enforced; moreover, no valid waiver of any provisions of this Act of Cash Sale at any time shall be deemed a waiver of any other provision of this Act of Cash Sale at such time, nor will it be deemed a valid waiver of such.

No determination by any court, governmental body or otherwise that any provision of this Act of Cash Sale or any amendment hereof is invalid or unenforceable in any instance shall affect the validity or enforceability of (a) any other provision thereof, or (b) that provision in any circumstance not controlled by the determination. Each such provision shall be valid and enforceable to the fullest extent allowed by, and shall be construed wherever possible as being consistent with, applicable law.

All questions concerning the construction, validity, and interpretation of this Act of Cash Sale and the performance of the obligations imposed hereby shall be governed by the laws of the State of Louisiana.

35

The parties do not intend, nor shall this Act of Cash Sale be construed as, creating any resolutory conditions, vender’s lien(s), or stipulation pour autri and if any of the foregoing are deemed created by this instrument the same are herewith waived by the parties hereto.

THUS DONE AND PASSED on the               day of                             , 2005, at the City of                        , Parish of                                      , State of                            , the undersigned party having affixed her signature in the presence of me, Notary, and the undersigned competent witnesses, after due reading of the whole.

WITNESSES:
	Robert E. Christman

NOTARY PUBLIC

THUS DONE AND PASSED on the             day of                                       , 2005, at the City of                            , Parish of                                             , State of                                         , the undersigned party having affixed her signature in the presence of me, Notary, and the undersigned competent witnesses, after due reading of the whole.

WITNESSES:
	Louise C. Christman

NOTARY PUBLIC

36

THUS DONE AND PASSED on the                    day of                                  , 2005, at the City of                                , Parish of                                      , State of                                 , the undersigned party having affixed her signature in the presence of me, Notary, and the undersigned competent witnesses, after due reading of the whole.

WITNESSES:	PURCHASER:
			FUEL STOP 36, INC.
		By:
				, Manager

NOTARY PUBLIC

37

EXHIBIT D

[Legal Opinion]

[Letterhead]

                               , 2005

JALOU II, INC.

1869 Mills Highway

Breaux Bridge, Louisiana 70517

Re:Purchase Agreement, dated as of November      , 2005

Ladies and Gentlemen:

We have acted as counsel for Fuel Stop 36, Inc., a Louisiana corporation (the “Company”), Roger L. Miller, Yvonne Ledger Miller, Robert E. Christman and Louise C. Christman (Roger L. Miller, Yvonne Ledger Miller, Robert E. Christman and Louise C. Christman are collectively, the “Sellers”) in connection with the transactions contemplated by the Purchase Agreement, dated December    , 2005 (the “Agreement”), by and among the Company, the Sellers and JALOU II, INC., or its designee, a Louisiana corporation (the “Purchaser”).   Capitalized terms used but not defined herein are used as defined in the Agreement.

In rendering the opinions set forth herein, we have examined originals or copies, certified or otherwise identified to our satisfaction, of (i) the Agreement and certain of the other Transaction Documents as listed on Exhibit A (attached hereto and incorporated herein by reference) and referred to collectively as the “Transaction Documents,” (ii) such company records and other agreements, documents and instruments necessary to give the opinions set forth below and (iii) such certificates or comparable documents of public officials and officers and representatives of the Company and Sellers, as the case may be, and we have made such inquiries of such officers and representatives and considered such matters of law as we have deemed appropriate.

In all cases, we have assumed the genuineness of signatures on all documents except those of the Company and the Sellers, the legal competence of each person signing on behalf of each party, the authenticity and completeness of documents submitted to us as originals and the conformity to authentic original documents of documents submitted to us as copies.  As to the opinions expressed in Section 7 below, only, we have entirely relied upon certificates of Officers of the Company originals of which are attached hereto (the “Certificates”).  We have no independent knowledge of any information, circumstances or set of facts that would cause us to question the veracity of the information contained in the Certificates.

Based upon the foregoing, we are of the opinion, as of the date hereof, that:

1.The Company is duly organized, validly existing and in good standing under the laws of the State of Louisiana, with all requisite corporate power and authority to own its properties and to conduct business as described in the Agreement.  The Company is duly qualified to carry on its business as currently being conducted in each jurisdiction where such qualification is required, including, but not limited to the State of Louisiana.

2.The Agreement has been duly authorized, executed and delivered by the Company and the Sellers, and the Agreement constitutes the legal, valid and binding obligations of the Company and the Sellers, enforceable against each of them in accordance with its terms, subject as to enforceability to applicable bankruptcy,

38

insolvency, reorganization, moratorium, liquidation or similar laws in effect from time to time relating to or affecting the enforcement of the rights of creditors generally.

3.The execution and delivery by the Company and the Sellers of the Agreement and the performance of their obligations there under will not, as applicable, (a) result in the violation of any Louisiana corporate or federal or state securities statutes or regulations, or any order or decree known to us to have been issued by any court or governmental authority which is binding upon the Company or the Sellers or any of their respective property, or (b) conflict with or result in a breach or violation of any of the terms or provisions of the Company’s Articles of Incorporation or Bylaws or violate, conflict with or result in a breach or termination of, or otherwise give any Person additional rights or compensation under, or the right to terminate or accelerate, or constitute (with notice or lapse of time, or both) a default under the terms of any material agreement or instrument to which the Company or the Sellers is a party or by which any of the Company’s assets or properties are bound or result in creation of a lien upon any of the properties or assets of the Company, under any agreement of the Company or the Sellers.

4.The authorized capital stock of the Company consists of:                       of Common Stock, without par value (the “Common Stock”), of which                       will be issued and outstanding (the “Shares”) upon the sale of the shares to the Purchaser in accordance with the terms and conditions of the Agreement.  The Shares are duly authorized, validly issued, fully paid and non-assessable and are not subject to any pre-emptive rights under the laws of Louisiana, the Articles of Incorporation and Bylaws of the Company or under any agreement to which the Company or any of the Sellers are a party.  The Sellers are each the legal, beneficial and record owner of all the issued and outstanding shares of Common Stock of the Company, free and clear of any lien, encumbrance or claim, and prior to the sale of the Shares, the Sellers are the sole shareholders of the Company.

5.The Shares have been duly authorized for sale to the Purchaser pursuant to the Agreement and, when issued and delivered by the Sellers pursuant to the Agreement against payment of the consideration therefor as provided therein, will be duly authorized, validly issued, fully paid and non-assessable.  After delivery of the Shares to Purchaser, the Purchaser will be the sole shareholder of the Company.

6.The sale of the Shares as contemplated by the Agreement is not subject to any statutory or contractual preemptive rights.  There are no outstanding options, warrants or other rights, agreements or obligations calling for the issuance of Common Stock.

7.No actions, suits, claims or proceedings against the Company other the Sellers are pending nor are any actions, suits, proceedings or claims threatened, that if adversely determined would, either in any single case or in the aggregate, question the validity of or prevent the consummation of the transactions contemplated by the Agreement or have a Material Adverse Effect on the financial conditions, properties or operations of the Company.

8.Please note that no title examination of the Company’s or the Sellers’ assets has been requested of or performed by the undersigned.

9.This opinion letter is given solely to the Purchaser and its designee and may be relied upon only by the Purchaser and its designees and may not be relied upon by any other party or entity, except for the Purchaser’s lender, for any purpose whatsoever.  This opinion letter may not be quoted, circulated or published without the prior written consent of the issuer, except among the Purchaser’s officers, agents, lender and representatives and as necessary to enforce the terms of this opinion letter or the Agreement.  The opinions stated herein are made as of the date hereof, and we assume no obligation to advise you of any changes to the foregoing.

Very truly yours,

39

EX-14.1

EXHIBIT 14.1

Jacobs Entertainment, Inc.

Code of Ethics and Business Conduct

3/22/2006

TABLE OF CONTENTS
Introduction to the JEI Code of Ethics and Business Conduct	3
How to Obtain Guidance on a Compliance Issue or to Report a Concern	5
Quick Reference of Policies	7
Antitrust, Gaming, Securities and Other Laws	11
Insider Trading	12
Regulation FD Compliance	12
Conflicts of Interest	13
Confidential Information	14
No Loans to Executives	15
Equal Employment Opportunity	15
Harassment-Free Work Environment	15
Employee Privacy	16
Fraud, Theft, Payments, Kickbacks or Similar Conduct	16
Cooperation with Independent Auditors	17
Obstruction of Government Investigations	17
Foreign Transactions	18
Gifts and Gratuities	18
Safeguarding Company Assets	19
Use of Computer Resources, Including Software Acquisition, Protection and Distribution	19
Drug-Free Workplace	19
Responding to Inquiries from the Press and Others	20
Environment, Health and Safety	20
Political Activity	20
Discipline and Reporting	21
Corporate Compliance Officer	22
JEI Compliance Program Organizational Chart	23

2

Introduction to the Jacobs Entertainment, Inc.

Code of Ethics and Business Conduct

This Code of Ethics and Business Conduct explains the standards of behavior that Jacobs Entertainment, Inc. (JEI) expects of its directors and employees in their daily activities and dealings with others.  High standards of ethical behavior and workplace conduct make good business sense.  They serve as the cornerstone of our reputation as an organization.  Our ability to attract customers and quality employees depends on this reputation.  Your actions may enhance, maintain, or damage this standard that we have developed.  Therefore, it is expected that you will exercise the highest standards of ethics in all of your decisions that may impact the Company.  The Code cannot foresee every situation that might arise.  Rather, it identifies guiding principles to help you make decisions consistent with JEI’s values and reputation.  You should also familiarize yourself with various corporate policies that provide more detailed guidance on specific issues that may affect your work.  This Code applies at all times, without exception, to all members of the Board of Directors and all JEI employees.

It is the policy of Jacobs Entertainment, Inc. and each of its subsidiaries (collectively referred to as “JEI” or the “Company”), that the principal executive officer, executive officers, the senior financial officers (individually, an “Officer,” and collectively, the “Officers”) and all employees of JEI advocate and adhere to the following principals governing their professional and ethical conduct in the fulfillment of their respective responsibilities:

As an officer, director or employee of JEI, you are expected to:

1.act with honesty and integrity and in an ethical manner and seek to promote the interests of the Company when the opportunity arises;

2.deal fairly with the Company’s customers, suppliers, competitors and employees;

3.avoid conflicts of interest between your personal, private interests and the interests of the Company and seek to avoid the appearance of such conflicts of interest.  A conflict of interest may arise when an individual takes actions or has interests that make it difficult to perform his or her Company work objectively and effectively, or when an individual uses his or her position at the Company for improper personal benefit;

4.perform your responsibilities and duties in such a manner as to ensure that periodic reports required to be filed with the Securities and Exchange Commission and other public communications made by the Company, including, but not limited to , press releases, contain information that is full, fair, accurate, timely and understandable;

5.comply with laws of federal, state and local governments applicable to the Company, and the rules and regulations of agencies having jurisdiction over

3

the Company including, but not limited to, the laws pertaining to insider trading of Company securities;

6.act in good faith, responsibly, with due care and diligence, without misrepresenting or omitting material facts or allowing his or her independent judgment to be compromised;

7.respect the confidentiality of information acquired in the course of the performance of your responsibilities except when authorized or otherwise legally obligated to disclose such information;

8.never use confidential information acquired in the course of the performance of your responsibilities for improper personal advantage;

9.proactively attempt to promote ethical behavior among your subordinates and peers;

10.use Company assets and resources employed or entrusted to you in a responsible manner for legitimate business purposes and not for improper personal advantage;

11.never exploit corporate opportunities or compete with the Company;

12.always comply with the laws and regulations of the jurisdiction within which it conducts business.

The Company will endeavor to:

1.enhance customer confidence in the soundness of the gaming system;

2.agree to make their systems and practices available for inspection and review by any legitimate gaming commission or governmental authority;

3.design all services to protect customer privacy and confidentiality;

4.institute controls to detect and eliminate fraud and to protect data and the systems from internal and external hacking;

5.be truthful in all advertising and promotional efforts and shall publish only accurate information about its operations;

6.provide controls to deter minors from accessing its gaming or wagering and liquor service facilities.  These controls require customers to declare that they are of lawful age and JEI institutes reasonable measures to verify this information;

7.increase awareness, advocate treatment and promote research and education on problem gambling via various problem gambling coalition groups;

8.conduct its banking and financial affairs in accordance with accepted standards of internationally recognized banking institutions;

9.adhere to all jurisdictional laws pertaining to transaction reporting.

4

How to Obtain Guidance on a Compliance Issue or to Report a Concern

Each officer, manager and supervisor is responsible for ensuring that their employees know, understand and comply with Company policies, the Code of Ethics and Business Conduct and all applicable laws and regulations.  Several of the policies contain procedures for obtaining guidance or reporting a concern.  If there is no procedure in the policy, or you do not believe you can follow the procedure outlined in a policy, please proceed as follows:

You should obtain guidance from, or promptly report your concern to, your supervisor.  Should you feel uncomfortable discussing it with your supervisor, you should bring the matter to the attention of your Department Director, your Human Resources representative, Corporate Human Resources, or the Corporate Compliance Officer.  You may obtain the contact numbers for the Corporate Human Resources Department, the Corporate Compliance Officer or the Office of the President of Gaming Operations from the JEI Hotline.

JEI Hotline—999-999-9999—Compliant Procedure

To the extent practical JEI will protect the anonymity of any employee who reports suspected misconduct.  It is the Company’s policy that every employee who acts in good faith in reporting possible violations will be free from reprisal, retaliation or negative consequences in their employment as a result of such reporting.  In the event of a resulting internal investigation, you will be informed of its outcome as soon as is practicable under the circumstances.

Violation of JEI’s Code of Ethics and Business Conduct may result in disciplinary action, including but not limited to, a warning, suspension or termination of employment.  Violations may include non-compliance with JEI policies, lack of supervision or diligence in enforcing Company policies, providing false or misleading information, as well as any retaliatory actions, direct or indirect, against an employee who reports a reasonably suspected violation of this Code or other misconduct.

Any infraction or potential infraction of this Code by any Officer or employee should be promptly reported to your Department Director, your Human Resources representative, Corporate Human Resources, or the Corporate Compliance Officer.  The Corporate Compliance Officer shall report all such reported infractions and potential infractions to the Audit Committee of the Board of Directors of JEI. There shall be no reprisals for reporting an actual or possible violation of this Code.  The Audit Committee shall have the power and authority to monitor compliance with the Code, investigate potential or alleged violations of the Code, make determinations (including acting on requests for waivers from the provisions hereof) and make recommendations to the Board of Directors with respect to penalties and consequences for violations of this Code.  The Board of Directors of the Company is

5

authorized to take appropriate disciplinary action, including dismissal of the offender (after opportunity to be heard) if the violation of this Code is serious and detrimental to the Company.  Conflicts of interest shall be resolved in an ethical manner with due consideration being given to the legitimate interests of the Company.

6

Quick Reference of Policies
General	In general, this Code prohibits unlawful, unethical and inappropriate behavior. The Code applies to all employees of the Company.
Antitrust, Gaming, Securities and Other Laws	Employees must comply with all laws and regulations, including all antitrust, gaming, liquor and securities regulations and laws. No employee may retaliate against another for reporting criminal activity.
Insider Trading	Employees must strictly adhere to the prohibitions against insider trading and must not disclose “inside information” to other persons.
Regulation FD Compliance (Full Disclosure)	Employees who communicate regularly on the Company’s behalf with the investment community and senior officials must comply with the SEC’s Regulation FD which requires a public disclosure of any “material” information that has been disclosed to any person in the investment community.
Conflicts of Interest	Employees and their close relatives must avoid taking any action that creates, or appears to create, a conflict between their own interests and the interests of the Company. The Company discourages full-time employees from “moonlighting” and prohibits employees from performing services as independent contractors for any of the Company’s customers, suppliers vendors or competitors.
Confidential Information	Employees must refrain from disclosing certain business information, market sensitive data, or any other proprietary information without appropriate management approval.

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No Loans to Executives	JEI may not make or arrange loans to its executive officers or directors.
Equal Employment Opportunity	It is the Company’s policy to affirmatively recruit, retain, and promote employees without regard to age, sex, color, race, creed, national origin, religious persuasion, marital status, disability or veteran status. No form of illegal discrimination will be tolerated.
Harassment-Free Work Environment	No form of unlawful harassment will be tolerated
Employee Privacy	It is the Company’s policy to respect the privacy of all employees. However, employees shall have no expectation of privacy in their use of business tools or in their work spaces or property on the Company premises.
Fraud, Theft, Payments, Kickbacks or Similar Conduct	Employees may not engage in any scheme to defraud any person out of money, property, or honest services, including by theft, fraud or embezzlement. The receipt of fees, loans, or other payments resulting from transactions involving the Company or its subsidiaries and affiliates is strictly prohibited. No employee will provide or accept kickbacks, including those in the form of currency, services, other assets or reductions of personal debts.
Cooperation with Independent Auditors	Employees may not intentionally mislead the Company’s independent public accountants in connection with their audit of the Company’s financial statements.
Obstruction of Government Investigations	It is illegal to destroy or conceal documents, records or other information with the intent of impairing the integrity or availability of the information for use in a government investigation.

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Foreign Transactions	Employees must comply with the Foreign Corrupt Practices Act. By doing so, they may not pay money or anything of value to foreign government officials, parties or political candidates for the purpose of influencing the acts or decisions of such officials in order to obtain business or obtain any improper advantage. Employees may not cooperate in any way with boycotts between foreign countries not sanctioned by the United States.
Gifts and Gratuities	Gifts and other forms of special benefits to or from customers, suppliers or competitors, of JEI can raise ethical and legal questions that could potentially embarrass or damage JEI. Therefore, caution is required when dealing with such matters. It is your responsibility to ensure that your acceptance of meals, refreshments or entertainment is proper and could not reasonably be construed in any way as an attempt to secure favorable treatment from you.
Safeguarding Company Assets	Employees may not use, spend, or dispose of Company property (including funds) for personal use or benefit, or in a manner or for a cause that is unethical or illegal. All financial reports must be truthful, accurate and reliable.
Use of Computer Resources, Including Software Acquisition, Protection and Distribution	The employees of any operating unit or support function that internally develops, or purchases software must ensure that appropriate intellectual property rights (e.g., copyrights and patents) are obtained and secured. Such software is property licensed or owned by the Company and must be protected.

9

Drug-Free Workplace	The Company prohibits the unlawful possession, manufacture, use, or distribution of controlled substances in the workplace or at any place where an employee could be construed to be a representative of the Company or one of its subsidiaries or affiliates.
Responding to Inquiries from the Press and Others	Employees should refer all inquiries from the media, shareholders and the financial community to the office of the President of Gaming Operations.
Environment, Health and Safety	It is the Company’s policy to comply with all environmental, health and safety laws and regulations. Employees should be environmentally aware and sensitive and are required to report any non-compliance with environmental laws or regulations. Employees should report all accidents, injuries, occupational illnesses and unsafe conditions or practices.
Political Activity	The Company shall comply with all election and campaign funding laws, requirements and prohibitions. Under no circumstances may any funds or property of the Company be used, directly or indirectly, to support or assist the candidacy of any person seeking elected office without the prior consent of the CEO or the President of Gaming Operations.
Discipline and Reporting	Non-compliance with the Code may result in discipline, including warnings, suspensions or termination of employment. Employees are expected to report violations of the Code for investigation and appropriate action.

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Corporate Compliance Officer The Corporate Compliance Officer will monitor reports of alleged wrongdoing, conduct investigations as appropriate, implement and make appropriate modifications to the Code, and report to the Audit Committee on a regular basis.

Antitrust, Gaming, Securities and Other Laws

It is JEI’s policy to compete vigorously, aggressively and fairly, in accordance with applicable laws and regulations.  You are expected to generally understand the laws and regulations that apply to your job and to act in accordance with them.

Antitrust law can be very complex.  In general, we are to compete without any anticompetitive understandings or agreements with our competitors, suppliers, dealers and/or customers.

All employees are expected to conduct themselves in accordance with and at all times abide by the gaming and liquor regulations and laws governing the jurisdiction in which they work.

You should avoid discussion or agreements with competitors (even informal ones) regarding prices, terms or conditions of sales, credit or billing practices, costs, profits (or profit margins), market shares, bids, requests for proposals, intent to do business (or not) with particular suppliers or territories, or plans to build or expand existing businesses.

You should maintain our independence of judgment in the pricing, marketing, purchasing and selling of all products and services.  Avoid inaccurate or misleading statements about competitors, suppliers, customers or their offerings.  We succeed by offering competitively priced, quality products and services, not by attempting to prevent anyone from entering a market, or by disparaging any competitor, supplier or customer or trying to “put them out of business.”

Our purchasing decisions are based on fair and objective criteria, not on whether a supplier agrees to use our goods and services.  Do not suggest to suppliers that purchasing decisions depend on the supplier’s use of our goods or services or that failing to do business with a subsidiary or affiliate could jeopardize business with the parent company.

You should report illegal activity and unethical conduct.  Neither JEI nor any of its employees may retaliate against any person for providing information, reasonably believed to be truthful, to any law enforcement officer relating to the commission or possible commission of a crime.

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Insider Trading

In the course of your duties, you may become privy to “inside information” within the meanings of state or federal laws.  This means material, non-public information that might have an effect on our bond (or perhaps as the result of a future equity offering, our stock) price if the information were publicly known.  You should also be aware that the same prohibition against insider trading applies to trading in the stock of our customers, suppliers or any other company if you have insider information about them.  Employees are strictly prohibited from providing inside information to other persons as this information might influence their trading activities of financial transactions.

Examples of such “insider information” may include: expansion plans, major management changes, current or future earnings projections, new contacts or projects, mergers, acquisitions or divestitures or other such material matters.

It is your responsibility to understand laws and policies that may apply to you.  Further information on blackout periods, pre-clearance and other matters related to insider trading may be obtained through the office of the President of Gaming Operations.

Regulation FD (Full Disclosure) Compliance

It is federal law and, accordingly, our policy that JEI, all senior officials and all employees who regularly communicate on the Company’s behalf with the investment community comply with Regulation FD adopted by the U.S. Securities and Exchange Commission.  Regulation FD generally provides that when the Company or any person acting on its behalf discloses “material” non-public information to the holders of JEI securities, broker-dealers, investment advisers, investment managers, investment companies, hedge funds, investors, industry analysts and the affiliates of any of these, the Company is required to make a public disclosure of the same information.  In order to ensure compliance with Regulation FD, you should review carefully and adhere to the terms of the JEI “Disclosure Policy”.

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Conflicts of Interest

You may not engage in any activity, or become involved in any arrangement, directly or indirectly, which will conflict, or may be reasonably viewed as conflicting, with your responsibilities to JEI.  This includes the use of JEI’s name, information or goodwill for your personal gain or that of others.  A conflict of interest may arise from your involvement, or another person acting on your behalf, in certain business or personal activities that may currently, or potentially conflict with your duties at JEI.

A conflict may exist regardless of your intent.  If you believe that you are, or may become, involved in a conflict of interest, you should address the issue promptly.

To avoid such situations, employees must:

1.Select and deal with suppliers, vendors, customers and other persons doing or seeking to do business with JEI in a completely fair and objective manner without favor or preference based upon personal financial considerations.

2.Not engage in any direct financial, managerial or other relationship with any supplier, customer, competitor or regulatory agency that could give rise to an actual or potential conflict of interest or the appearance of a conflict of interest.

3.Not engage, directly or indirectly, in any association or activity (whether for profit of not) that might impair or appear to impair the ability to make objective an fair decisions on behalf of JEI, or that might not otherwise be in the best interest of JEI.  This includes, for example, directly or indirectly engaging in competitive activities, diverting a business opportunity from JEI, or improperly using or disclosing Confidential Information.

4.Select and deal with suppliers, customers and other persons doing or seeking to do business with JEI in a completely fair and objective manner without favor or preference based upon personal financial considerations.

5.Not accept from or give to any supplier, customer or competitor any gift or entertainment except as permitted under the section entitled “Gifts and Gratuities.”

6.Not do business with a close relative or business entity with which the employee or a relative is associated, except where such dealings are on arm’s-length terms, have been fully disclosed to the Corporate Compliance Officer and have been given specific written approval.

7.Not directly or indirectly own a substantial financial interest in any firm or corporation which is a competitor of or which does or seeks to do business

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with JEI.  (Stock ownership of less than 1% in companies traded on a national securities exchange is not considered to be a conflict of interest, nor is any other ownership if it is less than 5% of the employee’s total assets of 10% of his or her net worth.)

You must not directly or indirectly deprive JEI of a business opportunity discovered in the normal course of performing your duties, including diversion of a business opportunity to your own or someone else’s account.

JEI employees who choose to work at another job must not allow that employment to have any negative impact on their performance at JEI.

Additionally, under no circumstances may you perform the service of an independent contractor or consultant for any competitor, customer or supplier of JEI.

Furthermore, you must not engage in any supplementary employment or activities that could cause embarrassment to, jeopardize the interest of, use proprietary information of, or interfere with the operations of JEI.

Disclosure must be made of all investments, including the ownership of stock traded on the national securities exchanges, which may be reasonably construed to create an actual or apparent conflict of interest.  A Conflict of Interest Disclosure Form must be completed and returned to Human Resources at commencement of employment, annually if you previously disclosed a conflict of interest, or if you have reason to believe your actual or proposed activity may violate this policy.

Confidential Information

You must not disclose trade secrets, customer lists, special methods of operation or any other information that is of value to our business.

Confidential Information is generally business or technical information not generally available to the employee population as a whole or to third parties, and which may have been developed or specifically acquired by JEI.  It includes “market sensitive” material which could affect the decisions of current or potential investors.  Information from employee personnel records or customer records is also confidential and protected by various privacy laws.  Such information should only be provided with appropriate management approval.

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No Loans to Executives

Federal law prohibits JEI from making or arranging loans to its executive officers or directors.  Because a loan is broadly defined to include any extension to credit, unusual transactions between directors and executive officers should be carefully examined.  For example an advance against the equity value of a home in connection with a relocation would be considered loans made by JEI.  If you have a question about whether a transaction might be a loan, you should consult with the Corporate Compliance Officer before arranging the transaction.

Equal Employment Opportunity

The Company is dedicated to the principles of equal employment opportunity in any term, condition or privilege of employment.  We do not discriminate against applicants or employees on the basis of age, race, sex, color, religion, national origin, disability, or any other status protected by applicable federal, state or local law.

The Company will make reasonable accommodation for qualified individuals with know disabilities unless doing so would result in an undue hardship to the Company.  This policy governs all aspects of employment, including selection, job assignment, compensation, discipline, termination, and access to benefits and training.

Harassment-Free Work Environment

JEI is strongly committed to the principle of fair employment, and as such it is our policy to provide employees a work environment that is free from all forms of unlawful discrimination, intimidation or harassment.  In recognition of each person’s individual dignity, racial, ethnic, religious, sexual or any other harassment of our employees will not be tolerated.  This includes inappropriate verbal or physical conduct or otherwise creating an intimidating, offensive, abusive or hostile work environment.  If you have a question, concern or complaint of discrimination, including harassment, based on race, color, sex, religion, age, national origin, handicap or disability, veteran status or other protected status, you are encouraged to bring the matter to the immediate attention of your supervisor.  If you feel uncomfortable discussing an issue with your supervisor, or if you reasonably believe that your supervisor should not be present during the first step of the resolution process, or that you cannot bring the matter to the attention of your supervisor or Department Director directly, contact your Human Resources representative or Corporate Human Resources directly for assistance.

15

Employee Privacy

The Company reserves the right to retrieve and review any message or file composed, sent or received.  It should be noted that although a message or file is deleted or erased, it still possible to recreate the message.  Therefore, ultimate privacy of messages cannot be assured to anyone.  Although electronic mail and voice mail may allow the use of passwords for security, confidentiality cannot be guaranteed.  It is possible for messages to be retrieved and viewed by someone other than the intended recipient.  Furthermore, all passwords are known to the Company, as the system may need to be accessed by the Company in the absence of an employee.

All messages created, sent, or retrieved over the Internet are the property of the Company and should be considered public information.  The Company reserves the right to access and monitor all messages and files on the computer system at any time.  All communications can be disclosed to law enforcement officials or other third parties without prior consent of the sender or the receiver.

The Company provides and maintains the following forms of electronic communication, messaging agents and electronic facilities:  internal and external electronic mail (e-mail), telephone voice mail, Internet access, and computer hardware and software.  As a condition of providing the previously identified communications access to its employees, the Company places certain restrictions on workplace use of the same.

Employees are responsible for the content of all text, audio, or images they place or send over the Internet.  Fraudulent, harassing, or obscene messages are prohibited.  All messages on the Internet should be identified with the employee’s name.  Employees may not obscure the origin of messages and the information published should not violate or infringe upon the rights of others.

Fraud, Theft, Payments, Kickbacks or Similar Conduct

JEI employees may not engage in any scheme to defraud anyone out of money, property or honest services.  Any act of an employee that directly or indirectly involves theft, fraud, embezzlement, misappropriation or wrongful conversion of any property, including that of JEI or any of its employees, suppliers or customers, is expressly prohibited.  No employee shall make any false written or verbal statement involving any JEI business or activity.

You may not accept personal commissions, fees, loans or any other form of payment arising from any transaction or business activity directly or indirectly involving JEI.  No employee will accept, provide, attempt to provide, or offer to provide a kickback to anyone for any reason.

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These “payments” or “kickbacks” may include, but may not be limited to: money, fees, commissions, loans, gratuities, lavish trips, entertainment, recreation, personal services, accommodations, or any other form of value.

Cooperation with Independent Auditors

JEI’s management is responsible for the accuracy and completeness of JEI’s financial statements.  JEI and the investing public rely upon the skill and integrity of JEI’s management and also on the report provided by our independent auditor on these financial statements.  Companies that do not provide accurate and complete financial information are often the subject of lawsuits and possible criminal probes.

The independent auditor’s report is dependant upon a thorough understanding of JEI’s financial reporting system and the information generated by it as well as the judgments and assumptions of our management.  Accordingly, it is critical that our independent auditors receive complete and truthful information and otherwise the full cooperation of our employees.  JEI insists that those employees who provide information to JEI’s independent auditors do so in a way that is accurate and complete.  Federal law makes it a crime for individuals to take any action designed to mislead or coerce the Company’s independent accountants for the purpose of making the Company’s financial statements materially misleading.

Obstruction of Government Investigations

JEI’s record retention policy provides guidance concerning the period of time during which certain information must be maintained before it can be destroyed.  Most information obtained or created during the course of normal work can and should be destroyed if it no longer serves a business purpose.  Certain other information is required to be maintained for a fixed period of time by regulatory agencies or for other reasons outlined in JEI’s records retention policy.  Federal law makes it a crime for individuals to conceal or destroy documents if it is done with the intent of impeding a federal investigation or in contemplation that there may be a federal investigation.  There are similar laws in many states as well as similar laws, rules and regulations governing our various business activities.  Accordingly, if a government investigation is initiated or contemplated, all documents relevant to the subject matter of the investigation must be preserved.

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Foreign Transactions

JEI is committed to ethical business practices both at home and abroad.  If you conduct business for JEI outside of the United States, you are expected to comply with all applicable laws and regulations governing such transactions.

The Foreign Corrupt Practices Act makes it a crime to directly or indirectly offer, promise to pay or pay money or anything of value to foreign government officials, parties or political candidates for the purpose of influencing the acts or decisions of such officials in order to obtain business or obtain any improper advantage.  All JEI officers, employees and agents must keep accurate and truthful records reflecting payments and transactions for all foreign and domestic business activities.

Various federal laws govern trade between the United States and foreign countries and prohibit U.S. companies and their foreign subsidiaries from doing business with certain countries, agencies and individuals.  As these laws and regulations vary by country and type of goods or services, employees engaged in business transactions outside of the U.S. should obtain advice prior to engaging in such activities.

It is illegal and against Company policy for JEI employees to cooperate in any way with boycotts between foreign countries not sanctioned by the United States.  Any written or oral requests for boycott support or boycott-related information should be immediately reported.

Gifts and Gratuities

Gifts and other forms of special benefits to or from customers, suppliers, vendors or competitors, of JEI can raise ethical and legal questions that could potentially embarrass or damage JEI.  Therefore, caution is required when dealing with such matters.  It is your responsibility to ensure that your acceptance of meals, refreshments or entertainment is proper and could not reasonably be construed in any way as an attempt to secure favorable treatment from you.  No gifts of money should ever be accepted.  If you question the appropriateness of a gift, contact your Human Resources representative, or the Corporate Compliance Officer immediately as to the existence, nature and value of the gift.  As a general guideline, employees should consult with such persons before accepting gifts which exceed $50 in value.  Employees are prohibited from (a) taking for themselves personally opportunities that are discovered through the use of corporate property, information or position; (b) using corporate property, information or position for personal gain; and (c) competing with the Company.

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Safeguarding Company Assets

JEI is strictly accountable for any funds and property entrusted to its care.  You are not to use, spend or dispose of Company funds, or property for personal use or benefit, or in a manner or for a cause that is unethical or illegal.

You are responsible for maintaining written records and expense reports in sufficient detail to completely, accurately and fairly reflect all transactions and expenditures made on behalf of JEI.  These documents must be prepared on a timely basis.  The falsification of any such documents with inaccurate or misleading data is prohibited.  Furthermore, you must accurately track and segregate any personal expenses that may be commingled with business expenses.  This includes segregating personal phone charges incurred via office or cellular telephone, or JEI-sponsored credit cards.

Use of Computer Resources, Including Software Acquisition, Protection and Distribution

Software, whether purchased or internally developed, and the intellectual property rights represented by software are valuable JEI assets and must be protected and managed in compliance with all software licensing requirements, restrictions and laws.  Such licensing agreements may prohibit copying or distributing such software for Company or personal use.

Use of the business tools, including without limitation the Internet, intranet or e-mail shall be generally limited to business purposes.  Any use should not interfere with work duties or violate Company policies, including policies relating to gambling, pornography, chain letters and solicitation.

Drug-Free Workplace

It is the goal of the Company to foster a work environment free from the behavior altering effects of illegal drugs and alcoholic beverages.  Use of alcohol and illegal drugs alter employees’ judgment resulting in increased safety risks, workplace injuries and faulty decision-making.  Therefore, working after the use of alcohol, a controlled substance or abuse of any other substances is prohibited.  Furthermore, the possession, purchase, consumption (use) or sale of a controlled substance or alcohol on Company premises or while conducting Company business is prohibited.  Alcoholic beverages served in conjunction with an authorized Company event are an exception to this prohibition.

Employees shall, when drugs are prescribed by a medical professional, inquire of the prescribing professional whether the drug prescribed has any side effects which may impair the employee’s ability to safely perform the employee’s job duties.  If the answer from the medical professional is yes, the employee shall obtain a statement

19

from the medical professional indicating any work restrictions and their duration.  The employee shall present that statement to his or her supervisor prior to going on duty.

The Company may conduct unannounced inspections for controlled substances and/or alcohol in the workplace or on Company premises, including parking lots.  All property of the Company such as desks, lockers and file cabinets are subject to inspection.  Any personal property of employees brought on to the Company’s premises or work sites such as vehicles, lunch pails, purses and packages are subject o inspection.  Employees are expected to cooperate in any inspection.  Failure to do so will result in disciplinary action up to and including termination.

Responding to Inquiries from the Press and Others

JEI has established policies for responding to inquiries from the press and from others legitimately seeking information about us.  It is important that employees not attempt to answer such inquiries unless authorized to do so.  Overall, our intention is to maintain a spirit of cooperation while always acting in JEI’s best interest and in accordance with applicable law.  Therefore, all inquires from the media, investors or the financial community as well as any legal inquiries should be directed to the office of the President of Gaming Operations.

Environment, Health and Safety

It is the policy of JEI to manage our business in an environmentally responsible manner and to comply with all environmental laws and regulations.  You are required to maintain an environmental awareness concerning the activities you perform and to conduct those activities in a manner that fully complies with all environmental rules and regulations.  You are further required to immediately report to your supervisor, Department Head or the Corporate Compliance Officer any event you witness which may result in noncompliance of any environmental law or regulation.

It is also JEI’s policy to provide a safe and healthy environment for our employees and visitors to its premises.  To this end you are expected to conduct operations in a manner that meets applicable health and safety laws and regulations.  Weapons of any type are not permitted on JEI property, or while an employee is engaged in activities on behalf of the Company.  All requests of exceptions to this rule must be based on a valid JEI business need and with the prior written approval of the Corporate Compliance Officer.  Additionally, you are required to immediately report any and all accidents, injuries, occupational illness, unsafe conditions or practices to your supervisor.

Political Activity

Participation in the American political system is the right of every individual.  We encourage our employees, as responsible citizens, to support candidates and ballot

20

measures of their choice at all levels of government.  The policies outlined below are not intended to discourage employees from individual political activity during their off-duty hours.

The Company shall comply with all election and campaign funding laws, requirements and prohibitions.  Under no circumstances may any funds or property of the Company be used, directly or indirectly, to support or assist the candidacy of any person seeking elected office without the prior consent of the CEO or the President of Gaming Operations.

Under limited circumstances some states permit corporations to make contributions to candidates, political parties and ballot issues; however, such contributions are limited and strictly controlled.   If made at all by JEI, such contributions will only be made by authorization of the CEO of JEI.

Discipline and Reporting

Violation of JEI’s Code of Ethics and Business Conduct may result in disciplinary action, including but not limited to, a warning, suspension or termination of employment.  Violations may include non-compliance with JEI policies, lack of supervision or diligence in enforcing Company policies, providing false or misleading information, as well as any retaliatory actions, direct or indirect, against an employee who reports a reasonably suspected violation of this Code or other misconduct.

Any infraction or potential infraction of this Code by any Officer or employee should be promptly reported to your Department Director, your Human Resources representative, Corporate Human Resources, or the Corporate Compliance Officer.  The Corporate Compliance Officer shall report all such reported infractions and potential infractions to the Audit Committee of the Board of Directors of JEI. There shall be no reprisals for reporting an actual or possible violation of this Code.  The Audit Committee shall have the power and authority to monitor compliance with the Code, investigate potential or alleged violations of the Code, make determinations (including acting on requests for waivers from the provisions hereof) and make recommendations to the Board of Directors with respect to penalties and consequences for violations of this Code.  The Board of Directors of the Company is authorized to take appropriate disciplinary action, including dismissal of the offender (after opportunity to be heard) if the violation of this Code is serious and detrimental to the Company.  Conflicts of interest shall be resolved in an ethical manner with due consideration being given to the legitimate interests of the Company.

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Corporate Compliance Officer

The JEI Board of Directors has approved and directed that the Corporate Compliance Officer report to the Audit Committee of the Board and further has directed the Corporate Compliance Officer to assist in implementing and supervising the Code throughout JEI.  In implementing the Code, the Corporate Compliance Officer will:

•Report to the Audit Committee of the Board of Directors as necessary or requested;

•Audit compliance with the Code;

•Deal with legal counsel and others in investigating suspected violations of the Code or the law;

•Report violations to appropriate governmental authorities;

•Establish and monitor programs to train employees about the Code and other compliance and ethics issues;

•Deal with issues submitted to him or her; and

•Oversee the updating and supplementing of the Code.

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JEI Compliance Program Organization Chart

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EX-21.1

EXHIBIT 21.1

Subsidiaries of Jacobs Entertainment, Inc., the Registrant

The list of the subsidiaries of Jacobs Entertainment, Inc. was included as Exhibit 21.1 to our registration statement on Form S-4 (SEC Registration No. 333-88242) filed on May 14, 2002 and incorporated hereby by reference.

In addition, Jacobs Entertainment, Inc. has formed or acquired the following subsidiaries:

	State of		Percentage of
Name	Organization		Ownership
Colonial Downs, L.L.C.		Virginia	100	%
JRJ Properties, LLC		Louisiana	100	%
Jalou Breaux Bridge, LLC		Louisiana	100	%
Jalou Eunice, LLC		Louisiana	100	%
Jalou of Jefferson, LLC		Louisiana	100	%
Fuel Stop 36, Inc.		Louisiana	100	%
Jalou of Larose, LLC		Louisiana	100	%

EX-31.1

EXHIBIT 31.1

Certification of Chief Executive Officer Under

Section 302 of the Sarbanes-Oxley Act of 2002

I, Jeffrey P. Jacobs, certify that:

1.I have reviewed this Annual Report on Form 10-K of Jacobs Entertainment, Inc. (“registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Reserved;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design of operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	March 29, 2006
Signature:	/s/ Jeffrey P. Jacobs
	Jeffrey P. Jacobs
Title:	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Certification of Chief Executive Officer Under

Section 302 of the Sarbanes-Oxley Act of 2002

I, Stephen R. Roark, certify that:

1.I have reviewed this Annual Report on Form 10-K of Jacobs Entertainment, Inc. (“registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Reserved;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design of operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	March 29, 2006
Signature:	/s/ Stephen R. Roark
	Stephen R. Roark
Title:	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

Certification Pursuant to 18 U.S.C. Section 1350

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report of Jacobs Entertainment, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), I, Jeffrey P. Jacobs, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.the Annual Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and

2.the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Jeffrey P. Jacobs
Name:	Jeffrey P. Jacobs
Title:	Chief Executive Officer
Date:	March 29, 2006

EX-32.2

EXHIBIT 32.2

Certification Pursuant to 18 U.S.C. Section 1350

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report of Jacobs Entertainment, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), I, Stephen R. Roark, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.the Annual Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and

2.the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Stephen R. Roark
Name:	Stephen R. Roark
Title:	Chief Financial Officer
Date:	March 29, 2006